80% of Foundations Expect Giving to Increase or Stay the Same in 2004

A lingering stock-market slump and the after-effects of substantial endowment losses since 2000

prompted foundations to decrease their giving by 2.5 percent last year, according to one of two new reports issued by the Foundation Center. Giving had also declined — by 0.2 percent — in 2002.

The nearly 65,000 grant-making U.S. foundations gave $29.7-billion in 2003, compared with $30.4-billion the previous year, according to the latest edition of “Foundation Growth and Giving Estimates.” Foundation assets dropped 6.9 percent from 2001 to 2002, and have decreased 10.5 percent since 2000.

About 45 percent of the foundations said they expected giving to increase this year, while 36 percent expected no change in giving levels and 18 percent predicted that their giving would decline.

Since many foundations calculate their grant budgets based on a three-year rolling average of their endowment values, changes in their total giving rarely fluctuate as widely as changes in their assets.

“After three years of maintaining giving levels and fulfilling large grant commitments in the face of reduced resources, foundations will need to see their assets recover before they will make notable increases in their giving,” the report said.

The second report, “Foundation Giving Trends,” tracks giving patterns for a sample of more than 1,000 of the largest private and community foundations. It too predicted no immediate bounce back to previous grant-making levels, saying it was “likely that foundation giving will remain flat or decrease modestly at least for the near term.”

Overall giving by the largest grant makers declined by 5 percent in 2002, the report said, although the pattern varied by field. Among the findings for 2002:

• Decreases in support were most significant among health groups (down 15 percent); social sciences (down 11 percent); environmental and animal groups (down 9.7 percent); education (down 6 percent); and the arts (down 5 percent).
• Support rose in some areas: for religion (up 22 percent); science and technology (up 16 percent); international affairs (up 4 percent); and social services (up 1.6 percent). Giving for public affairs was virtually unchanged.
• Grants for general operating support constituted nearly 19 percent of all grant dollars — the highest share ever for that purpose — perhaps reflecting the desire of some funds to make up for cuts in government financing, the report said. Meanwhile, grants for student aid dropped by 54 percent; for capital projects, by 18 percent; and for program support, by nearly 15 percent. The student-aid decline reflects in part a return to normal after two major grants in this area in 2001 by the William and Flora Hewlett and Ford Foundations.

“Foundation Growth and Giving Estimates” and “Foundation Giving Trends: Update on Funding Priorities” are part of the Foundations Today series published by the Foundation Center. Copies of the reports are available for $20 and $45 apiece from the Foundation Center, Attn: Customer Service, 79 Fifth Avenue, New York, N.Y. 10003-3076; (800) 424-9836; fax (212) 807-3691; http://fdncenter.org. The set of three reports (including the “Foundation Yearbook,” due out in June) costs $95, including shipping.