Foundation Source recently released its third annual report on the activities of private foundations. It is based on the transactions of 714 foundations that use Foundation Source’s administrative services. Its 2012 report showed that its foundation clients were a pretty good proxy for the larger field of foundations under $50 million in assets. Fundraisers should pay attention to these reports for these reasons:
- These “small” foundations are the norm: 98% of U.S. private foundations have assets under $50 million – that’s about 84,000 foundations. More than half of private foundations are under $5 million in assets. The famed foundations coveted by your boards are the abnormally large and weird bunch.
- They’re actively growing: on average, they added $89 in new funds for every $100 they spent in 2013, about the same as the previous two years.
- They’re generous: their average distribution ratio – the amount they spend on charitable work compared to their assets – was 7.3%. About a third distributed more than 10%. This is higher than the IRS mandate of 5% and higher than the average for large foundations.
- They support general operations: a little less than half of the grants by foundations under $10 million and about 28% of grants by foundations $10-$50 million were for general operating support. That compares to an industry average of about 10% if a National Committee for Responsive Philanthropy survey of all types of foundations was accurate.
- Lastly, these are foundations started by people you know. They’re more likely to be local business owners and retired entrepreneurs, more likely to have been a part of local or regional civic groups, more likely to have gone to the same churches and groceries as one of your board members or existing donors. And, they’re more likely to have active, living donor families and groups attached – meaning they are more likely to give from their hearts and values.
Tired of being ignored by large foundations? Tired of strategic philanthropy and 15-step evaluation plans? Tired of endless questions from high-paid program officers? There are 84,000 other, more normal, choices.