Foundation assets ended the year on a high note, climbing to $1.5 trillion in December, a 14.7 percent increase from $1.3 trillion the previous year, according to a new estimate by FoundationMark, a company that uses tax filings to forecast the state of grant making.
The increase in total assets comes after a blockbuster year for the stock market, which defied gloomy predictions to close 2023 up 24 percent, according to the S&P 500. That increase swelled foundation investment portfolios, which grew by around 17 percent, according to a FoundationMark estimate.
In recent years, foundations’ coffers have also grown thanks to an influx in large donations, totaling $92 billion in 2021 and $67 billion in 2020, compared with less than $60 billion in previous years.
Even as assets soared, foundation giving grew more modestly last year, reaching an estimated $97.5 billion, a 5.5 percent increase from 2022. That’s because foundations typically peg their giving, which includes grants and some of their own administrative costs, to three-year rolling averages of their assets, not year-to-year changes.
This helps keep foundation giving relatively consistent regardless of market fluctuations. It also means that a good year like 2023 is often tempered by a bad year like 2022 — when assets fell by 9.5 percent to $1.3 trillion — and vice versa.
Over the past decade, foundations have given away an average of 7 percent of their rolling assets each year — slightly above the 5 percent required by law — according to FoundationMark.
These projections do not account for the effects of inflation, which rose to a daunting 9.1 percent in mid-2022 before easing to 3.4 percent by December 2023. While foundations have technically never been wealthier, inflation may still be cutting into the impact of their giving, and many nonprofits are still feeling a financial crunch, says John Seitz, head of FoundationMark.
In other words, even $97.5 billion in giving doesn’t go quite as far as it used to.
“It’s great that foundations had a good year asset-wise,” said Seitz. “Is it enough to keep up with inflation? Maybe not.”
