While giving by the more than 75,000 grantmaking foundations in the U.S. crept up 2.8 percent in 2008, assets plummeted and the outlook for this year and next is gloomy, a new report says.
After adjusting for inflation, giving fell about 1 percent, says the Foundation Center's report, "Foundation Growth and Giving Estimates."
Overall, foundations awarded $45.6 billion in grants in 2008, up from $44.4 billion in 2007, but their combined assets plunged almost, 21.9 percent, representing a loss in potential grant funds of $150 million.
And were it not for a jump in giving by the Bill & Melinda Gates Foundation, which gave $2.8 billion in 2008, giving by all other foundations would have increased only about 1 percent from 2007 to 2008.
The report predicts foundation giving in 2009 will drop in the range of "high single digits to low double digits," with more than two-thirds of funders anticipating a reduction in their grantmaking.
And because many foundations base their grantmaking budgets on a three- to five-year rolling average of their assets, the Foundation Center expects an additional decline in giving in 2010.
"Foundations remain one of the few sources of stability for nonprofit organizations in this very volatile economic climate," Bradford Smith, president of the center, says in a statement. "However, the longer this crisis persists, the more foundations will have to reduce giving."
As of 2007, the U.S. had 75,187 grantmaking foundations, up 3.7 percent over 2006, and almost two thirds of active grantmaking foundations were created after 1989.
Almost nine in 10 foundations are independent foundations, which together saw giving rise 2.5 percent to $33 billion in 2008, or a decline of 1.3 percent after adjusting for inflation, the report says.
That's an abrupt turnaround from 2007, when giving by independent foundations jumped 17.3 percent.
While giving by these funders represented 5.9 percent of 2007 assets, greater than the 5 percent mandated by law, more than two in three independent foundations anticipate reducing their funding in 2009.
Corporate foundations together awarded $4.4 billion last year, up 0.8 percent over 2007, or a 3 percent decline after adjusting for inflation.
More than half of corporate funders expect to cut their giving this year, the report says.
The depth of those cuts could be dramatic, given that about a quarter of giving by corporate foundations in 2007 came from financial sector companies, which were hit harder than most by the economic crisis.
Community foundations in the U.S. awarded a combined $4.6 billion in grants last year, up 6.7 percent, or 2.7 percent after inflation.
But almost three in four community foundations expect to reduce their giving this year.