Funding Nonprofit Endowments:
Foundation Perspectives and Practices

Overview

Traditionally, endowment funding has been directed to wealthy and well-established nonprofit institutions. In recent years, the conversation about endowments as an equity approach has received more attention in philanthropy. Little is currently known about the degree to which foundations are funding nonprofit endowments.

Our research aims to explore:

How common is it for foundations to award grants to nonprofit endowments?

What are foundations that make endowment grants to nonprofits trying to accomplish with their funding, and what are the criteria used to determine recipients?

What do foundation leaders see as barriers to contributing to nonprofit endowments?

Are grants to nonprofit endowments considered to be part of a strategy to promote racial equity? Why or why not?

We surveyed:

0

foundations

0

responded

representing a 34 percent response rate

1 / 6

1

Finding 1

Prevalence of Nonprofit Endowment Funding

Just under a third of foundations provide endowment grants, and these grants represent a small fraction of their giving.

31%

of foundations surveyed report that they fund nonprofit endowments.

For most foundations that fund nonprofit endowments, endowment grants represent a small percentage of their total number of grants.

86%

of foundations surveyed report that less than a quarter of their grants are made to nonprofit endowments.

Similarly, 80 percent of foundations surveyed report that less than a quarter of their annual grantmaking dollars are allocated to nonprofit endowments.

Percent of Annual Grantmaking Dollars Foundations Spend on Nonprofit Endowments (N=86)

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2

Finding 2

Who Receives Nonprofit
Endowment Funding

The majority of foundations that fund nonprofit endowments make those grants to arts or direct service organizations, and most use an existing relationship with the organization as a criterion for funding. Advancing equity is not the primary consideration for most foundations that fund nonprofit endowments.

More than half of foundations that fund nonprofit endowments do so for museums and performing arts organizations. A similar proportion make endowment grants to direct service organizations.

Types of Organizations That Receive Endowment Funding (N=80)

66%

of foundations that fund nonprofit endowments use their existing relationship with the nonprofit organization as a criterion for funding.

Criteria Used by Foundations To Select Grantees for Endowment Funding (N=82)

33%

of foundations that fund nonprofit endowments identify advancing equity as a primary consideration.

"How people communicate about endowments has always been associated with finances and operations. It’s missing that ultimately an endowment is about opportunity. What we’re all trying to do is level the playing field and truly give opportunity and access to more and to all."

– Foundation Leader

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3

Finding 3

When Endowment Funding
Is Not a Fit

Among foundations that are not currently funding nonprofit endowments, few plan to do so in the future, most often because they do not see endowment grantmaking as aligned with their mission, funding strategy, or size.

42%

of foundations that do not fund nonprofit endowments have never considered doing so.

Whether Foundations That Don’t Fund Nonprofit Endowments Ever Considered It (N=195)

Foundations cite various reasons for not funding nonprofit endowments.

Most Common Reasons for Not Funding Nonprofit Endowments (N=46)

"Given where the current board is and our current grantmaking strategy, we are very focused on direct services and program grants in specific areas of interest."

– Foundation Leader

Funding Nonprofit Endowments:

Foundation Perspectives and Practices

To our knowledge, this research is one of the only attempts to measure the prevalence of — and approaches to — endowment grantmaking among foundations. We hope this work can help inform discussions about endowment grantmaking among foundation staff, leaders, and boards by building understanding about the motivations for, approaches to, and challenges of funding nonprofit endowments.

Support for this research was provided in part by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the foundation.

If this report has been helpful to you, please consider supporting CEP’s research. Reach out to us for more information.

Thank you.

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Recorded: Tuesday, April 23, 2024

Funding Nonprofit Endowments: Foundation Perspectives and Practices

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Authors:
Elisha Smith Arrillaga, Ph.D.; Christina Im; and Emily Yang

Copies of the survey instruments can be found here.

This work is licensed under the Creative Commons BY-NC-ND license.

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Funding Nonprofit Endowments:Foundation Perspectives and Practices