How The Chronicle’s Survey on Private Foundations Was Compiled

The Chronicle’s annual survey of the nation’s largest private foundations is based on

the financial information of 188 grant makers.

Of those, 134 foundations responded to a Chronicle questionnaire. The newspaper obtained data on the other foundations from their informational tax returns, which must be made available to the public.

Among the 109 foundations that provided asset figures for the fiscal year ending in 2006, assets totaled $185.4-billion. The 10 wealthiest foundations accounted for $102.7-billion of those assets, or 55 percent.

The Bill & Melinda Gates Foundation, with assets worth $33-billion, topped the list. When that foundation is excluded from the assets of all foundations in the survey, the total assets were $152.4-billion and the nine other wealthiest foundations accounted for $69.7-billion of those assets, or 46 percent.

Among the 122 foundations that provided data showing how much money they paid to charities in the 2006 fiscal year, grants totaled $8.7-billion.

The Chronicle also collected data on total charitable operating and administrative costs in 2006, which were provided by 101 foundations.

As in years past, information supplied by the Foundation Center, an organization in New York that conducts research on grant makers, helped determine the pool of foundations that were selected to participate in the survey project. The Chronicle asked the center to rank the 150 largest private grant makers by their assets and the amount they gave away during the most recent fiscal year for which data were available.

To be included in this year’s survey, foundations had to hold at least $313.6-million in assets or have awarded at least $16.8-million in grants in the fiscal year ending in 2005, the most recent year for which all the foundations had audited financial information. Organizations that met those standards in the 2006 fiscal year were also included.

These cutoffs were much higher than last year’s. In last year’s survey, foundations that had at least $230-million in assets or gave $9-million in grants were included.

Fifty-four grant makers that met one of this year’s requirements declined to participate in the survey. For those organizations, figures came from their most recently completed Form 990-PF, the informational tax returns filed with the Internal Revenue Service. Data from all organizations for which The Chronicle obtained financial information are presented in a searchable database online at http://philanthropy.com.

Officials at some foundations said they declined to complete a Chronicle survey form because of a shortage of staff members, or because the foundation has a policy of not responding to surveys.

Seven grant makers provided informational tax returns for the fiscal year ending in 2006. They were: California Endowment, in Los Angeles; Roy J. Carver Charitable Trust, in Muscatine, Iowa; Jack Kent Cooke Foundation, in Lansdowne, Va.; Conrad N. Hilton Foundation, in Reno, Nev.; W.K. Kellogg Foundation, in Battle Creek, Mich.; Peter Kiewit Foundation, in Omaha; and Virginia G. Piper Charitable Trust, in Scottsdale, Ariz.

The Chronicle sent a written request to all the foundations surveyed for their Forms 990-PF in the third week of January, so organizations would have time to comply with federal law, which requires the form be made available within 30 days of such a request.

All foundations contacted for the survey either provided The Chronicle with their Form 990-PF or made it available online for public inspection, with the exception of the Reiman Charitable Foundation, in Milwaukee, which did neither. The IRS has been notified of the foundation’s failure to comply with the federal-disclosure law.

Many grant makers that responded said their figures for 2006 were estimated or unaudited, and thus subject to change. In a handful of cases, grant makers submitted figures for fiscal years ending in 2006 and 2007; for those, figures were estimated or unaudited.

New Use of Data

This year, The Chronicle collected several pieces of information designed to improve readers’ understanding of trends at foundations. The survey asked foundations to provide the value of their assets averaged over the course of a fiscal year, instead of simply providing the assets at the end of the fiscal year as the survey did in the past.

In addition, foundations were asked to provide the total amount they distributed for charitable purposes, including grants paid, program-related investments, adminstrative costs related to programs, and other adjustments.

Both figures are used by the IRS to determine whether foundations have met the federal requirement to distribute at least 5 percent of their assets to charity each year.

Grant makers may meet that requirement over the 12-month period following the end of each fiscal year. What’s more, when they distribute more than 5 percent in one year, they can carry the excess forward over five years. As a result, some foundations might seem to be giving less than the required 5 percent, but it is likely they gave more than 5 percent in previous years.

While The Chronicle does not analyze payout the way the IRS does, the figures showing charitable spending by foundations inform readers of the broader picture of activity at large foundations.

To show grant seekers how much in administrative costs foundations counted toward their payout requirement, this survey includes a table showing both the administrative costs and the total charitable spending figure.

These figures must be read with care, since foundations often have mission-related reasons for spending a lot on administrative expenses that count toward their charitable spending. For example, the Ford Foundation, in New York, operates 12 overseas offices to work with efforts it supports, which accounts for some of the 14.4 percent of its charitable distributions it spends on administrative costs.

Readers should also be cautious when examining a foundation’s giving and asset figures from year to year, as sharp increases or decreases may not necessarily mean a change in a foundation’s financial condition or policy.

Some grant makers make large payments initially on multiple-year pledges, followed by payments of smaller amounts in subsequent years. Others make large, one-time payments that are atypical of their giving patterns.

Such was the case with the Dyson Foundation, in Millbrook, N.Y., when it made large grants in 2005 to celebrate its 50th anniversary, and the H.N. & Frances C. Berger Foundation, in Palm Desert, Calif., when it awarded a golf course to Bob Hope Classic Charities, in Rancho Mirage, Calif., in 2005, which accounts for the apparent steep drop in the Berger foundation’s grants in 2006.

Many foundations whose assets increased sharply from 2005 to 2006 cited strong investment performance as a key factor.

Some foundations’ assets dropped sharply because they have shut down, such as Florik Charitable Trust, in Chicago, which dissolved in 2005, or the Betty and George Kaiser Foundation, in Tulsa, Okla., and the Whitaker Foundation, in Arlington, Va., which both dissolved in 2006. Also, the Jay and Betty Van Andel Foundation, in Grand Rapids, Mich., is in the process of dissolving.

Three of the foundations on the list are considered pass-through funds: the Ellison Medical Foundation, in Bethesda, Md., the JEHT Foundation, in New York, and the Polk Bros. Foundation, in Chicago. Those groups are designed to distribute all their assets within each 12-month period.

The foundation survey was compiled by Noelle Barton and Sam Kean, with assistance from Maria Di Mento.