Studies Offer Conflicting Forecasts for Foundation Giving in 2004

Separate reports from the Foundation Center and The Chronicle of Philanthropy indicate that foundations will continue to see their assets recover in 2004. The studies provide differing views on estimated growth in giving for the upcoming year, however.

A notable increase in funding will be seen as foundations’ assets recover, according to the Foundation Center’s annual report, Foundation Growth and Giving Estimates 2003 Preview. The persistent decline of the stock market in 2002 and into early 2003 is cited as a central reason why foundation giving experienced by an overall 2.5 percent decrease in 2003. However, the percentage decline in giving was less than expected considering the loss of more than 10 percent in foundation assets between 2000 and 2002.

The center's study indicates that independent foundations, including family foundations and new health foundations, comprise the vast majority of funding. Their total giving declined by an estimated 3.3 percent in 2003, following a 7.6 percent drop in independent fund assets in 2002. Corporate foundations, the next largest sector to provide funding, decreased by 2 percent, the first decline in giving since the Foundation Center began tracking the figures in 1987.

Community foundations, on the other hand, reported a slight increase of 1.5 percent, following a 5.1 percent rise in 2002. Overall, community foundations saw the least amount of change in their assets possibly due to increased giving and an unchanged level of new gifts into the community foundations, the report suggests.

Not all is gloom and doom for those who rely on foundation funding, however, as giving in 2004 is expected to rise, the Foundation Center observes. According to the latest foundation giving forecast survey, 45.4 percent of respondents indicated they expect to increase giving, while 36.4 expect no change. Only 18 percent of foundations said they anticipate a decline in funding. Independent foundation respondents were most likely to increase giving and nearly half of corporate respondents indicated no change.

While the Foundation Center reports a likely increase of funding in 2004, a new survey by The Chronicle of Philanthropy indicates that charitable funds plan to freeze their grant making at the 2003 levels, citing small economic gains and a volatile market.

Assets did begin to grow in 2003 for the nation’s largest private foundations, according to Standard & Poor’s 500 Index, a catalog of stock prices for 500 publicly traded companies. However, many foundations’ investments are still worth less than they were a few years ago, the survey shows.

The Chronicle surveyed 141 foundations and found that 73 planned to keep grant budgets the same, while only 46 expected an increase. In 2002, the William and Flora Hewlett Foundation cancelled its plan for a $20 million national program to help minority youth due to a rapid loss in its investments. Other foundations are expected to follow suit in 2004, slowing the growth of new programs or putting them on hold even if their giving remains the same because of the loss of assets and their slow recovery, the report indicates.

The Foundation Center study relied on figures reported by large and mid-size independent corporate and community foundations that responded to the foundation giving forecast survey along with figures from year-end fiscal indicators and is available at: http://fdncenter.org/research/trends_analysis/. The Chronicle of Philanthropy article can be viewed at: http://philanthropy.com/summary/v16/i10.htm