Ian Wilhelm (Moderator):
    Hello and welcome to our live chat about The Chronicle's annual survey of the nation's wealthiest foundations. I'm Ian Wilhelm, a senior writer with The Chronicle of Philanthropy, and I'll be moderating this discussion over the next hour as well as answering questions.

Joining me is Noelle Barton, an assistant editor with The Chronicle who oversees our survey efforts. We are both interested to hear your ideas about trends in the foundation world and to discuss other aspects of grant making. We have received excellent questions in advance, but please keep them coming. Just click the "ask a question" link on this page.

Question from Ian Wilhelm:
    First off, Noelle, could you tell us briefly how many foundations were surveyed and what were the major findings?

Noelle Barton:
    A key piece of information we look at is assets from year to year, and this year we found that for the 112 foundations that provided data for 2005 and 2006, the median change in assets was an increase of nearly 8 percent. This means half of these organizations saw their assets change at a better rate than 8 percent, and half grew by less than 8 percent, or declined.

The foundations we examined are a pretty good snapshot of the foundation world. Combined assets of the 112 foundations that provided their 2006 year data equaled $185.4-billion; total assets of the nation's grant makers equaled $550.6-billion in 2005, the most recent year for which that information is available.

Question from Malcolm Furgol, American Association of State Colleges & Universities:
    In what ways do you see technology (especially the Internet, computing and communication devices) impacting grant making and the goals of the foundations you talked to? Have you seen any desire by foundations to showcase results of their giving through this medium (such as podcasts or video blogs)?

Noelle Barton:
    At least one foundation has made a significant recent committment to grant-making in this area. The MacArthur Foundation pledged $50-million in over the next five years to learn more about how technologies such as video games, instant messaging, and the use of cellphones and the Internet are changing the way young people learn. Foundation officials there hope that some of what they learn with this digital media project will inform their grant-making in other areas, we learned. The foundation also made an effort to promote the effort online. It actually announced the program on Second Life, a virtual gaming system. Other foundations are interested in using the Internet for similar promotions.

Question from The City of Jersey City:
    What percentage of giving from various foundations goes to municipalities for creative projects around community development, historic preservation, new energy options....

Noelle Barton:
    That's a good question, but our data analysis does not capture the information you're looking for here, unfortunately. However, our online database with this survey project is searchable by program areas. We asked respondents to name the top five program areas in which they awarded grants in 2006.

So by searching the "government and public policy" program area, you can narrow your search for this information to those foundations that awarded grants last year in this area. The same goes for other areas that might be of interest to you, such as "community and economic development" and "energy." Perhaps start with that and then reach out to those foundations for more detailed information on the percentage that supported these areas.

Ian Wilhelm (Moderator):
    The database Noelle is referring to can be found on our Web site here: http://philanthropy.com/premium/stats/foundation.

Question from Lesa Lessard Pearson, nonprofit consultant, EMBA candidate:
    As foundations prepare to increase their giving, the process of managing value must play an intregal and on-going role in all grant-making decisions. It is imperative that foundations hold themselves accountable to their own mission, vision and goals which may or may not be the same as the mission, vision and goals of the organizations they fund. Mutally agreed upon outcome measurements must be established up front before any financial contract is signed. As foundations move beyond the traditional checkbook relationship and partner more actively in the realities of solving critical emerging problems the relationship betwen funder and fundee will become more meaningful, transparent and trustworthy especially in the area of problem solving and risk taking. Would you agree that fund raisers could inspire greater contributions if they came to the table not only equipped with a statement of need but a record of quantitative and qualitative data driven success and a relationship portfolio that documents active participation beyond the basic ask?

Ian Wilhelm:
    Lesa, you raise a number of interesting points. Many grant makers want charities to measure their results, but some argue that taking too much of a focus on evaluation can be counterproductive.

For example, how does a foundation measure the efforts of an advocacy group when it is tough in the world of policymaking to say who is responsible for getting legislation turned into law.

What do other foundations/grant seekers think? Do fund raisers need to be better job at telling philanthropies their accomplishments?

Just click the "ask a question" link on this page to post a response.

Question from Ian Wilhelm:
    Noelle, we looked at the charitable administrative costs of some of the largest foundations. What did we find there?

Noelle Barton:
    We wanted to examine what the foundations that paid the most toward charitable giving had spent on administrative costs. Both figures are listed on the IRS form, and the 2005 year was the most recent year for which audited data on these items was available. Both of these figures factor into the IRS’ calculation of payout, but we simply wanted to examine what portion of a foundation’s total charitable giving they spent on administrative costs – specifically those administrative costs that are considered charitable by the IRS.

We found that among the 20 foundations that had the highest level of total charitable giving in 2005, the median portion of their total charitable giving they spent on charitable administrative costs was 9 percent. The median level they spent on expenses was about $18-million.

Some of these foundations are ones that typically have high administrative costs, because they run museums or research facilities. Others tend to keep expenses low because of small staff numbers and other factors. What do foundations or charities think about admin costs at grant makers?

Question from Marc Fest, Knight Foundation, Dir. Comm.:
    How are the big, traditional foundations evolving, in your eyes, in their relation to the notion of "risk-taking" when it come to grant-making?

Ian Wilhelm:
    Hi Marc, certainly the big foundations are talking more about taking risks. In fact, the Kate B. Reynolds Charitable Trust, in Winston-Salem, N.C., mentioned in the story that it plans to be taking more risky approaches as part of a revamp of its programs.

My question for the foundation world, is if it is taking more risks, will we see more failures? And if so, will foundations be candid about them. In my story I note two foundation -- Hewlett and Irvine -- that are releasing reports in which they highlight mistakes so other grant makers can learn from them.

Question from Stacy Palmer, editor, The Chronicle of Philanthropy:
    In your story, you reported about an effort in California to force grant makers to report how much they gave to minority-led groups. Do you think we'll be seeing similar efforts in other states? How are grant makers responding to this proposal?

Ian Wilhelm:
    The advocacy group behind this effort, the Greenlining Institute, told me that other state legislators and members of Congress are interested in the topic. No bills however have been introduced elsewhere, other than Calfornia.

Foundations are fighting that bill, but say they are concerned about how much they give to miniority-led groups. In Calfifornia, the California Endowment is leading a research effort to get better data on such giving. The Council on Foundations also has hired a new staff member to oversee diversity issues. It's shaping up to be a pretty hot topic in the foundation world.

Question from Janet, human service agency:
    It seems that there have a significant move for foundations to be more "involved" in their grantmaking. Did you see any of this in the study?

Ian Wilhelm:
    Depends on the grant maker. We didn't ask about greater involvement with their giving in our survey but there has been a long term trend of foundations doing more than just giving money to groups, and instead guiding efforts.

For example, Robert Wood Johnson announced this week it will give $500-million to fight childhood obesity. RWJ will certainly be leading that effort and be heavily involved with the groups it supports.

What do charities think of this? I hear mixed things about the growing involvement of foundations.

Ian Wilhelm (Moderator):
    It's past 12:30 so our chat is halfway through. We have received some good questions, but please keep them coming. Just click the "ask a question" link on this page.

Question from Ian Wilhelm:
    For the first time we asked survey respondents about foundation leaders' "signing authority," meaning how much they can approve in grants without seeking permission from the board. Noelle, what did we discover?

Noelle Barton:
    The majority of respondents answered this new question, indicating their chief executive has the authority to award some level in grants without board approval. The amount these foundations allow their chiefs to distribute ranged widely, from just $2,500 at the Ralph M. Parsons Foundation to the $40-million allowance for the top executive at the Bill & Melinda Gates Foundation.

That said, the foundations that answered fell across a wide spectrum with respect to asset size as well, from a size of about $325-million to $33-billion in 2006.

Question from Malcolm Furgol, American Association of State Colleges & Universities:
    Over the last few years the federal government has decreased their social service funding activities, especially in operating support, are private foundations becoming more likely to provide such funds as federal money becomes harder to obtain? If they are, can you provide some examples?

Ian Wilhelm:
    According to a recent report by the National Committee for Responsive Philanthropy, while many groups are pushing for foundations to provide more operating support, little has changed.

Foundation leaders often tell me they understand the need for providing operating support, but also must balance that with their need to evaluate their efforts, which is easier when you make grants for programs.

As for examples, I know that the Hewlett Foundation has been outspoken in its support of paying operating costs and wants to give about 50 percent of its giving annually for such expenses.

Question from Janet, human service agency:
    Thanks for asking what charities think. I tend to think that charities would like minimal involvement. We are the ones doing the work and know what works. I do think foundations should adequately vet charities and expect reports and accountability but then let us do the work. If charities end up spending a lot of time managing foundations involvement, it takes away from the work that needs to be done.

Ian Wilhelm:
    Janet, thanks for your response. This debate, of course, is related to the operating vs. program support. What do our foundation readers think?

Question from Stacy Palmer, editor, The Chronicle of Philanthropy:
    We've reported on the increased scrutiny of foundations by Congress -- and the growing pressure for foundations to disclose more information. Did you find signs that foundations are responding to this pressure in any way?

Ian Wilhelm:
    Stacy, foundations have made an effort to be more forthcoming. But while Congress remains interested in foundations, that interest is somewhat different now that the Democrats are in control. For example, Max Baucus, who now leads the Senate Finance Cmte., is interested in how much foundations support rural areas. Reports will be coming out soon to discuss that issue. It'll be interesting to see how grant makers respond to that.

Question from Ian Wilhelm:
    Noelle, we asked grant makers for the first time how many of them provide compensation to the members of their boards. What was the response?

Noelle Barton:
    For the foundations that returned surveys and were in the top 150 by assets or grant making, 57 percent indicated they compensate board members. These respondents came from foundations with a larger median asset level than the full set of organizations in our survey (median assets of $720-million for those compensating board members, compared to $625-million for all of the foundations in our set).

Question from Ian Wilhelm:
    Noelle, what does our survey mean for fund raisers? What findings should they be looking at?

Noelle Barton:
    Fund raisers should be encouraged by recent trends in the foundation world with respect to grant making. Our table on how much grant makers plan to give in 2007 shows the potential for some meaningful increases in giving.

Some respondents don't answer the 2007 questions, and so this year, among the 57 foundations that provided estimates for 2007 grant making, the median percent change expected was a 6 percent increase over 2006 giving levels.

Half of these foundations anticipate an increase greater than 6 percent, and half expect an increase less than 6 percent, or a decrease. We rely on their estimated figures to find this information, but also ask a multiple-choice question on what they expect their grant-making trend to show in 2007. Here’s where the grant-making picture becomes more clear: 37 of these foundations said they expect grant-making to increase by more than 3 percent this year, 15 expect it to stay within 3 percent of their 2006 level, and just 5 said they expect it to drop by more than 3 percent. So, another way to read this is that 91 percent of these respondents anticipate their grant-making level to increase or remain the same in 2007 as the previous year, which may be encouraging to grant seekers.

A new report released by the Foundation Center this week found 2006 to be a record year in giving by foundations, with total giving topping $40-billion.

Question from Malcolm Furgol, American Association of State Colleges & Universities:
    During your research did you encounter any information on collaborations between foundations in awarding grants?

Ian Wilhelm:
    Malcom, thanks for all your questions. We are seeing more foundations collaborating. A recent, though small, trend has also been for wealthy foundations to give to other foundations. For example, the Gates Foundation gave a $40-million grant to the Hewlett Foundation for African education.

Question from Ian Wilhelm:
    In terms of the wealthiest foundations, we found -- to perhaps no one's surprise -- that the Bill & Melinda Gates Foundation, in Seattle, was the largest with $33-billion.

Noelle, who were the other largest grant makers in the country according to our survey?

Noelle Barton:
    We typically get a mostly repetitive set of the top 10 foundations from year to year, when looking at asset size. In 2006, the Gates Foundation was followed by the Ford Foundation, Robert Wood Johnson Foundation, the William and Flora Hewlett Foundation, and the W.K. Kellogg Foundation rounding out the top five largest foundations. The top 10 for 2006 were the same top 10 from the previous year, but a handful shifted position slightly in this list.

You can refer to previous years of this survey’s data, including a top 10 list each year, on The Chronicle’s Web site, under "Giving by Big Foundations." Almost all of the 2006 top 10 saw an increase in assets from 2005.

Ian Wilhelm (Moderator):
    Thanks for all who joined us today. Thanks to Noelle and to all of you who asked such good questions. A transcript of the chat will be available online. If you have questions or comments, please e-mail editor@philanthropy.com. Thanks again!