Most Foundations Do Not Have Any Paid Employees, Study Finds

By DEBRA E. BLULM

Few U.S. foundations are run by paid staff members, according to a

new report by the Foundation Center, in New York. Many of the funds, particularly those with small endowments and family foundations run by family members themselves, are staffed exclusively by volunteers.

Even among larger foundations — those with assets of at least $1-million or that give away at least $100,000 in grants each year — only one out of six has paid employees, the report says. That’s down from one out of four big grant makers with employees a decade ago.

The report is based on the center’s annual surveys of the nation’s largest grant makers.

The number of such foundations has grown rapidly, from 7,440 in 1990 to 18,323 last year. And, the report says, the total number of grant makers with employees, as well as the total number of foundation employees, has grown — but not as quickly as the pace of foundation expansion. Last year, about 3,000 foundations reported a total of nearly 15,500 full-time and part-time employees. That was up from about 1,800 foundations with nearly 8,300 employees in 1990.

Increases in Staffing Expected

The report says that the lag in the number of employees hired by foundations could change soon, as many of the newest and newly large funds — especially those that have seen their assets soar due to stock-market gains in recent years — find they need employees to handle expanded management and grant-making duties.

As expected, the biggest grant makers are by far the biggest employers, too, the report says. A group of 370 foundations with assets of $100-million or more employed more than half of the country’s paid staff members last year, averaging 22 employees per foundation. The average number of employees dropped quickly for the next category of foundations — those with assets of $50-million to under $100-million — to 4.8. Grant makers with endowments smaller than $5-million had an average of 1.9 paid employees.

Size is not the only predictor of whether a foundation is likely to have paid staff members. Nearly 90 percent of community foundations — which, the report notes, are not tied to a single donor and thus must raise money as well as run grant programs — have employees.

By comparison, only 14 percent of independent grant makers, which include many family-run foundations, hire paid staff members.

Where the foundation is located may also help predict whether it has paid employees. The report says that grant makers in the West, for example, are the most likely to employ paid staff members. Nineteen percent of the funds there have employees, versus 15 percent in the Northeast.

The report’s author, Steven Lawrence, says that newly established foundations in the West may have started with larger endowments than those created elsewhere or saw rapid growth in their assets, and thus were more likely to hire staff members than new foundations in other regions of the country. He also speculates that despite the desire of many newly wealthy entrepreneurs to take a hands-on approach to their foundations, many of those donors have found that they need to focus their attention on their businesses and thus leave more foundation duties to paid staff members.

Among the report’s other findings:

• In 2000, 280 private foundations shared paid staff members, up from 193 that did so in 1991.
• Twenty-six foundations report 50 or more paid staff members. Among the biggest employers in 2000 were New York’s Ford Foundation, with 560 staff members, and the W.K. Kellogg Foundation, in Battle Creek, Mich., with 262 employees. The J. Paul Getty Trust, an operating foundation in Los Angeles that runs many of its own programs, reported that it has 1,380 paid staff members.

Highlights of the report, “Foundation Staffing: Update on Staffing Trends of Private and Community Foundations,” are available on the Foundation Center’s Web site at http://fdncenter.org/grantmaker/trends/index.html.

The full copy of the report is available to subscribers of the Foundation Center’s “Foundations Today Series,” which includes five annual research reports and costs $95 a year. Orders should be sent to Foundation Center, Department NA11, 79 Fifth Avenue, New York 10003-3076; (800) 424-9836; fax (212) 807-3691. Online orders can be made via the center’s Web site.

STAFF SIZE AT FOUNDATIONS, 2000

Note: 2000 figures cover 18,323 foundations; all figures based on funds worth at least $1-million or that give $100,000 or more a year.

Source: Foundation Center