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Foundation growth slows

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The skidding U.S. economy in 2001 braked years of rapid growth in giving by charitable foundations, which still boosted contributions to record levels last year, a new report says.

Fueling the increase, which was greater than expected, were the continuation of multi-year grants made during the boom of the late 1990s, startup grants by new foundations and a philanthropic outpouring after the Sept. 11 attacks, says the report by the Foundation Center.

Giving by more than 56,000 grantmaking foundations in the U.S. grew 5.1 percent in 2001 to an estimated $29 billion – the smallest annual increase since 1994 and down from an 18.2 percent gain in 2000.

Still, while the estimated $1.4 billion growth in grants represented only one-third of the record $4.2 billion increase a year earlier, the report says, the growth beat modest expectations that reflected two straight years of falling stock values and the start of a recession.

Total grant dollars by foundations last year doubled the total given in 1996, exceeding growth in contributions by individuals and corporations, and outpacing inflation by 2.2 percent, the report said.

Hurt by the sinking stock market, foundation assets grew 8.4 percent to $486.1 billion in 2000, falling off after five years of double-digit growth.

A few big foundations enjoyed big asset gains, but half of the 50 biggest foundations posted losses, the report said.

Assets of the David and Lucile Packard Foundation, for example, fell by $3.4 billion, or nearly one-fourth, reflecting the plunge in tech stocks.

Gifts and bequests from donors to their foundations in 2000 fell to $27.6 billion, down 13.9 percent from a year earlier – when Bill and Melinda Gates gave a record $11.5 billion to their foundation – but totaled two-and-half-times the $10.3 billion donated in 1995.

Giving by independent foundations – including family foundations and those formed through the conversion of hospitals and health-care organizations to for-profit businesses – grew 5.4 percent to $22.5 billion in 2001, compared to an increase of 18.7 percent a year earlier.

Half of the grants made in 2001 represented early grantmaking by new foundations created at the end of the economic boom of the late 1990s, plus contributions made after Sept. 11.

Giving by corporate foundations grew 2.6 percent to $78 billion in 2001, compared to an increase of 6.1 percent a year earlier, and fueled by a surge in giving after Sept. 11. That annual increase was the smallest since 1994.

Gifts from companies to their foundations fell 12.4 percent to $2.9 billion in 2000, although the value of corporate shares held by foundations posted a modest net gain of $741 million.

Giving by community foundations grew 4.6 percent to $2.3 billion in 2001, compared to an increase of 17.1 percent a year earlier. Last year’s increase of nearly $100 million outstripped the growth in corporate giving.

The slower growth in community foundation giving was prompted by the falling stock market, which drove down the value of foundation assets, and reduced personal wealth among donors.

Assets of community foundations grew 10.2 percent in 2000 to $30.5 billion, compared to an increase of 20.4 percent in 1999, while new gifts to community foundations grew 16.1 percent in 2001, down from a record increase of 27.6 percent in 1999.

The number of grantmaking foundations more than doubled to nearly 56,600 between 1987 and 2000, with the number of active foundations growing by nearly 10,000 since 1998, or 9.9 percent a year on average.

That included nearly 6,400 new foundations in 2000 alone — the most in a single year since the Foundation Center started tracking foundation data in 1975.

Those new funders gave $709.9 million in grants, or one-sixth of the growth in foundation giving between 1999 and 2000, and added $9.3 billion in endowments, or one-fourth of the growth in assets during the period.

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