The Silent Majority in Philanthropy Makes Itself Heard

When it comes to private foundations in the U.S., the perception is very different from the reality.

In contrast to the mega-endowments of foundations with names like Ford, Gates, and Buffett attached, 98 percent of the 86,000 U.S. foundations have endowments of $50 million or less, according to Foundation Source.

Foundation Source, which provides support services for private foundations, studied 714 foundations and found most are supported by investment income and new contributions. In contrast, the biggest foundations rely exclusively on investment returns.

Those who run smaller foundations also tend to be more actively engaged with their giving. The average annual distribution of foundations studied was 7.3 percent of assets, well above the 5 percent threshold required by federal law. In fact, the smallest foundations—those with under $1 million—were the most active, distributing an average of 14 percent of assets.

“Not only do they give more relative to their size, but the types of grants they provide are the most coveted by non-profits,” writes Andrew Schulz, Foundation Source executive vice president. “Foundations with less than $10 million in assets awarded almost as much in general operating support grants as they paid out in grants for specific projects.”

No doubt, the 70 private foundations that hold $1 billion or more remain a potent force. But it’s the 84,000 or so “little guys” that may hold the key to foundations achieving a greater collective social impact.

An executive summary of the Foundation Source report is here.