Recovery From Recession Has Been Uneven for Community Funds

Community foundations’ assets and grant making are slowly recovering from the recession, according to a new study of financial trends at U.S. community foundations.

But new donations aren’t very strong, and that could cause grant making to slow in the future.

Community funds, which raise money and distribute it in one geographic region, increased their grants last year by an average of 7 percent, consistent with the 8-percent growth in assets they achieved last year. But that growth was primarily achieved from investment gains, because the amount donors contributed to community foundations was flat.

Changes in Giving

The study also found a big difference in grant-making patterns at big and small foundations. The 100 largest foundations have not increased their total giving at all over the past three years, the study found.

Still, many community funds are in better shape than they were in the depths of the downturn, and six in 10 say they now hold more in assets than they did before the recession started in 2007. Many of the funds that have not achieved that goal said their fiscal years ended in December, and they were hurt by stock-market declines in the last quarter of 2011.

One worrisome sign is a decline in donations to donor-advised funds, which fuel much of the giving to community foundations. The funds are a kind of checking account that allows donors to contribute money now, get a tax break, and then distribute it whenever they are ready.

Donations to those funds dropped by an average of 7 percent, a sign the study’s authors said was the result of a continued caution donors feel about the shaky economic recovery.

The survey, conducted by the Council on Foundations and CF Insights, included data from 290 community foundations representing $53-billion in assets, or more than 90 percent of the money held by such funds.