Private Foundations and Charitable Trusts: A Decade of Charitable

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Giving and Growth, with Highlights of 1991 and 1992

by Alicia Meckstroth and Paul Amsberger

rivate foundations, over 42,400 for 1992, contribute billions of dollars each year to charities and

communities to support causes in such areas as

education, health, human services, community development, the arts and humanities, and the environment.

Private foundations represent over one-quarter of all

Internal Revenue Code section 501(c)(3) nonprofit charitable organizations that file information returns with the

Internal Revenue Service. For 1992, foundations made

contributions, gifts, and grants totaling over $10.9 billion

[1]. This represents a two-year current-dollar increase of

23 percent over the contributions, gifts, and grants given

for 1990. During the two-year period the number of

foundations increased by 6 percent.

Foundations rely largely on asset growth, earned income on investments, and contributions received to

support their charitable giving. In terms of gains in assets

and revenues, foundations experienced a relatively strong

two-year period from 1990 to 1992, with the vast majority

of the gains realized over the 1990 to 1991 period. Total

foundation assets grew by 17 percent over the two-year

period, to $192.2 billion. Investment assets of $181.2

billion represented the majority of foundation assets.

Gains of 20 percent in the value of investments in corporate stock and 30 percent in the value of corporate bonds

largely explain the 17 percent two-year increase. Total

foundation revenue increased by 21 percent from 1990 to

1992, to $23.6 billion, despite a decrease of 4 percent

from 1991 to 1992. A significant increase of 70 percent in

net gains from sales of assets and a smaller increase of 16

percent in the amount of contributions received by foundations, helps to explain the increased revenues. Additionally, the decrease in foundation revenues from 1991 to

1992 and the only minimal growth in assets from 1991 to

1992 was largely due to one organization's sale of some

of its assets in 1991 [2]. Figure A shows the total amount

and percentage changes for various private foundation

revenue, asset, and expense items for the period 1990 to

1992 [3,41.

For 1992, over 2,900 nonexempt charitable trusts

described in Internal Revenue Code section 4947(a)(1)

held $3.1 billion in total assets, realized $346.8 million in

total revenues, and distributed $154.6 million in contributions, gifts, and grants. The amount of grants given by

these charitable trusts increased by only 2 percent from

1990 to 1992 despite a 29 percent increase in revenues

Alicia Meckstroth is a private consultant and Paul Arnsberger is

an economist with the Special Studies Special Projects Section.

This article was prepared under the direction of Michael

Alexander, Chief

and a 13 percent increase in assets during this same

period. These trusts are discussed in detail beginning with

the section, Section 4947(a)(1) Nonexempt Charitable

Trusts.

Statistics of Income Studies

The statistics presented in this article on both private

foundations and charitable trusts are based on sample data

from Form 990-PF, Return of Private Foundation (or

Section 4947(a)(1) Charitable Trust Treated as a Private

Foundation), the annual information return filed by these

organizations [5]. The 1992 Reporting Year represents

the fourth consecutive year that Statistics of Income has

collected data on the 4947(a)(1) charitable trusts that are

treated as private foundations. Statistical studies on

private foundations have previously been conducted for

Reporting Years 1974, 1979, 1982, 1983, and 1985

through 1991 [6].

Private foundations and charitable trusts are treated

separately in both the statistical and descriptive analyses.

In the analyses that follow a number of key topic areas on

foundations are discussed, including:

• Overview of revenue, assets, and grants paid

• Organizational definition and legislative background

• Top ten domestic foundations

• Sources of foundation revenue

• Excise tax on investment income

• Foundation assets and investments

• Investment behavior by size of foundation

• Income yields and rates of total return

• Charitable distribution (or payout) requirement

• Charitable grants and other qualifying distributions

• Payout rates

• Asset growth and distribution goals

Following these is a similar, but shorter, discussion of

charitable trusts and a summary of both types of organizations. The report ends with a discussion of the data

sources and limitations and an explanation of key terms.

vate iFoundations

Overview of Revenue, Assets, and Grants Paid

During the decade from 1982 to 1992, foundation assets

and charitable grants paid increased steadily each year with

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Figure A

Private Foundations: Selected Financial..

Items, 1990-1992

[Money amounts are in billions of dollars.]

1990

1991

1992

Percentage

increase,

1990-1992

(1)

.(2)

.(3)

(4)

164.

161.7

13.9

126.2

32.5

79.3

14.4

21.6

189.6

184.6

12.5

139.4

31.1

90.9

17.4

32.7

192.2

181.2

12.7

144.4

30.5

95.2

18.7

30.4

16.6

Total revenue ...................................................................................

19.5

24.6

23.6

21.0

Contributions, gifts, and grants received........................................

Net gain (or loss) from sales.of assets ........................ .................

--6.-8

8.5

-7.9 6.7

16.271.8

-6.7

6.6

Item

Total assets (fair market value) ................................ . .................

Investments, total ....................................

...

........

Savings and temporary cash investments.....................................

Investments in securities, total .....................................................

U.S. and State Government obligations.. ............................. .....

Corporate stock.... .....................................................................

Corporate bohds...................................L ...................................

Other investments' ............................ : .......

......

Dividends and interest from securities ................................. .......

3.9

6.4

Total expenses ........... ................................................:.....................

Contributions,gifts, and grants~ paid ...............................................

11.7

8.9

13.2

.10.1

14.5

.10.9

-Excess of revenue (less loss) over expenses ..............................

-7.8-

111A

9.11

12.1

-8.6

14.4

-6.2

20.1

29.9

40.7

22.5

Sum of "Investments in land, buildings, and equipment (less accumulated depreciation)," "Investments in mortgage loans,* and *Other investnnents,* as reported on the Form 990-PF.

'Other investments" includes items such as advances; certificates of investment; and investments in art. coins, gold, and gems.

66-

overall real growth of .1 12 percent and 71 percent, respectively.- Foundation-revenue-grew by 79 percent from-1982..

to 1992, with steady annual increases from 198,2 to 1986

and fluctuating.year-7to-year changes ftom 1986 to 1992.Substantial real increases, in contributions received and net

gains from sales of assets from 1982 to 1992, 104 percent

and 162 percent,'respectively, help to explain the overall

increases in revenue. The overall growth in foundation

assets and revenues markedly exceeds the 32 percent real

,growth of Gross Domestic Product from 1982 to 1992.[7].

The number of foundations increased by nearly' 50 percent,

from 28,468 in 1982 to 42A28 in 1992. Figure B.graphically di.splays the growth, in real assets, revenue,.and grants

from 1982 to 1992.

The asset growth of foundations during the 1982 to

1992 decade helped to increase total grants paid over the

same period. Th~'&aritable payout requirem

ient'fot.

certain types of foundations (explained in detail in the

sectiorf Charitable Distribution (or Payout) Requirement)

is based on-the value of foundation investment assets; that

is, as investment assets grow, so does.the amount that

foundations are requited to distribute. Total investment.,

assets, equal to $181.2 billion* for .1992, increased by 116'

_percent

from 1982 to 1992. Investm.ent assets for the

"large" foundations, those

holding $50 million or more in

real terms by 163

fair market value of.assets, grew in

percent oVer the decade, to- $12 1. 8 billion. The real

amount of charitable grants d,istributed by the large foundations grew-by--1165 percent.ove r. the same time-period,. to

$5.7. billion. The large foundations accounted for, the

majority of foundation assets, 66 percent in 1992. The

number of these large foundations increased from 165 in

1982'to 476 in: 1992 as a few new. large organization's

wer8 formed and as existing foundations increased past

$50 million in assets size.

Comparisons of the different size class'es of foundations

are discussed -throughout this article. The following

classifications apply throughout unless-otherwise indicated: the-"smallest foundations refers to.the group

holding less than $100,000 in fair market value of total

assets (excluding foundations that either do not report

assets or that report assets equal to zero); "small fourdations" refers to the group holding less than $1 million in

assets (excluding foundations that either do not report

assets or that report assets equal to zero); "mediurfi-size

foundations" refer,s-to the group holding from $1 million

to less than $50 million in assets; "large foundations"

refe'rs to the group holding $50 million or more in assets;

and, the, "largest foundations" refers to the. group holding

$100 million or more in assets.

Organizational Definition and Legislative Background

A private foundation is a nonprofit, tax-exempt cqrporation, association, or trust which is narrowly supported and

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Figure B

Private Foundations: Real Growth in Revenue, Assets, and Grants, 1982-1992, in 1987 Dollars

Billions of dollars

ISO

161.2

111-

159.0

-2

139.8

Total assets I

120

1028

116.8

01-

75.0

~111

Total revenue

17.4

-------

20.7

5.6

A-

6.4

6.8

AL-1

1983

1985

1986

1987

10.9

13.9

5.3

0 1

1982

Total grants paid

I Fair market value.

NOTE: Data for 1984 are not available.

17 1

18.4

_7~_10~~-7.5

15.7

1988

1989

20.9

19.5

17.2

------- ~9_,

-0

9.0

8.6

7.8

1990

1991

1992

Tax Year

controlled, usually by an individual, family, or corporation. It is this narrow base of support and control which

differentiates a private foundation from a publicly

supported tax-exempt charitable organization, although

both receive tax exemption under section 501(c)(3) [8].

The other 501(c)(3) organizations, those filing the Form

990, Return of Organization Exempt From Income Tax,

generally receive broad support from a large number of

sources within the general public. Because of their

centralized support and control, private foundations are

more strictly regulated than the other section 501(c)(3)

organizations. Private foundations held less than 16

percent of the book value of total assets and earned less

than 5 percent of the total revenue of all section 501 (c)(3)

nonprofit charitable organizations that filed information

returns for 1992 with the Internal Revenue Service [9].

The nonexempt charitable trusts included in this article

are described in section 4947(a)(1). Charitable trusts

represented only 6 percent of the total number of Form

990-PF filers for 1992. Unless otherwise noted, the same

background information and requirements apply to both

types of Form 990-PF filers [10]. A detailed discussion

and analyses of the characteristics and behavior of the

charitable trusts can be found beginning with the section,

Section 4947(a)(1) Nonexempt Charitable Trusts.

The two types of private foundations or trusts, "operating" and "nonoperating," are distinguished by the type of

charitable support they provide. Nonoperating foundations

generally provide indirect charitable support by making

grants to other nonprofit organizations that conduct charitable programs of their own [ I 11. Nonoperating foundations are annually required to distribute (typically through

grants or related expenses) a minimum amount for charitable purposes, the "distributable amount." If they do not

distribute the required amount in the current year, they

have until the end of the following year to fulfill the

charitable distribution requirement without penalty. The

minimum required amount is based on 5 percent of the

value of their "noncharitable-use (or net investment)

assets" [12].

If an organization is sufficiently involved in the direct

operation of its charitable activities, then it can qualify as

an operating foundation and is exempted from the charitable distribution requirement that applies to nonoperating

foundations. Although operating foundations are not

subject to the annual distribution requirement, many

choose to make grants in addition to carrying on charitable

programs of their own. For a further explanation of the

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and

* 1992

regu.irements

, of operating foundations, see operating

nonoperating foundations that had*no "distributable

foundations and section 4947(a)(1) charitable trusts in the

amount" and, therefore, were not required to make a

Explanation of Selected Terms section.

minimum distribution (see the Explanation of Selected

Individual income tax deductions for contributions to.

Terms section for a definition of the'required distributable

nonoperating foundations are generally more restrictive

amount); 29 percent were nonoperating foundations that

than deductions for contributions made to operating

made other types of disbursements in order to satisfy the,

foundations or other section 501(c)(3) organizations.

charitable distribution requirement; and the remaining 26

Contributions that either establish or support a

percent were nonoperating foundations that did not fully

nonoperating foundation qualify for a Federal tax deducmake the required distribution for 1992and legally had

until the end of their 1993 accounting period to do so

tion of up to 30 percent of the donor's "adjusted gross

without tax penalty. The types of disbursements, other

income" (AGI). This compares to a deduction limit of So-than grants, made by foundations to fulfill the charitable

percent of AGI for donations to operating foundations and

distribution requirement include the following: operating

to othef 501 (c)(3) nonprofit charitable organizations

(Form 990 filers)..

and administrative expenses used in the conduct of chariPassage of the Tax Reform Act of 1969 (TRA69)~

table programs. or activities; amounts paid to acquire

'-subjetted-foundations to-an-excise-tax-on-"net-invdstment- - - charitable-use -assets -,- charitable '-set-asides' -for-future

income":for the first time. While most foundations pay

time periods;. and program-related investments. All of

the excise tax, some operating foundations are exempt

.these expenditures counted towards a foundation's charifrom the tax. For a further explanation of exempt operattable distribution requirement. Some of the nongrantmaking foundations described above were "failed

ing foundations refer to operating foundations in the

-publicc-charities" that had been iecldssifiedby the Intem

*al

-Explanation. of Selected Term.s-section..-TRA69-alsoR&venu6S6rvicea*snonoperating'foundati(ins. These

imposed a series of excise taxes on foundations that

engaged in "prohibited activities," which were deemed not

organizations could no longer qualify for thdfavored

public charity status of a Form 990 filer because they

to be in the public interest.. These'activities applied to any

foundationthatattempted. to influence legislation by

failed to maintain the required minimum support, from

contacting. legislators, -cncouraged thep~~Iijq.to-contact_

_public sources. Many, however, continued to operate

legislators, or participated in- the campaign of a candidate

direc.t.charitable programs rather than make grants to,other

for public office; any foundation that engaged in 'certain

.nonprofit organizations: Some of these organizations may

financial transactions (ofacts of "self-dealing") with

have qualified as operating foundations, but did not

"disqualified persons" having"a relatioftship with the

request such status from the Internal Revenue Service.

foundation, such as substantial donors or officers, direcForeign foundations (those foundations organized

abroad) comprise less than 0:1 percent of the foundation

tors, or trustees of thefoundation-'any foundation Which

.popu

.--A foreign foundation was required to'file

owned holdings, in'a.b6siness enterprise'deemed'to be

excessive or which made investments deemed to jeoparForm 990-PF when it received'a cei-tain degree of'support

dize the charitable purpose of the foundation; and any

from either U.S. citizens or corporations. These foiindanonoperaiing

foundation

that

failed

distribute

the

tions may ormay not have chosen to distribute charitable-.

required minimum payout after a 1. -year grace period.

grants within the United States. the IRS required that

taxes on these prohibited activities are' reported on Form

foreign foundations, like domestic -foundations, pay an

4720, Return oi Certain Excise Taxes on Charities and

excise tax.on investment income.. While the excise tax.'

Other Persons. Under Chapters 41 and 42 of the Internal

equaled 2 percent of worldwide "net" investment income

Revenue Code, and are not included in this article.

for the majority of domestic foundations', the tax oii

Of the estimated 42,400 private foundations filing Form

foreign foundati'oris,equaled 4 percent of their "gr6ss"

990-PF information returns f6r 1992, 91 percent were noninvestment income*derived from U.S. sources. The

operating foundations and the remaining 9 percent were

investment income on which these taxe's are based does

operating foundations, virtually the same percentages a: s

not include any income included'in figuring ihe tax on'

prior years. Nearly 35,200 foundations, or 83 percent of all

unrelated business income, as reported on Form 990-T,

foundations, made grants for 1992. Nearly 87 percent of the

Exempt Organization Businesi Income Tax Return.

nonoperating foundations and 47 percent of the operating,

Ton Largest Domestic Foundations

foundation's made grants. (Unless otherwise noted, data are

the

non-grantmaking

foundations,

Three-quarters of all foundations held less than $1.million

for 1992.) [131 Of

percent were operating foundations; 17 percent were

in total as Sets. 'The - largest-f6unddti6n-s, those holding.

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

$100 million or more in total assets, comprised less than I

percent of all foundations, but held 58 percent of total

foundation assets, realized 46 percent of total revenue, and

distributed nearly 44 percent of total grants for 1992. In

contrast, the small foundations, those holding less than $1

million in assets, held only 3 percent of total assets,

realize d 7 percent of total revenue, and distributed I I

percent of total grants. These foundations accounted for

72 percent of all foundations.

The ten largest domestic foundations, displayed by asset

size in Figure C, held over 18 percent of total foundation

assets and distributed close to 12 percent of total foundation grants for 1992, $35.3 billion and $1.3 billion, respectively [14]. From 1990 to 1992 this represents only a 7

percent increase in assets of the largest ten foundations,

but a 33 percent increase in grants. The increase in assets

was much lower than the overall foundation asset increase

of 17 percent for 1990 to 1992. However, the increase in

top ten foundation grants was much higher than the

increase of 23 percent in all foundation grants for 1990 to

1992. The huge Ford Foundation alone accounted for 3.6

percent of all foundation assets and 2.6 percent of all

foundation grants for 1992. The ten largest foundations in

terms of assets for 1992 are the same as for 1990, with the

top three foundations assuming the same positions. While

the Annenberg Foundation was the tenth largest foundation in terms of assets for 1992, its $137 million of grants

were third only to the Ford Foundation's $282 million of

grants and the combined W.K. Kellogg Foundations' $227

million 'of grants.

The Robert Wood Johnson and Annenberg Foundations

both realized gains in assets over the two-year period from

1990 to 1992 that were well above the overall 17 percent

gain in all foundation assets, 28 percent and 27 percent,

respectively. The Robert Wood Johnson Foundation

realized all of its gains from 1990 to 1991 and actually

realized a 9 percent loss from 1991 to 1992. The

Annenberg Foundation, in contrast, realized comparable

gains for both years. These two foundations also distributed grants over this same period at a rate well above the

overall 23 percent increase in all foundation grants, 56

percent and 149 percent, respectively. A number of the ten

largest foundations experienced overall losses in assets

over the period from 1990 to 1992. The Lilly Endowment,

MacArthur Foundation, and the combined W.K. Kellogg

Foundations experienced two-year losses of 18 percent, 8

percent, and 7 percent, respectively. These three foundations realized all of their asset losses during the 1991 to

1992 period [15].

Soumes of Foundation Revenue

Over the decade from 1982 to 1992, foundation revenues

fluctuated from year to year, but realized an overall real

increase of 79 percent. The two-year period from 1990 to

1992 was no exception, as foundation revenues increased

in nominal terms a dramatic 26 percent from 1990 to

1991, only to decrease by 4 percent from 1991 to 1992, to

$23.6 billion. When the Wellcome Trust, a British

foundation, is excluded from this calculation, revenues

would have increased by 12 percent from 1991 to 1992.

Figure C

Top Ten Domestic Private Foundations, by Size of Fair Market Value of Total Assets, 1992

[Money amounts are in millions of dollars.]

Name

1. Ford Foundation ..............................................................................................................

2. J. Paul Getty Trust I ........................................................................................................

3. W.K. Kellogg Foundation Trust / W.K. Kellogg Foundation 2..........................................

4. Robert Wood Johnson Foundation .................................................................................

5. John D. and Catherine T. MacArthur Foundation ...........................................................

6. Lilly Endowment, Inc .......................................................................................................

7. Pew Memorial Trust ........................................................................................................

8. Andrew W. Mellon Foundation........................................................................................

9. Rockefeller Foundation ...................................................................................................

10. Annenberg Foundation ..................................................................................................

Total...............................................................................................

State

Total assets

(1)

(2)

(3)

(4)

6,956

798

282

NY/Ml

6,184

4,675

. 10

227

3,735

2.946

426

579

177

225

2,608

2,218

2,185

2,139

1,654

109

183

222

213

128

119

137

Total revenue

Total qrants paid

103

127

I The J. Paul Getty Trust is an operating foundation. All other foundations listed are nonoperating foundations.

2 The W.K. Kellogg Foundation Trust (classified as a private foundation and not as a section 4947(a)(1) charitable trust) is located in New York and has a *pass-through" relationship

with the W.K. Kellogg Foundation, located in Michigan. Typically, the entire amount of the annual qualifying (charitable) distributions of the W.K. Kellogg Foundation Trust is made in

the form of a grant to the W.K. Kellogg Foundation, which then redistributes the grant forchantable purposes (and does not count the redistribution as a qualifying distribution of its own).

The combined total assets of the lwo organizations are shown in the 'Total assets* column, but in order to avoid duplication, only the grants paid by the W.K. Kellogg Foundation are

shown in the *Total grants paid' column.

3 Fair market value.

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

The overall revenue increase over the two-year period is

largely explained by a huge increase in net gains from

sales of assets from 1990 to, 199 1. Over the two-year"

period, total foundation net gains from sales of assets

increased by 70 percent, to $6.7 billion for 1992. Overall

gains of 116 percent were realized from 1990 to 1991,

while an overall loss of 21percent occurred from 1991 to

1992. This pattern can be larg~ly explained by the

Wellcome Trust's sale of some of its assets for Mt. The

Wellcome Trust, alone, realized net gains from,,sales of

assets of $3.8 billion for 1991. These gains dropped to

$0.2 billion for 1992. Once again, by excluding~the'

Wellcome Trust from the data for 1990-through 00,.net

gains from'sales of assets would have increased by-only

---21-percent-from-1990-to-1991-and-by-36-percent from

1991 to 1992.

The large foundations, which earn over half of foundation revenues, realized both the greatest gains:and the

greatest losses when compared to the smaller foundations;,

From 1990 to 1991, large foundation revenues increased

by 45 percent, but from- 1991-to-1992,-tFeii~-r~ve-nu-e-sdeclin~d by 12 percent. Excluding the Wellcome Trust

from the calculations, large foundation revenues would

have increased by 6 percent from 1991 to 1992 and by l6i

foundation

percent the

- following year. In contrast, small

revenues in&ri~s6d by-.25'Oercent',for the 1990-199r- .

period, but then decreased by 9 percent for the next y ear.

Medium-sized foundations achieVed moderate increases

of 4 percent and 10 percent for each of the time periods,

1990 to 1991 and 1991 to 1992, respectively. Figure Q

Aisplays the sources of foundation revenue for 1992 for all

foiindations and forthree different size.groups: "small,".

"medium," and "large."

The year-to-year changes in revenue among the different size groups of foundations is better understood

through an examination of the different sources of revenue

upon which the different groups

- rely. The.figure for total

foundation revenue reveals that for 1992 over a third of

total revenue came from contributions received by foundations; and well over a quarter each came from both net

gains from sales of assets and dividends and interest from

securities, 29 percent and'28 percent, respectively.

Smaller amounts were earned.frorn interest on savings and

temporary cash investments and "ot~eC sources. While

the small foundations earned nearly three-quarters, or 72

percent, of their revenue from contributions, the large

foundations earned only a fifth, or 21 percent, in this

manner. Similarly, while the large foundations earned 71

percent of revenue from the combination of net gains from

sales of assets and dividends and interest from securities,

the small foundations-. earned only 19 percent of revenue

from these two'inves'tmefit sources. As in past years, the

data show that as the size of the foundation increases, the

proportion of revenue from contributions declines and the

proportion from investment income rises.

An examination of the actual number of small and large

foundations receiving contributions and earning investment income shows that the large foundations may~be a

somewhat more homogeneous group relative to the small

.foundations. Of the large foundations, nearly all, or 98

percent, earned dividends and interest from securities for.

1992; 94~percent realized net gains from sales of assets;

and-only 41 percent re~eived contributions. In contrast,

57 percent of the small foundations earned dividends and

interest from securities for thatyear; only 31 percent

realized net gains- from sales- of assets;- and fewer than

half, or 47 percent, received contributions. These percentages were relatively comparable for 1991.

In terms of contributions received, small foundations

received an amount for 1992, $1.3 billion, that was' 18

percent over the amount received for 1990. In contrast,

the ed-ntributidn~~--giVe-ri-to-ffeditfm--size foundations- ~ remained stagnant over the two-year period, at about $3.8

billion; The large foundations, in contrast, realized notable increases in contributi ons received. From 1990 to

1992, these contributions increased by, 49 percent, to $2.7

billion-. Thelarge increase in net gains-from sales of

assets between 1990 and 1992 was widespread. among

foundation§. Small foundation net gains from those sales

increased 130 percent over the two years, to $12T9

million. A similar pattern was true for the, miedium-size

foundations, which realized increases in net gains of 139

percent, amounting to $1.8 billion for 1992. Net gains

from sales of assets also increased notably for the'la.rge

foundations, t o $4.8 billion, a 53 percent increase o~er the

same period.

In terms of dividends and interest from securities"

overall foundation earnings increased by only 4 percent.

from 1990 to 1992. Small foundations realized 9 percent

less dividends and interest from securities for 1.992. as

compared to 1990; medium foundations earned virtually

the same amount from this type of revenue for 1992 as-for

1990;.and large'foundations

achieved a modest increase of

dividends

andinterest

from securities from

6 percent

1990 to 1992.

Reporting Year 1992 represented only the fourth.year

for which information on the "unrelated business" activities of private foundations was available from the Form

990-PF. Only 3.1 percent of foundations reported ajotal

of $72.7 million

. in "unrelated business income" (UBI) for

1992. For 199 I these figures* were 3.5 percent and $65.5,

million, respectively. For 1992, the amount of UK-

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Figure D

Sources of Private Foundation Revenue, by Size of Foundation, 1992

Small Foundations2

Medium FoundatlonS3

Large Foundations '

Contributions, gifts, and

grants received

Dividends and Interest

from securities

Net gain (or loss)

from sales of assets

M Other Income *

Other Interest'

Includes foundations with assets unreported or equal to zero, which are not sho%wr separately.

Srnall ~undations are those holding trom$1 to less than $1,0D0,000 In fair market value of total assets.

Medium foundations are those holding from $1,000,000 to less than $50,000,000 in fair market value of total assets.

.Large foundations are those holding $50,000,000 or more in fair market value of total assets.

Represents "Interest on savings and temporary cash investments."

Includes 'Gross rents and royalties' and 'Gross profit (or loss) from business activities,' as well as items such as imputed interest on deferred payments and programrelated investment income.

NOTE: Detail may not add to total because of rounding.

represented only 0.5 percent of total revenue as reported

on the "Analysis of Income-Producing Activities" schedule on the Form 990-PF. A tax was levied on the unrelated business income of foundations as it was reported on

the Form 990-T, Exempt Organization Business Income

Tax Return [ 161.

The section on the "Analysis of Income-Producing

Activities" categorizes total foundation revenue (with the

exception of contributions) as either "unrelated business

income... ..excluded income," or "related or exempt

function income." Unrelated business income is that

income from a trade or business that was regularly carried

on by the organization and that was not substantially

related to the performance of the organization's exempt

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

purpo~e -or function' (other than that the orgahizat ion

needed the'profits derived from the unrelated activity).

Excluded income repres6its income which was not directly ' related to the tax-exempt, charitable function of the'

foundation and which was excluded or exempted from the

tax on unrelated business income by Code sections 512, , 513, or 514. Generally, dividends, interest, rental inconie,

and gains from sales of investment assets were all considered excluded income. Related or exempt function income generally represents any income eamed,that.is

related to the organ*ization's purpose or function. constitut-:

ing the basis for the organization's tax exemption.

The'vast niaJority of revenue reported in the."Afialysis

of Income Producing Activitie.s" section (which exclud6s

contributions received) was reported as excluded income,

regardles§ of whether-or not they are considered "exempt

foreign foundations." Additionally, domestic -ope'rating

foundations, by ineeting several requirements that show

extensive public support and control, can be exempted

from the excise tax on net investment income.

Twenty-six

percent of all operating foundations were exempted from

the-excise tax for 1992. For a complete discussion.of the

requirements for exempt operating foundations, see

operating foundations* in the Explanation of Selected

TeTrns section.

One provision of the Deficit Reduction Act of 1984.

allowed any domestic nonoperating foundation to'reduce

the annual 2 percent excise tax to I percent, if, simply

stated, the foundation showed improvement in the rate at

which it, paid out charitable dollars. Specifically,.

y if cur---rent-"qualifyirfg-disttibutions"-exceeded-a~5--year avera-ge

of qualifying distributions plus 1' percent of current net

(directly) related to the foundation's exempt, charitable

investment income., a foundation qualified for therdduced

purpose and only one-half of I percent reported as UBJ

tax.. Qualifying for the reduced tax was not affected by

,[17]. In termsI of the type of foundation, operating foundawhether a foundation's charitable payout rate exceeded

eport

much

higher

proportion

income

tions tend

---exempt fun.ction-income compared-to-nonoperating-foun-- - --the.required 5,-percent;-it was-affected, however, by thelevel of increase- in a foundation's payout, rate.

dations, 33 percentI compared,to 8 percent,, respectively.

Investment income, on which the excise tax- is based,

types

fou

da~iibnsreportone-half

percent

Both

~leIssincreased by 19, percent from 1990 to 1992, to $143

'as

UBL"SindlIfoundati.ons

tend

report

higher..,

billion. This rate of increase-is cbmpdiable to the.overall

pro portion of inconie-as UBI and'exempt function income,

increase-in foundation revenue. -Small foundations

--Iessthan 2 ~ercdntand 29-percent,.resppctively, dnda--'

however, experienceddeclining investment income,from

smaller percentage as excluded income, 69 percent.' In:

1990 to 1992, 6 percent,, w'hile* both r~e"diurii-;si,ze -and,"

contrast, the large foundations reported less than'one-ten'ih

large foundations

realized increases of 2~.Ferc~n,t and 19

of one percentage point as UBI, 6 percent as exempt.

percent re.spectively. An increase of f9. percent in capital

function incorrid, and 94 percent as excluded inc6 -in e-.

gain income explains much of the overalf gain J6 investExcise,Tax on Investment income

ment income. (For a complete definition of'-fiet investment

The excise tax on the investmenrinco.me of private

income and a furtherexplanation of capital gain net

foundations was enacted as part of TRA69. Originally, it

income and how. it, differs. from net gain (or loss) from

was levied in order. to provide funds for Internal Revenue. ,

sales of'assets,,~see the:appropriate entries in the ExplanaService oversight of foundation activities and enforcement

tion of Selected Terms'se6tion.) For 1992,'foun-dations

of laws governing their exempt status. Domestic foundareported excise tax. on investment income of $ f94,2

tions generally are liable for -a tax equal to-2 percent of

million.. This amount. was A 25 percent increase over that

their net investment income and foreign foundations for an

for 1990., Figure E displays selected statistics o0h,.e

,excise tax equal to,4 percent, of their gross investment

excise tax of foundations by size of foundation'.. Thirtyincome. Domestic organizations compute the excise tax

two* percent of all foundations. increased the rate at which

based on investment income from.all sources, while

they'paid out charitable dollars forIM, iher6by~qualify]-- foreign organizations compute the tax based on investment

ing for the reduced I-percent 6xcise'tdx. 'A greater per-income from U.S. sources only. Some foreign fou.ndacentage of the large foundations qualified for the reduced

tions, classified as "exempt foreign* foundations," are not,

tax compared to the small foundations, 46 percent versus

subject to'the charitab.I& payout requirement, but still are.

29 percent.

required to pay the. excise tax on investment income,

Foundation Assets and Investments

These exempt foreign foundations are those that from the

least

percent

Total foundation assets continued to grow steadily"to

date of their creation have received at

$1,92.2 billion for 1.992. This represents an overall,

sources

outside

the

United

States..

their support from

increase of 17 percent from .1 990to 1992. Assefs'f6Ceach

D u_:e~ to'sp~ ecal-t

i reaty provisions with the United Staies, all

the three size groups increased as Well, the sniall

foundations

are

exempted

from

the"

excise

tax,

Canadian*

72,

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Figure E

Private Foundations Reporting Excise Tax on Investment Income, by Size of Foundation, 1992

[Money amounts are in millions of dollars.)

Item

Number of foundations .........................................................

Percentage of all foundations

............................................

Net investment income (Nil) .................................................

Excise tax .............................................................................

Percentage of all foundations reporting:

1 percentlax ......................................................................

2 percent tax ......................................................................

4 percent tax ....................................... ;..............................

Total

Small

foundations 2

Medium

foundations 3

Large

foundations 4

(1)

(2)

(3)

(4)

35,083

14,252.2

194.2

24,611

463.7

7.2

9,689

4,587.7

68.3

448

9,192.2

118.6

(6)

I Includes 337 foundations with assets unreported or equal to zero, which are not shown separately. These foundations

income and paid excise tax of $0.1 million.

2 Small foundations are those holding from $1 to less than $1,000,000 in fair market value of total assets.

3 Medium foundations are those holding from $1,000,000 to less than $50,000,000 in fair market value of total assets.

4 Large foundations are those holding $50,000,000 or more in fair market value of total assets.

Includes $170 million in gross investment income from 30 foreign foundations.

Less than 0.5 percent.

foundations by 6 percent, and both the medium and large

foundations by 17 percent. Excluding the Wellcome

Trust, the assets of all foundations would have grown by

20 percent from 1990 to 1992. Investment assets of

$181.2 billion represent the vast majority of foundation

assets, 94 percent. These investments increased by a twoyear total of 16 percent. Investment assets include savings

and temporary cash investments; U.S. and State Government obligations; corporate stock; corporate bonds; land,

buildings, and equipment held for investment purposes;

mortgage loans; and "other" investments. Non-investment

assets include non-interest bearing cash; land, buildings,

and equipment used in the direct operation of a

foundation's charitable activities; various receivables;

inventories held for sale or use; prepaid expenses and

deferred charges; and "other" assets, which include items

such as escrow deposits, interest-free or low-interest loans

made for charitable purposes, and program-related

investments.

Holdings of investments in securities (including investments in U.S. and State Government obligations, corporate stocks, and corporate bonds), increased by over 14

percent from 1990 to 1992. These securities, valued at

$144.4 billion for 1992, represented 80 percent of total

investment assets. Nearly two-thirds of all securities, or

$95.2 billion, were held in the form of corporate stock,

with more than one-fifth and one-tenth of securities held

in the form of U.S. and State Government obligations and

corporate bonds, respectively. Reporting Year 1992

represents only the third consecutive year since 1979 for

which the IRS required foundations to report separately

the value of each of these types of securities on the Form

arned $8.7 million in net investment

990-PF. Over the 1990 to 1992 period, foundations

experienced considerable increases in investments in

corporate stock, 20 percent, and investments in corporate

bonds, 30 percent, and decreases in investments in government obligations, 6 percent. Foundations also experienced overall decreases in holdings of other types of

investment assets, including savings and temporary cash

investments and investments in land, buildings, and

equipment, each of which declined by 8 percent from

1990 to 1992. While this same pattern was generally true

for each of the three size groups of foundations, each

group experienced increases and decreases of varying

magnitudes [18].

As foundations grow in size they tend to engage in

more sophisticated investment practices and hold greater

proportions of investment assets, particularly corporate

stock. While the large foundations held 96 percent of all

their assets as investments for 1992, the small foundations

held 83 percent as investments. Figure F displays the

composition of investment assets for small, medium, and

large-sized foundations. While the large foundations held

80 percent of all investments as a combination of corporate stocks, corporate bonds, and government obligations,

the small foundations held only 64 percent in this manner.

Holdings of corporate stock, 53 percent of total investments, were the dominant investment for all foundation

size groups, but particularly for the large foundations.

While large foundations held 56 percent of investment

assets as corporate stock, the small foundations held 38

percent in this manner. Small and medium-size foundations tend to hold somewhat more of their investments in

U.S. and State Government obligations and corporate

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Figure F

Composition of Private Foundation Investment Assets, by Size of Foundation, 1992

TOW

Small Foundations

Large Fou

Medium FoundationS3

Corporate stock

" Corporate bonds.

El Government obligations

Other investments

Savings and temporary cash

investments

lwiudet;'fo~ndafict a Win assets u nreported a equal to zero, which are not shown separately.

Small foundatiorx% we those holding it= $I to less than $1,000,000 in fair market value of total assets.

- Medlum foundations .,a those holding from $11,C)(10,000 to less than $50,000,000 in fair market value of total asset

Largeoffoundations

Sum

"Irwainnenst

are those holding $50,000,000 or more in fair market ~alue of total assets.

in land, buildings, and equipment (less acotanulated depreciation),' 'l-stments, in mortgage loans,' and *Other inwstrnwts,' as reported on ~)e Fort, 99D-PF. 'Other

imtestments" includes items such as advances; certificates of investment; and investments in art, coins, gold, and gems.

NOTE: Percentages my not add to 1~0% because of rounding.

bonds compared to thelarger foundations. , As foundations,grow in size they also tend to hold a smaller percentage of their assets in the form of.savings and temporary cash investments. For 1992, the small foundations

held,25 percent of their investment assets as savings and

tempgrary.cash, investments, compared.to 9 percent for the

medium size foundations and only 5 percent for the large

foundations. -Large foundations, also. tend to hold. less

non'interest bearing cash compared to the, small foundations. For. 1992, small foundations held 6 percent of total

assets as non-interest bearing cash,compared to less than

for the large foundations. The distribution of, '

I percent

assets by the different size groups may generally indicate

that many of the small foundations have less of.a preference

for risky investments and more of a preference for

asset liquidity compared to the large foundations. 'While

holdings of cash for the small foundations remained

relatively constant-over. the -199.0 to 1992 period, the largefoundation holdings of cash actually increased by over

300 percent from 1990 to 1992. This can be largely

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

explained by the huge holdings of cash held by the

Wellcome Trust for both 1991 and 1992.

Investment Behavior by Size of Foundation

In general, the larger the asset size of a foundation, the

more it tends to

' emphasize the growth of its assets (or

endowments) as a means by which to fund charitable

giving, both now and in the future. Unlike other nonprofit

charitable organizations, nonoperating foundations of all

sizes most often distribute grants in order to fulfill their

charitable purpose. Although foundations have relative

freedom in the way that they choose to invest their taxexempt endowments, they are also subject to a minimum

distribution or charitable payout requirement. Allowing

for certain exceptions, nonoperating foundations must

annually distribute for charitable purposes an amount that

equals 5-percent of the average value of their net investment assets. (For an explanation and discussion of the

payout requirement, see the sections beginning with The

Charitable Distribution (or Payout) Requirement.) In

order to fund charitable activity without reducing the

value of their endowment, a foundation must earn an

average "rate of total return on assets" (defined below)

that equals at least 5 percent plus the costs of investment

and the rate of inflation. To the extent that foundations

wish to maintain or increase the value of their endowments to fund charitable giving into the future, this

represents an important goal.

Different sizes of foundations tend to have different

charitable and investment objectives. For instance, larger

foundations may tend to operate with more of a long-term

focus. They may invest and manage their assets in order

to maintain or increase the size of their endowments by

earning income and realizing a return on assets which will

allow them both to meet the annual 5-percent payout

requirement and to use any remainder to increase their

investment portfolio [191. Many of the larger foundations

pay out close to the required 5-percent of their net investment assets to charitable causes each year. The larger

foundations hold a greater proportion of assets as investments in securities, including a greater proportion as

corporate stock. Holdings of corporate stock tend to have

greater risk but also higher returns compared to other

investment holdings. Larger foundations may also tend to

possess the resources necessary to use sophisticated

investment management services. For these reasons, the

larger foundations typically earn higher rates of total

return on investments than do the smaller foundations.

Many of the smaller foundations do not possess the

resources necessary to use sophisticated investment

management techniques and may not have the same

incentives to perpetuate their endowments. They tend to

hold lower risk and lower-return assets than the larger

foundations [201. Moreover, they may operate with more

of a short-term focus in order to distribute large contributions currently, so as to direct their resources to present

concerns and immediate needs [21]. The smaller foundations rely much more on contributions as a source of

revenue compared to other foundations. Given this, many

may act as conduits or "pass-through" organizations,

receiving contributions one year and then distributing

them in the same year or the next. To note, the larger

foundations, which typically benefit from professional

investment management services, realized the greatest

rates of total return on their investments and "paid out"

the smallest percentage of their assets as charitable distributions between 1990 to 1992.

Income Yields and Rates of Total Return

An income yield measures the realized investment income

earned by a foundation on its investment assets. Figure G

shows median "net investment income yields" for

nonoperating foundations for 1988 through 1992. The

median yield is calculated, rather than the mean, since it

minimizes the influence of large outliers in the data, and

therefore, may be a better representation of the typical

foundation. The net investment income, or NII, yield was

calculated by dividing net investment income by the endof-year fair market value of investment assets [22]. Only

nonoperating foundations were analyzed since only they

are subject to the charitable payout requirement, discussed

below. The use of only nonoperating foundations in the

analysis here and in the sections that follow allows for

comparisons of the NII yields, rates of total return, and

payout rates, all discussed below.

During the period from 1988 to 1990 the median NII

yields remained relatively constant between 7.1 and 7.7

percent. The total foundation NII yield declined from 7.1

percent for 1990 to 6.5 percent for 1991 and then to 5.6

percent for 1992. However, an examination of the yields

for the different size groups reveals that the large foundations' median yield increased slightly during both 1991

and 1992. The largest foundations realized a median yield

of 7.1 percent for 1992, up from 6.6 percent for 1990 and

6.8 percent for 199 1. In contrast the median rate of the

small foundations declined somewhat in both years. The

smallest foundations realized an NII yield of 4.2 percent

for 1992, down from a 6.4 percent yield for 1990. The

large foundations typically earn somewhat higher NII

yields than the smaller foundations. Since large foundations, compared to small foundations, rely more on investment income as a source of revenue and may use more

sophisticated investment management techniques, it is not

surprising that they typically realize higher NII yields.

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Figure G

Nonoperating Private Foundation Net Investment Income (Nil) Yields, by Size of Fair Market

Value of Total Assets, 1988-1992

Size of fair market value

of total assets

Median Nil yields (percentages)

1988

1989

'1990

1991

1992

(1)

(2)

(3)

(4)

(5)

7.2

7.7

7.1:

6.5

5.6

6.6

6.8

8.0

6.4

7.3

6.5

4.2

5.6

7.6

8.0

8.2

7.1

6.9

6.6

7.0

7.3

72--.

7.1

All -nonoperating foundations' .........................................

Small foundations

$1 under if 00,000 ...............................................................

$100,000 unde~ $1,000,000 .................................................

Medium foundations

$1,000,000 under $10,000,000............................................

$10,000,000 under $50,000,000............................... ..........

7..2

Large foundations

8.6- 8.1

--$50,000,000 under-$1 00,000,000... ..

................... ......

$100,000,000 or more .........................................................

7.3

'Excludes nonoperating foundations vath assets unreported or equal to zero.

The rate of total return, a measurement of, the total

-capital-apprecia.tion-o,f ffid-endowment-of-a foundationjsa more comprehensive measure of investment performance than the N11 yield. An exami nation of rates of total

return on.assets helps to show. differences among the

differerif sizes of nonop'erating foundations. Figure H

- shows median rates of total return-,on- nofioperating-foun-dation.assets*f6r 1988 to 19 92. A comparison with the

charitable payout rates, discussed below, helps to further.

the understanding of the different sizes of foundations.

Consistently strong rates of total return tend to lead to

,increased long-rungiving power. The rate of total return

6.6

6.8

formula bsed here measures the change in the. value of the

entire-asset-base-.with- considerations foOnflows-andoutflows, of money [231. The formula adjusts for inflation

and measures* the realized income from assets, investments

and otherwise, a's well as the unrealized appreciation or

depreciation in the fair market value of assets.

-- Median-foundation- rates of total-return-on assets for

1991 and 1992 re bounded from the very, low 1990 rates:

For 1990, the total nonoperating foundation median rate

was 2.4 percent. This, increased to 6.7 percent for 1991,

butfell again to, 3.6 percent- for 1992. - An examination of

the different size "groups shows a- similar trend, but at. a

Figure H

Nonoperating Private Foundation Rates of Total Return on Assets, by Size of Fair Market

---Value of Total Asiets,'; ---Size of. fair market value

of total assets

All nonoperating foundations' ......................

Median rates of total return (percentages)

1988

1989

1990

1991

1992

(1)

(2)

(3)

(4).

(5)

n.a.

4.3

2.4

6.7

3. 6~

n.a.

2.0

5.3

2.5

7.6

0.9.

4.2

6.8

7.9

7.7

10.9

10.0

-12.2

5.1

5.2

12.9

14.9

6.3

6.2

Small foundations .

$1 under s.1 00,ooo................. : .........................

$100,000 under $1,000,ODO .............................

Medium foundations

.$1,000,000 under $10,000,000........................

$10,000,000 under $50,000,000 ......................

3.4

2.3

Large foundations

$50,000,000 under $100,000,000 .....................

8.3

$100,000,000 or more ......................... : ..............

9.0

n.a. . Not available.,

'Excludes nonop~rating.foundations %vith assets unreported or equal to zero.

11.6

12.7

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

much different magnitude. Large foundations typically

earn much higher rates of total return than do smaller

foundations. Generally, as the holdings of investment

assets increase; so do the total returns on assets. Median

rates for the largest nonoperating foundations increased

from a rate of only 1.3 percent for 1990 to 14.9 percent

for 1991, the largest median rate of return realized by

foundations in recent years. The year-to-year fluctuations

in the returns of foundations, particularly the larger ones,

tend to coincide with fluctuations in the stock market.

The rate of total return for these foundations then dropped

to 6.2 percent for 1992. The median return of the smallest

nonoperating foundations, in contrast, increased from 1.4

percent for 1990 to 2.5 percent for 1991, only to fall to 0.9

percent for 1992.

Charitable Distribution (or Payout) Requirement

The following discussion of the charitable distribution

requirement and the payout rate excludes operating

foundations since they are not subject to the distribution

requirement. Therefore, all references to foundations in

this section and in the sections that follow are to

nonoperating foundations, unless otherwise indicated. For

reasons of comparability, the operating foundations were

also excluded from median net investment income yields

and rates of total return, discussed previously.

The Federal Government first began to grant taxexempt status to charitable foundations in the early

1900's. Legislative changes and discussions prior to 1969

focused on the regulation of foundation activities. However, beginning with TRA69, private nonoperating foundations were required to meet a charitable giving or ,

11payout requirement." The 1969 legislation provided

guidelines for foundation minimum giving levels. The

original payout requirement, which was based on the

greater of (adjusted) net income or a fixed percentage of

net investment assets, was designed to prevent potential

abusive foundation activity and ensure that a minimum

amount was charitably distributed. Later, the Economic

Recovery Tax Act of 1981 (ERTA) modified the payout

requirement by basing the required amount only on net

investment assets and not on income. Generally, the data

indicate that, after ERTA, large foundations altered their

giving patterns more noticeably than small foundations

[24]. From 1982 to 1992 the large foundations realized

the greatest percentage increase in both assets and distributions. The number of large foundations, not adjusting

for those that moved to the large size group due to an

inflationary inc rease in their assets, also increased at a

much faster rate than the other size groups. (For a more

detailed discussion, see the section, Asset Growth and

Distribution Goals.)

Under the guidelines of ERTA, each year nonoperating

foundations must calculate a "distributable amount,"

which is the minimum amount that the organizations must

distribute for charitable purposes by the end of the next

full reporting year in order to avoid a penalty tax on

undistributed charitable dollars. The distributable amount,

or required payout amount, equals 5 percent of the fair

market value of net investment assets (the "minimum

investment return"), plus or minus certain adjustments,

either allowed or required [251. See distributable (payout)

amount, net investment assets, minimum investment

return, and net adjustments to distributable amount in the

Explanation of Selected Terms section.

Charitable Grants and Other Qualifying Distributions

To fulfill the charitable payout requirement, nonoperating

foundations can apply "qualifying distributions" from the

current year, as well as any carryovers (distributions paid

in excess of the minimum required amount) from the 5

previous years. The requirement can be met in either the

current year or the following year. Qualifying distributions for 1992 for these nonoperating foundations are

comprised primarily of contributions and grants, 88

percent; with smaller proportions for operating and

administrative expenses, 8 percent; "set-asides" for future

charitable distributions, 2 percent; program-related

investments (e.g., loans made to public charities at below

market or zero rates of interest), I percent; and amounts

paid to acquire charitable-use assets (e.g., buildings,

equipment, or supplies), less than I percent.

As mentioned previously, nonoperating foundations

fulfill their exempt purpose in an indirect manner, primarily by making grants to other charitable organizations,

while operating foundations generally expend their income for direct involvement in charitable activities and

programs. Operating foundations are not subject to the

same charitable payout requirement, but they must still

expend a minimum amount each year on direct charitable

.support, usually through conducting their own charitable

programs. These expenditures count as "qualifying

distributions" in meeting the operating foundation requirements. For a discussion of the operating foundation

requirements, see operating foundations and section

4947(a)(1) charitable trusts in the Explanation of Selected

Terms section.

For 1992, nonoperating foundations paid out $11.3

billion in qualifying distributions against a required

payout (or distributable) amount of $7.6 billion. As in

years past, qualifying distributions increased at a relatively constant rate, 17 percent over the period from 19901992. The different size groups increased qualifying

distributions at different rates between these years. The

Private Foundations and Charitable Trusts: A Decade of CharitableGiving and

Growth, with Highlights of 1991 and 1992

small foundations paid out 18 percent more qualifying

distributions for 1992 than for 1990, while the medium

foundations paid out I I percent more and the large f6undations, 22 percent more. When the Wellcome Trust's

qualifying distributions are excluded, the large foundations qualifying distributions increased by 26 percent from

1990 to 1992. Foundation gi ving generally increases

faster than the rate of inflation.

Over 79 percent of foundations with a charitable payout

requirement either met or exceeded the required amount

for 1992 in that same year. Those that did not had until

the end of the following reporting year W fulfill the requirement. While 17 percent of the small foundations did

not meet the 1992 requirement during 1992, thereby

amassing "undistributed income," nearly 46 percent

. of ttie

-large'foundations chbs~e-to- wait'6nti I- the followirfg-report::

ing year to distribUte their required amount for 1992 [26].

Given that the annual payout amount is not calculated

until the end of t he reporting year and that it is based on

the monthly average

of investment assets, many founda-tions C'hoose.t*o-take-advantage-of the_l~year_tax- and-penalty-free "grace period" for making required distributions. This lag time gives them an opportunity to consider

their investment returns, payout rates, and contributions

received, among other factors, when preparing their

grantmaking budgets for the, following year or-years.--In contrast, while some foundations chose to wait until

1993 to disperse 1992 qualifying distributions, many gave

in excess of the 1992 required amount during the 1992

Reporting Year. Small foundations typically distribute

much more than their required amount. For 1992, the

small foundations as- a group distributed an amount of

qualifying distributions that was over 325 percent more

than their combined required distributable amount. In

contrast, the large. foundations for 1992 distributed an

amount of qualifying distributions that was 18 percent

more than their combined required distributable amount.

Contributions, gifts, and grants distributed by

nonoperating foundations equaled $10.7 billion for 1992.

According to the Foundation Center's Foundation Giving,

thelargest proportions of total foundation grants for 1992

went to the areas of education, health, human services,

and arts and culture [27]. The contributions and grants

given by foundations accounted for less than one-tenth of

total philanthropic giving, with the vast majority of giving

coming from individual gifts [28].

- Payout- Rates

Since the small foundations tend to distribute more

charitable dollars relative to the required amount, they

also tend to have higher charitable payout rates. Figure I

displays median foundation payout rates by size of

loundation for -1988 throula h 19 92. To calculate the

payout rate, the amount of (adjusted) qualifying distributions was divided by the amount of the monthly average

of net'investment assets [29]. The 1991 and 1992 median

payout rates declined slightly over past years. Foundation

payout -rates are genera.11v ex,tremely steady,~ but from

1990 to 1992.: they declined by half of a percentage point

for the median foundation, from 7.0 percent for 1990 to

6.5 percent for 1992. The median payout rates for 1991'

and 1992 for the smallest foundations, 12.0 percent and

11.7 percent, respectively, increased-over the 1990 payout

rate, 10.6 percent. In contrast, the median payout, rate of

Figure I

Nonoperating Private.Foundation Payout Rates, by Size of Fair Market Value of Total

Assets; 1988-1992

Median payout rates (percentages)

Size of fair market value

of total assets

All nonoperating foundations' ............... ; ...........

1988 ,

1989

1990

1991

(1)

(2)

'(3).

7.2.

7.1

(4)

6 7'

10.7

6.6

10.9

6.8

10.6

6.7

12.0

6.3

5.9

5.5.

5.8

5.4

5.8

5.4

5.6

6.2

5.3,

5.3

5.4

5.0

5.4

5.0

Small foundabons

$1:under $100,006 ................................................

$100,000 under $1,000,000..................................

Medium foundations

$1,000,000 under $10,000,000 .............................

$10,000,000 under $50,000,000 ...........................

Large foundations

$50,000,000 under $100,000,000 ....................

. - ...; ...

-$100,000,000 or more................ .....................

Includes'nonoperating foundations with assets unreported or equal to zero, which are not shown separately.

78.

.5.5

5.3

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

the largest foundations remained very constant and

equaled the required 5.0 percent for 1992. Overall, Figure

I shows that foundation payout rates for all size groups

remained relatively constant over the entire 5-year period.

The payout rates for the large and medium-sized foundations were very close to the required 5 percent. Those

of the smaller foundations, which tend to emphasize

current, rather than future, charitable giving, were much

higher than the required rate. The smaller foundations

seem to focus more on distributing charitable dollars

currently, rather than on long-term endowment growth.

The larger foundations, on the other hand, tend to reinvest

a greater portion of their return on investments, perhaps to

ensure endowment growth for future charitable giving.

The trend of the large foundations to give consistently at a

payout rate of 5.0 percent seems to demonstrate their use

of long-range planning in setting grantmaking budgets.

Salamon, in a survey of the payout policies of foundations, found that smaller foundations, as a group, tend to

use their investment yields to help to structure their

charitable payout rates, while the larger foundations, as a

group, tend to structure their investment decisions in order

to reduce the effect of the payout requirement on their

assets [30].

Asset Growth and Distribution Goals

Over the decade from 1982 to 1992, total nonoperating

foundation assets increased in real terms by 115 percent,

This growth in nonoperating foundation assets is explained both by the growth in the value of assets and by

the 52 percent increase in the number of foundations. The

increasing assets helped to fund a real increase of 61

percent in the amount of qualifying charitable distributions made by foundations during that decade. The

overall growth in foundation assets and charitable

distributions exceeds the 32 percent real growth rate of the

Gross Domestic Product from 1982 to 1992 [31].

The growing assets of foundations during the 1982 to

1992 decade helped to increase total grants over the same

period. Foundation statistics suggest that a growing

endowment may help to fund charitable giving at the same

or at an increased amount in the future. During much of

the 1980's and into the early 1990's, many foundations

benefited from favorable stock market conditions that

allowed them to realize rates of return and income yields

high enough to easily meet the 5-percent charitable payout

requirement. As foundation assets increased, so did the

required distributable amounts, thereby leading to an

increased amount of charitable distributions made by

many foundations.

Large foundations historically have realized greater

rates of total return on assets than have small foundations.

The large foundations typically rely heavily on the growth

of their endowments to fund charitable programs and,

therefore, have distributed dollars at consistent rates and

in such a way as to further long-run asset growth. From

1982 to 1992, the significant real asset growth of the large

foundations allowed them to increase charitable distributions at a faster rate than either of the other size groups,

despite paying out charitable dollars at rates hovering at

the minimum 5.0 percent.

Figure J displays revenue, assets, and qualifying charitable distributions for the different size groups of foundations for the period 1982 to 1992. During that 10-year

period, the large foundations increased real assets by 164

Figure J

Nonoperating Private Foundations: Changes

in Number of Foundations and Real Growth

in Revenue, Assets, and Charitable Distributions, by Size of Foundation, 1982-1992

[Money amounts are in billions of 1987 dollars.)

Percentage

Item

Total number of nonoperating

foundations' ....................................

Total revenue ................................

Total assetS2.................................

Total charitable distributionS3 ........

Number of small nonoperating

foundations ...................................

Total revenue................................

Total assets2 ................................

Total charitable distributionS3 .......

Number of medium nonoperating

found tions.. ..................................

Totalarevenue................................

Total assetS2 .................................

Total charitable distributionS3.......

Number of larg? nonoperating

foundations ....................................

Total revenue ................................

Total assetS2 .................................

Total charitable distributionS3........

1982

1992

increase,

1982-1992

(1)

(2)

(3)

25,363

9.6

67.1

5.8

38,620

17.7

144.3

9.3

115

19,752

1.0

4.1

27,824

1.3

4.9

1.0

(1)

3,948

3.9

27.1

2.6

9,331

6.5

44.5

3.5

136

148

4.7

35.9

2.1 1

438

9.8

94.9

4.8 1

196

110

164

128

I The total number of foundations includes 1,027 foundations for 1992 and 1,515

foundations for 1982 that had assets unreported or equal to zero. These

foundations are not shown separately.

2 Total assets represent 'fair market value of total assets" from Form 990-PF.

3 Total charitable distributions represent 'qualifying distributions" from

Form990-PF.

4 Small

foundations are those holding from $1 to less than $1,000,000 in fair

market value

total assets.

Medium foundations

are those holding from $1,000,000 to less than

$50,000,000 in fair market value of total assets.

I Large foundations are those holding $50,000,000 or more in fair market value

of total assets.

Less than 0.5 percent.

NOTE: Constant dollar arrounts were calculated using the Gross Domestic

Product (GDP) price deflator.

Private Foundations and Charitable Trusts: A Decade of Charitable -Giving and

Growth, with Highlights of 1991 and 1992

percent, while increasing charitable distributions by 128

percent. In contrast, the small foundations, which7typically pay out charitable dollars at more generous rates

than the large foundations but.realize lower rates of total

return and income yields, increased real assets and distri-,

butions by 21 percent and less than one-half of I percent,

respectively. It is-important to note, however, that the

number of large foundations increased at a rate nearly 5

times that of the small foundations during this decade.

The number of large foundations increased by 290, or 196

percent, while the number of small foundations increased

by over 8,000, or 41 percent.

Section 4947(a)(1) Nonexempt Charitable Trusts

Overview of Revenue, Assets, and Grants Paid

Charitable- tru sts~ddscribed in-liternal Revenue-Code,

section 4947(a)(1) are organizations Which have exc'lusively charitable interests but Which are not exempt from

'federal income tax as Section 501 (c)(3) organizations are.

Charitable trusts that are not publicly supported are. :,

-subjeci-to-tfie same requi rements as foundations, inclu ding

the exc.ise tax provisions and the charitable payout

requirement. Charitable trusts are typically supported and

controlled by' an individual or family andlike f6undations, they file the Form .990-PF. The 49~7(a)(I)

charitable trusts that file the Form 990-PF, hereafter

referred to as "charitable trusts" are unlike'-foundations in

that they are not required to be formally recognized as taxexempt organizations. by IRS, Most were originally.

formed as 4947(a)(2)'split-interiest trusts that at one time

had one or more noncharitable beneficiaries. Addition.

ally, the 4947(a)(1) trusts must pay an annual tax on. their

income.(usually from investments).that is not distributed

. for 'charitable purposes. ' Trusts must report such itico -me

and tax (under Subtitle A of the IR.Q on Form 1041, U.S.

Fiducia*ry Income Tax Return. Statistics for charitable

trusts contained in this article are based. on Forms 990-PF,

but not on -Forms 104 f.

Two other types of section 4947(a)(1) charitable *trusts

file different returns with the Internal Revenue Service

and are not covered in this article. First, certain charitable

trusts, those that receive the majority of their support from,

public, rather than private, sources, file the Form 990.

These trusts typically operate in'con.nec'tion' with, and

provide support to, one' or more public , charities. Second,

split-interest trusts, which have both charitable and.

noncharitable beneficiaries, file.the Form 5227, SplitL

Interest Trust Information Return.

Over 2,900 section 4947(a)(1) trusts filed Forms 9902

PF for 1992. For thisyear, charitable trusts represented, 2

percent or less of the total assets held, total revenue

earned, and total grants distributed by all of the Form.990-

PF filers. The number of Form.990-PF filers classified as

trusts increased by' 12 percent from 1990. Nearly 99

percent of these organizations"were classified as

nonope'rating trusts. The vast majority of trusts, 92 per~

cent, made, charitable grants for'1992. This compares to

83 percent, for pfivate foundations'. From 1990 to 1992,

total trust revenues increased at a faster rate than the

revenues of foundations, ~9 percent.(compared to 21

percent), from $269.7 million to $346.8~million. Large

increases in both net gains from sales of assets,,219

percent, and contributions received, 63 percent, help

explain the overall increase in revenues. Total trust assets,

eqqal.to $3. 1. billion for 1992, also increased;from 1990 to

092, but a smaller'percentage increase than the assets of

foundations, 13 percent for tru~t assets compared to,17

-percent-for foundation assets- -Increases-of-25-percent in---.-investments in corporate stock and 17 percent in invest-,

ments in corporate bonds help explain the overall increase

in trust.assets. Despite large increases in both assets and

revenues, the amount of.grants distributed.by tr.ust,s in- .

creased-by-Qnly-2-pe,rcent-hetwe-e,n-I 990 -and 1-992-to

$154.6 million. Figure K.shows total amount and percentage changes for various charitable trust revenue, asset, and

expense items for the period 1990 to 1992:

'The following classifications apply, unless otherwise

indi_cat d, to the discussion 6f c'haritable trusts through ut

the remainder of this article: "small charitable trusts"

refers to the group holding less than $ I. million in assets

(excluding trusts that either do not report assets or that

report assets equal to zero); "medium-siize dharitable

trusts" refers to the'group, holding from $ 1: million to lesg

than $10 million in assets; and" "large charitable

trusts'

refers to the group holding $,10 million or more in assets.

It'sho Id.be nofed that the medium and ldrge-'siz'ed trusts

are much smaller on average than.the medibm and. largesized foundations.

Sources of Charitable-Trust Revenue

With large increases in net gains from sales of assets and

in the amount of contributions~ received'during- the 1990 to

1992 period, the -composition oftrust rev~nue for 1992

changed somewhat from 1990. Trusts cam the majority ~of

their revenue from net gain'from th.e sales of assets, 36

percent, and dividends and. interest. from securities,- 35.

percent. A smaller proportion.of totaf r~eve'nues,'18

,percent, come from cdntributi ons received., Compared to

foundations, which received over a third of their revenue

from contributions, trusts relied much less on contributions as a'.source of revenue.dnd much~more on investment

income. The overall trust revenue compositioil most

resembles-the large foundation revenue composition.

Along with increases-in overall revenue, charitable trust

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Figure K

IRIC Section 4947(a)(1) Charitable Trusts: Selected Financial Items, 1990-1992

[Money amounts are in rnillions of dollars.]

Percentage

Item

1990

1991

1992

increase,

1990-1992

(1)

(2)

(3)

(4)

Total assets (fair market value) .......................................................................

Investments, total ................................................................................................

Savings and temporary cash investments........................................................

Investments in securities, total .........................................................................

U.S. and State Government obligations.........................................................

Corporate stock..............................................................................................

Corporate bonds .............................................................................................

Other investments I ..........................................................................................

2,772.4

2,475.6

225.8

1,876.5

449.0

1,101.4

326.1

343.3

2,991.0

2,714.4

212.5

2,023.8

415.1

1,287.0

321.8

478.1

3130.0

2:831.3

193.7

2,174.5

413.9

1,379.2

381.5

463.1

12.9

14.4

(14.2)

15.9

(7.8)

25.2

17.0

34.9

Total revenue......................................................................................................

Contributions, gifts, and grants received ............................................................

Net gain (or loss) from sales of assets...............................................................

Dividends and interest from securities ................................................................

269.7

38.9

39.5

120.0

280.4

39.3

73.7

117.0

346.8

63.3

126.1

120.1

28.6

62.7

219.2

0.1

Total expenses ....................................................................................................

Contributions, gifts, and grants paid ...................................................................

192.2

151.8

197.0

158.2

191.2

154.6

(0.5)

1.8

Excess of revenue (less loss) over expenses..................................................

77.5

83.3

155.6

100.8

1 Sum of "Investments in land, buildings, and equipment (less accumulated depreciation)," "Investments in mortgage loans,' and "Other investments," as reported on the

Form 990-PF. "Other investments" includes items such as advances; certificates of investment; and investments in art, coins, gold, and gerns.

net investment income, on which the excise tax is based,

increased by 27 percent from 1990 to 1992, to $252.8

million, while the amount of excise tax reported increased

by 36 percent, to $4.3 million.

Less than I percent of charitable trusts reported "unrelated business income" for 1992, totalling only $117,200,

or less than one-tenth of one percentage point of the total

revenue reported on the "Analysis of Income Producing

Activities" schedule of the Form 990-PF. Like foundations, the majority of trust revenue reported on the aforementioned schedule was reported as excluded income, 87

percent, with the remaining amount reported as income

that was (directly) related to the trust's charitable purpose,

13 percent [32]. Like the foundations, the operating trusts,

compared to the nonoperating trusts, tend to report a much

higher proportion of income on this schedule as exempt

function income.

Charitable Trust Assets and Investments

Like foundations, charitable trusts hold the majority of

their assets as investments, 90 percent, which is somewhat

less than the proportion of investment assets held by

foundations. Over three-quarters of trust investment

assets, or 77 percent, were held in the form of securities.

The amount of investments in securities increased by 16

percent from 1990 to 1992, to $2.2 billion. This increase

was greater than the 13 percent overall increase in trust

assets over this period. Figure L depicts the composition

of investment assets for all trusts and for each of the

different size groups. Investment assets include savings

and temporary cash investments; government obligations;

corporate stock; corporate bonds; land, buildings, and

equipment; mortgage loans; and "other" investments.

Over three-quarters of all trust investment assets were

held as either government obligations, corporate stock, or

corporate bonds. Compared to foundations, trusts held a

somewhat smaller proportion of investment assets in

corporate stock, 49 percent, and government obligations,

15 percent, and a somewhat larger proportion in corporate

bonds, 13 percent. The remainder of investment assets

was comprised of savings and short-term cash investments, 7 percent; and land, buildings, equipment,

mortgage loans, and other investments, 16 percent. Like

foundations, as trusts grow in size they tend to hold

somewhat more of their investment portfolio as investments in securities, particularly corporate stock.

Charitable Trust Income Yields and Rates of Total Return

As in the case of foundations, the median net investment

income (NII) yields and rates of total return on assets were

calculated only for nonoperating trusts. Figure M displays

the median NII yields for the different sizes of charitable

trusts for 1989 through 1992. The trusts realized somewhat higher NII yields for 1991 and 1992 compared to

foundations. For instance, for 1992 the median trust

realized a 7.5 percent NII yield, while the median foundation realized only a 5.6 percent yield. For all of the years

displayed in Figure M, the small trusts realized higher NII

yields than either the medium or large-sized trusts. This

trend is the opposite of that of foundations. Compared to

Private Foundations and Charitable Trusts: A Decade of Charitable Giving. and

Growth, with Highlights of 1991 and 1992

Figure L

Composition of Charitable Trust Investment Assets,'by Size of7rust, 1992

Total'

-- Large-Charitable Trusts

Medium Chafl~=

bl-Trusts-

Sihall-Charitable'Trusts

Corporate stock'

El Government obligations

I I

Corporate bonds

Other investments

Savings and temporary cash

n-men

Includes chaAtable trusts with assets unreported

or equal to zero, which are not shown separately.

Small charitable trusts are those holding from $1 to less than $1,000,000 in fair market value of total assets.

.3 lVedum charitable trusts are those holding from $1,000,000 to less than $10,000,000 In faii market value of total assets.

4 Large charitable trusts are those holding $10,000.DDO or more in fair market value of total assets.

'Sum of'Investments In Iand, buildings. and equipment (less accumulated depreciation).' "Investments in mortgage loans,* and 'Other investments,'

investments' includes iterns such as advances: certificates of investment: and investments in art, coins, gold, and gerqs.

NOTE: Percentages may not add to 100% because of rounding.

foundations, there is little difference among the different

trust size groups in terms of the extent towhich they rely

on investment.income as a,source of revenue.

Figure N displays the median rates of total return on

assets for the different sizes of trusts for the years, 1990 to

1992. For both 1991 and 1992, the median trustrate of

total return exceeded the median foundation rate of total

as reponed on the Form 990-PF.

"Other

return, 10.5 percent to 6.7 percent for 1991 and, 6.4 percent

to 5.6 percent for 1992. In ten.Ti.s.of both the NII yield and

rate of total return data', it seem s that the small trusts outperformed their small foundation counterparts. The large trusts,

however,. did not outperform foundations of the same size

for either year. Unlike foundations" few notable differences

existed arriong the different size groups of.trusts.

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 199 1 and 1992

Figure M

Nonoperating Charitable Trust Net Investment

Income (Nil) Yields, by Size of Fair Market

Value of Total Assets, 1989-1992

Median Nil yields

Size of fair market value

of total assets

(percentages)

All nonoperating trusts......................................

Small trusts

$1 under $100,000 ................................................

$100,000 under $1,000,000..................................

Medium and large trusts

$1,000,000 under $10,000,000 ................... . ......

$10,000,000 or more................................... . .........

1989

1990

(1)

(2)

8.9

7.4

8.5

9.3

7.3

7.5

8 2

8.2

7.2

6.6

Median Nil yields

Size of fair market value

of total assets

(percen tages)-conti nued

1991

All nonoperating trusts......................................

Small trusts

$1 under $100,000 ................................................

$100,000 under $1,000,000..................................

Medium and large trusts

$1,000,000 under $10,000,000.............................

$10.OW,000 or more ............................................

1992

(3)

(4)

7.3

7.5

7.3

7.4

7.28.0

7.0

6.9

7.1

or 21 percent more than the required distributable amount.

As in the case of foundations, the discussion of the

distribution requirement and payout rates excludes

operating trusts because they are not subject to the same

payout requirements as nonoperating trusts.

The small trusts as a group distributed 28 percent more

for charitable purposes than the required amount, while

the medium trusts distributed 10 percent more than the

required amount and the large foundations 27 percent

more. Much less variation in the payout rate is evident

among the different size groups of trusts, as compared

with foundations. Approximately 72 percent of trusts

either met or exceeded the required payout amount for

1992. This is somewhat less than the 79 percent of foundations that met or exceeded the required payout amount

in that same year. The remaining 28 percent of trusts

amassed undistributed income and had until the end of the

following reporting year to fulfill the requirement.

Figure 0 presents median payout rates for charitable

trdsts for 1989 to 1992. The median payout rate for all

trusts for 1992 was 5.0 percent, which,was below the 6.5

percent median payout rate for foundations for that same

year. While the smallest foundations paid out distributions at a rate of 11.7 percent for 1992, trusts of the same

'Excludes nonoperating trusts with assets unreported or equal to zero.

Figure 0

Nonoperating Charitable Trust Payout Rates,

by Size of Fair Market Value of Total Assets,

1989-1992

Figure N

Nonoperating Charitable Trust Rates of

Total Return on Assets, by Size of Fair

Market Value of Total Assets, 1990-1992

Size of fair market value

of total assets

retu

1990

(percent

1991

1992

(percc

tages)

1989

1990

(1)

(2)

All nonoperating trusts' .........................

5.9

5.8

6.4

5.9

6.0

5.7

5:8

5.6

5.5

Median rates of total

Size of fair market value

of total assets

Median payout rates

(2)

(3)

All nonoperating trusts' ....................

3. 4

10 S

Small trusts

$1 under $100,000 ....................................

$100,000 under $1,000,000 ......................

Small trusts

$1 under $100,000 ..............................

$100,000 under $1,000,000................

3.2

3.5

10.3

10.5

5.7

6.4

Medium and large trusts

$1,000,000 under $10,000,000 .

$10,000,000 or more ....................... .......

Medium and large trusts

$ 1,000,000 under $10,000,000 ...........

$10,000,000 or more.......................... :.

3.5

10.1

11.1

6.5

4.7

Size of fair market value

of total assets

Median pdyout rates

'Excludes nonoperating trusts with assets unreported or equal to zero.

Charitable Trust Distributions and Payout Rates

The section 4947(a)(1) charitable trusts distributed $154.6

million as contributions, gifts, and grants paid for 1992, an

increase of only 2 percent over 1990. The grants distributed by the trusts represented 93 percent of the total

amount of qualifying distributions. The nonoperating

trusts paid out $163.8 million in qualifying distributions

(percentages)continued

1991

1992

(3)

(4)

All nonoperating trusts' .........................

5.5

5.0

Small trusts

$1 under $100,000 ....................................

$100,000 under $1,000,000......................

6.0

5.5

5.0

Medium and large trusts

$1,000,000 under $10,000,000 .................

$10,000,000 or more........................ ........

5.1

5.0

I Includes nonoperating trusts with assets unreported or equal to zero, which

are not shown separately.

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with. Highlights of 1991 and 1992

size paid out distributions at a rate of only 5.5 percent.-'

The charitable trusts generally distributed charitable

dollars at a lower rate than didfoundations.- Aside from

the smallest trusts, those holding assets from $1 to less

than $100,000, trusts paid out charitable dollars at a

median rate equal to the required -5.0 percent for 1992;

which is comparable to the payout rate of the large f9undations.

Summary

Pflvate Foundations

Over 42,4.00,private foundations, representing over onequarter of all Internal ReVehue Code 501(c)(3) nonprofit

charitable organizations that filed information returns with

the-Internal-Re-venu-e-,Seivici~, distributed oXqr

billion in charitable contributions and.grants for 1992..

Foundations increased the amount of contributions and.

grants given by 23 percent from 1990 to 1992. During

this same time period, total foundation revenues an&assets

both realized relatively strong increases of 21 percentand

17-pe-rcen-t, _

res`p&ctively-.

Total foundation revenue increased to $23.6 billion

from 1990 to 1992. All of the gain occurred from 1990 to

199 1, as foundations actually realized a 4, percent loss in

revenues from 1991 to 1992. A significant two-year

'in-crease-o-f 76-p-'erce-tit-ifn ni-e-t-g-ains7from sales-of assets.-and-.a smaller increase of 16 *percent in the amount of co.ntributions received by foundatio ns, help to explain the increased total revenues from 1990 to 1992. Overall trends

by size of foundation. continue to show that as the size of a

foundation increases, the proportion of revenue from

contributions declines, while the proportion from net

investment income rises.

Like total revenue, net investment income, on which

the excis& tax is b,ased,'increalsed by 19 percent from 1990

to 1992, to $14.3 billion. Foundations reported a total of

$194.2 million for the excise tax paid on investment

in Orne, an increase of 25 percent compared to the tax

paid for 19.90..

Total foundation assets grew to-$192.2-billi6h.for 1992;

an increase of 17 percent from 1990. Nearly allo.f the

,gains were'realized for the 1990 to 1991 period, As foundation assets only increased by I percent- from 1991 to

-Foundations held the majority of their assets as -192.

investments, 94 percent, with investments in.securiti.es,

alone, comprising 80 percent of total investment assets.

Foundations held well'over half of their investment assets,

$95.2 billion,. as investments in corporate stock; followed .

by investments in Government obligation§, 17 percent;

-As-the

and ifivestmenfsih corporate -bonds . 10 percent.

size of a foundation increased, the proportio n of 'assets

held as corporate stock tended to increase, while the

proportion held As savingsand temporary cash invest-,

ments tended to.decrease.

Along with the increases ih assets, particularly. from

1990 to 1991, foundations, especia.11y the large~ foundations, realized Very high rates of t~tal return On assets for

1991. For this year, the median foundation achieved a

return of 6.7. percent,.'while the largest, foundations

achieved a median return of 14.9 percent. For 1992, along

with the srhall gains in total foundation as~ets, median'

foindation rates of total returns were more moderate. The

median found.ation,achiev8d a return of 3.6.percent for

1992, w' hile, the. largest foundations Achieved a median

return.of 6.2 percent. The large foundations typ ically

achieve higher rates of return than their small counterpAq~. Asin

- past years,'this was also tru e for.b'th'1991

and 1992. For instance, for I §41,T1w ~ilest foundationsrealized.a rate,of total return of only 2.5 percent, compared *to the, 14.19 percent median, return for the largest

foundations.'- In terms of the income yield on, net invest.

ment as sets, or the."het investment. income'(NII) yield," ..

-the -median-foundlation-realized4

slightly-lower yield-for-,

199

and

1992,,6.5

'percent

arid

5.6 percent,, respecboth.

tively, comparedtolhe

7. i. percent median yield for 1990.

Foundations t ypically rely largely on asset growth,

earned income on investments,, and contributions received

to- support their charitable-giving-.' Charitable di§tributions____ continued to. increase at a relatively consistent rate for

i991 and 1992 as .foundations continued to make contri'butions to areas su~h as edti6ati6fi, health, human *ser~,i6es,

community development,-th.e arts and humanities,- and the

environment. In order to fulfill. the charitable, payout

requirement, nonoperating foundations paid.out $113

billion in qualifying distributions against a required,

payout'amount of $7.6 billion: The arhouilt of-,qualifying

distributions made by the onoperating foundations

increased by 17 percent from 1990 to 1992. 'However,-as

a measure of rate of charitable giving, the median charitable payout rat.e decreased by half a percentage point

from 1990 to 1992, from 7.0.pp'r~Pnt to 6.5 percent.. As in

past years, the.-smailler foundations tended to pay out

charitable dollars at higher rates than the larger.foundations. . The smallest, foundations distributed 6aritabie

dollars at a median payo6t r.ate. of .1 2.0 percent for 199 1

and.1 1.3 percent for 1991 In contrast, the largest foundations distributed charitable dollars at a median payout rate

of only 5. 1 percent for 199 1, and 5.0'percent for 1.991.,-,

The rate 4 5.0 percent was~ equal to the minimum required

payout rate.

. During the d~caae fr6m 198~ to 1992, foundation assets .

and charitable grants, increased in real terms by 1 12

percent -and 71 percent, respectively. Real foundation

revenue grew by 79. percent during the same decade, with

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

steady annual increases from 1982 to 1986 and fluctuating

year-to-year changes from 1986 to 1992. The overall

growth in foundation assets and revenues markedly

exceeds the'32 percent growth of the Gross Domestic

Product from 1982 to 1992 [33].

Section 4947(a)(1) Charitable Trusts

Over 2,900 rionexempt charitable trusts defined under

Internal Revenue Code 4947(a)(1) represented 6 percent

of the total number of Form 990-PF filers for 1992, which

includes both private foundations and 4947(a)(1) charitable trusts. Charitable trusts are subject to the same

charitable distribution requirement as foundations and

operate in a relatively similar manner. For 1992, these

charitable trusts represented less than 2 percent of the total

assets held, total revenue earned, and total grants distributed of all of the Form 990-PF filers. Charitable trusts

distributed $154.6 million in charitable contributions and

grants for 1992 an increase of only 2 percent from 1990

to 1991. During' this same period, trusts realized increases

in both revenues and assets, 29 percent and 13 percent,

respectively. Total trust revenues increased to $346.8

million for 1992. Large increases in both net gains from

sales of assets, 2 10 percent, and contributions received, 63

percent, help explain the overall increase in revenues.

Compared to foundations, trusts relied much less on

contributions as a source of revenue and, instead, relied

more on investment income. In this respect, they behaved

most like the large foundations.

Total charitable trust assets grew to $3.1 billion for

1992, an increase of 13 percent over 1990. Two-year

increases of 25 percent in investments in corporate stock

and l7percent in investments in corporate bonds help

explain the overall increase in trust assets. Like foundations, trusts held the majority of their assets as investments, 90 percent, with investments in securities alone

comprising 77 percent of total investment assets.

For both 1991 and 1992, the median trust rate of total

return exceeded the median foundation rate of total return.

For 1992, the median trust earned a total return on assets

of 6.4 percent, and for 1991, 10.5 percent. The trusts

realized somewhat higher NII yields for 1991 and 1992,

compared to foundations. For 1992, the median trust

realized a 7.5 percent NII yield and for 1991, 7.3 percent.

For both years the small trusts realized higher NII yields

than either the medium or large-sized trusts. Unlike

foundations, there were few notable differences in NII

yields and rates of total return on assets among the different size groups of trusts.

In terms of charitable giving, in order to fulfill the

charitable payout requirement, the nonoperating trusts

pAid out $163.8 million in total qualifying distributions

against a required distributable amount of $134.9 million.

The amount of qualifying distributions made by the

nonoperating trusts increased by less than 2 percent from

1990 to 1992. The median payout rate for all trusts was

5.0 percent for 1992, which was below the 6.5 percent

median payout rate for foundations. There was little

variation in the rate at which trusts of different sizes paid

out charitable dollars. For instance, for 1992, the smallest

trusts paid out distributions at a rate of 5.5 percent, while

the largest trusts paid out distributions at a rate equal to

the required 5.0 percent.

Data Sources and Limitations

The statistics in this article are based on a sample of

Reporting Years 1991 and 1992 Forms 990-PF that were

filed with the IRS. For 1992, for example, IRS required

organizations having accounting periods beginning in

1992 (and therefore ending between December 1992 and

November 1993) to file a Form 990-PF. Some part-year

returns were included in the samples for organizations that

changed their accounting periods, or filed initial or final

returns. More than 61 percent of the foundations in the

sample had accounting periods covering Calendar Year

1992 or, in some cases, part-year periods that ended in

December 1992. The same was true for Reporting Year

199 1. For charitable trusts, 58 percent filed calendar year

returns for 1992 and over 55 percent did so for 1991. The

1992 and 1991 samples were stratified based on both the

size of book value of total assets and the type of organization (either a foundation or a 4947(a)(1) charitable trust)

[341.

Foundation returns were selected at rates that ranged

from approximately 5 percent (for the more numerous but

very small asset-size returns) to 100 percent (for the

relatively few returns with large amounts of assets).

Charitable trust returns were selected at rates that ranged

from 31 to 100 percent. The 5,761 returns in the 1992

sample (4,929 foundations and 832 trusts) were drawn

from an estimated population of 42,428 foundations and

2,932 trusts. Similarly, 5,574 returns in the 1991 sample

(4,381 foundations and 1,193 trusts) were drawn from an

estimated population of 41,348 foundations and 2,662

trusts. The magnitude of sampling error, measured by

coefficients of variation for selected items for Reporting

Year 1992 is shown in Figure P.

The samples were designed to provide reliable estimates of total assets and total revenue. For both 1991 and

1992, to accomplish this, 100 percent of foundation

returns with book value of assets of $10 million or more

and 100 percent of charitable trust returns with book value

of assets of $1 million or more were included in the

sample, since these were the returns that, in dollar terms,

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and.

Growth, with Highlights of 1991 and 1992

Figure P

Coefficients of Variation for Selected Items, by

Type of Organization, 1992

Item

Private

foundations

Charitable

trusts

Total assets (fair market value)......................

Total revenue ..................................................

Total expenses ...............................................

Contributions~ gifts, and

grants paid ......................... ............. ............

0.39.

1.87

2.06

0.57

1.24

2.06

2.25

2.61

accounted for the majority of activity. Efforts were made,

to verify that organizations -selected as foundations were,

in fact, foundations*; and that oTgahizations selected as

trusts were, in fact, trusts. The relatively small number of

foundafions in the sample that were incorrectly selected.as

trust s,were ultimately re-classified as foundations'(for the

statistics)

usin9: identification codes from the IRS Exempt

Organization Master File. However, the weights used for

these organizations were based on the original sample

selection-classification., The-~e-§a-iiie--Fn&th-o-d§-~vdr-e-us-ed-~~

for. the trusts that were incorrectly sampled as foundations.

Approximately 34 percent of all foundations, including

those reclassified as foundations, reported $10 million or

more in book value of total assets for. 1992. These foun-ddti6tfsFre15bftdd 80~pCi~cent of-thd -Cstimated-book-val(lt of

assets of all foundations. While these foundations, were

sele.cted.at a rate of 100 percent, the remaining foundation'

population was *,rdndomly selected for the sample at

various rates of less than 100 percent depending.on asset

size: 4.9 percent for returns with assets zero, unreported,

or less than $100,000; 5.9 percent for returns with assets.of $ 100,000 to, less than $4 million; and .14.4 perdent for

returns with assets of $1 . million to less than $10 million.

Approximately 37 percent of all 4947(a)(1) charitable

trusts in the sample reported $1 million or more in book

value of 4otal assets, for 199 1. These trusts reported 79.

percent

' of the book value of assets of all trusts. While

these trusts were selected at a rate'of 10.0. percent, the,

remaining trust populati on was randomly selected for the

sample at various rates of less than 100 percent depending

on asset size: 3 1. 1 percent for returns. with assets zero, ,

unreported, or less than $100,600; and 27.9 percent for

returns with assets of $100,000,to less than $1 million.

Samplirig, rate's for both foundations andtrusts Were

similar for 1991 data.

The popplat ion from which the 19,91'and 1992 samples

of Form 990-PF records posted to.'.,

were drawn consisted

.the IRS Business Master File during 1991 and 1992 for.

the 1991 sample and 'during 1992-and--1993 for the 1992

sample. Some of the records designated were for organi-

zations that were deemed inactive or terminated. Inactive

and terminated organizations are not reflected in the

estimates. For the small number of activ large foundations whose returns for the 1991 and 1992 Reporting

Years were not yet filed or were otherwise -unavailable for

the statistics (approximately 5 returns in each year), data.

were estimated using other returns having, similar chaiacteristics. For the unavailable active trust returns, which 1

were smaller in size than those, for foundations*, pnor-year

data of those trusts were in most instances used as a

substitute, approximately 5 returns in each year.

The data presented were obtained from returns as

originally filed 'with IRS. The.data were subjdct-to comprehensive testing and correction procedures in order to

ensure statisticat reliability and validity. - In most cases,

-changes-made-to-the original-return-as a result. of-ad-miriistrative processing, audit proceduresi or a tax payer-amend7

ment were.not, incorporated into the data base. A general

discussion.of the reliability of estimates'based on'samples,

methods for evaluating both the magnitude of sampling

and non-sampling error, and the precisi6wof sample'

-esiin-lates-can b-e f-o-und'in the-ie_-ner~

al Appe-n~

dix~to this

report.

Explanatioi.i of Selected Terms

The following explanations describe terms as they applied,

-to-both-priy4te foundations-and-chari table- trusts for-1991

'and, 1992,' Unless 6therwisle indicated, all,references to

foundations also' apply to trusts

Adjusted Net Income..--In general, this was the amount

by Which a private foundation's gross income exceeded.,

the expenses associated with earning the income.

In.

cluded were all amounts derived fr6m'or co nnected withproperty held by the foundation, such

as net'short-term

capi6l gain, ordina'ry,investment income (dividends,

interes.i, rents, and royalties), and income from amounts.

set aside for future charitable use, from all charitable

functions,:or from unrelated trade or business activities.

Excluded were contributions received and long-term

capital gains. -Long-term capital,losses could be reported

as "other expenses" for the calculation of adju.sted,net

income. This item is primarily used to determine if an

operating foundation met the required "income test.',' This

test demonstrates if the,operating. foundation spent the

~a'st rl~pjority of its investment income on t he direct, active

conduct of tax-exempt charitable activities. See opFrating

foundation-and section 4947(a)(I)..charitable trusts in this

section. This item was reported on' Form 990-PF,, Part J,

line 27c, column (c).

Assets Zero or Unreported --Included in this asset size

category. were: (1) final returns of-liquidating or dissolvingfoundatio'ns that had disposed of all assets; (2)'returns

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and.

Growth, with Highlights of 1991 and 1992

of those foundations reporting zero end-of-year assets that

had apparently distributed (or disposed of) all assets and

income received during the year; and (3) returns of those

foundations that did not report assets. A liquidating or

dissolving foundation usually passes its assets on to

another foundation or to a public charity.

Capital Gain Net Income. --This was the amount of net

gains from sales or dispositions of property used for

investment purposes (property used for charitable purposes was excluded). Capital losses from the sale or other

disposition of property could be subtracted from capital

gains only to the extent of such gains. Capital gain net

income was used in the computation of "net investment

income" (on which an excise tax generally had to be

paid). In contrast, the net gain (or loss) per the books

from the sale of all assets (other than inventory), including

those used for both investment and charitable purposes,

was reported as "net gain (or loss) from the sale of assets"

on Form 990-PF, Part 1, line 6, column (a). This item,

capital gain net income, was reported on Form 990-PF,

Part L line 7, column (b).

Charitable Trust.--A charitable trust, also referred to as

a "nonexempt" charitable trust, was defined in Internal

Revenue Code section 4947(a)(1) as an organization (1)

that is not considered tax-exempt under section 501(a); (2)

that has exclusively charitable interests; and (3) that has

amounts in trust for which donors are allowed to claim a

tax deduction for charitable contributions. Nonexempt

charitable trusts that are not publicly supported are subject

to the excise tax provisions that apply to private foundations and are required to file the same Form 990-PF.

("Publicly supported" nonexempt charitable trusts are

required to file Form 990, Return of Organization Exempt

From Income Tax, and are, therefore, not included in the

statistics.) Nonexempt charitable trusts that are treated as

private foundations must pay an annual tax on income

(usually from investments) that is not distributed for

charitable purposes, and they must report such income and

tax on Form 1041, U.S. Fiduciary Income Tax Return.

Data from this form are not included in the statistics of

this article.

Disbursements for Exempt Purposes.--These deductions

comprised the largest component of "qualifying distributions" and included grants paid, operating expenses, and

necessary and reasonable administrative expenditures for

activities that were directly related to the tax-exempt

purposes of the foundation. These amounts were determined solely on the basis of the cash receipts and disbursements method of accounting, as required by law and

regulations. This item was reported on Form 990-PF, Part

1, line 26, column (d).

Disqualified Persons.--With respect to engaging in

prohibited transactions with a private foundation, such as

11self-dealing,"

the following were considered disqualified

persons: (1) all substantial contributors to the foundation

(generally, those who contributed an amount over $5,000

that was also more than 2 percent of total contributions

received by the foundation); (2) foundation officers,

directors, trustees, or managers; (3) an owner of more than

a 20-percent interest (based on voting power, profits

interest, or beneficial interest) in an organization that was

a substantial contributor to the foundation; (4) a member

of the family of any individual described above (including

spouses, ancestors, children, grandchildren,

great-grandchildren, and spouses of children, grandchildren and great-grandchildren; but not including brothers

or sisters); (5) organizations in which persons described

above held a total beneficial interest of more than 35,

percent; (6) another private foundation, for purposes of the

tax on excess business holdings, that was effectively

controlled by a person or persons in control of the foundation in question or to which substantially all of the contributions were made by a disqualified person; and (7)

certain government officials, for purposes of the tax on

"self-dealing."

Distributable (Payout) Amount.--This was the minimum

payout amount that was required to be distributed by

nonoperating foundations by the end of the year following

the year for which the return was filed. Failure to distribute income within this time period resulted in a 15-percent

excise tax on the undistributed portion. The distributable

amount was computed as 5 percent of net investment

assets, called the "minimum investment return," minus the

excise tax on net investment income and the income tax

under subtitle A, plus or minus other adjustments, either

allowed or required (see "Net Adjustments to Distributable Amount").

The tax under subtitle A is levied on charitable trust

and taxable private foundation income (usually from

investments) that is not distributed for charitable purposes.

The tax reported on Form 1041 for trusts and Form 11 20,

U.S. Corporation Income Tax Return for taxable private

foundations. Taxable private foundations are those entities that may operate as taxable entities but will continue

to be treated as private foundations until their tax status as

such is terminated.

The distributable amount item was reported on Form

990-PF, Part XI, line 7.

Excess Distributions Carryover. --This was the amount

distributed, after fulfilling the charitable payout requirement, that equaled the excess of qualifying distributions

for 1992 over the distributable amount. If necessary,

excess amounts from the current year could be carried

forward to be applied to the distributable amount for the 5

Private Foundations and Charitable Trusts: A Decade of Charitable Givin& and.

Growth, with Highlights of 1991 and 1992

following years. This item was reported on Form 990-PF,

Part XHI, line 9.

Inventories. --Included was the value of materials,

goods and supplies purchased or manufactured by the

organization and held for sale or use in some future

period. This item was reported on Form 990-PF, Part 11,

line 8; columns (a) (beginning-of-year book value), (b)

(end-of-year book value), and (c) (end-of-year fair market

value).

Land, Buildings, and.Equipment, Charitable-use. --This.

represented either thd book value (less aiccumulated.

depreciation) or fair market value of allI land, buildings,

and equipment not held'for investment purposes and Used

by the organization in conducting its charitable activities.

This item was reported on Form 990-PF, Part 11, line 14,

columns (a) (beginn'hg7of-y6ar book value), (b),.

(end-of-year book valud),. and (c) (end-of-y'ear fair. market,

value).

Land, Buildings, -and Equipment, Investment-use. -7This

represented either the book:valu6 (less accumulated

depreciation) -or fair market-va.10e,of all Iand-,buildings,- and equipment held for. investrrient. purposes., such as .

rental- properties. This item was reported on Form

990-PF, Part -IIJine 11, columns (a). (beginning-ofryear

book value), (b) (end-of-year book value), and (c)

--(end:-o&year fair market value).- - - - '- 7Minimum. Investment Return. --This was the aggregate

fair market value of assets. not used- for charitable putposes, less both the indebtedness incurred, to acquire these

assets and the-cash held for charitable activities, multiplied by. 5 percent. The minimum investment return was

used as -the base for calculating the '.'distributable

amount." This item,was reported on Form 990-PF, Part

X, line 6.

Net Adjustments to Distributable Amount. --Adjustments

that increased the "di stributable Amount" consisted of

increases attributable to the income portion (as distinct

from the principal portion) of distributions from

split-interest trusts on amourits~placed in trust after May

26, 1969. (A split-interest.trust is a trust that is not,exempt from tax. and not all of whose interests. are devoted to

and like purposes, but

charitable, religious, educational,

that has amounts in trust for which a charitable contribu7

tion deduction was allowed.) These organizations file.

Form .5,227, Split-Interest Trust Information Return.

Recoveries of amounts previously treated ;is qualifying

distributions also had to be added back to the distributable

amount.. Adjustments that decreasedthe distributable

amount were the result of incomerequired to be accumulated by-the terms of an organization's governing instrument. These adjustments were allowed only for founda88

tions or trusts organized before May 27, 1969 whose

governing instrument continued to require such accurndla-'

the organization

tion, since State Courts. would not allow

to change its governing instrumenc These items were

reported on Form 990-PF, Part'XI" lines 4a, 4b,, and 6..Net Gain (or Loss)from Sales of Assets. --Included

were profits and losses from sales of items such-as securities, land, buildings, or equipment.' Gain or loss reflected

the amount. shown on the books of the foundation and

inclu&d any amount from the sale of property used foreither investment,or tax-exempt charitable purposes..,Most of the gain oi loss was from sales. of stocks and,

bonds. Profit. or. loss from the sale of inventory itemsmas

included in gross profit (loss) from business. activities..

This item Was reported on Form 990-PF, Part L line 6,

column-(a).

Net Investment Assets .(Nonchariteible-use Assets).--Foi

purposes of calculating "minimum* investment reium

only the average, -rather than end-of7yearl'_fair~.Tnarket

value of assets that were not used or held for.,'Pse for.':

-.1ax-exempt-purposes entered -into-the computdtion.--Anasset was considered an investment'asset if Jt Was not used

in, carrying out'a,charitable, educational, or.oiher similar

functibn.which gave rise to the tax-exemp! status of the

foundation. Examples include the fair ri4rket value of

securities and rental prpperty-owned by -the-foundation- for

investment purposes. The asset amounts.included,on the

balance sheet in Part 11 of the .,Form 9§o-*PF in'cluded both

.investment and~charitable-use assets. Tfiis,item, which

was reported on Form 990-PF, Part X, lin&.5Js, not shown

separately in the tables of this article., However, .'mini- mum'investment return," Which is based on! net investment

assets, is shown in.the tables.

Net Investment Income. ~-This was'the amount by which

the sum of gross investment income plus capital gain net

income exceeded allowable'deductions. Included in

investment incomeweie interest, dividends, capitaJI'gAin

net income, rents, payments with respect to. securities

loans, and royalties. Exc.luded'Were.tax.-ex6mpt interest

on state And local' government obligation's and dny~ inVestmerit income derived from un.related trade or business

activities that were subject to the "unrelated busihess

. income" tax reported on Form 990-T, Exempt ftanization Business Income. Tax Return. , This item was reported'

on Form 990-PF, Part I, line 27b, column (b).

Nonoperating Foundations (andSectloh 4947(a)(1)

Charitable Trusts).-Jhese were'organ izations that gener-',

411y carried on their charitabl e activities' in,an indirect

manner by making.grants to other organizations directly

engaged in charitable activities,-in contrast to those (operating) foundations and trusts that engaged in charit4ble

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

activities themselves. However, some nonoperating

foundations and trusts were actively involved in charitable

programs of their own, in addition to making grants.

Nonoperating foundations and trusts were subject to an

excise tax (and possible additional penalties) for failure to

distribute an annual minimum amount for charitable

purposes within a required time period. An organization's

status as a nonoperating foundation or trust was indicated

on Form 990-PF, Part VII, line 9.

Operating Foundations (and Section 4947(a)(1) Charitable Trusts)-These organizations generally expended

their income for direct, active involvement in a

tax-exempt activity, such as operating a library or museum, or conducting scientific research. Operating foundations and trusts were excepted from the income distribution requirement and related excise taxes that were applicable to their nonoperating counterparts. To qualify as an

operating foundation or trust for a particular taxable year,

the foundation or trust had to meet both an "income test"

and one of three other tests: an "assets test," an "endowment test," or a "support test."

To meet the income test, a foundation or trust had to

spend at least 85 percent of the lesser of its "adjusted net

income" or "minimum investment return" on the direct,

active conduct of tax-exempt, charitable activities (as

opposed to the payout of grants in support of such programs). Simply put, to meet the assets test, a foundation

or trust had to directly use 65 percent or more of its assets

for the active conduct of charitable activities. To meet the

endowment test, a foundation or trust had to regularly

make distributions for the active conduct of charitable

activities in an amount not less than two-thirds of its

"minimum investment return." To meet the support test, a

foundation or trust had to regularly receive substantially

all of its support (other than from gross investment income) from the public or from five or more qualifying

exempt organizations, and (a) no more than 25 percent of

its support (other than from gross investment income)

from any one such qualifying exempt organization; and

(b) no more than 50 percent of its support from gross

investment income.

Distributions made by a private nonoperating foundation or trust to an operating foundation or trust qualified

toward meeting the nonoperating organization's distribution requirement. (Distributions made by one nonoperating

foundation or trust to another were subject to a number of

conditions and restrictions requiring a "pass-through" of

the distribution, whereby the donor organization received

credit for a qualifying distribution but the donee

organization did not.) Additionally, contributions to operating

foundations or trusts were, deductible on the donors'

individual income tax returns, up to 50 percent of their

"adjusted gross income" (as opposed to 30 percent for

contributions to nonoperating foundations).

While most operating foundations paid the excise tax

on net investment income, 26 percent of operating foundations were considered exempt from this tax for 1992 under

section 4940(d)(2) of the Internal Revenue Code. In order

to be exempt, an operating foundation was required to

meet the following requirements in any given year: (1)

maintain public support for a minimum of 10 taxable

years; (2) maintain a governing body at all times that is

broadly representative of the general public and that is

comprised of no more than 25 percent disqualified individuals; and 3) at no time during the year include a disqualified individual as an officer of the foundation. An

organization's status as an operating foundation or trust

was indicated on Form 990-PF, Part VII, line 9.

Other Assets. --Assets reported as "other" included: (1)

those assets not allocable to a specific asset item on the

Form 990-PF balance sheet or not included elsewhere on

the return; and (2) certain amounts given special treatment

in the course of statistical processing. The first category

included such items as construction reserve land, dividends receivable, escrow deposits, income tax refunds,

interest discounts, interest-free loans, overdraft protection

and program-related investments. The second category

included atypical amounts reported by the return filer as

"negative liabilities." These items were reported on Form

990-PF, Part 11, line 15, columns (a) (beginning-of-year

book value), (b) (end-of-year book value), and (c)

(end-of-year fair market value).

Other Investments. --Investments reported as "other"

included such items as advances, bank certificates, cash

values of life insurance, certificates of investment, miscellaneous loan income, patronage dividends, and investments in art, coins, gold, and gems. These items were

reported on Form 990-PF, Part 11, line 13, columns (a)

(beginning-of-year book value), (b) (end-of-year book

value), and (c) (end-of-year fair market value).

Private Foundation.--A private foundation was defined

in Internal Revenue Code section 501 (c)(3) as a nonprofit

organization with a narrow source of funds that operated

or supported educational, scientific, charitable, religious,

and other programs dedicated to improving the general

welfare of society. A private foundation qualified for taxexempt status under Code section 50 I (c)(3) but was not

(1) a church, school, hospital, or medical

research organization; (2) an organization ~% ith broad public support in

the form of contributions or income from tax-exempt

activities; (3) an organization that was operated by, or in

connection with, any of the above described organiza-

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

. 90-

temporary cash investments; dividends and interest. from

tions; or (4) an organization that conducted tests for'public

sec urities; pet gain (or loss) from sales of assets (mostly

between

private

foundasafety. The primary difference

investment

assets, but also charitable-use assets); gross

the

sources

ofeach

type

tion and a public charity was

royalties;

gross profit (or loss) from.business

rents

and

typically

received

organization's funding. A foundation

other

income (such as royalty incorne, .

activities;,and

corporation,

its. funds from an individiial, a family, or a

investment

income, interest earned' on,

program-related

awhile a public charity received its funds primarily from

charitable

purposes,

and imputed interest

assets

used

for

public.

large number of sources within the general

deferred

payments).

These

other income items

certain

--Qualifying.distributions

Qualifting Distributions.

line 11, column (a).

reported

Form

990-PF,-Part

were

purposes

(grants"

included disbursements for charitable

and charirevenue

items

included

both

investment

Total

charitable

purposes,

and

direct expenditures to accomplish

table-use

items,

were

reported

shown

books and

administrativeexcharitable-purpos.e operating and

the.

the

foundation,

And

were

based

on.either

records

used

directly

penses); amounts paid to acquire assets

accounting.

Total

cash

receipts

the

accrual

method

charitable.

accomplish tax-exempt functions;

revenues were reported on Form 990-PF, Part 1, line 12',

program7related investments; and arnounts~ set aside for

column (a)~

distributions:

could

future charitable projects. Qualifying

-Undistributed -Income. z~This is-the portion of 'the rerurdst's

o'bl

datib

-t

-6--6-e -&fed ited - a- g a ffinst -the -fo-uhdati o'n's. o"distributable amount" s,till undistributed'after

quired

-This

item

was.reported

pay out its "distributable amount."

against it the sum of current-year qualifying

applying

on Form 990-PF, Part XII, line,4.,.

distributions

and any excess distributions carried over

specific

charitable

'Set-Asides. --Amounts set-aside for

prior

years.

Sanctions were imposed in the form of

fTbrn

qualifying

distributions

only

purposes can'.be treated as

foundations that did not pay_9ut on

-excise

taxes-on-private

the

-IRS-the-foundation establishes -to-,the-satisfaction-.ofamount

equal

the.

"distributable

a'moun~' by the end of

specific

project

withlin

that the amount will be paid for the

reported on Form

following

tax

year.

This

item

was,

the

first

se't-aside

and

the

60 months fropl-the~ date'of the

(d)..

990-PF,Part

XIII,

line

6f,

column

the

cash-'

foundation meets eith er the suitability'test

'Unrelated Busines's Income`(UBI). --This is an exempt

distribution test.' To, meet the suitability test a'foundation

__organization's

incorpe frorn a tradd or business that was

and

mtist-dem-,.

IRS

must rec.eive-prior.,~ppr'o'val,.,from.the

- was not

carried

- - by the

' organization

- '

- and that

regularly

onstrate: that, the project can betterbe accomplished by a.

substantially

the'performance

ofthe

-meet

set-aside than by'an -immediate payment of funds.

organization's exempt purpose or function (other than that~

the cash di4ribution test under section 4942(g)(2)(B)(ii) a

the organization. needed the profits derived from the

its'knnuai

return

foundation must attach a schedule to

unrelated activity). The,term "trade or business" generally

are

met.

The

foundation

showing how,the requirements

comprised'ariy activity, carried on for the production of

year

the.

set-aside

and

for

musi'attach.a schedule for the

income from selling goods or performing services. A,tax,

the

set-aside

amount

has,been

each subsequent year until

as reported on the Form .990-T, Exempt Organization

reported

Form

990-PF,

distributed.: - Set-asides were

Tax Return, was imposed on "unrelated

Business-Income

3b...

Part XII, lines 3d and

business taxable income,(UBTI)." Unrelated business

Total Ass~ts. --This was the sum of all assets reported in

-taxable

income is gross unrelated business income, less

sheet,

shown

~at

both,

book

value

the foundation's balance

trade

deductions

-directly connected withcarrying on the

were

orted

For

and fair market value. Total assets

certain

other

deductions.

unreor

business

and

less

columns

(a)

(be'ginning-of-year'

990-PF, Part,11, line 16,

lated business income tax was determined based on the

book value), (b) (end-of-year book value), and (c)

corpprate,or trust tax rates that were in effect for a gi ven

(end-of-year fair market value).

tax year.. (Gross) . unrelated. busliness income'and the "*

,Total Expenses.-This was tfiesum of contributions,

associated business codes were reported on Form 990-PF,

plus-various

operating

and.

adminisgifts,and grants paid,

Part XVI-A, columns (a) and (b).

and

trative expenses related to both investment

were'.

charita'ble-purpose activities; Total expense items

Notes and References

reported as shown on the books and records of thefounda111, The amount:of contributions, gifts, and grants paid by

tion and were based on either the cash receipts or the

foundations is based on the amount that foundations

accrual method ofaccbunting.' Total expenses were

actually disbursed for 1992 using the cash receipts

reported on Form 990-PF, Part 1, line 26, column (a).

and.disbursements* method of accounting.

Total-Revenue. -This was the sum,o.f gross 66ntribu[21 This ~organization, the Wellcome Trust, is a private

tio'ns,'gifts, and grants received; interest on'savings and

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

foundation funded by a British pharmaceutical

company. For 1990, the foundation reported $9.0

billion in fair market value of total assets and earned

$158 million in total revenues. For 1991, the foundation held $10.6 billion in assets and later sold $3.8

billion of its asset holdings (which increased its total

revenue to $4.0 billion). By the end of 1992, its

assets dropped to $5.1 billion and its total revenue

dropped to $574 million.

quarterly Statistics of Income Bulletin, or which were

originally prepared for other publications such as the

Journal of Nonprofit Management and Leadership,

Trusts and Estates, the Independent Sector's Research Forum, and the American Statistical Association. Private foundation data for 1987 and earlier

years were published in the Compendium of Studies

of Tax-Exempt Organizations, 1974-1987. Data for

Reporting Years 1986 through 1990 are included in

the second volume of the series, the Compendium of

Studies of Tax-Exempt Organizations, 1986-1992,

Volume 2.

Because Forms 990-PF on which private foundations

report their financial information are public documents, the names of individual foundations can be

used in this article.

Both volumes of the Compendium are included under

Publication 1416 and are available exclusively from

the Statistics of Income Division. Results of private

foundation studies for 1982, 1983, and 1985-1992

have also been published in various issues of the

Statistics of Income Bulletin: Fall 1985, Volume 5,

Number 2 (1982 data); Winter 1986-1987, Volume 6,

Number 3 (1983 data); Summer 1989, Volume 9,

Number 1 (1985 data); Spring 1991, Volume 10,

Number 4 (1986-1987 data); Winter 1991-1992,

Volume 11, Number 3 (1988 data); Winter 19921993, Volume 12, Number 3 (1989 data); Winter

1993-1994, Volume 13, Number 3 (1990 data);

Winter 1994-1995, Volume 14, Number 3 (1991

data); and Winter 1995-1996, Volume 15, Number 3

(1992 data). Private foundation data, primarily for

1974, were published in the special report, Statistics

of Income-] 974-1978, Private Foundations.

[31 Unless otherwise indicated, dollar amounts and

percentages in the text and figures are not adjusted for

inflation. However, Figure B, which presents data

over a 10-year time period, does present real changes

in revenue, assets, and charitable distributions.

Adjustments for inflation are based on the 1987

implicit price deflators for the Gross Domestic

Product from the Department of Commerce, Bureau

of Economic Analysis, found in Council of Economic

Advisors, Economic Report of the President, 1995,

Table B-3.

[4] The Explanation of Selected Terms section at the end

of this article defines total assets, total revenues and

other selected items reported on Form 990-PF, Return

of Private Foundation (or Section 4947(a)(1) Charitable Trust Treated as a Private Foundation). Also,

all references to assets are stated at fair market value

unless book value is specifically noted.

[5] The data presented in this article are from the Forms

990-PF, filed for Reporting Years 1991 and 1992, by

organizations which had accounting periods beginning

in either 1991 or 1992. Therefore, the statistics for

Reporting Year 1991 include organizations with

accounting periods that ended sometime during the

period December 1991 through November 1992.

Similarly, the statistics for Reporting Year 1992 include

organizations with accounting periods that ended

sometime during the period December 1992 through

November 1993. For a more detailed analysis, see the

section, Data Sources and Limitations.

[6] Statistics of Income periodically consolidates exempt

organization data by publishing volumes in the

Exempt Compendium series. These volumes include

annual analyses of data that have appeared in the

[71

Council of Economic Advisors, Economic Report of

the President, 1995, Table B-2.

[8] For an in-depth discussion of organizations other than

private foundations that are tax-exempt under Internal

Revenue Code section 501(c)(3), see "Charities and

Other Tax-Exempt Organizations, 1992," Statistics of

Income Bulletin, same issue.

[9] Of the 466,961 nonprofit charitable organizations recognized by the Internal Revenue Service under section

501(c)(3), there were 157,941 Fonyis 990 and 990-EZ

and 42,428 Forms 990-PF filed for 1992. Those not

required to file included religious organizations.

[10] For purposes of the analyses, "charitable trusts" refer

only to the section 4947(a)(1) charitable trusts that

file Form 990-PF, while "private foundations" refer

to the section 501(c)(3) private foundations that rile

Form 990-PF.

Private Foundations and Charitable Trusts.: A Decade of Charitable'Giving and

Growth, with Highlights of 1991 and 1992

[1-1]

Programs termed "charitable" refer to tax-exempt

activities which are charitable, educational, scientific, social, literary, or religious in nature.

Managing Foundation Assets: An Analysis of

Foundation Investment and Payout Procedures and

Performance, Washington, DC: The Council on

Foundations, 1989; and Salamon, Lester M. and

Voytek, Kenneth P., Foundation Investment and

Payout Performance: An Upda.te, Washington, DC:

The Council on Foundations, 199 1.

[121 The net value of noncharitable-use assets was

reported on Form 990-PF, Part X, line 5. For more

information, see net investment assets in the

Explanation of Selected Terms section.

[13]. For purposes of the analyses, the term

"grantmaking" in the text and tables refers to any

organization reporting contributions, gifts, and

grants paid on Part I of the Form 990-PF.

[14]

A foundation is considered domestic if it is organized in the United States; however, this does not

-necessarily imply -that all of-its-assets, activities,-or

grant recipients are domestic.

[15]

Six out of the ten largest foundations had calendar

year accounting periods, meaning that all of their

activity occurred during -the calendar year period.

-However; four of the-ten had-other-fiscal-yearaccounting periods. For instance, for the 1992

Reporting Year, the Ford Foundation had an

-accounting period ending in September 1993; the

two W.K. Kellogg Foundations in August 093; and

- -the Annenberg Foundation-and-J.- Paul Getty Trust

both in June 1993; therefore, much of their activity

for 1992 occurred in Calendar Year 1993. See the

section, Data Sources and Limitations.

[16]

For moie,information on the unrelated business

income of exempt organizations, see Riley,

Margaret, "Exempt Organization Business Income

Tax Returns, 1992," Statistics"of Income Bulletin,

Volume 15, Number 4, pp. 64-8 1.

[17] While all foundations reporting revenue (with the

exception of those reporting only.contributions)

were required to complete the "Analysis of IncomeProducing Activities" schedule of the return, only

77 percent actually did so on their return as originally filed.

[181 This pattern was true for all of the investment

categories noted, with the exception of investments

in land, buildings, and equipment. While both

small and large foundations realized decreases in

investments in land, buildings, and equipment, 9 per

cent and 15 percent, respectively, medium founda-.

tions realized an increase of 7 per-cent in this asset.

92.' 1

[ 191

Salamon, Lester M. and Voytek, Kenneth P.,

[20]

Salamon and Voytek, Ibid.

[21]

Salamon and Voytek, Ibid.

[221

Net investment income is comprised of income not

considered to be related to a foundation's charitable

purpose, such as interest, dividends, and capital gain

net income. The net investment income amount

used-in calculating NII.yield was obtained-fromcolumn (b) of the income statement, found in Part I

of the Form 990-PF.

[231 The rate of total return formula used here is the

same'as that developed and used by Salamon and

- - Voytek-in-their studies-on-foundation assets.- See

Salamon and Voytek, Managing Foundation

Assets: An Analysis of Foundation Investment and

Payout Procedures and Performance, Washington,

DC: The Council on Foundations, 1989, p. 32. The

- formula is as follows:

Rate of Total Return =

[Ending Fair Market Value of Assets

- Beginning Fair Market Value of Assets

- Contributions Received

• Grants Paid

• Operating and Administrative Expenses.

• Excise Tax Paid on Net Investment Income]

DIVIDED BY

[Beginning Fair Market Value of Assets

50% of Contributions Received]

To calculate the rate of total return shown in Figure

H, samples of private foundation information

returns for consecutive years were matched in ord6r

to. analyze both the beginning- and end-of-year fair

market value data. Due to the lower sampling rates

used for the smaller foundations, the rate at which

returns were matched for consecutive years was not

high enough for 1988 to ensure a proper level of

statistical reliability. Therefore, the rate of total

return was only calculated for the medium- and

large-size foundations for that year.

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

The beginning fair market value of assets for any

given year equals the ending fair market value

reported on the prior year~s tax return. Thus, in

order to provide a consistent form of measurement

by which to compare rates of total return among

different years, the ending fair market value of asset

amounts (reported for both the year subject to the

computation and the prior year) were used to

compute the rate of return. In order to obtain an

inflation-adjusted real rate of return, the figure

equaling the beginning-of-year fair market value of

assets was adjusted using the Gross Domestic

Product implicit price deflator (see footnote 3).

[24] For a more detailed discussion, see Meckstroth,

Alicia, "Analyzing the Trends Within Private

Foundations," Trusts and Estates, August 1991, pp.

38-47; and, Meckstroth, Alicia, and Riley,

Margaret, "Private Foundation Returns, 19861987," Statistics of Income Bulletin, Spring 199 1,

Volume 10, Number 4.

[25] For valuing net investment (nonchafitable-use)

assets for the purpose of computing the minimum

investment return, reductions for "blockage" or

other marketability discounts were permitted.

These discounts (limited to 10 percent in the case of

securities, but statutorily unlimited in other cases,

such as for land holdings) could effectively reduce

the net investment asset base and, thus, result in a

minimum payout level of less than 5 percent of the

full fair market value.' An example of this type of

discounting was a foundation that owned 15 percent

of the stock of a publicly-held corporation. This percentage represented a block of securities so large in

relation to the volume of actual sales on the existing

market that it could not be liquidated in a reasonable

time without depressing the market price of the securities. Because of this situation, the foundation was

allowed to discount the fair market value of the stock

for the purposes of reporting it on the Form 990-PF.

[26] After applying current-year qualifying distributions

and any carryovers from previous years, the amount

by which foundations fell short of meeting the

charitable payout requirement was called

"undistributed'income."

[27]

Renz, Loren; Lawrence, Steven; and Treiber,

Rikard R., Foundation Giving: Yearbook of Facts

and Figures on Private, Corporate and Community

Foundations, 1995 edition, New York: The Foundation Center, 1995, Table 56, p. 56.

[28] Ibid., pp. 49-50.

[29] To calculate the payout rate, the amount of (adjusted) qualifying distributions was divided by the

amount of the monthly average of net investment

(or noncharitable-use) assets. This payout formula

adjusts qualifying distributions with additions and

subtractions that are made to the required "distributable amount" on the Form 990-PF. The numerator

of the formula also includes excess distributions

made in the past and applied to the requirement of

the current filing year.

[30] Salamon, Ibid., pp. 269-270.

[31] Department of Commerce, Bureau of Economic

Analysis, Ibid, Table B-2.

[32] While all trusts reporting revenue (with the exception

of those receiving only contributions) were required

to complete the "Analysis of Income Producing

Activities" schedule of the return, only 90 percent

did.

[33] Department of Commerce, Bureau of Economic

Analysis, Ibid., Table B-2.

[34] The samples were stratified based on book value of

assets, rather than fair market value, because fair

market value of assets was not fully validated by the

Internal Revenue Service during administrative

processing for the Business Master File (BMF)

system, from which the Statistics of Income

samples were drawn. Book value of assets, on the

other hand, was fully validated. Beginning with the

1992 Reporting Year, the IRS fully validated the

fair market value of assets for purposes of the BMF

system. This makes it possible for Statistics of

Income to begin sampling the 990-PF tax returns

based on the fair market value of total assets for the

1994 Reporting Year.

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Table I.-All Private Foundations: Number and Selected Financial Data, by Type of Foundation and

Size of Fair Market Value of Total Assets

[All figures are estimates based on samples-money amounts are in thousands of dollars)

Selected sources of revenue

Type of foundation,

size of fair market value

Total revenue

Number

of returns

of total assets

Number

Dividends and interest

from securities

Net gain (or loss)

from sales of assets

Amount

Number

of returns

Amount

Number

of returns

Amount

Number'

of returns

Amount

(4)

(5)

(6)

(7)

(8)

(9)

27,283

333

5,396

11.945

7,619

1,110

412

-232 236

6,631,079

2,971

10,190

197,436

925,386

635,331.

533,788

--599,811-3,726,166

17,999

206'

2,269

7.282

6,384

1,015

395

223

226

6,733,267

-2,526

13,960

113,900

758,618

583,392

494.953

- 492,7694;278,202

6,197,344

2,936

9,582

191,479

882,221

588-923509:232

555,832

3,457,139

17,149

206

2,122

7,102

6,028

-911

365

207

208

6,248,271

-2,526

12.914

111.341

725,154

- 554331446:374

457,276

3,943,407

of returns

ALL FOUNDATIONS

Total.........................................................................

Zero or unreported........................................................

$1 under $100,000 ........................................................

$100,000 under $1,000,000....................... ..................

$1.000,000 under $10,000,000 .....................................

$1 0,000,ODO under $25,000,000 ...................................

.$25,000,000 under $50.0~ W0,000

- ...................................

$50,000,000 under $100,000,000 ................... : .............

$100,000,000 or more ..................................................

Contributions, gifts,

and grants received

(1)

(2)

(3)

42,428.

1,137

14,733

15,941

8.531

1,180

237

239

41,413

932

13,996

15,897

8,511

1,179

428

267239

23,566,388

91,606

386,638

~1,367,283

4,036,788

2,613,958

2,236,590

- 1,910,96710,922,557

19,280

7,902,873

548

87,286

7,718

342,929

6.698

925,103

3,460

1,851,583

501

1,037,506

172

908,538

--98- ----653144~95

2,096,484

38,620

1,028

12,915

14,909

7,883

1,b53

395

218

220

37,735

822

12.295

14,865

-7.869__

1,052

395

218

220

21,354,907

89.911

329,627

1,266,801

3.474,842

2,326,864

2,005,445

1,784,815

10,076,603

16,7.34

459

6,447

6.153

2,965

403

145

3,808

3,678

2,211,481

749,755

. -1,569

-50-1564

80,409

307,348

89.633

45,059

15,379

159,794

1,435

433,736

860

484,996

359454

430

108

6085,957

43,165

46,408

24,556

43,979

269,027

*147

180

355

104

-11,045

2,559

33,463

29,061

48,579

35,493

334,795

16,987

206

1,975

A942

6,112

948

375

215

6,506,152

-2,526

13,143

98,141

691,336

562,302

472,979

468,871

4,201,907

Nonoperating foundations

Total.............................................................. : ..........

Zero or unreported ........................................................

$1 under $100,000 ........................................................

$100,000 under $1,000,000 ..........................................

-$I-,000,000 under $10,000,000 .....................................

$10,006,000 under $25,000,000...................................

$25,000,000 under $50,000,000...................................

$50,000,000 under $100,000,000 .................................

$100,000,000 or more ..................................................

Operating foundations

Total .........................................................................

Zero or unreported ........................... ............................

$1 under $100,000........... ..............................................

.................................

$100,000 under $1,000,000

$1,000,000 under $10,000,000 .....................................

under

$25,000,000

....................................

$10,000,000

$25,000,000 under $50,000,000 ............................. :

$50,000,600 uhde $100,000,000..................................

$100,000,000 or more..................................................

7,153,118

25,848

85,717

313

5,036

292,364

844,694

11,491

_1~544,236_ _7,189

947,673

-1,00

383

863,479

638,064

215

218'

1,936,690

1,818

1,033

649

128

. 33

1,695

1.033

642

128

57,012

100,482.

561,946

.287,094

231,146

126,152

845,954

2,546

*89

1,271

545

485

35,197

719

10,534

14,149

7,853

1,087

404

225

226

35,067

678

10,448

14,146

7.853

1,087

404

225

226

21,956,869

88,648

298,998

1,174,991

3,551,366

.2,288,089

2,105,372

1,816,787

10,632,617

14,963

- 356

:5.309

5.559

2,984

428

154

7,114,121

86,711

262,468

781,747

1,596,183

872,952

865,960

640,998

2,007,103

25,282

. 332

.4,554

7,237

1,038

391

222

224

6,430,457

1,581

9,176

191,370

889,966

603,647

512,581,

568,286

3,653,852

33,421

654

9,668

13,635

7,608

1,036

387

216

218

33,291

613

9,583

13,632

7,608

1,036

387

216

218

20,731,358

87,150

275,351

1,112,689

3.274,404

2,194,975

1,951,346

1,775,163

10,060,281

13,876

291

41720

5,357

2,816

390

142

6,733,371

85,256

241,585

733,892

1,431,734

829,111

837,489

638,052

1,936,253

24,479

312

4,338

10,976

7.056

992

377

213

216

6,152,985

1,546

8,706

186.094

874,374

582,827

501,090

551,963

3,446,386

16,506

206

1,889

6.787

5,950

902

359

207

6,11 T7,0711

-2.526

12,240

96,308

675,538

550,572

446,307

457,276

3,941,356

1,776

*65

866

514

245

1,T76

1,225,511

-1,499

23,647

62,302

276.963

93,114

154,026

41,624

5 2,336

1,087

*65

589

203

168

380,750

-1,455

20,882

47,855

164,449

43,842

28,470

2,946,

70,850

802

*21

215

308

182,

277,472

481

329,080

470

5,276

15,592

20,820

11,491

~07:465

16 323

.85

*156

162

.16

1 8

GRANTMAKING FOUNDATIONS

Total ...........................................................: .............

Zero or unreported ................................................ *

$1 under $100,000 ........................................................

$100,000 under $1,000,000..........................................

$1,000,000 under $10,000,000.............................. : ......

.............................

$10,000,000 under $25,000,000

$25,000,000 under $50,000,000...................................

$50,000,000 under $100,000,000 ..................................

$100,000,000 or more ...................................................

Grantmaking-nonoperating foundations

Total................................................................

Zero or unreported ................................... :....................

$1 under.$100,000........................................................

$100,000 under $1,000,000..........................................

$1,006,000 under $10,000,000 ........... ;

: ................

$10,000,000 under $25,000,000...................................

$50,000,000

...................................

$25,000,000 under

$50,000,000 under $100,000,000 ....................... :

...........................................

$100,000,000 or more

Grantmaking-operating foundations

Total .........................................................................

Zero or unreported ........................................................

$1 under $100,000 ........................................................

$100,000 under $1,000,000 .............. ...........................

$1,000,000 under $10,000,000.....................................

$10,000,000 under $25,000,000 ...................................

$25,000,000 under $50,000,000 ...................................

$50,000,000 unde $100,000,000....... : ...........................

$100,000,000 or more ............................................. =~:_

Footnotes at end of table.

866

514

245

*902

15,798

11.729

26.672

11,595

260,551

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Table 1.--All Private Foundations: Number and Selected Financial Data, by Type of Foundation and

Size of Fair Market Value of Total Assets--Continued

[All figures are estimates based on samples-money amounts are in thousands of dollars]

Excess of revenue

Type of foundation,

(less loss)

Total expenses

for exempt

over expenses

size of fair market value

of total assets

Disbursements

Net investment income,

Number

of returns

Amount

Number

Amount

of returns

purposes

Number

of returns

Amount

Number

Amount

of returns

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

ALL FOUNDATIONS

Total .........................................................................

Zero or unreported........................................................

$1 under $100,000 ........................................................

$100,000 under $1,000,000..........................................

$1,000,000 under $10,000,000 .....................................

$10,000,0130 under $25,000,000 ...................................

$25,000,000 under $50,01>0,000...................................

$50.000,001) under $100,000,000.................................

$100,000,000 or more..................................................

41,240

1,055

13.866

15,741

8,497

1,177

427

237

239

14,498,073

150,822

433,092

11001,959

2.570,423

1,757,848

1.159.315

1,148,059

6,276,556

41,456

826

14,172

15,854

8,522

1,179

428

236

239

9,068,314

-59,216

-46,454

365,324

1,466.365

856,110

1,077,275

762,908

4,646,001

36,639

411

10,661

15,125

8,387

1,162

422

233

237

14,252,246

8,721

40,528

423,146

1,990,549

1,494,124

1,102,995

1,275,898

7,916,285

39,182

887

12,624

15,223

8,374

1,173

426

236

238

12,693,054

119,676

405,464

941,064

2,241,681

1,406,462

1,016,266

998,052

5,564,388

Nonoperating foundations

Total.........................................................................

Zero or unreported ........................................................

$1 under $100,000........................................................

$100,000 under $1,000,000..........................................

$1,000,000 under $10,000,000.....................................

$10,000,000 under $25,000,000 ...................................

$25,000,000 under $50,000,000 ...................................

$50,000,000 under $100,000,000 .................................

$1 00,000,000 or more ..................................................

37,627

946

12,192

14,759

7.848

1,050

394

218

220

13,189.477

147,233

379,102

921.039

2.151,058

1,539,158

989,162

1,064,336

5.998.389

37,853

781

12,477

14,838

7,874

1,052

395

217

220

8,165,429

-57,322

-49,476

345,762

1,323,784

787,706

1,016,282

720,478

4,078,214

33,873

387

9.549

14,299

7,774

1,040

391

214

219

13,246,548

8.496

38,066

398,665

1,911,160

1,402,178

1,029,845

1,169,999

7,288,140

35,883

799

11,161

14,275

7,769

1,050

393

217

219

11,653,581

116,244

359,688

869,969

1,948,154

1,217,543

873,461

934.994

5,333,529

3,613

*109

1,674

982

649

128

1,308,596

*3,588

53,990

80,921

419.365

218,690

170,153

83,722

278,167

3,603

*44

1.695

1,016

649

128

902,885

1,005,698

*225

2,462

24,482

79,389

91,946

73,150

105,899

628,144

3,299

3,022

19,561

142.581

68,404

60,993

42.430

567,787

2,766

*24

1,113

826

613

123

1,462

948

605

124

1,039,473

-3,432

45,776

71.095

293,527

188,920

142,805

63,058

230,858

Total .........................................................................

Zero or unreported ........................................................

$1 under $100.000........................................................

$100,000 under $1,000,000 ..........................................

$1,000,000 under $10,000,000.....................................

$10,000,000 under $25,000,000...................................

$25,000,000 under $50,000,000...................................

$50,000,000 under $100,000,000 .................................

$100,000,000 or more..................................................

35,194

719

10,534

14,146

7.853

1,087

4134

225

226

13,719,663

149,142

355,579

954,016

2,347.134

1,598,956

1,084,326

1,077,123

6,153,387

34,873

575

10,428

14,078

7,851

1,087

404

224

226

8,237,205

-60,493

-56,581

220,975

1,204,233

689,132

1,021,045

739.664

4,479,230

32,625

345

8,693

13,868

7.797

1,077

399

222

225

13,776,197

8,651

37.618

397,872

1,882,086

1,425,773

1,065,526

1,205,388

7,753,284

35,197

719

10.534

14,149

7,853

1,087

404

225

226

12,127,592

118,391

348,890

911,705

2,086,961

1,269,707

967,628

955,154

5,469,156

Grantmaking-nonoperating foundations

Total .........................................................................

Zero or unreported ........................................................

$1 under $100,000 ........................................................

$100,000 under $1,000,000..........................................

$1.000,000 under $10.000,000 .....................................

$10,000,000 under $25,000.000...................................

$25,000,000 under $50,000,000 ...................................

$50.000,000 under $100,000,000.................................

$100,000,000 or more..................................................

33,418

654

9,668

13,632

7,608

1.036

387

216

218

13,010,162

146,615

335,445

894,935

2,103,748

1,527,413

968,444

1,049,696

5,983,865

33,159

551

9,583

13.564

7,606

1,036

387

215

218

7,721,196

-59,465

-60.094

217,754

1,170,655

667,561

982,902

725,467

4,076,415

31,168

321

8,059

13,388

7,558

1,027

384

213

217

13,133,777

8,425

35,835

375.227

1,846,912

1,392,547

1,022,961

1,169,838

7,282,032

33,421

654

9,668

13,635

7,608

1,036

387

216

218

11,564,025

116,045

330,134

858,143

1,924,193

1,209,827

864,193

931,236

5,330,255

1,776

*65

866

514

245

709,501

1,714

516,010

563,567

845

514

245

3,512

3,221

33,577

21,571

38,144

14,197

402,815 1

642,420

*225

1,783

22,644

35,175

33,226

42.565

35.550

471,252

1,776

20,134

59.081

243,386

71,543

115.883

27,427

169,521

1,458

*24

633

480

239

866

514

245

18,756

53,562

162,769

59,880

103,434

2.3 :: 0111

Operating foundations

Total .........................................................................

Zero or unreported ........................................................

$1 under $100,000........................................................

$100,000 under $ 1,000,000 ..........................................

$1.000.000 under $10,000,000.....................................

$10,000,000 under $25,000,000 ...................................

$25,000,000 under $50,000,000 ...................................

$50,000,0W unde $100,0W,000 ..................................

$100,000,000 or more ..................................................

GRANTMAKING FOUNDATIONS

Grantmaking-operating foundations

Total.........................................................................

Zero or unreported ........................................................

$1 under $1 DO.000 ........................................................

$100,000 under $1,000,000..........................................

$1,000,000 under $10,000,000 .....................................

$10,000,000 under $25,000,000 ...................................

$25,OW,000 under $50.0W,000 ...................................

$50,000.000 undo $100,000,000..................................

$100,000,000 or more ...................................

Footnotes at end of table.

195

Private Foundations and Charitable Trusts: A Decade of Charitable Giving and

Growth, with Highlights of 1991 and 1992

Table 1.-All Private Foundations: Number and Selected Financial Data, by Type of Foundation and

Size of Fair Market Value of Total Assets--Continued

[All figures are estimates based on samples-money amounts are in thousands of dollars]

Exrise tax on investment income

Contributions,

Type of foundation,

gifts, and

size of fair market value

grants paid2

of total assets

Number

Amount

Number

of returns

(18)

Domestic

foundations

Total

Foreign

foundations

Amount

of returns

(21)

Number

Amount

of returns

(19)

(20)

(22)

(23)

10,910,358

117,712

319,895

842,996

1,915,881

1,156,907

848,349

----855,669- 4,852,948

194,157

139

573

6,635

30,703

21,643

15.910

19J00

99,455

35,054

336

9,723

147,887

8,159

1,111

399

--222---- 217

187,363

137

573

6,635

30,695

21.609

15,846

9,093- ____2__

92,775

33,421

654

9,668.

13,635

7.608

1,036

387

216

218

10,700,524

115,398

306,848

815,373

1.831,496

1,139,731_

805,082

850,441

4,836,155

189,274

137

539

6,315

29,930

20.597'15,263

17,659

98.836

32,919

312

8,843

14.200

7,724

1-1036

383

209

212

182,480

134

539

6,315

29,922

-20,563-15,199

17,652

92,156

1,776

866

514

245

209,834

-2,314

--131046

27,623

84,386

17,176

43,267

5,229

.16,793

4,883

-- 3~

320

773

1.046

647

1,441

619

2,135

880688

435

4,883

- -34320

773

1,046

647

1,441

619

35,197

719

10,534

14,149

7,853

1,087

404

225

226

10,910,358

117,712

319,895

842,996

1,915,881

1,156,907

848,349

855,669

4,852,948

189,385

136

521

6,157

29,129

20.810

15,728

18,046

98.857

31,739

315

8,111

13,705

7,739

1,053

389

214

182,620

136

521

6,157

29,122

20,777

15,675

18,039

92,192

33,421

654

9,668

13,635

7,608

1,036

387

216

218

10,700,524

115,398

306,848

815,373

1,831,496

1,139,731

805,082

850,441

4,836,155

187,095

134

496

5,865

28,652

20,437

15,150

17,656

98,706

30,547

291

7,604

13,310

7,522

1,023

378

208

211

180,330

134

496

5,865

28,644

20,404

15,097

17,649

92,041

1,776

*65

866

514

245

209,834

*2.314

13,046

27,623

84.386

17,176

43,267

5,229

16,793

2,290

-2

292

477

373

578

391

151

1,193

*24

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