Assets at the nation’s largest 31 foundations topped $148.7 billion last year as grant makers steered more than $7.8 billion toward nonprofits, an increase of more than $500 million over the previous year, according to a new Chronicle survey.
Both measures indicate that foundations are in good financial health over all, but have yet to fully rebound to prerecession levels.
Assets at 31 foundations that provided The Chronicle with historical data have yet to match their 2007 high of $164 billion, adjusted for inflation, and grant making has yet to surpass the $7.9 billion it reached in 2008.
| Year | Assets | Grants paid |
|---|---|---|
| 2014 | $148.7-billion | $7.8-billion |
| 2013 | $142.4-billion | $7.3-billion |
| 2012 | $132.5-billion | $7.4-billion |
| 2011 | $128.2-billion | $7.4-billion |
| 2010 | $135.5-billion | $7.0-billion |
| 2009 | $130.0-billion | $7.5-billion |
| 2008 | $120.2-billion | $7.9-billion |
| 2007 | $163.8-billion | $7.7-billion |
Note: Data is in 2014 inflation-adjusted dollars. Includes 31 foundations that provided 2014 figures.
But grant making gained momentum last year when it increased by a total of 8.2 percent at those foundations — their highest rate of growth since 2007.
“Foundations were severely hit by the financial crisis,” says Lester Salamon, director of the Center for Civil Society Studies at Johns Hopkins University.
In the years following the downturn, uncertainty about the markets “lingered for quite a while” among foundation chiefs, Mr. Salamon says.
But after three straight years of double-digit market gains, he says, many foundations had no choice but to increase their generosity last year, lest they be penalized for failing to pay out a minimum of 5 percent of their assets (certain expenses other than grants can be used to meet the payout rates), as required by law.
Looking ahead, foundations are likely to continue their giving streak.
Fifteen of the top 36 foundations told The Chronicle they plan to increase giving this year — more than double the amount who expressed such optimism in 2013. Last year, as foundation endowments grew, grants accounted for 5.27 percent of total assets.
The Gates Effect
As it has for years, the Bill & Melinda Gates Foundation dwarfed the rest of the field.
In 2014, the Gates foundation made $3.4 billion in grants, up from $3.3 billion in 2013. The Gates foundation gave more money than most foundations have in their coffers. The Carnegie Corporation of New York, for example, the 19th-largest foundation in The Chronicle’s rankings, posted $3.3 billion in assets.
Several foundations gave a lot more in 2014 than in previous years. For example, the Ewing Marion Kauffman Foundation turbo-charged its support for nonprofits last year following leadership changes and a strategy overhaul, which included a renewed commitment to education and entrepreneurship nationally and in its native Kansas City, Mo. Its grants surpassed $72 million, a 189-percent increase over 2013.
A healthy stock market was one of several factors in the William and Flora Hewlett Foundation’s decision to increase payouts. Grants at the foundation rose nearly 81 percent, to top $434 million, an all-time high for the California philanthropy. Its assets climbed nearly $300 million, to reach $8.9 billion.
10 Foundations Cut Back
The Open Society Foundations handed out the third-highest amount in grants, at $452 million, a nearly $9-million decrease from 2013. The foundation saw its assets grow from $4.9 billion in 2013 to $7.8 billion last year.
The gain came “primarily” from investment gains, according to Michael Vachon, a spokesman for Soros Fund Management, the investment firm founded by George Soros, Open Society’s founder.
Ten foundations tightened their purse strings in 2014. The Charles Stewart Mott Foundation, for example, reduced grants by 36 percent, to $73 million.
Mott officials say the reduction was due to a burst of grant making in 2013 to complete a “health and wellness” redevelopment project in the fund’s native city of Flint, Mich., among other factors.
The foundation also fulfilled several matching gift pledges in 2013 that had stalled during the recovery because other donors had not chipped in.
Another significant reason for the lower payout in 2014: Mott wanted to hold down its tax bill over the long term, says Ridgway White, who took over as president of the foundation in December. Foundations are subject to either a 1-percent or 2-percent excise tax on investment gains, depending on how much they give in grants. A foundation qualifies for the lower levy if, during a tax year, it has paid out more in grants than it has, on average, over the previous five years.
Mr. White says the foundation lowered its grant payments last year to “reset” the five-year average.
Increasing Assets
Stock-market gains will help the foundation “go back to its roots” and increase support of projects designed to improve schools in Flint, says Mr. White.
The philanthropy’s assets have increased, he says, “so we’re going to be able to expand grant making in the Flint area without pulling back dollars from existing grants” that support domestic and international environmental and civil-society organizations.
Lowering payouts is a common practice among foundations that want to minimize their tax liability, says Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy. He’d like to see changes in tax law that would set a levy that is not tied to a foundation’s grant making.
“The current policy framework has a perverse incentive” that encourages foundations to be less generous, he says.