Private foundation assets grow; payout exceeds required 5%

Private foundations with assets under $50 million posted strong growth in 2013, a new report says.

Assets of those 84,000 foundations, which represent 98 percent of all U.S. foundations, grew 14.1 percent to $2.69 billion, says the 2014 “Annual Report on Private Foundations” from Foundation Source.

Those foundations also distributed 7.3 percent of their assets, exceeding the 5 percent payout for private foundations required by law, says the report, which is based on $148 million in grants by 714 Foundation Source clients.

The 2 percent of all foundations that are the largest, in comparison to those tracked in the report, hold roughly 70 percent of all foundation assets, Foundation Source says.

It was the second straight year assets grew at foundations in the report, reflecting “continuing and sustained recovery of the economy in general,” Foundation Source says.

“Endowment growth was the product of both investment returns and new contributions to the foundations by their funders,” it says.

Thirty-five percent of private foundations studied distributed over 10 percent or more of their assets.

Each year since the recession began in 2008, the report says, distributions by private foundations have consistently exceeded the 5 percent minimum, although aggregate giving in real dollars fell 2.5 percent in 2013, suggesting a “rebuilding” year by some foundations, the report says.

Foundations with assets under $10 million awarded nearly as much in general support as in grants for specific projects.

Foundation Source says that level of investment in general support contradicts the view “that foundations rarely provide general operating support.”

The report also says foundations with assets of $10 million to $50 million gave three times as much in grants for specific purposes as in grants for general support.

That suggests “a preference for project funding as foundations increase in asset size,” Foundation Source says.

Todd Cohen

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