The stock market’s ups and downs and the uncertainty of economic recovery were the two major reasons why foundation giving dropped last year, the New York Times reported April 5.
According to the Foundation Center, the nation’s 65,000 independent, community, and corporate foundations awarded $29.7 billion in grants in 2003, down 4.7 percent when adjusted for inflation from the $30.3 billion awarded in 2002.
With many foundations losing assets as high as 10.5 percent from the stock market’s decline, foundation experts were expecting an even greater drop in giving.
“Foundations have yet to recover from the drop in their assets that started in 2000,” said Loren Renz, vice president for research at the New York-based Foundation Center. “Until they have fully realized that recovery and seen that the stock market is stable and the prospects for economic growth are more consistent, they’re going to be more cautious.”
Many foundations determine their spending using a three-year average of their assets, experts noted. “The thing a lot of nonprofits don’t understand is that 2003 being a good year doesn’t translate instantly into more money,” said Elizabeth Locke, president of the Duke Endowment. “It’s hard to explain how you had a good year but you’re not giving away an equivalently larger amount.”