[May 07, 2012]

Majority of U.S. Private Foundations Yet to See Assets Return to Pre-Recession Levels

Foundation Source (News - Alert), the nation's largest provider of support services for private foundations, today released research findings about changes in the asset levels of most U.S. private foundations between 12/31/2007 (just before the recession) and 12/31/2011. Chief among the findings: At the end of 2011, the total assets of private foundations with endowments of less than $50 million were, on average, 91.3% of their value on 12/31/2007 (see Figure 1).

Private foundations with assets of less than $50 million account for 98% of the approximately 80,000 private foundations in the U.S. Data about this subsector of the market is scant as most private foundation research focuses on the largest 1.5 - 2% of these philanthropies. This data provides a rare snapshot of the fiscal performance of the majority of private foundations in the United States during the worst economic crisis since the Great Depression.

KEY FINDINGS ARE AS FOLLOWS:

1. Most private foundations have yet to recover the value lost from the recession (see Figure 1). At the end of 2011, the endowments of private foundations with less than $50 million in assets were still down almost 9%, compared to their pre-recession values.

2. Donors contribute as much new capital to their foundations each year as they grant out (see Figure 2). Since 2007, private foundation donors contributed fresh capital to their foundations at the staggering rate of 104% of the amount granted. NOTE: This finding does not take into account foundation expenses, whereas the following point does include expenses.

3. Despite growth in 2009 and 2010, 2011 saw a 3% average decrease in foundation asset levels. New capital contributions in 2011 were up 19% from the prior year, but stil funded only 84% of total money out (grants plus expenses). This rate of replenishment is higher than 2010 (72%), but lower than 2008 and 2009 (94%, 111%).

These findings are a preview of Foundation Source's Private Foundation Index 2011, slated for publication in late summer. This past February, Foundation Source released other data from its forthcoming Index, looking at the grantmaking activity of private foundations with less than $50 million in assets (see this private foundation giving announcement). The full Index will provide extensive, aggregated data about private foundation grants, asset allocation and investment performance. To receive the complete Index report when it is released, please send an email request to 2011-Index@foundationsource.com.

In undertaking this study, Foundation Source looked at the three key variables that affect private foundation asset levels: 1) MONEY OUT: grants and expenses, 2) MONEY IN: infusions of new capital, contributed by the donor, and 3) GAINS & LOSSES: how a foundation's assets performed in the financial markets. While much other reporting about philanthropy is based on surveys and estimates, Foundation Source compiled this research based on real-time transactional data only.

The data for the study was collected by looking at 519 private foundations clients with assets of less than $50 million (see Figure 3 for details on the sample). To ensure the efficacy and consistency of the numbers, Foundation Source only included foundations in its sample population that had been clients for all five years (2007-2011).

According to H. King McGlaughon, Chief Executive Officer of Foundation Source, "Despite the sluggish economy, Foundation Source clients remain committed to their philanthropy and are continuing to fund their private foundations with fresh capital. Although total assets have not yet returned to their pre-recession levels, these donors are undeterred in their commitment to philanthropy and advancing their causes through impact-driven grants."

"We've seen for many years how our clients replenish their assets, but had not realized how well their contributions held up through the economic downturn," said Andrew C. Bangser, Chief Financial Officer of Foundation Source. "The data indicates that smaller foundations contribute more than larger foundations on a percentage basis. But that's to be expected as many of our clients' foundations are operated or controlled by individuals and families still in their earning years, who are continuing to fund their foundations throughout their working lives."

About Foundation Source (www.foundationsource.com)

Foundation Source is the nation's largest provider of support services for private foundations. Today, the company manages and advises more than 1,000 private foundations nationwide, ranging from $250,000 to $250 million in assets. Our full range of back-office, online and advisory services allows donors and their families to focus more on mission, strategy and family priorities and less on administration and compliance tasks. The result: better-run foundations with greater social impact.

Foundation Source provides its services in partnership with the nation's leading private wealth management firms, trust and estate attorneys and CPAs. The company is headquartered in Fairfield, CT with regional offices in Atlanta, Chicago, Dallas, Long Island, Los Angeles, New York City, Philadelphia, Salt Lake City, San Francisco, and South Florida.

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