Foundation giving is likely to rise by 2 percent this year, to $95 billion, according to a new estimate by FoundationMark, an organization that examines tax filings and other data to provide a quarterly forecast about the state of grant making.
Foundation endowment values dropped nearly 4 percent in the last quarter due to the slippage of stock and bond markets. While that hurt, overall asset gains for endowments were about 5 percent for the year — and that means foundations are unlikely to cut back total giving in 2023.
Making the situation far brighter: FoundationMark uncovered a surge in giving to foundations that will help make up for some of the challenges caused in the markets, according to John Seitz, the organization’s head. Newly updated Internal Revenue Service records show that in 2020 and 2021, wealthy donors sharply increased the sums they sent to their foundations.
Donors poured $92 billion into foundations in 2021 and $67 billion in 2020. That’s much higher than in the previous eight years, when contributions ranged from $40 billion to $60 billion a year. That has a powerful impact on giving: Most foundations set their giving rates based on the value of their assets over the previous three years.
Here’s a look at what FoundationMark’s latest research shows:
Major U.S. and international stock indices declined by an estimated 3 percent to 4 percent during the last quarter. Meanwhile bonds remained flat.
For foundation assets, that meant that a substantial chunk of the 4.6 percent gain in the second quarter was erased.
As donors poured more money into their foundations in 2020 and 2021 — increasing their donations by many billions over previous years — total foundation assets have swelled from $1.25 trillion to $1.32 trillion.
Foundations typically base their giving on the average total of their assets over the previous three years, so the combination of new money pouring in and investment gains bodes well for grant making. Foundations are required by law to distribute at least 5 percent of their net assets, on average, every year.
FoundationMark develops estimates of current assets and giving levels by examining foundation tax filings and other information about how they invest to develop the projections shown here.
Reporting for this article was underwritten by a Lilly Endowment grant to enhance public understanding of philanthropy. The Chronicle is solely responsible for the content. See more about the Chronicle, the grant, how our foundation-supported journalism works, and our gift-acceptance policy.
