By Jennifer Whytock
Casting a shadow over giving in 2002, and probably into 2003, assets of U.S. foundations fell 3.8 percent in 2001, the first decline since 1981.
The weak economy plus investment losses hurt foundation portfolios, especially among the largest foundations, with assets overall falling to $476.7 billion, The Foundation Center says in its Foundation Growth and Giving Estimates 2002 Preview.
Hardest hit was the David and Lucile Packard Foundation, which posted a loss of $3.6 billion in 2001, or nearly 37 percent, while assets of the Ford Foundation fell $3.8 billion, or 26 percent.
Of the 50 largest foundations, only six posted assets gains, including the Bill and Melinda Gates Foundation, Robert Wood Johnson Foundation and William and Flora Hewlett Foundation.
The Foundation Center estimates foundation assets may have decreased 10 percent to 12 percent in 2002, says Loren Renz, vice president for research.
Financial reports for 2002 already show assets fell 21 percent at Packard and 14 percent at Ford.
In the face of the overall decrease in assets, foundation giving fell 0.7 percent to $30.3 billion in 2002, the first decline in giving since 1983, the report says.
Foundations still gave more in 2002 than in any other year ever, except for 2001, when giving hit an all-time high.
Corporate and community foundations increased their giving in 2002, and 5,228 newly established foundations gave $603.3 million, helping to offset a decline in giving at independent foundations.
After awarding $451 million in grants in 2001, Packard gave only $230 million in 2002, and hopes to give $220 million in 2003, says Chris DeCardy, communications director.
“The response [from grantees] is disappointment that we don’t have the same amount of resources to give,” DeCardy says.
The foundation, which suffered big investment losses, is focusing its giving in areas in which it has had the greatest impact, while phasing out giving in other areas, giving only transitional grants but making no new grants.
While Packard represents an extreme case, it could signal rough roads for other foundations in 2003.
Forty-two percent of foundations that the Foundation Center polled in its Foundation Giving Forecast Survey expected giving to drop in 2003, while 38 percent expected giving to be flat and 20 percent expected giving to rise, Renz says.
A relatively bright spot is the Foundation for the Carolinas in Charlotte, N.C., which saw its assets grow by $3 million in 2001, up 1.2 percent, and by nearly 10 percent in 2002 to $279 million.
“We are experiencing a strong period of growth in a really challenging economic environment,” says Laura Meyer, executive vice president.
The foundation’s giving grew 35 percent in 2001, up $9.1 from 2000, but fell $2 million in 2002.
While foundation assets and giving shrink, the foundation community remains hopeful that this downturn will not hit them too severely.
“Overall,” says Renz, “this is better news than the field would have expected, given the widespread drop in assets last year.”