Despite the fallout of the financial crisis, private foundations stepped up grant-making activity during the recession, according to a Nov. 8 report published by The Foundation Source.
Among the organizations examined by The Foundation Source as part of its first annual Report on Private Foundations, the total value of grants made increased 4.5 percent from 2008 to 2011.
During that period, disbursements for grants and charitable expenses made by the organizations examined by The Foundation Source report averaged 11.6 percent of their cumulative assets.
The IRS requires that private foundations donate at least 5 percent of their total assets each year.
“During the recession, which everyone agrees is one of the worst economic times we’ve had since the Great Depression, these foundations were giving at two times the required level in terms of the amount of grants required each year,” said The Foundation Source CEO King McGlaughon.
Based in Fairfield, The Foundation Source provides administrative services, online foundation management tools and philanthropic advisory services to more than 1,100 private foundations nationwide.
The results of the group’s first annual Report on Private Foundations were based on actual transactions recorded by The Foundation Source for 519 of its clients. Of those tracked as part of the report, 55 percent have less than $1 million in assets, 39 percent have between $1 million and $10 million in assets and about 6 percent have assets of between $10 million and $50 million.
Despite the economy, private foundations continued to build up assets during the period surveyed, McGlaughon said.
“Since 2001, the amount of money going into foundations has been above $20 billion a year,” he said. “Before 2000, the average going into foundations was around $6 (billion) or $7 billion a year. So there was a huge jump in terms of how much money people were putting into foundations that took place at the end of the 1990s, and that level of funding has remained at that high level ever since.”
From 2008 to 2011, for every dollar granted to a nonprofit or paid as a charitable expense, private foundations recouped 88 cents in newly contributed capital from donors, the report states.
McGlaughon said private foundations serve particularly important roles during crises such as Hurricane Sandy.
“I can tell you that whenever there are these natural events — whether its an earthquake in Haiti or a tsunami in Southeast Asia or a hurricane in the gulf or now on the East Coast — our clients are extremely responsive,” he said. “A lot of these foundations typically make their grants at the end of the year but whenever we go through a situation like this they just immediately start making grants.”
Connecticut is among the states to have a disproportionate amount of private giving per capita, McGlaughon said.
As of December 2011, Connecticut was among the smallest states in the country, along with the likes of Rhode Island and Delaware, to have between 1,000 and 3,000 private foundations, the report states.
“Connecticut is one of the centers of private foundation creation and giving in the country,” he said. “There’s been consistent growth in the number of foundations created in Connecticut over the last 10 years.”
Stamford is a perfect example, McGlaughon said.
“There’s been a significant amount of renewal in Stamford, and a lot of that has been driven by government incentives but I would say also that there’s been a significant public-private partnership around that development and family foundations, these grant making organizations, have played a role in that,” he said.