Have Foundations Recovered From the Great Recession?
June 09, 2014
The answer seems straightforward. According to a preview of the forthcoming edition of Key Facts on U.S. Foundations, estimated foundation giving reached nearly $55 billion last year, a record. That was close to $8 billion more than in 2008 — the peak year for foundation giving before the economic downturn. Even after adjusting for inflation, the country's independent, corporate, community, and operating foundations gave $3.5 billion more in 2013 than they did in 2008. All good, right?
Well, mostly. But helping to boost the overall giving figure were close to 11,000 more foundations — some of them quite large — than we tracked in 2008, as well as approximately $2.8 billion more in product giving by about a dozen operating and corporate foundations created by pharmaceutical manufacturers to distribute medications. What's more, 35 percent of the independent and family foundations that responded to our recent "Foundation Giving Forecast Survey" indicated that they reduced their giving in 2013. In similar years past, a typical figure was 25 percent or less.
With a gravity-defying stock market, why hasn't foundation giving recovered faster? In part, because foundation giving didn't tank after the 2008 economic meltdown. The 17 percent drop in foundation assets in 2008 was followed by a roughly 2 percent decline in giving the following year. Looking to provide a secure source of support for struggling grantees, a number of foundations held their giving steady or reduced their giving by far less than the decline in their assets. As the assets of these foundations have recovered, their payout rates have also returned to more typical levels. The takeaway: foundations are an important source of stability during challenging and volatile economic times.
And the picture for 2014 looks even brighter. Foundation Center projects that independent and family foundations, which account for roughly nine out of 10 U.S. foundations, will increase their giving by 7 percent this year. And while we're forecasting a smaller increase for corporate and community foundations, overall giving in 2014 undoubtedly will outpace inflation.
Have foundations recovered from the Great Recession? As of today, we're willing to say "pretty much." And we're confident they'll be there for grantees when the next one comes.
Steven Lawrence is director of research at Foundation Center and author of the annual Key Facts on U.S. Foundations report. Looking for more data? Check out Foundation Stats, the most comprehensive resource available for generating tables and charts on the size, scope, and giving priorities of the U.S. foundation community.