US international grantmaking tops $3 billion

Annual foundation and corporate funding for international programmes reached $3 billion for the fourth year in a row in 2003, despite an economic downturn, terrorist attacks, and the ongoing war on terror, according to International Grantmaking III: An update on US foundation trends, a new report prepared and published by the New York City-based Foundation Center with the support and collaboration of the Council on Foundations.

The report also shows that grantmaking by US foundations and corporations for international purposes more than doubled from $1.6 billion in 1998 to $3.3 billion in 2001, growing at an even faster rate than foundation giving as a whole. International Grantmaking III examines patterns in international giving based on an analysis of grants made by the nation’s largest foundations and includes the results of a recent survey of a sample of US-based international funders.

The study finds that, after peaking in 2001, total giving for international purposes, including both giving to US-based organizations and giving directly overseas, declined slightly to $3.2 billion in 2002 and to an estimated $3 billion in 2003 owing to the economic downturn, which reduced both foundation assets and corporate profits. Even so, international giving adjusted for inflation increased by an impressive 79 per cent from 1998 through 2002, far more than the 42 per cent rise in foundation giving for all purposes during this period.

Why has international grantmaking increased?

The reasons for this growth appear to lie in the accumulation of wealth in the late 1990s, much of it in the internationally sensitive high-tech sector, and the emergence of several large new international funders like the Bill and Melinda Gates Foundation, the United Nations Foundation and the Gordon and Betty Moore Foundation. However, this is not the whole story. The study finds that the number of foundations and corporations giving for international purposes expanded to 636, an increase of 10 per cent, between 1998 and 2002.

All types of foundations increased international giving from 1998 to 2002, with independent and corporate grantmakers doubling their funding for international purposes during the period (the figures are $963 to $2 billion for independent grantmakers, $57 million to $115 million for corporate grantmakers). Most dramatic of all is the 360 per cent rise in international grantmaking by US community foundations during the four years (from $6.3 million to $29 million). While the number of community foundations funding international programmes remains relatively small (29 in 1998 rising to 43 in 2002), it is clear that more of them are responding to the needs of immigrant donors and the globally connected communities they serve.

Biggest slice of the pie for health and family planning

While funding in all sectors increased substantially, funding for health and family planning grew most rapidly from 1998 to 2002, surpassing international development and relief as the sector receiving the largest share of international grant dollars in 2002 (31.7 per cent), more than twice its share four years earlier. The focus of major funders like the Bill and Melinda Gates Foundation on the global AIDS crisis and other diseases in developing countries accounts for much of this increase.

Other funding areas receiving a larger share of international grant dollars in 2002 (compared to 1998) were civil society, religion, and science and technology. The share of funding for environmental purposes remained constant over the period. On the other hand, while funding for international development and relief, education, human rights and civil liberties, and arts and culture increased in dollar terms, all declined as shares of total international grant dollars over the years in question.

Nearly 40 per cent of total foundation and corporate giving for international purposes in 2002 was given directly overseas. Giving to US-based programmes, however, grew still more rapidly, continuing a trend that started in the mid-1990s.

Where does the money go?

Overseas grants increased to all geographic regions from 1998 to 2002, but there was a change in the regions’ relative shares. In 1998, the largest share went to Western Europe, but in 2002 the Asia and the Pacific region led the way (23.2 per cent), followed by Western Europe (21.5 per cent), Latin America (17.7 per cent) and Sub-Saharan Africa (17.6 per cent). The study notes that approximately two-thirds of the funding to organizations located in Western Europe is actually used to support global programmes and activities in other regions of the world. Overseas giving grew fastest over the four-year period in Eastern Europe, Russia, the Independent States, Asia, the Middle East (especially Israel), and the Caribbean region. The UK, South Africa, Mexico, South Korea and India are the five countries that received the largest amounts of funding from US grantmakers in 2002.

Grantmakers’ attitudes and practices

International Grantmaking III also features a survey, conducted in May 2004, of 64 US international grantmakers’ current attitudes and practices. A majority of respondents (nearly 60 per cent) cite increasing urgency to address global concerns as a more crucial external factor affecting their international grantmaking than either the stock market decline or the events of 9/11.

Reflecting a growing emphasis on impact and sustainability, a majority of survey respondents indicated that they have formed partnerships with other organizations and provide capacity-building grants to grantees. More than 40 per cent said they fund through US intermediary organizations that regrant the funds overseas. Survey respondents cited the capacity to monitor overseas grants as a principal benefit of funding through an intermediary organization while cost-effectiveness was cited as an advantage of funding directly overseas.

More than three-quarters of the respondents felt that it is now more difficult to fund internationally because the regulatory environment is both more demanding and more uncertain. Almost as many agreed that the international ‘war on terror’ makes funding overseas more difficult, owing to increased security risks abroad. However, the survey suggests a positive outlook. Despite these challenges, 87.5 per cent of survey respondents said that they expect their international grantmaking to either increase (37.5 per cent) or remain the same (50 per cent) in 2004 compared with 2003.

The full International Grantmaking III report includes additional analysis and exploration of trends plus the complete results of the 2004 international grantmaker survey. The report may be purchased from the publications section of the Council on Foundations website (www.cof.org) or from the Foundation Center (www.fdncenter.org).

Rob Buchanan is Director of International Programs at the Council on Foundations. He can be contacted at buchr@cof.org