September 05, 2012

Correction: The Downturn and Multiyear Foundation Grants

Editor's note: On Thursday afternoon, the National Committee for Responsive Philanthropy withdrew the study that was the basis for the following item. It said data from the Foundation Center was flawed.

Many nonprofits pinned their hopes on foundations to help them get through the worst of the downturn with multiyear grants, but now a new study finds that such contributions fell sharply from 2008 to 2010.

The study, by the National Committee for Responsive Philanthropy, examined more than 900 foundations from 2008 to 2010, comparing their grants to those offered by a similar group of foundations in 2004 to 2006.

The share of grants that were for multiple years dropped by 55 percent in the downturn when the Bill & Melinda Gates Foundation is excluded from the sample. That foundation gives more multiyear grants than any other philanthropy, awarding $2.6-billion in multiyear grants, or 96 percent of all the money distributed. When it is included, the drop in all foundation multiyear grants was 37 percent.

Among other findings:

* While multiyear grants by all types of foundations dropped from 2008 to 2010,  corporate and community foundations were far more likely to cut such awards.

* Foundations that distribute less than $10-million annually made bigger cuts to multi-year grants than larger funds. From 2004 to 2006, small grant makers gave an annual average of $397-million in multiyear awards, but that figure declined to $62-million from 2008 to 2010.

* Geographically, multiyear grants declined the most among foundations in the south, where they fell by 73 percent and accounted for only 5 percent of dollars distributed by the foundations in those states from 2008 to 2010.

* The percentage of foundations that made no multiyear grants more than doubled from 2008 to 2010 to 81 percent, up from 40 percent in 2004 to 2006.

The news about multiyear grants comes as it is becoming increasingly clear how much nonprofits struggled during the tough times. As I reported last week, for example, new data show a $35-billion drop in contributions among taxpayers who itemized their charitable donations in 2008 and 2009, amid the worst years of the downturn.

Send an e-mail to Holly Hall.