As the preceding chart indicates, there has been no net increase in the number of active grantmaking foundations in recent years. This fact reflects both the termination of numerous existing grantmaking foundations since 1969, and a dramatic drop in the creation of new grantmaking foundations. Data recently released by the General Accounting Office confirm this decline, 1 showing a 59% drop in the creation of new grantmaking foundations between the 1960s and the 1970s. Effects of Inflation In The Foundation Directory, 9th Edition (published September 1983), which includes 4,063 of the largest foundations, we have noted the effects of inflation on foundation dollars. These 4,063 foundations account for about 93 percent of all assets of active grantmaking foundations, but the real value of these assets in constant dollars has weakened. 1 Statistical Analysis of The Operation and Activities 36-078 0-84--13 We report in the new Directory as follows: Foundation assets continue to decline in real value as the number of foundations with portfolios above $1 million and annual giving above $100,000 increases. (See Figure C following text) in 1981 the current dollar value of assets of qualifying foundations was $47.3 billion, but in constant dollars only $17.4 billion, or about 30 percent less than the constant dollar value in 1972. This occurred despite a 62 percent increase in the number of qualifying foundations from 2,533 in 1972 to 4,063 in 1981. The number of Foundations qualifying for inclusion in the Directory has grown steadily since 1972, although the total number of active, grantmaking private foundations has remained fairly constant during the same period. This increase can be attributed to four factors: 1) improved access to information about foundation entities; 2) foundations established since 1972, and foundations established earlier which received substantial additions to endowment in the 1970s; 3) market conditions resulting in appreciated assets in current dollars which are sharply depreciated when converted to constant dollars; and 4) the growth in the number of foundations qualifying for inclusion by total giving ($100,000 or more), but which hold assets of less than $1 million. This last factor would appear to be due to market conditions which resulted in inflated current dollar values of total giving, and increased giving as a percentage of assets under foundation payout requirements prior to ERTA 1981. Average gifts received in constant dollars (i.e., 1967 dollars) for each of 2,533 foundations in 1972 amounted to about $232,000; in 1982, only $157,343 in constant dollars. The average grant payout in constant dollars per year for each foundation ($488,000 in 1972; $314,000 in 1981) has declined 35.6 percent. To be effective supporters of organizations in the nonprofit voluntary sector, foundations must maintain their giving power. Inflation, government regulation of minimum annual payout, and limitation of deductibility when new gifts to endowments are made all tend to decrease the ability of foundations to give today and still add to their assets and their grantmaking capability in the future. Inflation makes the greatest inroads, but regulation as an added factor creates a hardship, especially for independent foundations, the largest group surveyed: at the same time that inflation impairs the real value of assets and grants; independent foundations cannot attract a sufficient number of new dollars for endowment to counterbalance the loss. Payout requirements may leave little opportunity for greater investment, although this has been allevi- Still, regulation inhibits growth and discourages formation of new Thank you, Mr. Chairman, for the opportunity to file this statement as part of the record of your hearings on private foundations. 2.24.84 TABLE 3. AGGREGATE FOUNDATION FISCAL DATA ADJUSTED FOR INFLATION 1972-1981 Constant Collars based on 1967 = 31.00; 1972 = 5.799: 1975 = 5.52, 1977 = 3.351; 1972 = 3.46 1921 = 5.857 FIGURE C. THE EFFECT OF INFLATION ON FOUNDATION ASSETS 1969-1981 STATEMENT OF MRS. ORVILLE L. FREEMAN, NATIONAL PRESIDENT, GIRL SCOUTS OF AMERICA, WASHINGTON, DC Mrs. FREEMAN. Thank you, Mr. Chairman, and members of the subcommittee. I am Jane Freeman, the national president Girl Scouts of the U.S.A. I am delighted to have this opportunity to join my colleagues today on behalf of four organizations of the nonprof it sector. With me are Mr. Brian O'Connell, president of the Independent Sector, Mr. Jack Moskowitz, the senior vice president of government relations for the United Way of America, and Mr. Christ Mould general counsel of the YMCA of the U.S.A. had planned to be here and has asked me to tell the subcommittee that the YMCA is strongly supportive and has also submitted written testimony. Now, our organizations serve a diverse cross section of this Nation's citizens from the rural and urban areas, from all income levels and all ages, from all ethnic, racial, religious, economic, and social backgrounds. Our organizations represent valuable private resources that can be tapped in cooperative ventures with foundations and with the Federal and community leadership. We work together to avoid duplication of services and to develop ways of serving many millions of people. The national volunteer organizations represented here strongly support the proposed amendment of the law to remove certain impediments to the effective philanthropy of private foundations. In addition, written testimony has also been submitted by the following: Father Theodore Hesberg, president of Notre Dame; Gov. Terry Sanford, president, Duke University; Dr. Harold Shapiro, president, the University of Michigan. My formal statement has also been submitted for the record. Now, the Girl Scouts of the U.S.A., the largest organization serving girls and women in the world, the primary funding of our national services to almost 3 million members comes from two major sources-the modest annual dues of our members, and income generated through the sales of official Girl Scouts publications, uniforms, and equipment. A small group of private foundations make regular contributions to Girl Scouts, U.S.A. in response to an annual appeal letter. The Girl Scouts of the U.S.A. receives no United Way campaign funds. Our 355 local Girl Scout councils, which are responsible for their own organizations, do benefit from United Way. So, we need very much to have the kind of money that you get from a private foundation operating in the public interest to help us do a more diversified outreach, to do the new and innovative things that we cannot do, that kind of venture capital which private industry would have. We do not have that from our regular income sources, and we need that if we are going to be able to reach out to do such things as the special training of our leaders to reach out to minority people-a grant that we had from a foundation recently-we had a large grant from the Max Fleishmann Foundation several years ago that allowed us to develop a training center to train adult leaders. We have an upcoming conference on service to the American Indian communities, which has been made possible by a grant from a foundation. In all of our 72-year history, we have only been able to continue to do these innovative things with special foundation |