Foundation Giving Expected to Drop in 2003

Corporate, community and independent foundations can be significant sources of funding for local and regional technology-based economic development initiatives. Unfortunately, the first look at growth and giving estimates for 2002 and 2003, suggests foundations may be less charitable than previous years to new and existing grantees.

Foundation Growth and Giving Estimates: 2002 Preview, prepared by The Foundation Center, projects that giving by the country's nearly 62,000 grantmaking foundations in 2002 was $30.3 billion, down less than one percent from the $30.5 billion recorded in 2001. This relatively stable level of giving followed six consecutive years of double-digit percentage growth in foundation support.

Three straight years of stock market declines and a yearlong recession were balanced out by factors that contributed to the overall stability of foundation giving in 2002, including: giving by newly active foundations established near the end of the recent economic boom; a continuing high level of new gifts and bequests from donors to existing foundations; and ongoing payment of commitments made in the aftermath of the 9/11 attacks. In addition, an effort on the part of many foundations to maintain stable levels of giving – or at least to limit reductions – in the face of government cutbacks helped to keep overall foundation giving steady.

Foundation giving will almost certainly decrease in 2003, the report states, although not as dramatically as might be feared given the state of the economy and stock market. Collectively, foundations suffered an estimated 10-12 percent loss in the value of foundation assets in 2002, following a nearly 4 percent decrease in 2001. Moreover, roughly two-fifths of respondents to the Foundation Center's 2003 survey indicated they expected their giving to decline in the current year. Yet close to three-fifths of funders expected their giving to remain about the same or increase — including at least a few of the nation's largest independent foundations and several leading corporate and community foundations.

The findings have mixed meanings for the TBED community. As public funding sources tighten in many areas due to the persistent state and local fiscal crises, many TBED organizations are exploring alternative funding partners, including foundations. The overall decline in giving will likely make securing new foundation funding more difficult. Alternately, corporate and community foundations have been among the most active in supporting TBED initiatives, so the fact that 60 percent will maintain or possibly increase giving can be viewed as encouraging.

For examples of several ways foundations are facilitating the growth of local and regional tech-based economies, please see past issues of the SSTI Weekly Digest in the Digest archives online, including a special issue December 24, 1999. Foundations also provide research funding and are often included in the SSTI Weekly Digest Funding Supplements.

Giving projections for 2002 and 2003 are based on estimates reported in the Center's 2003 "Foundation Giving Forecast Survey" by more than 760 large and mid-size foundations, combined with year-end fiscal indicators and supplemental reporting by donors of 9/11 contributions.

The 10 page Foundation Growth and Giving Estimates: 2002 Preview can be downloaded at: http://www.fdncenter.org