‘Lean’ foundations – those with few or no staff – make a significant to American philanthropy but their size conditions how they operate according to the latest annual benchmarking report from Exponent Philanthropy (EP), which supports small foundations.
Based on a survey of 330 of its 2000 members, EP’s 2018 Foundation Operations and Management Report, provides a total figure of $4 billion in grants made. Many had payout rates – the proportion of assets paid out in grants – well above the US mandatory 5 per cent in 2017.
Those with the larger assets among the sample (over $100 million), had the highest percentage at almost 11 per cent of assets, though the smallest ones – those with less than $5 million in assets – also paid out an average of 7.73%.
They are also likely to provide more than financial support to their grantee organisations For one thing, 79 per cent made general operating grants in 2017 and 69 per cent of them made capacity building grants.
In other respects, their size influences what they do and how they do it. They are fairly strong on collaboration, for instance, with 69 per cent saying they collaborate or at least meet regularly with other funders and 52 per cent saying they share findings with other grantmakers.
They are also increasingly using technology to streamline operations in areas such as accounting and due diligence.
On the other hand, what they don’t do so often is fund internationally or engage in impact investing. Sixty-six per cent of their grant dollars were spent locally and only 6 per cent was spent internationally. Only fifteen per cent made impact investments.
One area where lean foundations don’t appear to differ too markedly from their larger counterparts is in preferred causes: education topped the list at 76 per cent, followed by human services at 61 per cent and health at 55 per cent.