Folly #100: What Makes Me Mad

It's also what makes me write.

Why do I write every week? The answer has evolved.

In the beginning

When I started in October 2022, I would have had two answers.

1. To voice frustration over the ridiculous expectations that foundations have for nonprofit grant applicants. The end of every Folly asks foundations to consider using a Common Application: if hundreds of universities can agree to do it for financial aid, why can’t grantmakers?

2. To see if I can do it. Can I write every week? I’ll admit that it’s been more fun — and felt easier — this past year than it did for the 18 months prior, when I was often writing late Thursday night for Friday morning’s issue. (Not a best practice, but is that normal for writers?? Since my real profession is fundraiser, I honestly don’t know what’s normal here.)

So I started writing because I was mad. (As in angry. And a little crazy.)

Now

Here’s what I think now, 100 issues later.

Charitable foundations increase the wealth gap, not reduce it.

Foundations in the U.S. sit on 1.6 trillion dollars in assets. Legally, a foundation can keep (and invest) 95% of its money and receive a tax-exemption for philanthropic “giving.” Sadly, investment return is in no way linked to the minimum grant disbursement.

(Of course, if the Big Beautiful Bill passes, foundations may have to give another 10% to the government. Why not just grant out that much more, creating impact and good will.)

It’s Getting Worse

In 2024, foundation assets swelled by 23.3%, according to yesterday’s Chronicle of Philanthropy article on the annual Giving USA study. And still, they are only required to give 5% in grants each year. It just doesn’t add up as charitable.

In the name of philanthropy, foundations have amassed a huge amount of wealth – nearly $1.6 trillion dollars, an increase of over 23% in 2024 alone.

According to the Federal Reserve, foundations own $1,599,680,000,000. (Let’s round up to $1.6T.) According to Giving USA, total U.S. charitable giving in 2024 was nearly $593 billion. Of that, foundations gave just under $110 billion.

Here’s what it all means:

Foundations made over 23% on their assets in 2024.

Foundations granted out less than 7.5% of assets in 2024. (Based on 1/1/24 valuation and 2024 giving.)

Grants from all those foundations’ assets contributed just 19% of all philanthropic dollars.

Why would any philanthropy expert rejoice that foundations will be able to give so much more in the future, instead of encouraging them to give more now?

On the topic of foundations’ healthy 2024 ROI, here’s a quote from the Chronicle of Philanthropy:

“…23.3 percent last year is going to help [foundations’] average in terms of their giving this year. My hope is that foundations early this year were in a good position and will be able to respond to some of the need.”

—Wendy McGrady, Chair, Giving USA

I’d agree that they’re in a “good position.”

Of course there are exceptions. No doubt you’ve read about big-name foundations increasing their grantmaking to well over the 5% minimum, largely in reponse to the gap that nonprofit organizations are facing from cuts in federal grants.

And others are removing barriers to grant applications and reports:

Our local Marin Community Foundation has made the application process much easier for nonprofits, and invites applications for multi-year and unrestricted grants.

The Silicon Valley Community Foundation, the largest in the country, invites grantees to come in and give an oral report where the staff of the foundation (not the grantee) take notes to create the written report that the foundation requires.

Glen Galaich, CEO of the Stupski Foundation, and co-host of the Break Fake Rules podcast, will spend down in the next four years. In their words, they “are returning all of our resources to the [Hawai’i and San Francisco Bay Area] communities we call home by 2029.” Now that’s leveraging resources for good.

So, now you know why this is called Funder Follies.

And, after 100 issues, I’m still writing because I’m mad. And a little crazy.

---

The more important question is … why are you reading? What makes you mad in the world of Doing Good?

Let’s change it together.