Grant Seekers Toolkit: The Role of Foundations

In recent years, more and more people have established foundations as their primary philanthropic vehicle. The amount that foundations give in grants is determined by the size of their endowments.

Foundations are legally mandated to expend at least 5% of the value of their assets each year. Most of this “payout” is given as grants. In recent years, there has been debate within the philanthropic world about whether or not foundations should be required to contribute more than 5% annually. Some foundations do elect to give out more than 5% annually.

Who’s Getting the Money?

An analysis of foundation giving demontrates that educational organizations and programs received the highest share of foundation grant dollars, followed by health, human services, and arts/culture.

While it is tempting to look immediately to the largest and best known foundations for support, it’s important to note that small and mid-sized foundations gave proportionally more to arts/culture and to human services organizations than did the nation’s largest funders. Overall:

  • Private foundations tended to favor grants for education, health, human services, and arts/culture.
  • Corporate foundations tended to favor giving for public affairs/society benefit.
  • Community foundations typically made grants to human services organizations.

In general, foundations continued to prefer project grants over general operating support. However, gifts for general operating support are on the rise. Organizations that fall into the “public affairs/society benefit” category and to arts and cultural organizations are the most likely to receive operating support.