Giving by Foundations
Giving by foundations includes grants to U.S. charities made by all American foundations. Community, private (including family), and operating foundations are among the types included in this prediction.v
Giving by foundations is predicted to increase by 6.3% in 2020 and by 6.6% in 2021.vi
The projections for giving by foundations (grantmaking) in 2020 is above the historical 10-year annualized average growth rate of 4.4% and the historical 40-year annualized average growth rate of 5.7%. The foundation giving projection for 2020 is on par with the 25-year annualized average of 6.3%, while the grantmaking projection for 2021 is above the historical 10-year, 25-year, and 40-year annualized average growth.13
Specific factors that will significantly and positively influence foundation giving in 2020 and 2021 include:vii
- Average growth in the preceding year’s GDP; and
- Above average growth in the S&P 500 in the present and preceding years.14
These two factors will account for most of the predicted growth in giving by foundations in these years. Since foundations typically budget their giving based on asset growth, trends in the prior year’s S&P 500 impact giving in the current year. As such, above-average predicted growth in the S&P 500 in 2019 and 2020 will influence strong foundation giving in 2020 and 2021.
The majority of the projected increase in foundation giving for the years 2020 and 2021 will be influenced by growth in the prior years’ GDP. However, growth in giving positively influenced by rising GDP will be tempered by the projected rise in household and nonprofit net worth in 2020 and 2021. This tempering effect may be due to foundations restraining giving during positive economic periods to save grant funding for economic downturns.15
- v This prediction does not explicitly break out directional changes in growth for each foundation type.
- vi All growth rates are based on predictions for giving in inflation-adjusted 2018 dollars using 2019 as the base year. The Philanthropy Outlook projects the growth rates of variables into 2020 and 2021; predicted growth rates are compared with the variables’ historical 10-, 25-, and 40-year annualized means. See Table 1 for these data.
- vii For the definition of these variables and their sources, see the “Variable Definitions and Sources” list in the Guide to the Philanthropy Outlook model at www.PhilanthropyOutlook.com. The Guide to the Philanthropy Outlook also includes information about the stability of the variables.