How Data on Grants Was Gathered

The Chronicle’s annual survey of the nation’s largest private foundations is based on financial information provided by 147 grant makers.

Among the 122 foundations that

provided asset figures for their fiscal year ending in 2005, assets totaled $166.5-billion. The 10 wealthiest foundations accounted for $94.4-billion of those assets. Among the 132 foundations that provided data on their grants paid in fiscal 2005, grants totaled nearly $7.3-billion.

The Chronicle also collected data on total operating and administrative costs and total compensation for foundation directors, trustees, and officers. Ninety-one foundations provided this information for the fiscal year ending in 2005.

To be included in the survey, foundations had to hold at least $230-million in assets or have awarded at least $9-million in grants in the fiscal year ending in 2004, the most recent year for which all the foundations had audited financial information. Organizations that met those standards in fiscal year 2005 were also included.

One hundred and seven grant makers of that size declined to participate in the survey. Figures for those organizations come from their most recently completed Form 990-PF, the informational tax returns filed with the Internal Revenue Service. Data from those organizations is presented on The Chronicle‘s Web site.

Foundation Policies

Officials at some foundations declined to complete a Chronicle survey form because it is their policy not to participate in surveys. Others said they lacked sufficient staff members to fulfill the request by the deadline.

The network of foundations created by the financier George Soros, six of which have headquarters in New York, submitted a survey questionnaire but because it omitted several key pieces of data, The Chronicle relied on the foundations’ informational returns to determine their assets and giving figures.

One grant maker, Robert Wood Johnson Foundation, in Princeton, N.J., responded to The Chronicle‘s survey just as the newspaper was about to go to press. As a result, only some of the foundation’s information is included in this issue, but all of it is presented on The Chronicle‘s Web site.

Four of the participants in this year’s survey provided Forms 990-PF that covered the fiscal year ending in 2005: the Roy J. Carver Charitable Trust, in Muscatine, Iowa; France-Merrick Foundation, in Baltimore; Northwest Area Foundation, in St. Paul; and Spencer Foundation, in Chicago. All other foundations, both those that participated in the survey and those that declined, provided the tax forms from the 2004 fiscal year.

Foundations were selected to participate based on information supplied by the Foundation Center, an organization in New York that conducts research on grant makers. The Chronicle asked the center to rank the 150 largest grant makers by their assets and the amount they gave away during the most recent fiscal year for which data were available.

The Chronicle sent a written request to foundations for their Forms 990-PF during the third week of December, so that organizations would have time to comply with federal law, which requires that the form be provided within 30 days of such a request.

All foundations contacted for the survey either provided The Chronicle with their Form 990-PF or made it available online for public inspection, with the exception of the Arthur S. DeMoss Foundation, in West Palm Beach, Fla., which did neither. The IRS has been notified of the foundation’s failure to comply with federal disclosure law.

Many of the grant makers that responded said that their figures for 2005 were estimated or unaudited, and thus subject to change. In a handful of cases, grant makers submitted figures for fiscal years ending in 2006 and 2007; those figures were estimated or unaudited.

Assets vs. Grant Making

This year, The Chronicle calculated the percentage of foundation assets paid in grants, based on data for the 2005 fiscal year provided by 120 groups.

This figure, while intended to give readers an indication of a foundation’s grant-making activity, should not be confused with the federal requirement that foundations distribute 5 percent of their net assets for charitable purposes every year.

Foundations are allowed to average their payout over three years to meet the requirement and are also allowed to include some administrative costs in meeting the federal requirement.

Readers of the survey should be careful when comparing a foundation’s giving and asset figures from year to year. A sharp increase or decrease in the amount of grants approved or paid may not necessarily mean a change in the foundation’s financial condition.

Some grant makers, for instance, make a large initial payment on a multiple-year pledge, then pay reduced amounts on the pledge in subsequent years. Others make large, one-time payments that are not typical of their giving patterns.

The assets of several foundations increased because of large cash infusions from the donors who created them.

For example, the assets of the Broad Foundation, in Los Angeles, rose by 52.3 percent from 2004 to 2005, from $544.8-million to $830-million, in part because of a $150-million pledge and a gift of $225-million in stock by Eli and Edythe L. Broad.

Mr. Broad is the founding chairman of two Los Angeles companies, KB Home Corporation and SunAmerica.

The Marisla Foundation, in Laguna Beach, Calif., saw its assets jump 464.3 percent from 2004 to 2005, from $14.3-million to $80.8-million, due to cash donations last year from its trustees.

Marisla, which changed its name from the Homeland Foundation in 2004, makes grants to environmental and human-services groups.

Some foundations’ assets dropped precipitously because they have shut down or are about to do so.

For example, the Whitaker Foundation’s assets plummeted from $123-million in 2004 to $38.9-million in 2005, because the Arlington, Va., grant maker is seeking to disperse all its funds by June 30.

The F.W. Olin Foundation, in Sarasota, Fla., and the John M. Olin Foundation, in New York, both dissolved last year.

It is also important to keep in mind that, because some foundations award money to their own foundation-run programs or to organizations they select, not all grants represent proposals chosen through a competitive application process.

Some foundations, such as the Ellison Medical Foundation, in Bethesda, Md., which reported that it had no assets at the end of its fiscal year, distribute within 12 months all the money they receive in a given year. Some other so-called pass-through foundations do not give all of their assets away before the fiscal year ends.

The foundation survey was compiled by Noelle Barton, Candie Jones, and Heather Joslyn.