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Private Foundations’ Contributions Hold Steady, Despite Asset Declines

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A woman writing a check (Image: Shutterstock) (Image: Shutterstock)

Private foundations with less than $50 million in assets gave nearly as much to charity last year as they did in 2017 despite declines in their asset balances, according to Foundation Source’s 2019 annual report on private foundations.

In 2018, foundations’ overall asset balances decreased by 3.5%, compared with 13.2% growth in 2017. Research showed that most of this drop in value occurred in the fourth quarter when the S&P 500 fell, ending the year down nearly 7% on the year.

At year-end, the foundations in the sample collectively held $4.6 billion, a loss of $180 million over the previous year.

Even with the decline, small foundations collectively awarded grants of $298.7 million, nearly matching their 2017 disbursements of $299.3 million.

In addition, they exceeded the mandatory 5% distribution requirement, disbursing on average 7.3% of their assets for charitable purposes. The smallest foundations — those with less than $1 million in their coffers — distributed 14.2% of their total asset balances.

“The generosity demonstrated by these foundations is impressive,” Foundation Source’s chief philanthropic officer, Page Snow, said in a statement. “Whether the year was attended by strong economic growth or not, they maintained consistent levels of giving, demonstrating their donors’ unshakable commitment to philanthropy.”

The analysis involved 987 of Foundation Source’s private non-operating foundation clients with assets of less than $50 million. Researchers examined investment returns, asset balances and transactions recorded by Foundation Source, which does not custody or manage assets, as it paid grants and expenses on behalf of its clients, prepared their tax returns and recorded investment information provided by each foundation’s financial institution.

As the stock market lost some of its 2017 momentum, foundations slightly decreased their allocations to equities and increased their fixed income holdings. Equity allocations fell to 50.3% from 51.6% in 2018, while fixed income holdings rose to 17.6% from 16.3%.

The report showed that donors did not rely solely on investment returns to fund their philanthropy. Instead, they contributed 73 cents to their foundations for every 76 cents disbursed as grants and charitable expenses.

“It’s encouraging to see donors funding their private foundations with infusions of fresh capital,” Snow said. “Whether the market growth in early 2019 indicates a positive direction for the rest of this year or not, we’re confident that these dedicated philanthropists will continue to significantly support the causes they champion.”

In terms of giving patterns in the three biggest areas, donations to education fell to 27.7% from 28.9% in 2017. In contrast, contributions to human services rose to 15.6% from 15.4%, and to public and societal benefit to 11.8% from 11.6%.