January 26, 2015

Smaller funders give bigger share of assets


King McGlaughon

King McGlaughon

Small to mid-size private foundations give more than twice the amount they are required to distribute, and the smallest foundations give away significantly more, new research shows.

While private foundations are required to pay out 5 percent of their assets each year, foundations with endowments of less than $50 million generally paid out more than 10 percent in 2011, according to preliminary findings from Foundation Source.

And foundations with less than $10 million in assets increased their giving by 20.6 percent, while foundations with assets ranging from $10 million to $50 million reduced their giving by 7.8 percent, according to the data, which are based on actual grantmaking among 719 private foundations with assets under $50 million.

"Small to mid-size private foundations are the silent majority in the philanthropic sector," H. King McGlaughon, CEO of Foundation Source, says in a statement. "These donors are comfortable granting larger percentages of the corpus because many are still financially productive and are pumpting new assets into foundations each year."

Private foundations with less than $50 million in assets represent 98 percent of the roughly 80,000 private foundations in the U.S., and assets of the vast majority range from $250,000 to $5 million.

Yet most reporting on private foundations focuses on the largest 1.5 percent to 2 percent of all foundations, Foundation Source says.

The data show that foundations gave 40.6 percent more in the area of arts and culture than in 2010, while funding declined 3.1 percent for education and 52.4 percent for science and technology.

Foundation Source expects this summer to publish its complete Private Foundation Index 2011, including information on investment management and grantmaking activity of small to mid-size private foundations.

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