Small Grant Makers Lead Gains in Foundation Giving, Says Study

Foundations with assets under $50-million increased their giving by 9 percent last year, according to preliminary findings of a study of 700 small and midsize grant makers released today.

The smallest grant makers increased their giving the fastest, with foundations worth $1-million to $10-million responsible for most of the increase.

That group gave 21.5 percent more to charity than in 2011, according to Foundation Source, an organization that helps grant makers handle administrative issues.

Small and midsize grant makers primarily increased their giving in response to the needs of charities, said King McGlaughon, Foundation Source’s chief executive. Such foundations are unlikely to worry about keeping their assets intact so they can exist forever, unlike big foundations, he said: “These are dynamic institutions that are at the core of community life and community support that are being funded at a high level on an ongoing basis in order to be responsive to the communities they serve.”

Also, said Andrew Bangser, Foundation Source’s chief financial officer, small foundations have more money to spend than they did in 2011.

While the markets’ 2012 performance meant that most foundations’ assets grew last year, those in the $1-million to $10-million range chalked up higher percentage gains in wealth than larger organizations did.

“That group stepped up,” said Mr. Bangser. “Their assets grew. They put more money into their foundations and gave a way a higher percentage of their asset base than in 2011.”

Payout Rates Are Up

Among the study’s other findings:

• Foundations gave more than twice the 5-percent minimum of their assets that they are required to by the Internal Revenue Service, continuing a trend seen over the last five years among smaller and midsize grant makers, said Mr. McGlaughon. Foundations in the report gave 11.7 percent of their assets to charity compared with 11.2 percent in 2011.
• Arts and culture, human services, and international causes were the main beneficiaries of the increased giving. Arts and culture received 13 percent of all grant dollars from these foundations in 2012, up from 11 percent in 2011; human services got 17 percent in 2012, bettering the 13.9 percent they received in 2011; and international causes got 7.5 percent in 2012, up from 6.2 percent the previous year.
• The smallest grants, those of less than $1,000, grew the most in 2012, followed by grants of $100,000 and $1-million.

Foundation Source will release the full report in May.