The number of foundation grants made to nonprofits in 2022 increased by 7%, and the total amount of dollars given jumped by 15% compared to 2021’s levels, according to analysis of 980 foundations. On average, these institutions made 33 grants during 2022, up from 31 a year earlier, and average grant size rose from $25,000 to $28,000.
The data is from the 2023 Report on Private Philanthropy: Giving and Investment Trends within Private Foundations, newly released by Foundation Source in Fairfield, Connecticut.
Foundations are required to maintain 5% distribution rates, based on the previous year’s investment returns. Healthy market returns during 2021 boosted 2022’s distributions. The 908 foundations analyzed easily cleared the minimum distribution mark, giving away 6.6% of their assets.
“Foundations are no less susceptible than anyone else to the ever-shifting market trends,” Foundation Source Head of Client Advisory Services Gillian Howell said via a statement. “Yet they’re also incredibly disciplined through highs and lows, allowing them to maintain generosity, hit record-high giving levels, and effect more change through their philanthropy.”
It would not be a surprise, however, if foundations pull back on their distribution during 2023. Market losses during 2022 caused the total asset balance of the 908 foundations analyzed to drop from $15.4 billion in 2021 to $13.2 billion in 2022.
“We’re cautious that negative asset growth in 2022 could signal a softer environment for giving in 2023,” Foundation Source Chief Marketing Officer Hannah Shaw Grove said via a statement. “But planning and strong grantee partnerships will help to mitigate headwinds as they continue to focus on long-term priorities and deep-rooted philanthropic legacies.”
Money is increasingly going to non-501(c)3 organizations, which saw an 89% boost in contributions to $34 million in 2022, up from $18 million a year earlier. Additionally, gifts to individuals increased 40% from 2021’s levels, while direct charitable grants were up by around 28%. Program-related investments, such as financing for affordable housing or community development, experienced a drop in funding of just less than one-third of 2021’s $7 million, to around $5 million last year.
Within recipient categories public/societal benefit organizations, received the most funds among defined categories, garnering 19.5% of all grant dollars, up from 17.5% during 2021. Education dropped from the top position to second, pulling in 18.1% of funds compared with 19.9% a year earlier, while human services nonprofits received 12.9% of funds, down from 13.9% in 2021.
Unknown or unclassified organizations received 20.3% of all 2022 grant dollars, up from 18.9% of funds a year earlier. As the report authors noted, “[a]s of June 2023, 33% of the 1,854,097 verified public charities in the U.S. did not have NTEE codes which represents a growing blind spot in the philanthropic sector.”
Most of the grants made were to U.S.-based recipients. But when funders looked abroad, they went big. The average grant made to a U.S-based recipient was $27,200, while those made to non-U.S. destinations averaged $90,400.
Overall, funders prefer to earmark their donations for specific purposes. Nearly two-thirds (66.1%) of gifts were restricted. The good news, at least for nonprofit administrators, is that this amount is down slightly from 2021, when 66.8% of grants were given with restrictions. The size of the recipient, as classified by annual revenue, indica ted the likelihood that a gift would come with restrictions.
Among nonprofits with less than $10 million in annual revenue, just under half of grants (49.5%) were made for specific purposes, compared with 61.7% of organizations with revenue between $10 and $50 million and 77.5% of organizations with revenue in excess of $50 million.
A full copy of the report is available here https://20294318.fs1.hubspotusercontent-na1.net/hubfs/20294318/Resource-Hub/PDFs/FS-2023-Report-on-Private-Philanthropy.pdf
