Foundation Giving and Asset Fluctuations (click here for a PDF version of this article)

The Foundation Center, an organization that tracks grant making and reports on trends, recently announced a 4.7% decrease in 2003 giving from independent, community and corporate foundations despite the stock market’s rise during the year.

Many foundations determine their spending using a three-year rolling average of their endowment values. Although the market performed much better in 2003 than in 2002, giving in 2003 still reflected the depressed asset values of 2001 and 2002. 

While changes in grant giving rarely fluctuate as widely as changes in foundation assets, it is unlikely that increases in giving will be seen until assets recover.

For example, The Starr Foundation and The William and Flora Hewlett Foundation each lost at least $1 billion in 2002 due to declines in their stock portfolios. Unlike The Starr Foundation, which has restrictions on its portfolio (cannot divest of AIG stock), The William and Flora Hewlett Foundation took steps to diversify its portfolio by divesting its stakes in Hewlett-Packard and Agilent. As a result, its assets rose last year and the foundation is in the process of transferring those funds to endow the foundation. Although market recovery last year may have a positive impact on giving for the foundation this year, swings in the market still prompt caution.

The Foundation Center reports that 45% of the nearly 65,000 foundations polled said they expect giving to increase in 2004 while 36% expected no change and 18% anticipate a decline in giving.

For additional information on “Foundation Growth and Giving Estimates” and “Foundation Giving Trends: Update on Funding Priorities,” please visit The Foundation Center website http://fdncenter.org. Copies of both reports are available for purchase.

For additional information on The William and Flora Hewlett Foundation, please visit http://www.hewlett.org.

For additional information on The Starr Foundation, please visit http://fdncenter.org/grantmaker/starr.    

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