Grant Makers Increased Giving by 8.2% Last Year, New Report Says

Grant makers in the United States awarded $40.7-billion in cash, corporate products, and other gifts last year, an increase of 8.2 percent from 2005 after inflation, according to new estimates released by the Foundation Center, a New York research group.

Community foundations increased the amount they contributed more than any other type of foundation, with the total amount given rising by 9.6 percent after inflation.

The report also found that nearly 60 percent of respondents expect giving to increase this year, up from 52 percent of foundations that said the same in 2006. Forty-nine percent of grant makers expect to give at least 10 percent more than they did in 2006, the report found.

Giving last year was strong largely because the assets of many foundations swelled in 2005. Most foundations base their grants budgets on how their assets fared the previous year.

Foundation assets grew 7.8 percent in 2005, the most recent year for which data were available, to $550.6-billion, the report found.

Assets at community foundations grew to $44.6-billion in 2005, or 15 percent, leading other types of grant makers by several percentage points, the Foundation Center found. Assets of private foundations rose 7.2 percent in 2005 to $455.6-billion, while corporate-foundation assets rose 6.9 percent to $17.8-billion in 2005. Community foundations raise money from large numbers of people while private foundations rely primarily on investment gains. Corporate foundations get money from their corporate parents and from investment gains.

The survey was based on data from 875 foundations and was designed to give estimates for both 2007 and 2006, plus more-detailed data on 2005 giving.

While a robust stock market that helped assets grow was the major reason giving was strong, the report cites two other key factors that are increasing the amount of money distributed to charities in recent years.

The survey identified an increasing number of “pass-through” foundations, which aim to distribute all of their assets each year. Also, nearly 9 percent of the amount foundations contributed in 2005 came from a dozen pharmaceutical foundations established by corporations in the last 10 to 15 years.

Steven Lawrence, senior director of research at the Foundation Center, said the pharmaceutical gifts “are almost a new type of philanthropy, this new element accounting for such a big share of giving.”

Foundations started by pharmaceutical companies awarded $3.2-billion, mostly in drugs, in 2005, or 90 percent more than 2004, the report found.

Still, the report said that the environment for giving is less predictable than in previous years, in part due to more erratic patterns of giving by community foundations via the donor-advised funds they maintain. The funds allow people to donate cash, stock, or other assests to special accounts, claim a tax deduction for the gifts, and decide how, when, and to which charities money in the accounts should be distributed.Nevertheless, other factors, such as a surge in the number of new foundations starting to award grants, are at play as well. For example, half of the foundations that had assets of at least $1-million or gave at least $100,000 in 2005 were established in the 1990s and early 2000s, the report said.

“The bottom line for grant seekers in the nonprofit community is that there continue to be greater resources dedicated to philanthropy each year,” Mr. Lawrence said.

The study, Foundation Growth and Giving Estimates: Current Outlook, is available free on the Foundation Center’s Web site.