Private foundations continued the increased giving last year that grew out of the pandemic, social justice problems and humanitarian needs, according to Foundation Source.
Private foundations gave even more generously to address the continued world problems in 2021 than in 2020, according to the 2022 Report on Private Philanthropy, a study of nearly 1,000 private and family foundations with assets between $1 million and $500 million that was released today.
“While some of our data indicates a return to pre-pandemic behaviors, the spike in giving over the last year could be a signal that the shocks of 2020 have had a lasting impact and set dedicated philanthropists on a new trajectory to address needs in a less reactive but increasingly generous way,” Sunil Garga, president and CEO of Foundation Source, a support organization for private foundations based in Fairfield, Conn., said in a statement.
“As the market winds have shifted again in 2022, it remains to be seen what will take place next, but foundations will likely rise to the occasion. More than any other charitable giving vehicle, foundations are equipped with a powerful and versatile philanthropic toolkit for creatively solving problems and effecting change,” Garga said.
“The foundations studied collectively gave $689 million in 2021, $40 million more than in 2020. The increase was more pronounced among larger foundations–those with $50 million to $500 million in assets–where giving went up nearly 21%. At the same time, foundations gave 500 fewer grants in 2021, suggesting a move from urgently helping as many recipients as possible in 2020 to having more targeted impact in 2021,” Foundation Source said.
Private foundation endowments saw double-digit growth in both 2020 and 2021, “which is consistent with strong market performance and contribution rates, helping to set the stage for future giving. In 2021 endowments increased $1.7 billion year-over-year,” the report said.
Foundations of all sizes granted more than their annual mandatory distribution requirement of 5% in 2021, with the smallest foundations giving 8.9%.
“Grants to individuals, which foundations used extensively during the crises in 2020 to directly send emergency aid to people in need, decreased by 64% in 2021. Foundations also decreased their use of general-purpose grants in 2021 by 3% after issuing an unprecedented number of them in 2020 to give recipients latitude to direct funds where they were needed most,” the report said.
Grants supporting human services and organizations that address public and societal needs decreased in 2021 after spiking in 2020, while those supporting education, the arts and the environment increased modestly, “indicating that foundations are gradually refocusing on their pre-pandemic missions,” Foundation Source said.
In the past year, smaller foundations had the largest allocation to equities and cash holdings, and the lowest allocations to alternative assets, in both 2020 and 2021, while larger foundations devoted more than 20% of their portfolios to alternatives in both years.
Assets grew for foundations of all sizes. Smaller foundations grew by 15.6% while larger foundations 5.1%.
“These findings signal both shifts and consistency,” Gillian Howell, head of client advisory solutions for Foundation Source, said in a statement. “The events of the world over the last two years have clearly impacted the giving landscape, but what has remained consistent is how private foundations have responded overall. They have been there throughout, meeting the moment to address the most urgent needs and also pursuing longer-term missions to make the world a better place.”