After Holding the Line for Two Years,
Foundation Giving Declined in 2003
PROSPECTS GOOD FOR MODEST INCREASE IN 2004 GIVING
New York, N.Y, April 5, 2004—Three consecutive years of stock market losses and a sluggish and uneven economic recovery caught up with foundations in 2003. Giving by the nation's nearly 65,000 grantmaking foundations declined an estimated 2.5 percent to $29.7 billion last year, down from just over $30 billion in 2002 and 2001, according to the Foundation Center's new report, Foundation Growth and Giving Estimates. This decline is smaller than might be expected, given the 10.5 percent loss in foundation assets between 2000 and 2002. Looking ahead, the beginning of a recovery in the stock market in 2003 will encourage modest overall growth in 2004 foundation giving.
"Foundations are not immune to economic cycles," stated Sara Engelhardt, president of the Foundation Center. "Just as the boom years of the late 1990s enabled foundations to increase their giving at an unprecedented rate, so too has the recession and prolonged stock market downturn led to a reduction in foundation giving. In the face of a double-digit loss in assets, it's heartening that foundations as a group were able to hold the line as well as they did."
In addition to the drop in the value of foundation assets, the decline in 2003 giving was due to the completion in 2002 of exceptional giving in response to the 9/11 attacks. Helping to mitigate the overall decrease were startup grantmaking by newly established foundations, a continuing high (albeit decreased) level of new gifts into foundations, improved portfolio performance for some funders, and a commitment by many foundations to maintaining stable levels of giving, especially in light of cutbacks in government funding programs.
Findings from Foundation Growth and Giving Estimates are based on actual 2002 giving and asset data tracked by the Foundation Center for all U.S. independent, corporate, and community foundations. Giving projections for 2003 and 2004 are based on estimates reported in the Foundation Center's 2004 "Foundation Giving Forecast Survey" by more than 900 large and mid-size foundations, combined with year-end fiscal indicators. Survey respondents also provided information on changes in their grantmaking strategies and on their expectations regarding foundation perpetuity.
2004 Foundation Giving Likely to Show Modest Growth
The end of the three-year stock market downturn and stronger than expected economic growth helped to boost foundation assets by an estimated 9 to 11 percent in 2003, which will encourage increased giving in 2004. Overall, close to half of foundations responding to the Foundation Center's 2004 survey indicated that they expect their giving to increase in the current year-most within the range of 1 to 10 percent. Only 18 percent anticipate reducing giving. However, many foundations—especially the largest ones—have yet to fully recover from the drop in their assets during 2001 and 2002. Foundations can be expected to proceed cautiously in increasing their grants budgets, as war, terrorist attacks, election-year politics, a hike in oil prices, or other unanticipated events could derail the recovery. As a result, giving is likely to increase in 2004 but at a modest pace.
Independent and Corporate Foundation Giving Declined in 2003;
Community Foundations Showed Modest Rise
Independent Foundation Support Declined 3.3 Percent in 2003. Independent foundations, including family foundations and most of the "new health foundations" (formed from health care conversions), comprise the vast majority of foundations and account for most of the giving. In 2003, their total giving declined an estimated 3.3 percent. This decrease followed a 1.9 percent decline in 2002. Actual grant dollars slipped from $23.3 billion in 2002 to an estimated $22.5 billion last year.
Corporate Foundation Giving Decreased 2 Percent in 2003. Funding by corporate foundations declined 2 percent in 2003—the first decrease recorded since the Foundation Center began tracking data on all corporate foundations in 1987. Exceptional giving in response to the 9/11 attacks was generally completed in 2002, contributing to the drop in corporate foundation support in 2003. However, the continued high level of new gifts into corporate foundations helped to moderate reductions in giving.
Community Foundation Funding Rose 1.5 Percent in 2003. In contrast to independent and corporate foundations, community foundations increased their giving in 2003. Still, this 1.5 percent increase represented the slowest growth in giving reported since 1994. Actual grant dollars rose marginally from $2.53 billion to $2.57 billion. A nearly unchanged level of new gifts into community foundations helped sustain the overall giving level.
Most Foundations Expect to Exist in Perpetuity
A large majority of U.S. foundations expect to exist in perpetuity, with only a small share of funders committed to "giving while living." According to the 2004 "Foundation Giving Forecast Survey," just over 69 percent of respondents expected their foundations to carry on grantmaking activities in perpetuity, while less than 9 percent did not. A substantial 22 percent of respondents reported being undecided on the issue. Smaller foundations—many of which are controlled by living donors and donor families—were more likely to be undecided, suggesting that they have not yet resolved this issue. An analysis of responses by establishment date reveals that the concept of "giving while living" has a relatively small but committed following among donors who established their foundations in the 1990s. While the overwhelming majority of respondents at foundations established in the last decade expected to exist in perpetuity (72.8 percent), these newer funders were also more likely to indicate that they would not exist in perpetuity (10.7 percent) than were foundations established between 1970 and 1989 (8 percent) and before 1970 (8.1 percent).
Foundation Giving Resources
Foundation Growth and Giving Estimates is part of the annual Foundations Today Series on foundation growth and trends in foundation giving and can be accessed at no charge from the "Researching Philanthropy" area of the Foundation Center's Web site. The Center will release an in-depth examination of 2002 foundation trends in Foundation Yearbook: Facts and Figures on Private and Community Foundations in late June. "Highlights" of Foundation Giving Trends, 2004 Edition, the Foundation Center's annual examination of funding trends of more than 1,000 of the largest U.S. foundations (published in February), are also available at www.foundationcenter.org/research/. All of these reports are available separately or through subscription to the complete series ($95) and may be purchased at the Foundation Center's online Marketplace.
About the Foundation Center
The Foundation Center's mission is to strengthen the nonprofit sector by advancing knowledge about U.S. philanthropy. To achieve its mission, the Center collects, organizes, and communicates information on U.S. philanthropy; conducts and facilitates research on trends in the field; provides education and training on the grantseeking process; and ensures public access to information and services through its Web site, print and electronic publications, five library/learning centers, and a national network of Cooperating Collections. Founded in 1956, the Center is the nation's leading authority on philanthropy and is dedicated to serving grantseekers, grantmakers, researchers, policymakers, the media, and the general public.
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