# PrivateFoundationsandCharitableTrusts,1996 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Aacdc40a7e217d18b ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text PrivateFoundationsandCharitableTrusts,1996 by Melissa Whitten rivate foundations provided more than $15.1 billion in contributions, gifts, and grants for 1996, an 18-percent increase over 1995. These outlays, which are generally awarded to charitable organizations, communities, or individuals, contribute to the operation of charitable programs in such areas as education, arts and humanities, health, human services, and environmental protection [1]. Foundations, which are tax-exempt under Internal Revenue Code section 501(c)(3), are required annually to file the information return, Form 990-PF. The 50,811 returns filed for 1996, including both domestic and foreign foundations, represented an increase of 6 percent from the prior year. Total fair market value of assets for private foundations grew by 19 percent to $312.8 billion for 1996, with investment assets, at $291.1 billion, representing the majority of that amount. Gains of 23 percent and 10 percent, respectively, in the value of investments in corporate stock and corporate bonds contributed to the 18-percent overall increase in investment assets. Total revenue, at $49.6 billion, grew by more than 50 percent. The substantial increase in total revenue was due, in large part, to an increase of more than 100 percent in contributions received, which totaled $21.0 billion. This dramatic rise can be interpreted, in part, as a recovery from the uncharacteristic 20-percent decrease in contributions received for 1995. Additionally, two foundations alone, the David and Lucile Packard Foundation and the recently-founded California Endowment, reported substantial contributions which accounted for nearly three-fourths of the total [2]. Additional increases of 41 percent in net gains from sales of assets and 4 percent in dividends and interests in securities were also reported. Various financial data, including private foundation revenue, asset, and expense items for 1995 and 1996, are shown in Figure A. Form 990-PF is also filed by nonexempt charitable trusts, as described in Internal Revenue Code section 4947(a)(1). Nearly 2,900 of these organizations filed the return for 1996, 5 percent more than 1995. Nonexempt charitable trusts filing Form 990- P Melissa Whitten is an economist with the Special Studies Special Projects Section. This article was prepared under the direction of Michael Alexander, Chief. PF reported fair market value of assets of $4.6 billion, revenue totaling $497.2 million, and distributions of $214.4 million in contributions, gifts, and grants [3]. StatisticsofIncomeStudies 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 [4]. Statistics of Income studies on private foundations have been conducted for reporting years 1974, 1979, 1982, 1983, and 1985 through 1995. Studies on 4947(a)(1) charitable trusts that are treated as private foundations have been conducted for reporting year 1979 and annually since 1989. PrivateFoundations OrganizationalDefinitionsandLegislativeBackground Together, nonprofit organizations tax-exempt under Internal Revenue Code 501(c)(3), including both private foundations and publicly-supported organizations, represent more than $1.5 trillion in total assets (book value) [5]. They contribute billions of dollars to charitable activities each year. A private foundation is distinguished from a publicly-supported charitable organization, which receives broad support from diverse sources in the general public, by its narrow sphere of support and control, which is generally limited to an individual, family, or corporation. In most cases, a foundation is organized in the form of a corporation, association, or trust, which provides some manner of charitable support or conducts charitable activities. Due to this centralization of control, foundations are subject to greater regulation than publicly-supported organizations. Therefore, for tax purposes, all organizations receiving tax-exemption are initially considered to be private foundations, required to file Form 990-PF. Organizations that meet certain requirements will then be further defined as publicly-supported or charitable, and will instead file Form 990, Return of Organization Exempt From Income Tax or Form 990-EZ, the short version of this information return. Some publicly supported exempt organizations, 103 Private Foundations and Charitable Trusts, 1996 FigureA Private Foundations: Selected Financial Items and Percentage Changes, 1995-1996 [Money amounts are in millions of dollars] Item 1995 1996 Percentage change, 1995-1996 (1) Number of foundations............................................................................................................................. 47,983 (2) (3) 50,811 5.9 Total assets (fair market value)............................................................................................................................. 263,386.5 312,815.3 18.8 Investments, total.............................................................................................................................246,118.7 291,068.0 18.3 Savings and temporary cash investments............................................................................................................................. 14,407.0 16,777.1 16.5 Investments in securities, total............................................................................................................................. 206,599.3 243,684.8 18.0 Government obligations............................................................................................................................. 32,864.6 33,045.7 0.6 Corporate stock............................................................................................................................. 153,527.1 188,482.8 22.8 Corporate bonds............................................................................................................................. 20,207.6 22,156.3 9.6 Other investments¹............................................................................................................................. 25,112.4 30,606.0 21.9 Total revenue............................................................................................................................. 49,601.9 53.6 Contributions, gifts, and grants received............................................................................................................................. 9,427.5 20,964.6 122.4 Net gain (or loss) from sales of assets............................................................................................................................. 11,981.9 16,923.2 41.2 Dividends and interest from securities............................................................................................................................. 7,637.7 7,956.7 4.2 20,618.5 14.8 15,122.8 17.6 Total expenses............................................................................................................................. 32,289.7 17,958.1 Contributions, gifts, and grants paid ²............................................................................................................................. 12,858.8 ¹ Sum of "Investments in land, buildings, and equipment (less accumulated depreciation)," "Investments in mortgage loans," and "Other investments," as reported on Form 990-PF. "Other investments" include items such as advances; certificates of investment; and investments in art, coins, gold, and gems. ² These data are based on the amount of contributions, gifts, and grants that foundations actually disbursed for charitable purposes for 1996 using the cash receipt and disbursement method of accounting. 104 104 including churches and organizations with minimal asset holdings and income, are exempted from filing any information return. See Private Foundation in the Explanation of Selected Terms section for a detailed description of the requirements for Form 990 versus Form 990-PF filers. For 1996, private foundations represented less than one-quarter of all Forms 990-PF, 990, and 990EZ filed. Additionally, they held 17 percent of total assets (book value) and earned 7 percent of total revenue reported [6]. Depending upon the type of charitable support that a private foundation provides, it may be classified as either “operating” or “nonoperating.” An operating foundation is directly involved in the operation of its own charitable activities [7]. Examples of this type of organization include certain museums, facilities providing housing or healthcare, or organizations conducting scientific research. Although operating foundations are not legally required to distribute grants to other organizations, many choose to contribute to other nonprofit programs. A nonoperating foundation is defined as such because it generally supports charitable programs indirectly, providing grants to other nonprofit organizations rather than operating programs of its own. These foundations, the most common Form 990-PF filers, are required to annually distribute a minimum amount for charitable purposes, which is based on 5 percent of the value of their “noncharitable-use (or net investment) assets” [8]. Those organizations that do not meet the required “distributable amount” in the current year may avoid being penalized by fulfilling the requirement by the end of the following year. In addition to the “distributable amount” requirement, most foundations are required, under the Tax Reform Act of 1969 (TRA69), to pay an excise tax on income received only from investments, or “net investment income.” Certain operating foundations are exempt from this tax. For a further explanation of exempt operating foundations, refer to Operating Foundations (and Charitable Trusts) in the Explanation of Selected Terms section. Additional excise taxes on “prohibited activities” (those which are contrary to public interest) were also imposed by TRA69. Business ventures or investments which in Private Foundations and Charitable Trusts, 1996 some way jeopardize the foundation’s charitable purpose, or acts of “self-dealing,” which are defined as financial transactions with foundation officers, directors, or trustees, substantial contributors, or “other disqualified persons,” are considered to be contrary to public interest and taxable under TRA69. The Act also penalizes certain political and legislative activities, such as participation by a foundation on behalf of, or in opposition to, a candidate for public office, or efforts to influence legislation by contacting (or encouraging the public to contact) legislators. Additionally, TRA69 established the tax penalty, which is imposed on any nonoperating foundation that fails to meet the required minimum payout after the 1-year grace period. Taxes on these prohibited activities are reported separately on Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the Internal Revenue Code. For 1996, private foundations reported $1.1 million in such taxes on Form 4720. AProfileofthe1996Form990-PFFilers Throughout this article, foundations will be discussed based on size class, as determined by the size of their end-of-year fair market value of assets. “Small foundations” refer to the group holding less than $1 million in fair market value of total assets as of the end of the year (including foundations that either do not report assets or that report assets equal to zero), “medium-size foundations” refer to the group holding from $1 million to less than $50 million in assets, and large foundations refer to the group holding $50 million or more in assets. Small foundations accounted for 71 percent of the more than 50,800 returns filed for 1996, but held only 3 percent of assets, as shown in Figure B. In contrast, large foundations accounted for less than 2 percent of all returns filed, but accounted for 70 percent of asset holdings, with 62 percent of total assets held by those foundations with fair market value of assets of $100 million or more. Large foundations also dominated the revenue category, FigureB Selected Data Items for Private Foundations by Asset Size, 1996 [Money amounts are in millions of dollars] All foundations Asset size Nonoperating foundations only Number of Total assets Total Number of Total assets Total returns (fair market value) revenue returns (fair market value) revenue (1) (2) (3) (4) (5) (6) 45,775.3 Amount Total....................................................................................................................... 50,811 312,815.3 49,601.9 46,101 Amount 286,837.3 Less than $100,000¹ .............................................................. 16,534 440.8 661.2 14,556 386.5 610.8 $100,000 under $1,000,000.............................................................. 19,300 7,631.6 2,094.0 17,726 7,011.6 1,797.7 $1,000,000 under $50,000,000.............................................................. 14,260 87,286.2 15,852.0 13,164 80,610.7 14,712.6 $50,000,000 under $100,000,000.............................................................. 358 25,053.7 3,965.5 328 22,877.4 3,556.2 $100,000,000 or more.............................................................. 192,403.0 27,029.2 327 175,951.1 25,098.1 100.0 100.0 Percentage of total 100.0 100.0 359 Percentage of total Total....................................................................................................................... 100.0 100.0 Less than $100,000¹.............................................................. 32.5 0.1 1.3 31.6 0.1 $100,000 under $1,000,000.............................................................. 38.0 2.4 4.2 38.5 2.4 1.3 3.9 $1,000,000 under $50,000,000.............................................................. 28.1 27.9 32.0 28.6 28.1 32.1 $50,000,000 under $100,000,000.............................................................. 0.7 8.0 8.0 0.7 8.0 7.8 $100,000,000 or more.............................................................. 61.5 54.5 0.7 61.3 54.8 0.7 ¹ Includes returns with zero assets or assets not reported. NOTE: Detail may not add to totals because of rounding and processing tolerances. 105 Private Foundations and Charitable Trusts, 1996 106 106 with those foundations holding $100 million or more in fair market value of assets reporting more than half of total revenue. As in past years, the number of nonoperating foundations far outnumbered that of operating foundations for 1996. Nonoperating foundations were represented by 91 percent of Forms 990-PF filed, with the remaining 9 percent made up of operating foundations. Grantmaking foundations filed 40,889 Forms 990-PF, or slightly more than 80 percent of all foundation returns filed, with 84 percent of nonoperating and 47 percent of operating foundations making grants. Foundations awarded $15.1 billion dollars in contributions, gifts, and grants for 1996. According to Foundation Giving, the largest dollar amount of grants distributed for 1996 benefited the area of education, with human services and health also receiving large proportions of funding [9]. Of those nonoperating foundations that were not classified as grantmaking, 42 percent satisfied the distribution requirement through other types of charitable disbursements, including administrative and operational expenses for charitable purposes, program-related investments, acquisition of charitable-purpose assets, and charitable “set-asides” for future projects. Additionally, 13 percent reported no “distributable amount” and were, therefore, not subject to the distribution requirement (see the Explanation of Selected Terms section for a definition of the required distributable amount), and the remaining 45 percent opted to meet the 1996 requirement in their 1997 accounting periods [10]. In addition to domestic foundations, foreign organizations receiving certain degrees of support from U.S. citizens or corporations must also file Form 990-PF. Foreign foundations are those that are organized abroad; they do not necessarily choose to distribute grants within the United States. For 1996, foreign organizations accounted for less than 0.1 percent of returns filed. Like domestic foundations, organizations based in foreign countries are required to pay excise tax on their net investment income from U.S. sources. For domestic foundations, this tax equaled 2 percent of their worldwide “net” investment income; it equaled 4 percent of “gross” investment income derived from U.S. sources for foreign foundations. TenLargestDomesticFoundations Forms 990-PF are available for public disclosure under Internal Revenue Code section 6104(b). Currently, a private foundation is required to publish a public notice stating that it has filed a Form 990-PF and must make the return available to the public for 180 days from the date that the notice is published. With the Tax and Trade Relief Extension Act of 1998, Congress directed that foundations furnish copies of their three most recent annual returns, as well as their original application for exempt status, to the public. Final IRS regulations incorporating these new rules are pending. Due to this public disclosure requirement, data from Form 990-PF differ from most other IRS return data, since return information for individual organizations may be published. The largest foundations, those holding $100 million or more in assets, held 62 percent of all assets, but accounted for fewer than 400 returns, or less than 1 percent of all foundations. Additionally, the largest organizations were responsible for 46 percent of all contributions paid. Ten foundations alone accounted for nearly one-third of the total assets held by the largest foundations, excluding those organizations organized abroad. These foundations, along with data on total assets and grants paid for 1996 are shown in Figure C. The Ford Foundation remained the largest, by asset size, of the domestic foundations for 1996, with more than $9.5 billion in total assets and $390.6 million in grants paid (3 percent of the total for all foundations) [11]. Overall, the total asset and grants paid amounts for the top ten domestic foundations were 25 percent and 29 percent higher, respectively, than the prior year totals. There were several major changes in the list for 1996, the most dramatic of which was the movement of the David and Lucile Packard Foundation, which, driven by an increase in assets of more than 200 percent, rose from tenth to third on the list. This foundation, which entered the list as the tenth largest for 1995, replaced the W.K. Kellogg Foundation and W.K. Kellogg Trust as the third-largest domestic foundation for 1996. In addition, the Pew Memorial Trust dropped from the list this year, and the Robert W. Woodruff Foundation re-entered as the eighthlargest foundation, with assets increasing by 26 percent [12]. Large increases in asset holdings were Private Foundations and Charitable Trusts, 1996 FigureC Top Ten Domestic Private Foundations, by Size of Fair Market Value of Assets, 1996 [Money amounts are in millions of dollars] Total Name and ranking State Total assets¹ grants (1) (2) (3) 1. Ford Foundation................................................. NY 9,597.9 390.6 2. J. Paul Getty Trust ²................................................. CA 7,389.6 9.5 7,386.4 102.8 paid 3. David and Lucile Packard Foundation................................................. CA 4. W.K. Kellogg Foundation Trust and W.K. Kellogg Foundation ³................................................. NY/MI 7,107.1 255.3 5. Lilly Endowment, Inc.................................................. IN 6,135.4 168.3 6. Robert Wood Johnson Foundation................................................. NJ 5,595.8 210.9 MacArthur Foundation................................................. IL 3,423.7 137.3 7. John D. and Catherine T. 8. Robert W. Woodruff 2,957.9 253.3 9. Andrew W. Mellon Foundation................................................. NY 2,826.1 Foundation Inc.................................................. GA 113.7 10. Rockefeller Foundation................................................. NY 2,738.8 85.0 Total....................................................................................................................... 55,158.7 1,726.6 ¹ Fair market value. ² The J. Paul Getty Trust is an operating foundation. All other organizations listed are nonoperating foundations. ³ 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 for charitable purposes (and does not count the redistribution as a qualifying distribution of its own). The combined total assets of the two 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. NOTE: Detail may not add to totals due to rounding. also reported by the Lilly Endowment, Inc. and the W.K. Kellogg Foundation, both of which reported increases of well over 25 percent, and the Ford Foundation, which reported a 17-percent increase. For eight of the ten largest foundations, Reporting Year 1996 also included increases in grants paid, the largest of which were reported by the Robert W. Woodruff Foundation (249 percent), and the Robert Wood Johnson Foundation (174 percent). Reductions in grants paid were reported by the Rockefeller Foundation and by the J. Paul Getty Trust, which, again for 1996, was the second-largest of all foundations and the only operating foundation to be included in the top ten [13]. SourcesofFoundationRevenue From 1995 to 1996, total revenue for private foundations increased by 54 percent. Much of this change is attributable to marked revenue increases among the largest foundations, as those foundations holding $100 million or more in fair market value of assets reported a 67-percent increase over 1996. Medium foundations also experienced a 36-percent rise in total revenue. An examination of the sources of foundation revenue for 1996 provides greater insight into the substantial increase in total revenue. The majority of foundation revenue (92 percent) was gained from contributions received, dividends and interest from securities, and net gain from sales of assets. Contributions received, after dropping 20 percent for 1995, increased by 122 percent for 1996. Additionally, this item replaced net gain from sales of assets as the major source of foundation revenue, accounting for 42 percent of the total. Although net gain from sales of assets represented a smaller percentage of total revenue for 1996, the category itself experienced an increase of 41 percent from 1995. Of the three major components of revenue, dividends and interest from securities increased at the lowest rate (4 percent) and made up just 16 percent of total revenue. Figure D shows revenue sources for 1996 for all foundations, as well as by asset-size class. As previously noted, the largest foundations contributed dramatically to the increase in revenue overall. Contributions received, the largest revenue component for 1996, rose to $9.7 billion, an amount four times larger than the $2.3 billion reported for 1995. Of total contributions received for 1996, more than $4.7 billion alone were reported by the Packard Foundation, while the recently-founded California Endowment reported an additional $1.2 billion. Medium and small foundations also recovered from 1995’s drop in contributions, reporting increases of 54 percent and 47 percent, respectively. Despite the overall rise in contributions received, large foundations remained the least dependent on contributions as a source of revenue. Large foundations relied more heavily on net gain from sales of assets than any other component, receiving 40 percent of their revenue from this category. Medium and small foundations, on the other hand, both depended on contributions received as the major rev107 Private Foundations and Charitable Trusts, 1996 FigureD Sources of Private Foundation Revenue, by Size of Foundation, 1996 All foundations 5% 3% 42% $49.6 Billion 34% 16% 1 Small foundations 108 $2.8 Billion 1 2 3 4 5 2 Medium foundations 3 Large foundations $31.0 Billion $15.9 Billion Contributions, gifts, and grants received Net gain (less loss) from sales of assets Dividends and interest from securities Other interest Other income 5 4 Small foundations are those holding from zero (including unreported) to less than $1,000,000 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," as reported on Form 990-PF. Includes "Gross rents and royalties" and "Gross profit (or loss) from business activities" as reported on Form 990-PF, as well as items such as imputed interest on deferred payments and program-related investment income. 108 Private Foundations and Charitable Trusts, 1996 enue source, with medium foundations reporting contributions received at 49 percent of total revenue and small foundations reporting the largest amount, 69 percent. Excepting contributions, all foundation revenues are assigned one of three categories on the “Analysis of Income Producing Activities” schedule of Form 990-PF. “Unrelated business income” (UBI) is taxable income from a trade or business that was regularly carried on by the organization but was not substantially related to the organization’s exempt purpose or function, other than to provide income to the organization. Organizations with unrelated business income must file Form 990-T, Exempt Organization Business Income Tax Return [14]. Private foundations reported $101.4 million in unrelated business income for 1996, less than 1 percent of total revenue from the “Analysis of Income-Producing Activities” schedule of Form 990-PF. Just 4 percent of all foundations had income categorized as unrelated business income. “Excluded income” represents income that was not directly related to the tax-exempt, charitable function of the foundation, but was exempted or excluded from the tax on unrelated business income by Code sections 512, 513, or 514. Included in this category are dividends, interest, rental income, and gains from sales of investment assets. Excluded income represented 92 percent of total income as reported on the schedule. Income that was directly related to the function or purpose for which the organization has received tax-exemption was classified as “related or exempt function income.” Nearly 8 percent of total revenue reported in this section, or $20.2 billion dollars, was reported as exempt or excluded income. ExciseTaxonInvestmentIncome In accordance with TRA69, private foundations pay excise tax on their net investment income each year. This tax is approximated by the Internal Revenue Service to cover expenses incurred in the oversight of foundation activities and the enforcement of laws governing their exempt status. Generally, domestic foundations are liable to pay taxes equal to 2 percent of their worldwide net investment income; most foreign foundations compute this tax based on 4 percent of their gross investment income from U.S. sources only. All foreign foundations, with the exception of any foundation based in Canada, are subject to the excise tax on investment income tax. Canadian foundations are exempt from this tax as a result of special treaty provisions with the United States. Of the foreign foundations that filed Form 990-PF for 1996, 39 percent were based in Canada. Domestic operating foundations that are able show extensive public support and control may also be exempt from the tax. For 1996, 15 percent of all operating foundations were categorized as exempt. Domestic nonoperating foundations, under the Deficit Reduction Act of 1984, may be eligible for a reduction of the tax to 1 percent of net investment income, in cases where the foundation is able to show a specific degree of improvement in the rate at which it paid out charitable dollars. Specifically, if current “qualifying distributions” exceeded a 5-year average of qualifying distributions plus 1 percent of current net investment income, a foundation qualified for the reduced tax rate for 1996. Data for foundations reporting excise tax on net investment income for 1996 are presented in Figure E. Net investment income rose to $26.2 billion, a 29percent increase. Foundations reported excise tax on net investment income totaling $370.3 million, 32 percent more than for 1995. Large foundations qualified for the 1-percent reduced tax rate at a greater percentage rate than did small foundations, at 48 and 36 percent, respectively. FoundationAssetsandInvestments Total fair market value of foundation assets reached $312.8 billion this year, a 19 percent increase from 1995. Total investments grew by 18 percent to $291.1 billion. Foundations held the majority of their assets, 93 percent, in investments. This latter category of assets includes savings and temporary cash investments; securities (corporate stock and bonds and government obligations); land, buildings, and equipment held for investment purposes; mortgage loans; and “other investments.” This category includes items such as non-interest-bearing cash, charitable-purpose land, buildings and equipment used in the direct operation of a foundation’s charitable activities, such as artwork displayed in a museum, various receivables, inventories held for sale or use, prepaid expenses and deferred charges, 109 Private Foundations and Charitable Trusts, 1996 FigureE Private Foundations Reporting Excise Tax on Investment Income, by Size of Foundation, 1996 [Money amounts are in millions of dollars] Medium Large foundations Small foundations ³ foundations (2) (3) (4) 26,876 13,502 Percentage of all foundations........................................................................................................................ 82 76 95 95 5 Net investment income (NII) ........................................................................................................................ 25,173.0 776.7 7,782.6 16,613.6 13.0 122.1 235.2 1-percent tax........................................................................................................................ 37 36 39 48 2-percent tax........................................................................................................................ 63 64 61 51 4-percent tax........................................................................................................................ ( ) ( ) ( ) 1 Item Total ¹ 1, 2 (1) Number of foundations........................................................................................................................ 41,056 Excise tax........................................................................................................................ 370.3 4 678 Percentage of all foundations reporting: 6 6 6 ¹ Includes 337 foundations with assets unreported or equal to zero, which were shown in totals, but not in the "small foundations" category in previous years. These foundations earned $9.7 million in net investment income and paid excise tax of $0.1 million. ² Small foundations are those holding from zero 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. 4 110 110 Large foundations are those holding $50,000,000 or more in fair market value of total assets. 5 Represents net investment income of foundations reporting excise tax. Total net investment income for all foundations was $26.2 billion. 6 Less than 0.5 percent. and “other assets,” including escrow deposits, interest-free or low-interest loans made for charitable purposes, and program-related investments. More than three-fourths of all assets (243.7 billion) were held in securities, investments in which increased 18 percent over the prior year. Corporate stock holdings increased 23 percent and accounted for 77 percent of total investments in securities. Investments in corporate bonds increased at a rate of 10 percent, while government obligations remained virtually unchanged from 1995. CompositionofInvestmentAssetsbySizeofFoundation Asset growth figures prominently in creating the financial basis for private foundations’ charitable giving. Foundations use investment as the basis to finance their charitable giving, which is made largely in the form of grants. Foundations may choose the manner in which they manage and invest their assets. Investments in corporate stock are considered to be high-risk, but also provide higher returns in the long run, while short-term investments, such as savings accounts or CD’s, have little risk but less return. Large founda- tions generally invest most extensively in corporate stock and other long-term investments and relatively little in short-term investments, while small and medium foundations, while still holding large portions of assets in corporate stock, are more likely than large foundations to include short-term investments in their portfolios. Figure F shows the composition of investment assets for all foundations and by size of foundation. Corporate stock was the major investment asset for each size category of foundation for 1996. Small foundations held slightly less than 50 percent of their investment assets in corporate stock, medium foundations held 56 percent, and large foundations held 69 percent. Savings and temporary cash investments, the category representing short-term investments, represented 20 percent of investment assets for small foundations and 4 percent for large foundations. IncomeYieldsandRatesofTotalReturn An income yield is a measure of the realized investment income that a foundation earns on its investment assets. Figure G shows median “net investment income yields” and “rates of total return Private Foundations and Charitable Trusts, 1996 FigureF Composition of Private Foundation Investment Assets, by Size of Foundation, 1996 All foundations 11% 6% 8% $291.1 Billion 11% 64% Small foundations¹ Medium foundations² Large foundations³ 7.0 Billion 80.9 Billion 203.1 Billion Corporate stock Corporate bonds Government obligations Savings and temporary cash Other investments 4 ¹ Small foundations are those holding from zero to less than $1,000,000 in fair market value of total assets. ² Medium foundations are those holding from $1,000,000 to less than $50,000,000 in fair market value of total assets. ³ Large foundations are those holding $50,000,000 or more in fair market value of total assets. 4 Sum of "Investments in land, buildings, and equipment (less accumulated depreciation)," "Investments in mortgage loans," and "Other investments," as reported on Form 990-PF. "Other investments" includes items such as advances; certificates of investment; and investments in art, coins, gold, and gems. 111 Private Foundations and Charitable Trusts, 1996 FigureG rate-of-total-return formula used here measures the change in the value of the entire asset base with Nonoperating Foundation Net Investment Income consideration for inflows and outflows of money Yields and Rates of Total Return on Assets, [16]. It measures the realized income from investby Size of Fair Market Value of Assets, 1996 ments and other assets, as well as the unrealized appreciation or depreciation in the fair market value Median net Median rates Size of fair market value investment of total of assets. Like net investment income yields, rates of income return of total assets total return generally increase with foundation size, yields on assets indicating that rates of return on assets increase as (percentages) (percentages) asset holdings grow. After a significant increase for 1995, rates of total return fell slightly for 1996 for All nonoperating foundations....................................................................................................................... 5.9 7.0 every asset-size class. Despite the decrease, the Small foundations medians remained much higher than those for years Less than $100,000................................................. 4.6 1.3 prior to 1995 [17]. $100,000 under $1,000,000................................................. 5.8 7.8 Medium foundations $1,000,000 under $10,000,000................................................. 6.5 11.8 $10,000,000 under $50,000,000................................................. 7.3 13.3 Large foundations 112 112 $50,000,000 under $100,000,000................................................. 8.7 13.9 $100,000,000 or more................................................. 9.4 14.8 on assets” for nonoperating foundations, by assetsize class, for 1996. The median, rather than the mean, is calculated, as it minimizes the influences of large outliers in the data and may, therefore, better represent a typical foundation. The net investment income (NII) yield was calculated by dividing net investment income by the end-of-year fair market value of investment assets [15]. These data are presented for nonoperating foundations, as only they are subject to the charitable payout requirement, discussed below. As in previous years, large foundations earned higher income yields for 1996 than other size classes, while small foundations earned much smaller yields on net income. This may indicate that large foundations typically invest in higher-risk investment assets with the potential for greater return, while smaller foundations invest more cautiously, perhaps because they have fewer resources to expend on investment management. Further insight into foundation investment return can be gained by examining data for the rate of total return on assets. This measure, which represents the total capital appreciation of the endowment of a foundation, is a more comprehensive indication of total investment performance than the NII yield. The CharitablePayoutRequirementandQualifying Distributions The charitable payout requirement applies to nonoperating foundations only and refers to the requirement, under the Economic Recovery Tax Act of 1981, that these foundations distribute a specific amount annually for charitable purposes. Each year, nonoperating foundations must calculate a “distributable amount,” based on the fair market value of their investment assets, which must be distributed by the end of the next reporting year in order to avoid a tax penalty. The distributable amount, or required payout amount, equals 5 percent of the fair market value of the organization’s net investment assets (the “minimum investment return”), plus or minus certain adjustments, either allowed or required. (See Distributable (Payout) Amount, Net Investment Assets, Minimum Investment Return, and Net Adjustments to Distributable Amount in the Explanation of Selected Terms section.) The requirement may be fulfilled by a combination of “qualifying distributions” from the current year and carryovers (distributions paid in excess of the minimum required amount) from the previous 5 years. Qualifying distributions for 1996 consisted primarily of contributions and grants (92 percent), with smaller proportions for operating and administrative expenses (5 percent), “set-asides” for future charitable distributions (1 percent), program-related investments (e.g., buildings, equipment, or supplies) (1 percent), and amounts paid to acquire charitableuse assets (e.g., buildings, equipment, or supplies) (1 Private Foundations and Charitable Trusts, 1996 percent). Qualifying distributions for nonoperating foundations totaled $16.0 billion for 1996, a 17-percent increase from 1995 and outpaced the required distributable amount, which rose by 13 percent to $11.2 billion. Large foundations increased their qualifying distributions by 20 percent, medium foundations by 13 percent, and small foundations by 19 percent. Of those foundations with a minimum payout requirement, 67 percent met or exceeded the requirement for 1996 in that reporting year. Those foundations that did not meet this requirement had until the end of the following reporting year to distribute the remaining amount. As the annual payout amount is not calculated until the end of the reporting year and is based on the monthly average of investment assets, many foundations choose to take advantage of the 1year tax-and-penalty-free “grace period” for making these distributions. Just under half of all large foundations chose to wait until the following year to fulfill the requirement; 42 percent of medium and 29 percent of small foundations also elected to meet the distribution requirement in Reporting Year 1997. While some foundations do not meet the distribution requirement for a given reporting year and choose to make those distributions in the following year, others make distributions which far surpass the required amount. Small foundations generally make distributions well over the requirement, and distributed nearly 400 percent more than their required amounts for 1996. Large foundations, on the other hand, exceeded the requirement by just 14 percent. Operating foundations, although not subject to the same charitable payout requirement as nonoperating foundations, are required to expend a minimum amount annually on the direct operation of their charitable activities and programs. These expenditures count as “qualifying distributions” toward meeting the operating foundation requirements. PayoutRates To better analyze the rates at which foundations fulfill the charitable payout requirement, the actual payout rates must be examined. To calculate the payout rate, the amount of (adjusted) qualifying distributions is divided by the amount of the average of net investment assets [18]. Median payout rates for 1996, by size of foundations, are displayed in Figure H. FigureH Nonoperating Private Foundation Payout Rates, by Size of Fair Market Value of Total Assets, 1996 Median Size of fair market value of total assets payout rates (percentages) All nonoperating foundations................................................................................................................. 5.7 Small foundations Less than $100,000................................................................................ 11.7 $100,000 under $1,000,000................................................................................ 5.5 Medium foundations $1,000,000 under $10,000,000................................................................................ 5.1 $10,000,000 under $50,000,000................................................................................ 5.0 Large foundations $50,000,000 under $100,000,000................................................................................ 5.0 $100,000,000 or more................................................................................ 5.0 For medium and large foundations, payout rates were at or just above the required 5 percent. Small foundations, which generally concentrate their efforts on current rather than long-term charitable giving, exceeded the required amount. The smallest foundations, in fact, distributed at more than twice the required rate. Section4947(a)(1)NonexemptCharitable Trusts DefinitionandOverview Unlike Section 501(c)(3) organizations such as private foundations, charitable trusts described under Internal Revenue Code section 4947(a)(1) are not formally recognized by the Internal Revenue Service as tax-exempt. These organizations resemble private foundations in that they have exclusively charitable purposes, have narrow bases of support and control, and are required to file Form 990-PF, Return of Private Foundation (or Section 4947(a)(1) Charitable Trust Treated as a Private Foundation). Generally, these types of organizations are supported and controlled by an individual or family. Any income which is not distributed for charitable purposes is annually subject to tax and is reported on Form 1041, Fiduciary Income Tax Return, for which no data are included in this article. 113 Private Foundations and Charitable Trusts, 1996 Also not covered in this article are publiclysupported 4947(a)(1) charitable trusts and splitinterest trusts. Publicly-supported 4947(a)(1) charitable trusts, those which receive the majority of their support from public (rather than private) sources, file Form 990, Return of Organization Exempt From Income Tax. These trusts typically operate in connection with, and provide support to, one or more public charities. Organizations known as splitinterest trusts, which have both charitable and noncharitable beneficiaries, complete Form 5227, Split-Interest Trust Information. Section 4947(a) charitable trusts represent 5 percent of Forms 990-PF filed for 1996. The 2,891 returns filed for these organizations are 5 percent more than for 1995. They comprise less than 2 percent of total assets, grants paid, and revenue for Form 990-PF filers again this year. Data on the number of returns filed, as well as asset, revenue, and expense items for 1995 and 1996, are shown in Figure I. Among these organizations, 99 percent were classified as nonoperating and 92 percent as grantmaking. 114 The following classifications apply, unless otherwise indicated, to the discussion of charitable trusts throughout the remainder of this article: “small charitable trusts” refer to the group holding less than $1 million in assets (including trusts that either do not report assets or that report assets equal to zero); “medium-size charitable trusts” refer to the group holding from $1 million to less than $10 million in assets, and “large charitable trusts” refer to the group holding $10 million or more in assets. Medium and large-sized trusts are, on average, much smaller than foundations in those size groups. CharitableTrustsRevenueandAssets Total revenue reached $497.2 million for charitable trusts in 1996, a 21-percent increase from the prior year. Contributions received, net gain from sale of assets, and dividends and interest from securities comprised 89 percent of that amount. Significant increases of 50 percent in net gain from sales of assets and 19 percent in dividends and interest from securities offset a 26-percent decrease in contributions, gifts, and grants received for 1996, as FigureI IRC Section 4947(a)(1) Charitable Trusts Treated as Foundations: Selected Financial Items and Percentage Changes, 1995-1996 [Money amounts are in millions of dollars] Percentage Item 1995 1996 change, 1995-1996 (1) Number of trusts....................................................................................................................... 2,743 Total assets (fair market value)....................................................................................................................... 3,676.1 Investments, total… … … … … … .......................................................................................................................... 3,382.2 Savings and temporary cash investments........................................................................................................................ 170.1 Investments in securities, total........................................................................................................................ 2,771.4 U.S. and State Government obligations........................................................................................................................ 441.2 (2) (3) 2,891 5.4 4,565.7 24.2 4,330.8 28.0 216.2 27.1 3,372.0 21.7 462.5 4.8 Corporate stock........................................................................................................................ 1,903.3 2,359.8 24.0 Corporate bonds........................................................................................................................ 426.9 549.7 28.8 Other investments¹........................................................................................................................ 440.7 742.6 68.5 497.2 20.7 Contributions, gifts, and grants received........................................................................................................................ 106.5 78.7 -26.1 Net gain (or loss) from sales of assets........................................................................................................................ 142.1 212.9 49.8 Dividends and interest from securities........................................................................................................................ 125.1 148.4 18.6 Total revenue....................................................................................................................... Total expenses....................................................................................................................... 411.8 262.0 Contributions, gifts, and grants paid ²........................................................................................................................ 222.3 269.7 2.9 214.4 -3.5 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" include items such as advances; certificates of investment; industrial development bonds; and investments in art, coins, gold and gems. 114 ² These data are based on the amount of contributions, gifts, and grants that charitable trusts actually disbursed for charitable purposes for 1996 using the cash receipt and disbursement method of accounting. Private Foundations and Charitable Trusts, 1996 compared to 1995. Net gain from sales of assets, at 42 percent, was again the leading component of revenue for charitable trusts, as shown in Figure J. Smaller proportions of revenue included dividends and interest from securities (30 percent) and contributions received (16 percent). Net investment income totaling $397.3 million was reported for 1996. Like foundations, most charitable trusts are required to pay an excise tax on their net investment income. For 1996, $6.6 million in excise tax were reported by charitable trusts filing Form 990-PF. Of the charitable trusts that paid this tax, 24 percent qualified for the reduced rate of 1 percent, while the remainder paid tax on 2 percent of investment income. For 1996, assets held by charitable trusts totaled FigureK Composition of Charitable Trust Investment Assets, 1996 17% 5% 54% $4,330.8 Million 11% 13% FigureJ Sources of Charitable Trust Revenue, 1996 Corporate stock 8% 16% Corporate bonds Government obligations 4% Savings and temporary cash investments Other investments¹ ¹ Sum of "Investments in land, buildings, and equipment (less accumulated depreciation)," "Investments in mortgage loans," and "Other investments," as reported on Form 990-PF. "Other investments" includes items such as advances; certificates of investment; and investments in art, coins, gold, and gems. $497.2 Million 30% 42% Contributions, gifts, and grants received Net gain (less loss) from sales of assets Dividends and interest from securities Other interest¹ Other income² ¹ Represents "Interest on savings and temporary cash investments," as reported on Form 990-PF. ² Includes "Gross rents and royalties" and "Gross profit (or loss) from business activities" as reported on Form 990-PF, as well as items such as imputed interest on deferred payments and program-related investment income. $4.6 billion, a 24-percent increase from 1995. Small charitable trusts, which accounted for 70 percent of returns filed, represented only 12 percent of total asset holdings. In contrast, 37 percent of total asset holdings were reported by large trusts, which represented 2 percent of these organizations. Like private foundations, charitable trusts hold the majority of assets as investments. More than 90 percent of charitable trust assets were held as investments for 1996, the majority of which were investments in securities. The composition of charitable trust investment assets is shown in Figure K. Holdings in corporate stock, which increased 24 percent from 1995, represented 54 percent of total investment holdings. “Other investments,” include investments in land, buildings, and equipment, investments 115 Private Foundations and Charitable Trusts, 1996 in mortgage loans, advances, certificates of investments, industrial development bonds, and investments such as art or coins. This category, at 17 percent, constituted the second-largest component of charitable trust investment assets. CharitableTrustDistributionsandPayoutRates There were $214.4 million in contributions, gifts, and grants paid by section 4947(a)(1) trusts for 1996, 4 percent less than for 1995. Nonoperating charitable trusts paid out $225.8 million in qualifying distributions, 95 percent of which was made up of grants. Small charitable trusts distributed 87 percent more than required distributions; medium trusts, 8 percent more, while large trusts’ qualifying distributions fell to 8 percent less than the required amount. DataSourcesandLimitations 116 116 The statistics in this article are based on a sample of Reporting Year 1996 Forms 990-PF that were filed with the IRS. Organizations having accounting periods beginning in 1996 (and therefore ending between December 1996 and November 1997) were required by IRS to file a Form 990-PF. Some partyear returns were included in the samples for organizations that changed their accounting periods, or filed initial or final returns. Some 64 percent of the foundations in the sample had accounting periods covering Calendar Year 1996 or, in some cases, partyear periods that ended in December 1996. For charitable trusts, 58 percent filed calendar year returns. The 1996 sample was stratified based on both the size of fair market value of total assets and the type of organization (either a foundation or a 4947(a)(1) charitable trust). Foundation returns were selected at rates that ranged from approximately 2.7 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 14.0 percent to 100 percent. The 7,552 returns in the sample (6,261 foundations and 1,291 trusts) were drawn from an estimated population of 52,297 foundations and 3,018 trusts. The magnitude of sampling error, measured by coefficients of variation for selected items, is shown in Figure L. The samples were designed to provide reliable estimates of total assets and total revenue. To ac- FigureL Coefficients of Variation for Selected Items, by Type of Organization, 1996 Private Charitable foundations trusts Item Coefficients of variation (percentages) Total assets (fair market value).................................................................. 0.89 3.24 Total revenue.................................................................. 1.29 4.27 Total expenses.................................................................. 1.52 7.56 complish this, 100 percent of foundation returns with fair market asset value of $10 million or more and 100 percent of charitable trust returns with fair market asset value of $1 million or more were included in the samples, since these were the returns that accounted for the majority of financial activity. The populations and sample rates and sizes for each asset-size class are shown in Figure M. Efforts were made to verify that organizations selected for the FigureM Private Foundations and Charitable Trusts: Population Size, Sample Size, and Sample Rates, by Size of Fair Market Value of Total Assets, 1996 Size of fair market value of total assets Population size Sample size Sample rate (percentage) (1) (2) (3) All private foundations and charitable trusts....................................................................................................................... 55,315 7,552 N/A Private foundations Total....................................................................................................................... 52,297 6,261 N/A 545 2.7 $125,000 under $400,000................................................... 9,532 372 Under $125,000................................................... 19,908 3.9 $400,000 under $1,000,000................................................... 7,871 547 6.7 $1,000,000 under $2,500,000................................................... 6,347 606 9.4 $2,500,000 under $10,000,000................................................... 5,523 1,074 19.1 $10,000,000 under $25,000,000................................................... 1,740 1,740 100.0 $25,000,000 or more................................................... 1,377 100.0 1,377 Charitable trusts Total....................................................................................................................... 3,018 1,291 N/A Under $100,000................................................... 831 121 14.6 $100,000 under $1,000,000................................................... 1,316 299 22.7 $1,000,000 or more................................................... 871 100.0 N/A--Not applicable. 871 Private Foundations and Charitable Trusts, 1996 sample were properly classified as foundations or trusts. The relatively small number of foundations in the sample that were incorrectly selected as trusts were ultimately reclassified as foundations (for the statistics) using identification codes from the IRS Exempt Organization Master File. However, the weights used for these organizations were based on the original sample selection classification. These same methods were used for the trusts that were incorrectly sampled as foundations. Approximately 6 percent of all foundations, including those reclassified as foundations, reported $10 million or more in fair market value of total assets for 1996. While these foundations were selected at a rate of 100 percent, the remaining foundation population was randomly selected for the sample at various rates of less than 100 percent depending on asset size: 2.7 percent for returns with assets zero, unreported, or less than $125,000; 3.9 percent for returns with assets of $125,000 to less than $400,000; 6.7 percent for returns with assets of $400,000 to less than $1 million; 9.4 percent for returns with assets of $1 million to less than $2.5 million; and 19.1 percent for returns with assets of $2.5 million to less than $10 million. Approximately 29 percent of all 4947(a)(1) charitable trusts in the sample reported $1 million or more in fair market value of total assets for 1996. While these trusts were selected at a rate of 100 percent, the remaining trust population was randomly selected for the sample at various rates of less than 100 percent depending on asset size: 14.6 percent for returns with assets zero, unreported, or less than $100,000; and 22.7 percent for returns with assets of $100,000 to less than $1 million. The population from which the 1996 sample was drawn consisted of Form 990-PF records posted to the IRS Business Master File during 1996 and 1997. Some of the records designated were for organizations that were deemed inactive or terminated. Inactive and terminated organizations are not reflected in the estimates. For the small number of active, large foundations whose returns were not yet filed or were otherwise unavailable for the statistics, data were estimated using other returns having similar characteristics. All data for returns filed by the top ten foundations are actual. For the unavailable active trust returns, which were smaller in size than those for foundations, prior-year data of those trusts were in most instances used as a substitute. The data presented were obtained from returns as originally filed with IRS. The data were subject to comprehensive testing and correction procedures in order to ensure statistical reliability and validity. In most cases, changes made to the original return as a result of administrative processing, audit procedures, or a taxpayer amendment were not incorporated. 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 precision of sample estimates can be found in the general Appendix to this issue of the SOI Bulletin. ExplanationofSelectedTerms The following explanations describe terms as they applied to both private foundations and charitable trusts for 1996. Unless otherwise indicated, all references to foundations also apply to trusts. Adjusted Net Income— In general, this is the amount by which a private foundation’s gross income exceeded the expenses associated with earning the income. Amounts derived from, or connected with, property held by the foundation, such as net short-term capital gain, ordinary investment income (dividends, interest, rents, and royalties), and income from amounts set aside for future charitable use, from all charitable functions, or from unrelated trade or business activities were included in this calculation. Excluded items were contributions received and long-term capital gains. Long-term capital losses could be reported as “other expenses” for the calculation of adjusted net income. This item is primarily used to determine if an operating foundation met the required “income test.” This test is used to determine whether the operating foundation spent the vast majority of its investment income on the direct, active conduct of tax-exempt charitable activities. See Operating Foundations and Trusts in this section. This item was reported on Form 990-PF, Part I, line 27c, column (c). Assets Zero or Unreported— This asset-size category included: (1) final returns of liquidating or dissolving foundations that had disposed of all assets; (2) returns of those foundations reporting zero end-of-year assets that had apparently distributed (or disposed of) all assets and income received during 117 Private Foundations and Charitable Trusts, 1996 118 118 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 is the amount of net gain 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 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 990PF, Part I, line 6, column (a). This item, capital gain net income, was reported on Form 990-PF, Part I, line 7, column (b). Charitable Trust— A charitable trust, also referred to as a “nonexempt” charitable trust, is 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 these 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 this article. Disbursements for Exempt Purposes— These deductions comprised the largest component of “qualifying distributions” and include 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 I, line 26, column (d). Disqualified Person— In general terms, a disqualified person is a substantial contributor; a foundation manager; person who owns more than 20 percent of a corporation, partnership, trust, or unincorporated enterprise that is itself a substantial contributor; or a family member of one of the types of disqualified persons described above. Distributable (Payout) Amount— This is 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 in this section). Excess Distributions Carryover— This is the amount distributed, after fulfilling the charitable payout requirement, that equaled the excess of qualifying distributions for 1996 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 following years. This item was reported on Form 990-PF, Part XIII, line 9. Grantmaking Foundations (and Charitable Trusts)— For the statistics in this article, grantmaking foundations and trusts are those organizations that reported $1 or more in contributions, gifts, and grants paid for charitable purposes on Form 990-PF, Part I, line 25, column (d). Inventories— The value of materials, goods, and supplies purchased or manufactured by the organization and held for sale or use in some future period is included. This item was reported on Form 990-PF, Part II, 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- Private Foundations and Charitable Trusts, 1996 use— This represents either the book value (less accumulated depreciation) or fair market value of all 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 II, line 14, 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, Investmentuse— This represents either the book value (less accumulated depreciation) or fair market value of all land, buildings, and equipment held for investment purposes, such as rental properties. This item was reported on Form 990-PF, Part II, line 11, columns (a) (beginning-of-year book value), (b) (end-of-year book value), and (c) (end-of-year fair market value). Minimum Investment Return— This is the aggregate fair market value of assets not used for charitable purposes, 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 “distributable amount” consist of increases attributable to the income portion (as distinct from the principal portion) of distributions from split-interest trusts on amounts 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 charitable, religious, educational, and like purposes, but that has amounts in trust for which a charitable contribution deduction was allowed. These organizations file Form 5227, Split-Interest Trust Information Return.) Recoveries of amounts previously treated as qualifying distributions also had to be added back to the distributable amount. Adjustments that decreased the distributable amount were the result of income required to be accumulated by the terms of an organization’s governing instrument. These adjustments were allowed only for foundations or trusts organized before May 27, 1969, whose governing instrument continued to require such accumulation, since State Courts would not allow the organization to change its governing instrument. These items were reported on Form 990-PF, Part XI, lines 4a, 4b, and 6. Net Gain (or Loss) from Sales of Assets— Profits and losses from sales of such items as securities, land, buildings, or equipment are included. Gain or loss reflected the amount shown on the books of the foundation and included any amount from the sale of property used for either investment or tax-exempt charitable purposes. Most of the gain or loss was from sales of stocks and bonds. Profit or loss from the sale of inventory items was included in gross profit (loss) from business activities. This item was reported on Form 990-PF, Part I, line 6, column (a). Net Investment Assets (Noncharitable-use Assets)— For purposes of calculating the “minimum investment return,” only the average, rather than end-of-year, fair market value of assets that were not used or held for use for charitable purposes enter into the computation. An asset was considered an investment asset if it was not used in carrying out a charitable, educational, or other similar function which gave rise to the tax-exempt status of the foundation. Examples include the fair market value of securities and rental property owned by the foundation for investment purposes. The asset amounts included on the balance sheet in Part II of Form 990-PF included both investment and charitable-use assets. This item, which was reported on Form 990-PF, Part X, line 5, is not shown separately in the tables of this article. However, “minimum investment return,” which is based on net investment assets, is shown in the tables. Net Investment Income— This is the amount by which the sum of gross investment income plus capital gain net income exceeds allowable deductions. Included in investment income were interest, dividends, capital gain net income, rents, payments with respect to securities loans (as defined in Code section 512 (a)(5)), and royalties. Any investment income derived from unrelated trade or business activities that were subject to the “unrelated business income” tax reported on Form 990-T, Exempt Organization Business Income Tax Return was excluded. This item was reported on Form 990-PF, Part I, line 27b, column (b). Nonoperating Foundations (and Nonoperating Charitable Trusts)— These are organizations that generally carried on their charitable activities in an indirect manner by making grants to other organizations directly engaged in charitable activities, in contrast to operating foundations and trusts that 119 Private Foundations and Charitable Trusts, 1996 120 120 engaged in charitable 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 Operating 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 1996, 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 organiza- tion’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, 17 percent of operating foundations were exempt from this tax for 1996 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— This category includes: (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 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 II, 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” include such items as advances, bank certificates of deposit, cash values of life insurance, certificates of investment, miscellaneous loan income, and holdings in art, coins, gold, and gems. These items were reported on Form 990-PF, Part II, line 13, Private Foundations and Charitable Trusts, 1996 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 is 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 tax-exempt status under Code section 501(c)(3) but was not (1) a church, school, hospital, or medical research organization; (2) an organization with 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 organizations; or (4) an organization that conducted tests for public safety. The primary difference between a private foundation and a public charity was the sources of the organization’s funding. A foundation was typically funded primarily by an individual, a family, or a corporation, while a public charity received its funds from a large number of sources among the general public. Qualifying Distributions— Qualifying distributions include disbursements for charitable purposes (grants, direct expenditures to accomplish charitable purposes, and charitable-purpose operating and administrative expenses); amounts paid to acquire assets used directly to accomplish tax-exempt functions; charitable program-related investments; and amounts set aside for future charitable projects. Qualifying distributions could be credited against the foundation’s or trust’s obligation to pay out its “distributable amount.” This item was reported on Form 990-PF, Part XII, line 4. Set-Asides— Amounts set aside for specific charitable purposes can be treated as qualifying distributions only if the foundation or charitable trust establishes to the satisfaction of the IRS that the amount will be paid for the specific project within 60 months from the date of the first set-aside and if the foundation meets either the suitability test or the cash distribution test. To meet the suitability test, a foundation must receive prior approval from the IRS and must demonstrate that the project can be better accomplished by a set-aside than by an immediate payment of funds. To meet the cash distribution test under section 4942(g)(2)(B)(ii), a foundation must complete a schedule with its annual return showing how the requirements are met. The foundation must submit a schedule for the year of the set-aside and for each subsequent year until the set-aside amount has been distributed. Set-asides were reported on Form 990-PF, Part XII, lines 3a and 3b. Total Assets— This is the sum of all assets reported in the foundation’s balance sheet, shown at both book value and fair market value. Total assets were reported on Form 990-PF, Part II, line 16, columns (a) beginning-of-year book value, (b) end-of-year book value, and (c) end-of-year fair market value. Total Expenses— This is the sum of contributions, gifts, and grants paid, plus various operating and administrative expenses related to both investment and charitable-purpose activities. Total expense items were reported as shown on the books and records of the foundation and were based on either the cash receipts or the accrual method of accounting. Total expenses were reported on Form 990-PF, Part I, line 26, column (a). Total Revenue— This is the sum of gross contributions, gifts, and grants received; interest on savings and temporary cash investments; dividends and interest from securities; net gain (or loss) from sales of assets (mostly investment assets, but also charitable-use assets); gross rents and royalties; gross profit (or loss) from business activities; and other income (such as royalty income, program-related investment income, interest earned on assets used for charitable purposes, and imputed interest on certain deferred payments). These other income items were reported on Form 990-PF, Part I, line 11, column (a). Total revenue items, which included both investment and charitable-use items, were reported as shown on the books and records of the foundation, and were based on either the cash receipts or the accrual method of accounting. Total revenues were reported on Form 990-PF, Part I, line 12, column (a). Undistributed Income— This is the portion of the required “distributable amount” still undistributed after applying against it the sum of current-year qualifying distributions and any excess distributions carried over from prior years. Sanctions were imposed in the form of excise taxes on private foundations that did not pay out an amount equal to the 121 Private Foundations and Charitable Trusts, 1996 “distributable amount” by the end of the following tax year. This item was reported on Form 990-PF, Part XIII, line 6f, column (d). Unrelated Business Income (UBI)— This is an exempt organization’s 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 purpose or function (other than that the organization needed the profits derived from the unrelated activity). The term “trade or business” generally comprised any activity carried on for the production of income from selling goods or performing services. A tax, as reported on Form 990-T, Exempt Organization Business Income Tax Return, is imposed on “unrelated business taxable income (UBTI).” Unrelated business taxable income is gross unrelated business income, less deductions directly connected with carrying on the trade or business, and less certain other deductions. The unrelated business income tax was determined based on the corporate or trust tax rates that were in effect for a given tax year. (Gross) unrelated business income and the associated business codes were reported on Form 990-PF, Part XVI-A, columns (a) and (b). 122 Notes and References [1] The amount of contributions, gifts, and grants paid by foundations is based on the amount that foundations actually disbursed for 1996 using the cash receipts and disbursements method of accounting. [2] For 1996, the David and Lucile Packard foundation reported $4.68 billion in contributions, gifts, and grants received and total revenue of $4.72 billion in total revenue. The California Endowment reported $1.34 billion in total revenue, $1.23 billion of which were in the form of contributions, gifts, and grants. [3] 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 file Form 990-PF. [4] The data presented in this article are from Forms 990-PF, filed for Reporting Year 1996, 122 by organizations which had accounting periods beginning in 1996. Therefore, the statistics include organizations with accounting periods that ended sometime during the period December 1996 through November 1997. For a more detailed analysis, see the Data Sources and Limitations section. [5] For further information on nonprofit organizations that are tax-exempt under Internal Revenue Code section 501(c), see Meckstroth, Alicia and Arnsberger, Paul, “A 20-Year Review of the Nonprofit Sector, 1975-1995,” Statistics of Income Bulletin, Fall 1998, Volume 18, Number 2. [6] For an in-depth discussion of organizations other than private foundations that are taxexempt under Internal Revenue Code section 501(c)(3), see Hilgert, Cecelia and Whitten, Melissa, “Charities and Other Tax-Exempt Organizations, 1995,” Statistics of Income Bulletin, Winter 1998-1999, Volume 18, Number 3. [7] Programs termed “charitable” refer to taxexempt activities which are charitable, educational, scientific, social, literary, or religious in nature. [8] 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. [9] Renz, Loren; Mandler, Crystal; and Trieber, Rikard, Foundation Giving: Yearbook of Facts and Figures on Private, Corporate, and Community Foundations, 1998 edition, New York: The Foundation Center, 1998, Table 58, p. 70. [10] Some data in this article are from unpublished Statistics of Income tabulations. [11] 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. [12] For 1995, the Robert W. Woodruff Foundation reported fair market value assets of $2.3 Private Foundations and Charitable Trusts, 1996 billion, making it the eleventh-largest domestic foundation for that year. Additionally, the foundation reported $72.5 million in grants paid for 1995. [13] Seven of the ten largest foundations had calendar year accounting periods, meaning that all of their activity occurred during the calendar year period. However, three of the ten had other fiscal year accounting periods. For instance, for the 1996 Reporting Year, the Ford Foundation had an accounting period ending in September 1997 and the J. Paul Getty Trust in June 1997; therefore, much of their activity for 1996 occurred in Calendar Year 1997. See the Data Sources and Limitations section. [14] For more information on the unrelated business income of exempt organizations, see Riley, Margaret, “Unrelated Business Income of Nonprofit Organizations: Highlights of 1995 and a Review of 1991-1995,” Statistics of Income Bulletin, Spring 1999, Volume 18, Number 4. [15] Net investment income is comprised of income not considered to be related to a foundation’s charitable purpose, such as interest, dividends, and capital gains net income. The net investment income amount used in calculating the NII yield was obtained from column (b) of the income statement, found in Part I of Form 990PF. [16] 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, Lester M. and Voytek, Kenneth P., 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 percent of Contributions Received] To calculate the rate of total return shown in Figure G, samples of private foundation information returns for 1995 and 1996 were matched in order to analyze both the beginning and end-of-year fair market value data. The beginning fair market value of assets for 1996 equals the ending fair market value reported on the 1996 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) was used to compute the rate of return. In order to obtain an inflation-adjusted real rate of return, the figure equaling the beginning-ofyear fair market value of assets was adjusted using the 1992 chain-type price index for Gross Domestic Product from the U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business, Volume 78, Number 8, August, 1998, Table 7.1. [17] For data from previous years, see Arnsberger, Paul, “Private Foundations and Charitable Trusts, 1996,” Statistics of Income Bulletin, Winter 1998-1999, Volume 18, Number 3. [18] 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 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. SOURCE: IRS, Statistics of Income Bulletin, Fall 1999, Publication 1136 (Rev. 12-99) 123 Private Foundations and Charitable Trusts, 1996 Table 1.--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 a sample--money amounts are in thousands dollars] Selected sources of revenue Type of foundation, Number size of fair market value of of total assets returns Total revenue Number Amount of returns (1) 124 Number Amount of returns (3) (4) Dividends and interest from securities Number Amount of returns (5) (6) Net gain (or loss) from sales of assets Number Amount of returns (7) (8) (9) All foundations Total............................................................................... 50,811 49,724 49,601,883 Zero or unreported......................................................................... 1,124 1,008 100,847 $1 under $100,000......................................................................... 15,409 14,496 560,356 $100,000 under $1,000,000......................................................................... 19,300 19,274 2,093,997 $1,000,000 under $10,000,000......................................................................... 11,839 11,809 7,195,849 $10,000,000 under $25,000,000......................................................................... 1,765 1,764 4,890,867 $25,000,000 under $50,000,000......................................................................... 656 656 3,765,303 $50,000,000 under $100,000,000......................................................................... 358 358 3,965,465 $100,000,000 or more......................................................................... 359 359 27,029,199 25,490 628 8,564 9,460 5,423 806 295 152 161 20,964,565 98,429 391,625 1,424,398 3,791,871 2,351,981 1,607,870 1,516,746 9,781,643 33,866 *117 5,318 14,837 10,598 1,669 630 345 353 7,956,671 *3,347 9,590 205,645 1,055,498 759,255 600,298 678,563 4,644,475 24,724 *191 2,722 9,880 9,103 1,566 595 336 333 16,923,166 *-3,911 133,670 236,133 1,620,157 1,379,871 1,156,934 1,542,008 10,858,304 Nonoperating foundations Total............................................................................... 46,101 45,198 45,775,344 Zero or unreported......................................................................... 1,124 1,008 100,847 $1 under $100,000......................................................................... 13,432 12,702 509,988 $100,000 under $1,000,000......................................................................... 17,726 17,701 1,797,707 $1,000,000 under $10,000,000......................................................................... 10,932 10,902 6,619,111 $10,000,000 under $25,000,000......................................................................... 1,621 1,620 4,526,521 $25,000,000 under $50,000,000......................................................................... 611 611 3,566,932 $50,000,000 under $100,000,000......................................................................... 328 328 3,556,174 $100,000,000 or more......................................................................... 327 327 25,098,064 22,473 628 7,397 8,469 4,770 690 259 128 132 19,630,356 98,429 341,641 1,231,418 3,454,120 2,251,066 1,562,350 1,278,434 9,412,897 32,082 *117 4,982 14,171 10,031 1,549 586 321 324 7,514,243 *3,347 9,267 197,233 1,006,800 715,756 567,856 637,610 4,376,373 23,617 *191 2,612 9,519 8,674 1,455 553 309 306 15,824,002 *-3,911 136,621 224,358 1,554,457 1,316,173 1,100,996 1,447,507 10,047,800 Operating foundations Total............................................................................... 4,709 4,527 3,826,538 Zero or unreported......................................................................... ---$1 under $100,000......................................................................... 1,977 1,795 50,368 $100,000 under $1,000,000......................................................................... 1,574 1,574 296,290 $1,000,000 under $10,000,000......................................................................... 907 907 576,738 $10,000,000 under $25,000,000......................................................................... 144 144 364,347 $25,000,000 under $50,000,000......................................................................... 45 45 198,371 $50,000,000 under $100,000,000......................................................................... 30 30 409,290 $100,000,000 or more......................................................................... 32 32 1,931,135 3,016 -1,167 992 653 116 36 24 29 1,334,209 -49,984 192,981 337,751 100,916 45,520 238,312 368,745 1,784 -*336 665 566 120 44 24 29 442,428 -*323 8,412 48,698 43,498 32,442 40,953 268,102 1,107 -*110 362 429 111 42 27 27 1,099,164 -*-2,951 11,775 65,700 63,698 55,939 94,501 810,504 Grantmaking foundations Total............................................................................... 40,889 40,632 44,920,209 Zero or unreported......................................................................... 613 570 95,287 $1 under $100,000......................................................................... 10,466 10,284 495,191 $100,000 under $1,000,000......................................................................... 16,165 16,139 1,485,007 $1,000,000 under $10,000,000......................................................................... 10,707 10,702 5,967,386 $10,000,000 under $25,000,000......................................................................... 1,644 1,644 4,410,251 $25,000,000 under $50,000,000......................................................................... 618 618 3,423,398 $50,000,000 under $100,000,000......................................................................... 339 339 3,604,870 $100,000,000 or more......................................................................... 337 337 25,438,818 19,295 372 5,731 7,344 4,587 717 265 136 143 17,767,994 93,812 334,091 989,581 2,998,847 2,084,804 1,376,388 1,266,274 8,624,198 30,748 *81 4,347 13,474 10,013 1,574 596 331 332 7,691,855 *3,049 7,846 195,077 1,007,016 726,962 576,189 660,971 4,514,745 22,928 *154 2,356 9,078 8,653 1,487 563 320 317 16,451,869 *-3,989 132,332 206,126 1,536,571 1,329,656 1,129,705 1,488,854 10,632,615 Grantmaking-nonoperating foundations Total............................................................................... 38,685 38,429 42,626,579 Zero or unreported......................................................................... 613 570 95,287 $1 under $100,000......................................................................... 9,555 9,373 459,198 $100,000 under $1,000,000......................................................................... 15,377 15,351 1,360,416 $1,000,000 under $10,000,000......................................................................... 10,314 10,309 5,750,081 $10,000,000 under $25,000,000......................................................................... 1,583 1,583 4,265,180 $25,000,000 under $50,000,000......................................................................... 599 599 3,353,865 $50,000,000 under $100,000,000......................................................................... 324 324 3,385,185 $100,000,000 or more......................................................................... 321 321 23,957,367 18,081 372 5,302 6,889 4,346 668 251 125 128 17,004,143 93,812 298,846 878,755 2,860,518 2,028,030 1,358,539 1,134,313 8,351,330 29,868 *81 4,194 13,107 9,750 1,522 577 319 318 7,421,134 *3,049 7,688 189,593 986,940 710,097 563,873 636,445 4,323,449 22,331 *154 2,283 8,859 8,442 1,438 546 307 302 15,697,389 *-3,989 135,331 205,393 1,500,077 1,296,397 1,100,356 1,436,876 10,026,950 Grantmaking-operating foundations Total............................................................................... 2,204 2,204 2,293,630 Zero or unreported......................................................................... ---$1 under $100,000......................................................................... 911 911 35,993 $100,000 under $1,000,000......................................................................... 788 788 124,591 $1,000,000 under $10,000,000......................................................................... 393 393 217,305 $10,000,000 under $25,000,000......................................................................... 61 61 145,071 $25,000,000 under $50,000,000......................................................................... 19 19 69,533 $50,000,000 under $100,000,000......................................................................... 15 15 219,686 $100,000,000 or more......................................................................... 16 16 1,481,451 1,214 -429 455 240 49 14 11 15 763,851 -35,244 110,825 138,329 56,774 17,849 131,961 272,868 879 -*153 366 263 52 19 12 14 270,721 -*158 5,485 20,075 16,865 12,316 24,526 191,296 598 -*73 220 211 49 17 13 15 754,480 -*-3,000 733 36,494 33,259 29,349 51,979 605,666 Footnotes at end of table. 124 (2) Contributions, gifts, and grants received Private Foundations and Charitable Trusts, 1996 Table 1.--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 a sample--money amounts are in thousands dollars] Excess of revenue Type of foundation, Total expenses size of fair market value of total assets Number Amount of returns (10) (less loss) over expenses Number Amount of returns (11) (12) Disbursements Net investment income Number Amount of returns (13) (14) for exempt purposes Number Amount of returns (15) (16) (17) All foundations Total............................................................................... 48,819 20,618,510 Zero or unreported......................................................................... 1,015 216,015 $1 under $100,000......................................................................... 14,329 549,822 $100,000 under $1,000,000......................................................................... 18,689 1,215,852 $1,000,000 under $10,000,000......................................................................... 11,657 3,616,367 $10,000,000 under $25,000,000......................................................................... 1,761 2,094,362 $25,000,000 under $50,000,000......................................................................... 652 1,790,798 $50,000,000 under $100,000,000......................................................................... 357 1,520,599 $100,000,000 or more......................................................................... 359 9,614,696 49,555 643 14,752 19,238 11,787 1,764 655 358 359 28,983,373 -115,169 10,535 878,145 3,579,482 2,796,505 1,974,505 2,444,866 17,414,503 43,572 526 10,510 17,981 11,454 1,746 647 352 357 26,230,433 9,728 160,546 611,926 3,433,811 2,437,236 2,078,580 2,472,097 15,026,509 45,905 796 12,665 17,960 11,390 1,735 649 355 356 17,606,143 203,850 497,467 1,048,556 3,013,129 1,835,325 1,537,578 1,254,564 8,215,672 Nonoperating foundations Total............................................................................... 44,218 18,736,732 Zero or unreported......................................................................... 1,015 216,015 $1 under $100,000......................................................................... 12,425 494,350 $100,000 under $1,000,000......................................................................... 17,130 982,912 $1,000,000 under $10,000,000......................................................................... 10,770 3,267,380 $10,000,000 under $25,000,000......................................................................... 1,617 1,858,161 $25,000,000 under $50,000,000......................................................................... 607 1,666,800 $50,000,000 under $100,000,000......................................................................... 327 1,393,136 $100,000,000 or more......................................................................... 327 8,857,978 44,989 643 12,884 17,683 10,895 1,620 610 328 327 27,038,612 -115,169 15,639 814,795 3,351,731 2,668,359 1,900,132 2,163,038 16,240,086 40,054 526 9,313 16,677 10,677 1,608 603 323 326 24,462,726 9,728 156,031 581,578 3,261,766 2,318,429 1,986,841 2,322,013 13,826,341 41,714 796 10,950 16,575 10,542 1,597 605 325 324 16,170,854 203,850 457,732 897,084 2,732,735 1,670,525 1,452,458 1,160,443 7,596,027 Operating foundations Total............................................................................... 4,601 1,881,778 Zero or unreported......................................................................... --$1 under $100,000......................................................................... 1,904 55,472 $100,000 under $1,000,000......................................................................... 1,559 232,940 $1,000,000 under $10,000,000......................................................................... 886 348,986 $10,000,000 under $25,000,000......................................................................... 144 236,201 $25,000,000 under $50,000,000......................................................................... 45 123,998 $50,000,000 under $100,000,000......................................................................... 30 127,462 $100,000,000 or more......................................................................... 32 756,718 4,565 -1,868 1,555 892 144 45 30 32 1,944,761 --5,104 63,350 227,752 128,146 74,373 281,828 1,174,417 3,519 -1,196 1,304 776 138 44 29 31 1,767,707 -4,515 30,348 172,045 118,807 91,739 150,084 1,200,169 4,192 -1,715 1,385 848 138 44 30 32 1,435,289 -39,735 151,472 280,394 164,800 85,120 94,121 619,645 Grantmaking foundations Total............................................................................... 40,888 19,200,288 Zero or unreported......................................................................... 613 203,887 $1 under $100,000......................................................................... 10,466 505,108 $100,000 under $1,000,000......................................................................... 16,165 970,499 $1,000,000 under $10,000,000......................................................................... 10,706 3,061,977 $10,000,000 under $25,000,000......................................................................... 1,644 1,926,155 $25,000,000 under $50,000,000......................................................................... 618 1,701,520 $50,000,000 under $100,000,000......................................................................... 339 1,422,692 $100,000,000 or more......................................................................... 337 9,408,450 40,596 423 10,393 16,136 10,705 1,644 618 339 337 25,719,921 -108,600 -9,917 514,508 2,905,409 2,484,096 1,721,878 2,182,178 16,030,368 37,991 344 8,443 15,724 10,567 1,630 612 335 337 25,289,401 9,092 155,912 544,596 3,179,430 2,327,565 1,999,387 2,402,367 14,671,052 40,889 613 10,466 16,165 10,707 1,644 618 339 337 16,838,175 202,867 476,114 913,773 2,772,034 1,718,101 1,484,761 1,204,676 8,065,849 Grantmaking-nonoperating foundations Total............................................................................... 38,684 18,190,999 Zero or unreported......................................................................... 613 203,887 $1 under $100,000......................................................................... 9,555 462,590 $100,000 under $1,000,000......................................................................... 15,377 880,914 $1,000,000 under $10,000,000......................................................................... 10,313 2,952,570 $10,000,000 under $25,000,000......................................................................... 1,583 1,842,847 $25,000,000 under $50,000,000......................................................................... 599 1,664,203 $50,000,000 under $100,000,000......................................................................... 324 1,351,987 $100,000,000 or more......................................................................... 321 8,832,001 38,392 423 9,482 15,348 10,312 1,583 599 324 321 24,435,580 -108,600 -3,392 479,502 2,797,511 2,422,332 1,689,662 2,033,198 15,125,367 36,201 344 7,795 15,044 10,210 1,573 594 320 321 24,131,572 9,092 152,447 534,535 3,121,073 2,273,552 1,956,395 2,316,697 13,767,779 38,685 613 9,555 15,377 10,314 1,583 599 324 321 16,022,542 202,867 448,098 831,814 2,677,576 1,664,678 1,452,279 1,153,800 7,591,429 Grantmaking-operating foundations Total............................................................................... 2,204 1,009,288 Zero or unreported......................................................................... --$1 under $100,000......................................................................... 911 42,518 $100,000 under $1,000,000......................................................................... 788 89,585 $1,000,000 under $10,000,000......................................................................... 393 109,407 $10,000,000 under $25,000,000......................................................................... 61 83,307 $25,000,000 under $50,000,000......................................................................... 19 37,317 $50,000,000 under $100,000,000......................................................................... 15 70,705 $100,000,000 or more......................................................................... 16 576,449 2,204 -911 788 393 61 19 15 16 1,284,342 --6,525 35,006 107,899 61,764 32,216 148,980 905,001 1,791 -648 680 357 57 18 15 16 1,157,830 -3,466 10,060 58,357 54,013 42,992 85,669 903,273 2,204 -911 788 393 61 19 15 16 815,632 -28,016 81,958 94,458 53,423 32,482 50,876 474,421 Footnotes at end of table. 125 Private Foundations and Charitable Trusts, 1996 Table 1.--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 a sample--money amounts are in thousands dollars] Contributions, Type of foundation, size of fair market value of total assets Number (18) Amount Number Amount of returns (19) Number Foreign foundations Amount of returns Number Amount of returns (20) (21) (22) (23) All foundations Total............................................................................... 40,889 15,122,843 Zero or unreported......................................................................... 613 202,250 $1 under $100,000......................................................................... 10,466 460,315 $100,000 under $1,000,000......................................................................... 16,165 834,184 $1,000,000 under $10,000,000......................................................................... 10,707 2,593,275 $10,000,000 under $25,000,000......................................................................... 1,644 1,590,214 $25,000,000 under $50,000,000......................................................................... 618 1,370,015 $50,000,000 under $100,000,000......................................................................... 339 1,072,488 $100,000,000 or more......................................................................... 337 7,000,101 41,056 337 9,071 17,468 11,188 1,695 620 339 339 370,335 105 3,071 9,861 53,446 37,680 30,948 36,597 198,626 41,039 337 9,071 17,464 11,188 1,694 617 337 332 369,481 105 3,071 9,849 53,446 37,664 30,908 36,593 197,844 17 --*4 -1 3 2 7 854 --*12 -15 40 4 783 Nonoperating foundations Total............................................................................... 38,685 14,786,651 Zero or unreported......................................................................... 613 202,250 $1 under $100,000......................................................................... 9,555 435,966 $100,000 under $1,000,000......................................................................... 15,377 790,375 $1,000,000 under $10,000,000......................................................................... 10,314 2,560,411 $10,000,000 under $25,000,000......................................................................... 1,583 1,575,270 $25,000,000 under $50,000,000......................................................................... 599 1,360,349 $50,000,000 under $100,000,000......................................................................... 324 1,060,865 $100,000,000 or more......................................................................... 321 6,801,163 38,362 337 8,167 16,392 10,623 1,601 599 320 324 357,922 105 2,989 9,365 51,436 36,496 30,266 34,839 192,424 38,345 337 8,167 16,387 10,623 1,600 596 318 317 357,068 105 2,989 9,354 51,436 36,481 30,226 34,835 191,641 17 --*4 -1 3 2 7 854 --*12 -15 40 4 783 Operating foundations Total............................................................................... 2,204 336,192 Zero or unreported......................................................................... --$1 under $100,000......................................................................... 911 24,349 $100,000 under $1,000,000......................................................................... 788 43,809 $1,000,000 under $10,000,000......................................................................... 393 32,864 $10,000,000 under $25,000,000......................................................................... 61 14,945 $25,000,000 under $50,000,000......................................................................... 19 9,665 $50,000,000 under $100,000,000......................................................................... 15 11,623 $100,000,000 or more......................................................................... 16 198,937 2,694 -904 1,077 564 94 21 19 15 12,413 -82 495 2,010 1,183 682 1,758 6,202 2,694 -904 1,077 564 94 21 19 15 12,413 -82 495 2,010 1,183 682 1,758 6,202 ---------- ---------- Grantmaking foundations Total............................................................................... 40,889 15,122,843 Zero or unreported......................................................................... 613 202,250 $1 under $100,000......................................................................... 10,466 460,315 $100,000 under $1,000,000......................................................................... 16,165 834,184 $1,000,000 under $10,000,000......................................................................... 10,707 2,593,275 $10,000,000 under $25,000,000......................................................................... 1,644 1,590,214 $25,000,000 under $50,000,000......................................................................... 618 1,370,015 $50,000,000 under $100,000,000......................................................................... 339 1,072,488 $100,000,000 or more......................................................................... 337 7,000,101 36,615 *264 7,494 15,504 10,481 1,615 601 329 329 359,720 *93 2,986 8,594 49,494 36,341 30,064 35,687 196,461 36,604 *264 7,494 15,504 10,481 1,614 599 327 323 358,883 *93 2,986 8,594 49,494 36,325 30,024 35,683 195,683 11 ----1 2 2 6 837 ----15 40 4 778 Grantmaking-nonoperating foundations Total............................................................................... 38,685 14,786,651 Zero or unreported......................................................................... 613 202,250 $1 under $100,000......................................................................... 9,555 435,966 $100,000 under $1,000,000......................................................................... 15,377 790,375 $1,000,000 under $10,000,000......................................................................... 10,314 2,560,411 $10,000,000 under $25,000,000......................................................................... 1,583 1,575,270 $25,000,000 under $50,000,000......................................................................... 599 1,360,349 $50,000,000 under $100,000,000......................................................................... 324 1,060,865 $100,000,000 or more......................................................................... 321 6,801,163 35,111 *264 6,955 14,923 10,172 1,569 591 319 319 351,743 *93 2,922 8,448 48,721 35,691 29,687 34,789 191,392 35,100 *264 6,955 14,923 10,172 1,568 589 317 313 350,906 *93 2,922 8,448 48,721 35,675 29,647 34,785 190,614 11 ----1 2 2 6 837 ----15 40 4 778 Grantmaking-operating foundations Total............................................................................... 2,204 336,192 Zero or unreported......................................................................... --$1 under $100,000......................................................................... 911 24,349 $100,000 under $1,000,000......................................................................... 788 43,809 $1,000,000 under $10,000,000......................................................................... 393 32,864 $10,000,000 under $25,000,000......................................................................... 61 14,945 $25,000,000 under $50,000,000......................................................................... 19 9,665 $50,000,000 under $100,000,000......................................................................... 15 11,623 $100,000,000 or more......................................................................... 16 198,937 1,504 -539 581 309 46 10 10 10 7,977 -64 146 773 650 377 899 5,069 1,504 -539 581 309 46 10 10 10 7,977 -64 146 773 650 377 899 5,069 ---------- ---------- Footnotes at end of table. 126 Domestic foundations Total of returns 126 Excise tax on net investment income gifts, and grants paid¹ (24) (25) Private Foundations and Charitable Trusts, 1996 Table 1.--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 a sample--money amounts are in thousands dollars] Total Type of foundation, Total assets (book value) size of fair market value of total assets Number Amount of returns (26) Investments in securities (book value) investment assets (book value) Number Amount of returns (27) (28) Total Number Government obligations Amount of returns (29) (30) Number Amount of returns (31) (32) (33) All foundations Total............................................................................... 49,792 256,677,119 Zero or unreported......................................................................... *111 *26,246 $1 under $100,000......................................................................... 15,409 423,614 $100,000 under $1,000,000......................................................................... 19,300 6,582,956 $1,000,000 under $10,000,000......................................................................... 11,834 29,632,869 $10,000,000 under $25,000,000......................................................................... 1,765 21,384,275 $25,000,000 under $50,000,000......................................................................... 656 17,547,312 $50,000,000 under $100,000,000......................................................................... 358 19,450,438 $100,000,000 or more......................................................................... 359 161,629,408 42,974 *38 9,991 18,202 11,616 1,755 655 358 359 237,003,489 *25,141 309,056 5,631,284 26,708,429 19,829,774 16,304,463 18,306,472 149,888,868 31,502 *1 4,188 13,975 10,358 1,654 622 353 351 193,078,752 *12,606 120,442 3,697,358 19,731,472 15,133,853 12,507,616 15,235,838 126,639,566 14,319 *1 1,203 5,114 5,874 1,134 445 270 278 31,887,527 *3,438 26,142 815,401 4,872,785 3,449,762 2,834,058 3,576,725 16,309,215 Nonoperating foundations Total............................................................................... 45,082 234,422,176 Zero or unreported......................................................................... *111 *26,246 $1 under $100,000......................................................................... 13,432 370,289 $100,000 under $1,000,000......................................................................... 17,726 5,996,375 $1,000,000 under $10,000,000......................................................................... 10,927 27,253,862 $10,000,000 under $25,000,000......................................................................... 1,621 19,436,424 $25,000,000 under $50,000,000......................................................................... 611 16,137,479 $50,000,000 under $100,000,000......................................................................... 328 17,704,320 $100,000,000 or more......................................................................... 327 147,497,182 39,625 *38 8,985 16,905 10,818 1,616 610 328 327 221,063,007 *25,141 281,225 5,341,445 25,291,873 18,520,618 15,299,400 16,911,149 139,392, [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Aacdc40a7e217d18b. Public record. Not legal advice.