Giving by Small Foundations Decreased in 2003, New Survey Finds

Members of the Association of Small Foundations increased the size of their assets by 13 percent last

year, but donated a smaller percentage in grants than in 2002, a new survey reported.

In 2003, 1,031 foundations reported giving away an average of 7.4 percent of their assets, a figure well above the 5-percent rate that federal law requires foundations to distribute annually, but a decrease from 2002, when the foundations surveyed said they donated on average 9.4 percent of their wealth.

The association, in Bethesda, Md., said the decline probably was connected to poor investment returns in 2002, when the assets of small foundations declined by nearly 5 percent. “Perhaps this is a final chapter in the rippling effects of the economic downturn,” the report said.

For the report, the association compiled responses on giving and management from about 40 percent of its 2,400 members. Member foundations range in size from about $100,000 in assets to approximately $450-million, and only a little more than half employ paid staff members.

By year’s end, the foundations in the survey anticipate healthy increases in their investments — an average of 8 percent — indicating possible growth in their grant-making budgets in 2005.

With the stock market recovering, the association’s members are less worried about the economy’s effect on their assets. In last year’s survey, almost 60 percent of respondents named “lack of asset growth or income” as their most important issue.

Today, succession has become the leading concern.

Among the survey’s other findings:

• The association’s members made an estimated 150,800 grants last year, totaling $2.47-billion.
• Almost 68 percent of the group’s members distributed their grants locally. Education was the top cause, with 30.2 percent of the foundations’ grant money devoted to it. Human services came in second, at 17.6 percent.
• Twenty-five percent of respondents compensate their board members for routine services, excluding fees for professional services and reimbursement for expenses.

Copies of the report, “2004-2005 Foundation Operations and Management Survey,” are available for $95 each for nonmembers and $10 for members from the Association of Small Foundations, 4905 Del Ray Avenue, Suite 308, Bethesda, Md. 20814; (888) 212-9922; asf@smallfoundations.org.