Foundation Funding Demystified:
Your Roadmap to Success
Foundations are an important funding source for nonprofits across the country. As you are looking ahead at your philanthropic needs and considering potential foundation support, you need to have a good understanding of how foundation funding has changed over the last few years and how that might impact you moving forward.
How Has Foundation Giving Changed Over Time?
Giving by Foundations Hits Second-Highest Level on Record
According to Giving USA 2023, giving by foundations represented 21% of all giving in 2022 and increased by 2.5% from 2021 to an estimated $105.21 billion (note: this estimate does not include corporate foundations). Even when adjusted for inflation, this is still the second-highest level on record. This is yet another indicator of the growing importance of foundation giving, which has, as whole, increased significantly over the decades: raising from 5% of total giving in 1982 to 21% in 2022. For more information, read our blog: Key Takeaways of Giving USA 2023.
Independent and Community Foundation Giving Increased in 2022
Candid’s 2023 Foundation Giving Forecast Survey revealed that 57% of independent foundations, which make up the majority of foundation giving, and 59% of community foundations increased their giving.
Foundations Returning to Pre-Pandemic Norms
Foundation giving was greatly impacted by COVID-19, uncertain economic climates, and social justice movements in recent years. During 2020 and 2021, many foundations gave more than the 5% federally mandated minimum, but we are currently seeing a return to pre-pandemic giving norms. Nonprofits will need to be aware of potential changes to the foundation support they receive, especially if they benefitted from a significant increase over the last few years.
The Rise of Trust-Based Philanthropy
This past year saw the continued growth of foundations using trust-based philanthropy to create more balanced and equitable philanthropy (see our blog post on Trust-Based Philanthropy in Action). Trust-based philanthropy can include making unrestricted gifts, removing invitation requirements from the application process, and reducing reporting requirements. These changes might seem minor, but they demonstrate trust in an organization and help to foster strong partnership between the foundation and the nonprofit.
So, what does this mean for you?
It is important to remember that foundation funding requires more than just writing the application. As you begin looking at potential foundation funders, you’ll want to keep four things in mind:
While foundation support is essential to the financial well-being of nonprofits across the country, it is important to remember to cultivate relationships with your individual donors, corporate donors, and other supporters. This will diversify your funding sources and ensure you have a strong footing no matter what the future brings.