January 26, 2006 | Read Time: 2 minutes
Charitable spending by foundations fell in 2002 for the second year in a row, according to a new IRS report.
In 2002, 73,255 private foundations distributed $26.3-billion for grants and other charitable purposes, a decline of 4 percent from the amount awarded in 2001. Foundations spent $27.4-billion in 2001 on charitable activities, a 0.7-percent decrease from 2000. The 2001 decline was the first since the IRS began keeping track in 1985.
The reductions in foundation expenditures in 2001 and 2002 followed the stock-market decline that began in 2000, which reduced the value of many assets held by foundations. Over all, foundations’ assets fell to $413-billion in 2002 from $455.4-billion in 2001, a drop of 9.3 percent. Foundations’ assets declined 3.4 percent from 2000 to 2001.
Meanwhile, another new IRS report shows that the number of charities that filed Form 990 and Form 990-EZ informational tax returns with the government rose from 240,569 in 2001 to 251,676 in 2002, an increase of 4.6 percent.
The number of charities filing returns grew 4.5 percent from 2000 to 2001, and 8.8 percent from 1999 to 2000.
The IRS noted that another 496,102 active charities did not file returns in 2002. Many groups are exempt from the filing requirement, including churches and other religious organizations, as well as nonprofit groups with annual gross receipts totaling less than $25,000. (The new figures do not count private foundations.)
Total revenue reported to the IRS by charities on their tax returns was $955.3-billion in 2002, an increase of 6.5 percent from the $897-billion reported the previous year. Total assets of charities were $1.73-trillion in 2002, 6.3 percent more than in 2001.
Total liabilities of charities were $693.6-billion in 2002, an increase of 13.4 percent from the $611.4-billion reported in 2001.
Both reports appear in the revenue service’s Statistics of Income Bulletin for fall 2005 and can be found online at http://www.irs.gov. Copies may be purchased for $39 from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, Pa. 15250-7954.
