Foundations appear to have responded quickly and intelligently to the economic crisis, directing more of their money for recession relief to the hardest-hit parts of the country, according to a study released today.
The study was conducted by Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office, and paid for by the Philanthropic Collaborative, a group of foundations, nonprofit organizations, and lawmakers.
The study analyzed a sample of grants collected by the Foundation Center that numbered 2,672 and totaled $472-million. The grants were made from 2008 to 2010.
Mr. Holtz-Eakin examined the relationship between an area’s needs—as measured by its population, mortgage delinquency rates, and unemployment rates—and how much grant money it received.
The study determined that foundations often gave a larger share to those parts of the country that were affected most by the recession.
For example, in 2009, 1,157 grants in the sample went to states with higher than average mortgage delinquency rates, while 352 went to states with lower rates.
In 2008 more grants (563) and money ($126-million) went to states with relatively low unemployment rates than states with greater unemployment, which received 422 grants worth $29.9-million.
But the following year, as joblessness emerged as a topic of great concern, foundations gave 803 grants and $200-million to the states with higher unemployment rates, compared with 706 grants and $112-million to states with lower unemployment rates.
Mr. Holtz-Eakin also used multivariate analysis to examine the relationship between grant money and factors like unemployment levels and mortgage delinquencies. He generally found a positive relationship, meaning that if one factor went up, so did grant money.
For example, a rise in unemployment of 5 percentage points led to a 1.5 percent increase in the number of grants and a 2 percent increase in the number of dollars, according to the report.
“You see the grant making and the dollars devoted to the sorts of things that are important go up, and they go up in places they should, those hard hit by housing and unemployment,” said Mr. Holtz-Eakin. “It’s a notable increase at a time that foundations are suffering.”
The study notes several shortcomings, including the limited sample of grants and the short time frame it examined.
The study is available on the Philanthropic Collaborative’s Web site, http://www.philanthropycollaborative.org.