Wisconsin Stateof Philanthropy Report 2009 by DFW


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Donors Forum of Wisconsin has released the first-ever Wisconsin State of Philanthropy Report highlighting the changes in the state’s philanthropic landscape.

The report provides a detailed looked at grantmaking in Wisconsin as well as a deeper look into how philanthropy is practiced in the state. The report on giving will enhance grantmakers’ ability to tell their giving stories, highlights the impact of Wisconsin’s grantmaking community, and accurately depicts the scope, diversity, and depth of Wisconsin philanthropy.

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Wisconsin Stateof Philanthropy Report 2009 by DFW

  1. 1. Wisconsin State of Philanthropy Report 2009
  2. 2. D onors Forum of Wisconsin is proud to present this premiere report on Wisconsin giving. The Wisconsin State of Philanthropy Report was based upon data gathered from the Funding Information Center at Marquette University, as well as the results of a survey of Wisconsin grantmakers conducted by the Donors Forum of Wisconsin. The State of Philanthropy Report includes a detailed look at grantmaking in Wisconsin. The first local publication of its kind, this report not only includes totals for giving in Wisconsin, but includes a deeper look into how philanthropy in Wisconsin is practiced. Our vision for this research report was to create a dynamic, frequently updated knowledge base of current and detailed information on Wisconsin’s foundations. Through this research we have created a report that strengthens Wisconsin grantmakers’ abilities to tell their giving stories, highlights the impact of Wisconsin’s grantmaking community, and accurately depicts the scope, diversity, and depth of Wisconsin philanthropy. table of contents State of Philanthropy. . . . . . . . . . . . . . . . . . . . . . . . . 2 Key Findings About Philanthropy in Wisconsin A Community of Giving. . . . . . . . . . . . . . . . . . . . . . 4 Top Ten Foundations Foundation Giving Individual Giving Other Grantmaking Types Regional Philanthropy The Changing Economy . . . . . . . . . . . . . . . . . . . . . 14 Economic Impact Projected Grantmaking Budgets Impact on the Nonprofit Sector Where The Dollars Go. . . . . . . . . . . . . . . . . . . . . . . 18 Types of Support Program Areas Focus on Health Focus on Education Insider’s Guide to Foundations. . . . . . . . . . . . . . . 22 Inside the Organization Managing Mission Challenges Facing the Philanthropic Sector Philanthropic Successes References and Resources. . . . . . . . . . . . . . . . . . . . 28 About the Report
  3. 3. Key Findings State of Philanthropy 2 |WisconsinStateofPhilanthropy2009 Charitable Contributions Total giving in Wisconsin has increased each year since 2004, resulting in record- setting total giving amounts in 2006. $3.51 billion given in Wisconsin 10 percent increase in total charitable giving $3.02 billion given by individuals in Wisconsin 12 percent increase in giving by individuals in Wisconsin foundation facts Wisconsin foundation giving has increased every year since 2002, increasing by an average of 4.7 percent each year. Assets have been increasing even faster, by an average of 5.7 percent each year through 2007. 1,290 Wisconsin foundations $7.25 billion Wisconsin foundation assets 7 percent increase in assets $497 million Wisconsin foundation grantmaking
  4. 4. About Philanthropy in Wisconsin state of philanthropy T he philanthropic sector in Wisconsin includes diverse vehicles for making all sorts of donations to nonprofit organizations. Individuals, families, charitable organizations, charitable funds and corporations work together to provide donations of grant dollars, volunteer service, board service, technical assistance and in-kind donations of products and services. Among the different types of philan- thropic organizations are corporate giving programs, donor advised funds, supporting organizations, federated funds, charitable trusts, and private, community, corporate, and operating foundations. Individual Giving Individual giving accounts for the vast majority of giving in the U.S. and for more than 80 percent of giving in Wisconsin. In 2006, more than 80 percent of charitable dollars in Wisconsin came from individuals, totaling over $3 billion. Individuals can make donations to organizations simply by making a contribution to an organization they support. Individuals can also participate in fundraisers, pay membership dues to museums, houses of worship or other nonprofits and institutions, or make dona- tions of household goods. Many individuals also donate their time and expertise by serving as volunteers or on boards of nonprofit organizations. Foundation Giving Over the past several years foundations have been increasing in number and influence across the country. Foundations, charitable organizations that make grants to non- profit organizations, include private foundations, community foundations, corporate foundations and operating foundations. Since 1978, an increasing proportion of giving in the U.S. is carried out through foundations, increasing from 5.5 percent to 11.6 percent of total giving, according to Giving USA. Foundations are unique in that they have several tax advantages over individual giving, but also have strict reporting and payout requirements.. Wisconsin is home to nearly 1,300 private foundations, a number that has been steadily increasing since 2000, by an average of 2.3 percent each year. In 2007 there was a 3.2 percent increase in the number of foundations. Foundation assets and grants have been increasing each year; assets by an average of 5.7 percent per year and grants by an average of 4.7 percent per year. In 2007, Wisconsin foundations had combined assets of over $7.25 billion, and broke their previous record for charitable giving, contributing nearly $500 million to chari- table organizations around the globe. The majority of foundations in Wisconsin have less than $1 million in assets. In 2006, 65 percent of foundations had less than $1 million in assets and in 2007 that number dropped slightly to 57 percent. The median asset level for Wisconsin foundations was $685,427 in 2007. Nearly all foundations grant less than $1 million annually. In 2007, only 8 percent of foundations gave out more than $1 million in grants, up from 6 percent in 2006. The median grant amount paid out by Wisconsin foundations in 2007 was $50,000. 0 2,000 4,000 6,000 8,000 2003 2004 200720062005 $387 $497$479$454$395 $6,241 $5,549 $5,254 $4,772 $7,254 Grants Paid Assets Total Wisconsin Foundation Assets and Grants Paid By Year Foundation assets and grants have been increasing each year; assets by an average of 5.7 percent and grants by an average of 4.7 percent. Amount show in millions. Source: Foundation Information Center, DFW 2008 3 |WisconsinStateofPhilanthropy2009
  5. 5. Top Ten Foundations A Community of Giving T here are many ways to make charitable contributions, and Wisconsin residents use many tools to make donations. Effective philanthropy can take numerous forms, including: private foundations, corporate foundations, and giving programs; community foundations; individual giving; grantmaking public charities; operating foundations. Each of these types of giving are described in detail in this section. Though most of the philanthropic giving in Wisconsin comes from individuals, founda- tion giving in Wisconsin is significant in scope. More than 85 percent of foundations in Wisconsin are private foundations, and private foundations hold more than two- thirds of the foundation assets in the state. However, several of the top givers and asset holders in Wisconsin are corporate and community foundations. Wisconsin’s Largest Foundations Foundation assets are heavily concentrated in the state’s largest foundations. The top ten foundations by assets hold 39 percent of all foundation assets in the state. The top 50 foundations by assets account for over two-thirds of the foundation assets, meaning that the top 4 percent of foundations hold over 66 percent of the foundation assets. Many Wisconsin foundations calculate grantmaking budgets that are not determined solely by their assets, which accounts for some discrepancies between the 10 Wisconsin foundations with the greatest assets and the 10 with the most grantmaking by dollar amount. Some foundations make grants based upon on an average of assets over a period of years. This approach is meant to preserve stability in grantmaking, so that changes in the market or in major gifts (to or from the foundation) do not drastically affect year-to-year grantmaking budgets. Some foundations make grants that are far more than the minimum 5 percent of their assets, sometimes because they are spending down their assets. Other foundations are pass-through foundations, which have smaller assets, but routinely transfer funds from other sources into the foundation. These types of budgeting generate discrepancies between the ten largest foundations by assets and by grants. The ten largest founda- tions in Wisconsin by grants paid includes five foundations which are not on the top ten list by assets: the Argosy Foundation, the Helen Bader Foundation, the Overture Foundation, the Jane Bradley Pettit Foundation, and the Cudahy Foundation. Grants paid in 2007 by the ten largest Wisconsin foundations by grants range from $10.4 million to $39.6 million, with a median of $14.1 million. National Foundations In addition to Wisconsin grantmakers, national grantmakers also play a large role in giving to organizations in Wisconsin. The top ten non-Wisconsin foundations giving in Wisconsin contributed a combined total of over $45 million to Wisconsin nonprofits in 2007, according to Foundation Center. These national funders provide much-needed support to Wisconsin nonprofit organizations.4 |WisconsinStateofPhilanthropy2009 Aggregate Data for Foundations by Type, 2008 Number % Assets (m) % Total Giving (m) % Private 1,137 88.14 $5,067.55 69.86 $332.34 66.82 Corporate 113 8.76 805 11.11 91.74 18.44 Community 32 2.48 1,341.57 18.49 71.35 14.35 Other1 8 0.62 39.08 0.54 1.95 0.39 Total 1,290 100.00 7,254.10 100.00 $497.38 100.00 1 Denotes operating and non-classified foundations Source: Foundation Information Center, DFW 2008 0 2,000 4,000 6,000 Community $71 $332$92 $806 $1,342 $5,068 Grants Paid Assets Corporate Family & Independent Source: Funding Information Center, DFW 2008 Foundation Assets and Grants by Type, 2008 Amounts are shown in millions.
  6. 6. Top Ten Foundations a community of Giving Top Ten Wisconsin Foundations by Total Giving, 2007 The top ten foundations by total giving together gave nearly $179, which accounts for 36 percent of foundation giving in Wisconsin in 2007. The top 5 percent of foundations account for nearly two-thirds of the founda- tion giving in 2007. Amounts are shown in millions. 1. The Lynde and Harry Bradley Foundation. . . . . . . . . $39.6 2. Greater Milwaukee Foundation . . . . . . . . . . . . . . . . . $28.8 3. Reiman Foundation, Inc.. . . . . . . . . . . . . . . . . . . . . . . $20.9 4. Argosy Foundation. . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.9 5. Northwestern Mutual Foundation . . . . . . . . . . . . . . . $15.2 6. Helen Bader Foundation. . . . . . . . . . . . . . . . . . . . . . . $12.9 7. Community Foundation for the Fox Valley Region. . . $12.2 8. Pleasant T. Rowland Foundation . . . . . . . . . . . . . . . . $11.5 9. Kohler Foundation. . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.5 10. The Overture Foundation . . . . . . . . . . . . . . . . . . . . . $10.4 Source: Funding Information Center, DFW 2008 Top Ten National Foundations by Assets, 2008 The top ten foundations by assets in the U.S. hold over $117 billion in assets. Wisconsin’s largest foundation, The Lynde and Harry Bradley Foundation, currently ranks the 83rd largest in the nation. Amounts are shown in billions. 1. Bill and Melinda Gates Foundation . . . . . . . . . . . . . . $38.9 2. J. Paul Getty Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.1 3. The Ford Foundation. . . . . . . . . . . . . . . . . . . . . . . . . . $11.0 4. Robert Wood Johnson Foundation. . . . . . . . . . . . . . . $10.7 5. The William and Flora Hewlett Foundation. . . . . . . . $ 9.3 6. W. K. Kellogg Foundation . . . . . . . . . . . . . . . . . . . . . . $ 8.1 7. Lilly Endowment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7.7 8. John D. and Catherine T. MacArthur Foundation . . . $ 7.1 9. The David and Lucile Packard Foundation. . . . . . . . $ 6.6 10. The Andrew W. Mellon Foundation. . . . . . . . . . . . . . $ 6.5 Source: Foundation Center 2008 Top Ten Non-Wisconsin Foundations Giving in Wisconsin, 2007 The top ten non-Wisconsin foundations contributing in Wisconsin gave a total of $43 million in 2007. Only two of the top ten non-Wisconsin foundations contributed more than $5 million to Wisconsin foundations in 2007. Amounts are shown in milions. 1. The Grainger Foundation. . . . . . . . . . . . . . . . . . . . . . $14.6 2. Robert Wood Johnson Foundation. . . . . . . . . . . . . . . $ 7.0 3. Ewing Marion Kauffman Foundation. . . . . . . . . . . . . $ 4.0 4. Fred C. and Katherine B. Andersen Foundation. . . . $ 3.9 5. The Kresge Foundation. . . . . . . . . . . . . . . . . . . . . . . . $ 2.9 6. The Joyce Foundation. . . . . . . . . . . . . . . . . . . . . . . . . $ 2.7 7. The Annie E. Casey Foundation. . . . . . . . . . . . . . . . . . $ 2.4 8. NoVo Foundation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.2 9. Otto Bremer Foundation. . . . . . . . . . . . . . . . . . . . . . . $ 1.9 10. U.S. Bancorp Foundation . . . . . . . . . . . . . . . . . . . . . $ 1.6 Source: Foundation Center, DFW 2008 Top Ten Wisconsin Foundations by Assets, 2007 The top ten Wisconsin foundations hold 39 percent of all foundation assets. The top 4 percent of foundations in the state hold over 66 percent of the foundation assets. Amounts are shown in millions. 1. The Lynde and Harry Bradley Foundation. . . . . . . . . $815.0 2. Greater Milwaukee Foundation . . . . . . . . . . . . . . . . . $574.4 3. Kern Family Foundation, Inc. . . . . . . . . . . . . . . . . . . . $385.0 4. Kohler Foundation. . . . . . . . . . . . . . . . . . . . . . . . . . . . $216.4 5. Reiman Foundation, Inc.. . . . . . . . . . . . . . . . . . . . . . . $203.3 6. Northwestern Mutual Foundation . . . . . . . . . . . . . . . $164.0 7. Community Foundation for the Fox Valley Region. . . $162.2 8. Madison Community Foundation. . . . . . . . . . . . . . . . $155.0 9. Pleasant T. Rowland Foundation . . . . . . . . . . . . . . . . $101.3 10. Siebert Lutheran Foundation. . . . . . . . . . . . . . . . . . $100.0 Source: Funding Information Center, DFW 2008 5 |WisconsinStateofPhilanthropy2009
  7. 7. Foundation Giving: Private Foundations a community of giving T he vast majority of foundations in Wisconsin are private foundations, which include family foundations and independent foundations. There is no legal distinction between family and independent foundations, but most people consider family foundations to be organizations started by members of a family who either sit on the board of trustees themselves or whose descendents sit on the board of trustees. Independent foundations are generally understood to be foundations with little or no family involvement. Since there is no legal distinction between these types, we refer to both of these types of foundations as private foundations. Over the past several years foundations have been increasing in number and influence across the country. Foundations, charitable organizations that make grants to nonprofit organizations, include private foundations, community foundations, corporate foun- dations and operating foundations. Since 1978, an increasing proportion of giving in the U.S. is carried out through foundations, increasing from 5.5 percent to 11.6 percent of total giving, according to Giving USA. Foundations are unique in that they have several tax advantages over individual giving, but also have strict reporting and payout requirements. Private foundations can be found in every region of the state, and contribute vital grant funding to the communities they reside in, and across the state, country, and even internationally. Private foundations are instrumental in creating livable communi- ties through their contributions, and are often the catalysts that help organizations to generate public support for projects and community initiatives. Private philanthropy goes well beyond dollars donated as foundation trustees and staff often lend their expertise to new nonprofits, and help organizations to grow and thrive. Successful public-private partnerships also rely on input and support from private foundations. Public-private partnerships have led to new community initiatives and new focused strategic methods to tackle difficult community issues. Assets and Giving Private foundations make up the majority of foundation giving in Wisconsin, accounting for two-thirds of all foundation grants in 2007. Family and independent foundations also hold 70 percent of the foundation assets in Wisconsin. Though private founda- tions hold most of the foundation assets, only six of the top ten largest foundations in Wisconsin by assets are private foundations, the other four are corporate and commu- nity foundations. Of the 50 largest foundations by assets, 32 are private foundations. The majority of private foundations in Wisconsin are modest in size, with less than $1 million in assets and run either by volunteers out of their homes or are housed in bank trusts and law firms. Nearly two-thirds of private foundations gave less than $100,000 in grants in 2007, and only 5 percent gave more than $1 million that year. More information about the inner workings of private foundations in Wisconsin is discussed in the Insider’s Guide to Foundations.6 |WisconsinStateofPhilanthropy2009 Wisconsin’s Top Ten Private Foundations by Assets, 2007 1. THE LYNDE AND HARRY BRADLEY FOUNDATION $815 2. KERN FAMILY FOUNDATION, INC. $385.0 3. KOHLER FOUNDATION $216.4 4. REIMAN FOUNDATION, INC. $203.3 5. PLEASANT T. ROWLAND FOUNDATION $101.3 6. SIEBERT LUTHERAN FOUNDATION, INC. $100.0 7. HERZFELD FOUNDATION $84.4 8. PHILLIPS FOUNDATION $83.3 9. DANIEL M. SOREF CHARITABLE TRUST $79.3 10. JUDD S. ALEXANDER FOUNDATION $75.3 Amounts are shown in millions Source: Funding Information Center, DFW 2008
  8. 8. Foundation Giving: Corporate Foundations a community of giving W isconsin’s vibrant corporate philanthropic sector encompasses a variety of sizes and forms of giving. Corporate giving often goes beyond the support of nonprofits to include civic organizations, community initiatives and special projects that help in the promotion of the community they work and live in. The role of corporate giving is often as initial investor or fundraiser for nonprofits. Their influ- ence is critical in the promotion of awareness of key community needs. Types of Corporate Giving Corporate foundations do not represent the entire scope of corporate charitable giving. Just as individuals outnumber and outspend private and family foundations, corpo- rate giving programs outnumber corporate foundations. There are many reasons for this discrepancy. Foundation giving has several advantages, but also has a few extra regulatory hurdles, making it the right choice for many larger corporations, and a less realistic choice for most smaller corporations. Due to these differences, corpo- rate foundations make up only a relatively small proportion of corporate donations. Wisconsin corporate foundations have combined assets of nearly $806 million, and gave out nearly $92 million in grants in 2007. Since the majority of corporations in Wisconsin making charitable contributions do so through corporate giving programs and therefore are not subject to the same reporting requirements as corporate foundations, it is harder to track and measure their giving. As a result, the true level of grantmaking by corporations is difficult to capture, and is likely much higher than the level indicated by the data in this report. In addition to the monetary contributions made by corporate foundations and giving programs, corporations often make in-kind gifts of their company’s products or services to the nonprofit organizations they support. Other common in-kind gifts include gifts of office furniture and equipment, office and meeting space, loaned executives, graphic design and printing services. Employee Partnerships One characteristic that makes corporate foundations unique is in the types of grants they make in partnership with their employees. Corporate foundations are much more likely to provide challenge or matching grants than community or private foundations, in part because many corporations provide employee matching gifts. Matching gifts are when a corporation offers to match the giving of their employees, or to match dollars raised by an organization for a specific project, thereby providing an incentive for indi- viduals to make contributions since they know the value of their gift will be increased due to the promise of the corporation to match the donated funds. Corporations promote employee giving in other ways as well, such as making financial contribu- tions that allow their employees to spend time volunteering, and conducting employee giving campaigns. 7 |WisconsinStateofPhilanthropy2009 Wisconsin’s Top Ten Corporate Foundations by Assets, 2007 1. NORTHWESTERN MUTUAL FOUNDATION $164 2. MEAD WITTER FOUNDATION, INC. $72.8 3. WINDHOVER FOUNDATION $68.5 4. OSCAR RENNEBOHM FOUNDATION, INC. $60.2 6. LADISH COMPANY FOUNDATION $32.0 7. WISCONSIN ENERGY CORP. FOUNDATION $30.4 8. CORNERSTONE FOUNDATION OF NORTHEASTERN WISCONSIN, INC. $27.4 9. ALLIANT ENERGY FOUNDATION, INC. $25.6 10. WISCONSIN PUBLIC SERVICE FOUNDATION, INC. $22.6 5. JOHNSON CONTROLS FOUNDATION $48.9 Amounts are shown in millions Source: Funding Information Center, DFW 2008
  9. 9. Foundation Giving: Community Foundations a community of giving W isconsin is home to over 30 community foundations across the state. This strong network of community philanthropy is the cornerstone of Wisconsin’s charitable giving landscape. Their impact in our state is expansive and vital to many of our communities. It is through their work that we benefit from having substantial endowments in communities as large as Milwaukee and as small as New Richmond, Wisconsin. These permanent endowments provide needed philanthropic resources for now and for the future. National Standards Wisconsin leads the nation in the number of community foundations achieving U.S. National Standards for Community Foundations. Their leadership in the national standards process has led to the development of a robust peer-review process found only among Wisconsin community foundations with the focus on best practices in governance, stewardship, transparency and community leadership. Through adopt- ing best practices they have embraced a role in developing and using their knowledge, networks, reputation and ability to contribute and leverage resources to drive change for the betterment of their communities. According to Foundation Center, community foundations are especially prevalent in Midwestern states. The Midwest is home to more than 45 percent of the nation’s com- munity foundations, and Wisconsin ranks fifth out of eight Midwest states and ninth nationally in total number of community foundations. Regional Leadership Though community foundation giving is primarily place-based, they offer a wide array of venues for giving from scholarships, field of interest, nonprofit agency and donor advised funds to supporting organizations, all of which support nonprofit organiza- tions in every area from arts to human services to health and welfare. Nearly every part of Wisconsin is served by community foundations located in more than 22 counties throughout the state. Wisconsin’s community foundations provide a significant amount of grant support for Wisconsin nonprofits. In many areas of Wisconsin, community foundations are the only significant forms of foundation grantmaking. 8 |WisconsinStateofPhilanthropy2009 Top Ten States by Number of Community Foundations, 2007 1. MICHIGAN 99 2. INDIANA 76 3. OHIO 69 4. CALIFORNIA 64 5. MISSOURI 50 6. PENNSYLVANIA 37 7. NORTH CAROLINA 32 8. TEXAS 31 9. WISCONSIN 31 10. FLORIDA 29 Source: Foundation Center 2008
  10. 10. Foundation Giving: Community Foundations a community of giving Assets and Giving Community foundations are technically classified as public charities, since their sup- port comes from community donations rather than a single family or corporation. However, community foundation tax data is collected by the major foundation data sources. Community foundations’ assets total more than $1.3 billion, and they contributed more than $71 million in grants in 2007. Community foundations are an especially vital source of support outside the southeastern region of the state, where the major- ity of foundation giving is concentrated. In 2007, community foundations held more than $673 million in assets and made over $35 million in grants in the counties outside southeastern Wisconsin. Donor Advised Funds One of the major activities of community foundations is managing donor advised funds. When donors establish these types of funds, they determine its purpose. Each year, a portion of the fund is used to make charitable grants in accordance with the donor’s intent. Community foundations typically manage a large number of donor advised funds, and these funds comprise a large proportion of community foundation assets and giving. Geographic Affiliates Not every community has the infrastructure to develop a free standing community foundation. To ensure communities no matter their size have the opportunity to grow and build placed based philanthropy community foundations have created the perfect vehicle geographic affiliates. Geographic Affiliates are unique place based giving structures run by committed leaders and donors who share a common passion for the future of the place they call home. Each geographic affiliate fund is led by a local advisory committee made up of com- munity volunteers, who under the guidance of an existing community foundation help identify current and emerging charitable needs in their communities, provide com- munity leadership and are involved in efforts to encourage charitable giving among residents. It is home-grown, hometown philanthropy and it is making a difference that is sustainable. 9 |WisconsinStateofPhilanthropy2009 Wisconsin’s Top Ten Community Foundations by Assets, 2007 1. GREATER MILWAUKEE FOUNDATION $574.4 2. COMMUNITY FOUNDATION FOR THE FOX VALLEY REGION $162.2 3. MADISON COMMUNITY FOUNDATION $155.0 4. OSHKOSH AREA COMMUNITY FOUNDATION $72.6 5. GREATER GREEN BAY COMMUNITY FOUNDATION, INC. $60.2 6. DULUTH-SUPERIOR AREA COMMUNITY FOUNDATION $53.2 7. RACINE COMMUNITY FOUNDATION, INC. $34.2 8. LA CROSSE COMMUNITY FOUNDATION $29.5 9. COMMUNITY FOUNDATION OF GREATER SOUTH WOOD COUNTY $27.9 10. COMMUNITY FOUNDATION OF NORTH CENTRAL WISCONSIN $27.3 Amounts are shown in millions Source: Funding Information Center, DFW 2008
  11. 11. Individual Giving a community of giving I ndividuals are not mandated by law to provide information on their charitable giv- ing, as foundations are required to do. The best source of information on individual giving comes from the IRS Statistics of Income data tables, which is publicly avail- able tax data on charitable contributions and bequests claimed as deductions on income taxes. IRS tax data only includes charitable gifts which are claimed on tax forms as itemized deductions, and therefore do not include all individual charitable giving. It is estimated that between 20 percent and 40 percent of taxpayers itemize their charitable deductions, according to the Forum of Regional Associations of Grantmakers. The latest available data on individual giving is from the 2006 tax year. In 2006, individuals in Wisconsin claimed a total of over $3.02 billion in charitable contributions. Wisconsin was ranked 20th in the country for total contributions by individuals, the same as Wisconsin’s ranking by population. In comparison, California had the highest contributions in 2006, with $24.36 billion, and North Dakota had the lowest with $206 million. Wisconsin ranked 29th for contributions as a percentage of adjusted gross income, at 2.14 percent. Wisconsin’s average charitable contribution claimed per tax return ranked 45th in the nation, at $3,467. Wisconsin Rankings Wisconsin’s high ranking for total contribution (for a state our size), and low aver- age contribution is a sign of Wisconsin’s unique character. The reason Wisconsin’s average contribution rank is so low is because Wisconsin residents are itemizers—we itemize charitable deductions more often than our neighbors in other states, likely due to Wisconsin’s relatively high state income tax. Evidence of this can be found in the difference between the average contribution by all individuals in Wisconsin (ranked 45th) and the average contribution by residents making over $200,000. Wisconsin’s average contribution by those making over $200,000 a year is $25,069, and was ranked 10th highest in the nation. Wisconsin outranks nearly every other Midwest state (with the exception of Nebraska), and even outpacing California’s average contribution of $21,764 by those making over $200,000. Wisconsin residents do not necessarily give less on average than other states; we are merely more likely to itemize small deductions than residents of other states. Again, this difference may have to do with Wisconsin’s income and property tax laws. Similarly, Wisconsin ranks unusually high in the number of foundations per state, especially when population is taken into account. Wisconsin ranks 9th in the country by number of community foundations, despite the fact that Wisconsin has a much lower population than every other state in the top 10. Wisconsin’s high number of foundations and our charitable contributions rankings are influenced by the fact that Wisconsin residents are exacting and precise tax filers. Many Wisconsin residents form foundations even when their asset base is small, in order to capitalize on the tax advantages associated with establishing private foundations. 10 |WisconsinStateofPhilanthropy2009 Top Ten States by Average Charitable Contributions by Residents Making Over $200,000 in 2006 Source: IRS Statistics of Income 2008 1. WYOMING $74,901 2. UTAH $40,480 3. OKLAHOMA $37,629 4. NEBRASKA $29,037 5. DISTRICT OF COLUMBIA $28,718 6. NEW YORK $27,928 7. NEVADA $26,370 8. FLORIDA $25,994 9. TENNESSEE $25,181 10. WISCONSIN $25,069
  12. 12. Other Grantmaking Types a community of giving G rantmaking public charities and operating foundations are unique forms of philanthropic giving. Some of the most visible grantmakers are grantmaking public charities, which not only contribute funds, but build public awareness of community issues and vital nonprofit institutions. Operating foundations contribute only a small amount of grant dollars to outside programs, but contribute to the public good themselves through charitable programs and research. Grantmaking Public Charities Grantmaking public charities are organizations that obtain their assets from various members of the public, rather than a single source, such as a family or business. Sometimes these organizations raise money for a particular institution – such as The University of Wisconsin Foundation – or other times they raise funds for specific causes, such as poverty, social justice, or a women’s fund. Since the IRS does not have a separate classification for public foundations other than community foundations, grantmaking public charities can be difficult to identify using IRS definitions and resources. As a result, tracking the giving of grantmaking public charities is very cumbersome when compared with foundation data. On Foundation Center’s list of the 50 largest grantmaking public charities, Wisconsin has one organization listed. The University of Wisconsin Foundation is ranked at number 38, with total giving in 2006 of over $143 million. Operating Foundations Operating foundations are unique in that they conduct themselves very much like nonprofit organizations. Operating foundations are their own type of organization categorized by the IRS. Operating foundations have the primary purpose of conducting research, social welfare, or charitable programs or services in the public interest rather than making grants. These charitable programs are often partially or wholly self-sustaining. Operating foundations sometimes make grants to other community organizations, but these grants are usually small in comparison with the amount used for internal charitable programs. One of Wisconsin’s internationally known operating foundations is The Johnson Foundation which is dedicated to convening conferences on important issues to soci- ety at their Wingspread facility. 11 |WisconsinStateofPhilanthropy2009 Snapshots of Philanthropy In 2001, the public dialogue surrounding critical issues facing Duluth, Minnesota and Superior, Wisconsin was so contentious that citizens were hesitant to engage in the public debate. In an effort to improve public discourse, the Duluth Superior Area Community Foundation launched Speak Your Peace: The Civility Project which encourages community members of the Duluth/Superior area to discuss community issues respectfully and promotes nine simple tools taken from P.M. Forni’s book Choosing Civility. “The nine tools of civility are about urging citizens to communicate with each other in a more respectful and effective way,” explains Holly C. Sampson, president of the Duluth Superior Area Community Foundation. “This isn’t about censoring people’s opinions but rather reminding ourselves of the basic principles of respect, even when in a heated debate.” The Community Foundation’s influence has been integral in engaging individuals in government forums, middle school classrooms, unions, businesses, and church groups to participate in the Speak Your Peace campaign. The impact extends beyond the Duluth Superior Area Community Foundation - multiple school districts and foundations in Wisconsin and Minnesota, including the Community Foundation of Greater South Wood County, are adopting Speak Your Peace in their communities and materials have been shared with communities throughout the United States and in Russia and Australia.
  13. 13. Regional Philanthropy A community of giving W isconsin’s five major regions have very different grantmaking trends. For our study, we defined Wisconsin’s regions according to the map below. Population and wealth are not uniformly distributed around the state. The result of this uneven distribution is that many more foundations are located in urban areas, particularly in Milwaukee. Foundations in the state of Wisconsin gave a total of over $497 million in 2007 Over two-thirds of that total came from foundations located in Milwaukee County. Indeed, Milwaukeewastheonlycountywithfoundationgrants totaling more than $50 million in 2007. According to the 2000 census, Milwaukee County comprises nearly 20 percent of the state’s total population. While Southeastern Wisconsin boasts two-thirds of the state’s foundation assets and grantmaking, it ac- counts for just over half of the number of foundations. The other regions of the state clearly are actively in- volved in philanthropic giving, even if they do not have the financial resources to give as much. Southeastern Wisconsin Of the more than 600 foundations in Southeastern Wisconsin, there are 37 pri- vate foundations that contributed over $1 million in grants in 2007, as well as 19 Southeastern corporate foundations that contributed over $1 million. Southeastern Wisconsin is also represented by several community foundations. Greater Milwaukee Foundation, the largest community foundation in the state, granted over $28.8 million in 2007. Top Ten Counties by Grants Paid Milwaukee $252,727, 819 Dane $46,694,085 Waukesha $45,796,085 Outagamie $17,760,682 Sheboygan $16,946,425 Brown $14,585,441 Racine $11,618,996 Rock $11,027,821 Marathon $8,471,240 Wood $8,451,623 Source: Foundation Information Center, DFW 2008 Distribution of Foundations, Assets and Giving by Region, 2007 Together the southeast and southwest regions represent 78 percent of the assets and 82 percent of total giving in the state. NUMBER OF FOUNDATIONS BY REGION 52% 12 10 6 5 3 FOUNDATION ASSETS BY REGION 66% 12 10 6 5 1 FOUNDATION GIVING BY REGION 69% 13 9 5 3 1 Southeast Southwest Northeast North Central Northwest Other Other denotes foundations that are located outside of the state, but give in Wisconsin. Source: Foundation Information Center, DFW 2008 12 |WisconsinStateofPhilanthropy2009
  14. 14. Regional Philanthropy A Community of giving Southwestern Wisconsin Thirteen percent of foundation giving comes from foundations located in Southwestern Wisconsin. Southwestern Wisconsin is represented commu- nity foundations in every urban area of the region, including Madison, Beloit, LaCrosse, and Janesville. The Madison Community Foundation, the largest in the region, granted over $3.1 million in 2007. Of the more than 200 foundations in Southwestern Wisconsin, there are eight corporate and private foundations that granted over $1 million in 2007. Northeastern Wisconsin The Appleton/Green Bay Area in Northeastern Wisconsin, the third largest metropolitan area, accounts for 9 percent of the grantmaking in the state. A large portion of giving in Northeastern Wisconsin comes from community foundations, including the Community Foundation for the Fox Valley Region ($12.1 million in grants in 2007), the Oshkosh Area Community Foundation ($3.1 million), and the Greater Green Bay Community Foundation ($2.7 million). There are also seven private and corporate foundations in the Northeast region which granted over $1 million in 2007. North Central and Northwest Wisconsin North Central and Northwest Wisconsin together account for 8 percent of the state’s grantmaking. These regions are represented by very strong community foundations. In North Central Wisconsin, the Community Foundation of Greater South Wood County granted over $3 million in 2007, and the Community Foundation of North Central Wisconsin granted over $2 million in 2007. There are nearly 100 foundations in North Central Wisconsin, and their combined grantmaking totals over $22.5 million. Northwestern Wisconsin is home to more than 50 foundations, which together granted more than $18 million in 2007. Northwestern Wisconsin is represented by community foundations in 5 counties. St. Croix Valley Community Foundation and Duluth Superior Area Community Foundation are the two largest community foundations in the Northwest, con- tributing $1.5 million and $2.1 million in 2007, respectively. Geography and Giving A grantmaker’s geographic location does not necessarily determine where it funds. The majority of foundations in Southeastern Wisconsin do not fund only in the Milwaukee area. Thirty percent of the Wisconsin 100 foundations limit their grantmaking to local projects only, but the majority of these grantmakers are community foundations. The vast majority of respondents contribute to projects throughout Wisconsin, with 40 percent indicating that they fund at the national or international level in addition to funding Wisconsin projects. Only 2 percent of respondents indicate that they do not fund in Wisconsin at all. 13 |WisconsinStateofPhilanthropy2009 $10 million to $50 million Over $50 million $1 million to $10 million $500,000 to $1 million $100,000 to $500,000 Under $100,000 Wisconsin Foundation Giving by County, 2007 Source: Foundation Information Center, DFW 2008
  15. 15. Economic Impact The Changing Economy O ne of the most pressing current issues facing philanthropic organizations is the effect of the economic downturn. How have assets of foundations been affected? How will decreased assets affect future grant payout? How are grantmakers responding? While the future is uncertain, grantmakers’ commitment to the nonprofits they serve is strong, and funders and nonprofits are working to- gether to address the effects of the economic downturn. This section examines how these changes have impacted Wisconsin foundations’ financial strength as well as their grantmaking activities. Assets Decline The 2008 decline in the stock market has affected the assets of Wisconsin’s philanthropists, just as it has affected every sec- tor of the economy. In 2008, nearly all (87 percent) of the organizations in the Wisconsin 100 experienced a decrease in assets. At the time the surveys were completed, most of these organizations saw a decrease in assets of less than 20 percent, while 29 percent of the respondents’ assets decreased by 20 percent or more. The surveys were collected between August 2008 and December 2008, so it is nearly certain that current decreases in assets among these foundations are quite a bit larger than indicated by the data. No correlation exists between losing a large percentage of assets and foundation type—community foundations, corporate foundations and private foundations have all been affected by asset losses. Similarly, no correlation was found between the foundations with the largest assets and the largest losses. The group that lost 20 percent or more of their assets included foundations with assets less than $1 million to over $100 million. Of those reporting a decrease in assets, 75 percent attribute the change to decreased return on investments. The other 25 percent of respondents attribute the asset decline to changes within the organization – major gifts, increased grant payout, corporate budgets, decrease in gifts to the foundation, spend- ing down, etc. The figure above represents total foundation assets by year. Since 2000, the average annual change in assets has been a 5.7 percent increase. The projected decrease is based upon data from the Wisconsin 100 survey results. 30% 37% 4% 8% 21% 1-10 percent decrease > 20 percent decrease 11-20 percent decrease no decrease 1-10 percent decrease Change in Assets for Wisconsin 100 Source: DFW Wisconsin 100 2008 0 1 2 3 4 5 6 7 8 2003 2004 200720062005 $4.64 $5.80 2008 2009 $7.25 $6.24$5.55$5.25 $4.77 Assets of Wisconsin Foundations by Year The bars for 2008 and 2009 represent projections based upon a total combined asset decrease of 20 percent each year. Amounts are shown in billions. Source: Foundation Information Center, DFW 2009 14 |WisconsinStateofPhilanthropy2009
  16. 16. Projected Grantmaking Budgets The Changing economy H ow will these decreased assets affect grant payout? Foundations calculate their grant payout in many ways, taking into account the IRS’s mandatory 5 per- cent payout, and the rolling average of assets of the foundation over the past few years. Most foundations’ grantmaking budgets for 2009 are based not on current assets, but on 2008 assets and earlier. Many foundations have indicated that they are adjusting their budgets for 2009. Foundations that used to pay out more than the 5 percent minimum may pay out a smaller percentage in the coming year, to preserve their asset bases. Other foundations may end up giving out far more than 5 percent this year in order to fulfill past pledges, but 2010 may bring significant cutbacks to grantmaking budgets. Most foundations have indicated that 2010’s budgets will be quite a bit leaner than 2009. The chart at right illustrates the grants paid by Wisconsin foundations from 2003 to 2007, with projections for 2008 and 2009. The chart illustrates a projected 10 per- cent decrease in grants in 2008, and a further 30 percent decrease in 2009 (based on Wisconsin 100 survey responses). For projected budget changes in 2009, survey respondents are nearly evenly split between projecting a stagnant grantmaking budget for 2009 (44 percent), and a some- what decreased budget (42 percent). More than 10 percent of respondents project a significant decrease in their grantmaking budget, and 4 percent project a moderate increase. There is no indication in the data that the group that lost the most in assets plans to decrease their grantmaking by a greater margin. The proportion of those significantly decreasing their grantmaking is the same (10 percent) among those who lost 20 percent of their assets or more and among group as a whole. Number and Size of Grants Nearly all surveyed grantmakers who are predicting relatively stable grantmaking in 2009 report that they will be keeping their number of grants and average size of grants about the same in 2009. All of the foundations that indicate they will be significantly decreasing their budgets report that they will be making fewer grants, but they are evenly split between making fewer grants that are also smaller, and making fewer grants of about the same size. Among those who indicate that 2009’s grantmaking budget will be moderately decreased, each group has a different strategy. Some indicate that they will choose to fund fewer programs but keep their grant sizes about the same. Others report that they will be making the same number of grants, but they will be smaller. Many report that they will be making fewer grants and smaller grants, and a few of the organizations are making fewer grants that are larger in size. 0 100 200 300 400 500 2003 2004 200720062005 $318 $398 2008 2009 $497 $479$454$395 $388 Grants Paid by Wisconsin Foundations by Year The chart illustrates a projected 10 percent decrease in grants in 2008, and a further 30 percent decrease in 2009. Amounts are shown in millions. Source: Foundation Information Center, DFW 2009 15 |WisconsinStateofPhilanthropy2009
  17. 17. Projected Grantmaking Budgets The changing economy Factors Affecting Grants Certain factors seem to have an effect on projected grant payout for 2009. The largest foundations surveyed (those with over $100 million in assets) appear to be the most stable, with half reporting a moderate decrease in their grantmaking budget and half reporting relatively stagnant grantmaking budgets. Foundations in the $30 to $100 million asset group have the smallest proportion reporting stable grantmaking in 2009. One reason the group may be decreasing their grantmaking is that mid-sized foundations may have higher administrative expenses (especially for staff) than their small-sized counterparts. They also have less of an asset cushion than their larger counterparts to pay for staff salaries and benefits when assets decrease. As is indicated above, staff size may have an effect on projected grantmaking budgets for the foundations studied. The majority of respondents (69 percent) do not foresee any change in administrative expenses next year, indicating that few organizations are anticipating staff cuts in 2009. The remaining 31 percent are equally split between foundations predicting they will spend more on administration next year, and founda- tions predicting they will spend less. Two respondents report hiring freezes in 2009, and only one foundation reports plans to hire staff this year. Intuition tells us that those organizations that have more staff members may have tighter budget constraints than those without staff. This situation, however, is not always the case. With staff size, as with assets, the mid-sized foundations appear to be affected the most. None of the foundations with more than five staff project significantly decreased grant budgets. The foundations with a single staff person and those with 2-5 paid staff members have the largest proportions projecting a significant decrease in their grantmaking budgets. Increased Grantmaking Organizations projecting moderately increased grantmaking budgets are in the 2-5 staff level group as well, but all of the organizations projecting increases qualified those projections. One of the organizations is accelerating its spend-down efforts, and another states that if economic conditions worsen they will be revisiting their budget plans. The final organization projecting an increase explains that this increase is the result of multi-year pledges, and will be followed by a decrease in grant funding in 2010. Grants and Geography Controlling for geographic location, survey respondents in Southeast Wisconsin are predicting less of a decrease in grant funding. Southeastern Wisconsin is the largest grantmaking region of the state, providing more than two-thirds of the dollars granted by Wisconsin foundations. Only 2 percent of the foundations in the Southeast predict that they will have significantly decreased grant budgets in 2009, compared to 11 per- cent predicting a significant decrease across the state as a whole. 16 |WisconsinStateofPhilanthropy2009 Funders, Nonprofits Respond to Economic Downturn When the economic recession hit in 2008, the Donors Forum of Wisconsin convened its membership to discuss how grantmakers were being affected by the economic crisis and the broader implications for the social sector. Based on the outcome of these meetings, DFW designed and facilitated a series of listening sessions in March 2009 for funders and service providers to share strategies and concerns regarding how to ensure that resources and services are available to meet community needs. The listening sessions provided an opportunity for grantmakers to hear directly from nonprofits on how the economy is affecting their services, and to assess the impact on the financial crisis on local organizations. Direct communication between funders and nonprofits is helping grantmakers to respond strategically in order to most effectively assist their grantees. In all, over 115 organizations participated in these conversations. The themes emerging from these discussions provide perspective on how foundations and nonprofits are responding to the current economic downturn.
  18. 18. Impact on the Nonprofit Sector the changing economy Impact on the Nonprofit Sector How will these decreased grantmaking budgets affect the nonprofit organizations that philanthropists serve? The National Center for Charitable Statistics reports that approximately 23 percent of nonprofit organizations revenue comes from private contributions each year , and that the largest proportion of nonprofit revenue comes from fees for services and goods. The proportion changes drastically depending on the type of nonprofit organization, however. For example, arts and culture organiza- tions receive an average of 41 percent of their revenue from private contributions, and environmental organizations receive nearly half of their revenue from private contributions. Approximately half of the surveyed foundations in the Wisconsin 100 report that grant requests remained approximately the same in 2008, while 40 percent report that the volume of requests increased in 2008. Forty-one percent of respondents state that they received more requests for general operating support in 2008, and 30 percent report that they received more requests for emergency support (i.e. cover- ing budget shortfalls). Combining these factors with the significant proportion of organizations decreasing their grantmaking, it is anticipated that the competition for grant funding will increase dramatically in the coming year, and that the entire nonprofit sector can expect their contributions from foundations to decrease fairly significantly in 2009 and 2010. 0% 10% 20% 30% 40% 50% M oreGen.Operating 41% LargerRequests 33% 31% 30% 26% 4% M oreStartUps M oreEmergency NoChanges M ore/New Unfamiliar Proportion of Wisconsin 100 Reporting Changes in Grant Requests Source: DFW Wisconsin 100 2008 17 |WisconsinStateofPhilanthropy2009 Key Themes from Discussions on the Economy Grantmakers are …Adjusting grantmaking strategies in response to steep decline in assets …Continuing commitment to grantmaking priorities while being responsive to critical community and basic needs …Promoting collaboration by encouraging and facilitating nonprofit alliances and mergers to increase efficiencies in addition to working collaboratively with other funders …Communicating with existing grantees to exchange information and stay updated on how best to support them …Supporting nonprofit performance through flexible dollars and non-financial resources Nonprofits are …Managing rising demand for services amid diminishing resources …Focusing on core mission and maintaining quality of service …Building partnerships for cost savings and enhanced impact …Strengthening relationships by involving board members, donors and staff in scenario planning and strategic decision making …Thinking outside the box to problem solve and creatively address financial challenges
  19. 19. Types of Support Where The Dollars Go F oundations are able to focus their giving in a number of ways that reflect both the needs of nonprof- its and the interests of the foundation itself. Grantmaking can be designated for a particular type of support includ- ing program, general operating, capital support, scholarships, challenge/match- ing grants, and technical assistance. Foundations may also choose to direct their grantmaking by defining specific program areas they support, such as so- cial services or arts and culture. Program General Operating Support Program support is the most popular type of grantmaking by the surveyed organizations; 91 percent of the survey respondents provided grant support for nonprofit programs. General operat- ing support for nonprofit organizations is the second most common type, with 72 percent indicating they provide this type of grant. Grantmakers for Effective Organizations defines general operating support as grants in support of a nonprofit organization’s mission rather than specific projects or programs. More and more, Wisconsin grantmakers are seeing the benefits of providing general operating support in addition to grants that are restricted to particular projects. Many funders tend to shy away from this type of funding, as it is difficult to track results when funding is not tied to particular programs, and sometimes donors feel less satisfaction when their grant dollars are being used for items like rent, salaries and utility bills. However, general operating support is widely viewed as beneficial, in that it can be stabilizing to organizations and can increase the capacity of nonprofits, making an impact on each and every program the organization administers. Other Types of Support Less than one-half of foundations surveyed provide capital support, multi- year, scholarships, challenge/matching grants, technical assistance, or program related investments. The smallest foun- dations (by assets) are the least likely to provide these less traditional types of support, which indicates that the vast majority of the foundations in Wisconsin exclusively provide general operating and program support. Nearly half of the organizations surveyed fund research, planning or evaluation grants at least sometimes, but very few respondents fund these types of grants regularly. The least common type of grantmaking is the program related investment (PRI). PRIs are low-interest or no-interest loans to nonprofit or for-profit organizations which advance the mission of the founda- tion. Only 6 percent of the foundations surveyed provide PRIs. This reluctance to provide PRIs is likely due in part to the extensive legal reporting requirements for these types of loans compared with grants. Additionally, many foundations prefer to use their principle to achieve the highest rate of return so that there is more money available for grantmaking. PRIs do not achieve a high rate of return by their very definition, however, these types of investments allow foundations to maximize their potential positive impact by using their assets to help advance their missions.18 |WisconsinStateofPhilanthropy2009 Snapshots of Philanthropy A pair of family-owned companies in Northeast Wisconsin formed a giving partnership to help people struggling to secure basic life needs such as food, housing and health care. The Basic Needs Giving Partnership, a joint initiative of the U.S. Oil Open Fund for Basic Needs and the J. J. Keller Foundation Inc, provides support to prevent people in episodic crisis from becoming people in chronic need. The partnership evolved out of the U.S. Oil Open, an annual golf outing which started in 1986. U.S. Oil Co., Inc. fully funds the event expenses, ensuring that every dollar contributed by sponsors and golfers goes directly into endowed funds within the Fox Valley, Oshkosh, and Green Bay community foundations. Each community foundation supports initiatives that take a long-term view in helping people prevent and move out of poverty and encourage collaborative solutions supported jointly by the non-profit, public and private sectors. J. J. Keller Foundation matches the grant-making budget in each of these funds, doubling the grant dollars available for basic needs programs. “When you have collaboration between organizations that are trying to accomplish the same goal, you can make it twice as effective with twice the funding,” notes Mary Harp-Jirschele, executive director of the J. J. Keller Foundation. In 2008 the golf outing was supported by nearly 600 businesses, foundations and individuals raising over $1.2 million. “Our focus is on collaboration among funders and nonprofits to make a measurable impact on the community we care about,” — Sarah Schmidt, Schmidt Family/U.S. Oil Co. Inc.
  20. 20. Program Areas Where the dollars go E ducation, social services, art and health represent the top four funding priori- ties for U.S. foundations. Wisconsin foundations’ major focuses are similar to these national priorities. In 2007, arts and culture was the top program area in Wisconsin, due to a major gift to the Discovery World Museum. 2006 represents a more typical year for Wisconsin with education as the largest program area, followed by social human services, and then arts and culture. The majority of foundations surveyed use their grantmaking capacity to fund five or more distinct programs areas. Community foundations tend to fund the most program areas, with more than 80 percent funding five or more. Private foundations are the most likely to conduct very focused grantmaking, with the largest proportion funding only one, two, or three types of programs. The number of program areas a foundation funds varies according to its asset level. All of the survey respondents with assets over $100 million fund five or more program areas. The proportion of foundations with under $5 million in assets funding five or more areas is closer to 50 percent. Foundations with a larger asset base are in a better position to diversify their giving, while smaller foundations tend to be more impactful in their grantmaking when they are more focused. Education is the most common focus area for Wisconsin foundations. More than three- fourths of respondents cite education as a program focus area, and this proportion is consistent among private, community, and corporate foundations, as well as for each asset level, from less than $1 million to over $100 million. An in-depth exploration of education funding is included on page 21. Social and human services and health also represent very common funding areas for Wisconsin foundations. The program areas that are least commonly supported by the survey respondents are economic development, religion, sports recreation, and disaster relief, which are each funded by about a quarter of the respondents, and international grantmaking, which is funded by only 9 percent of respondents. Disaster relief, funded by only 26 percent of foundations overall, is heavily funded by corporate foundations, with 75 percent making these types of grants. Community foundations are the most likely to support less common program areas such as sports and recreation and environment. 19 |WisconsinStateofPhilanthropy2009 Foundation Areas of Giving in Wisconsin and the United States The education area continues to receive the most support from Wisconsin and the U.S. Wisconsin giving is very comparable to the U.S. foundation trends. Source: FoundationSearch.com 2009 Economic Development Arts Culture Education Environment Health Religion International Social Human Services Sports Recreation 32% 35% 9% 13% 15% 6% 8% 12% .5% 4% 20% 14% 11% .5% 10% .5% 6% 3% Wisconsin, 2006 National, 2007
  21. 21. Focus on Health where the dollars go A bout one out of every four foundation grant dollars in the US goes toward health, according to Giving USA. In Wisconsin, about 62 percent of surveyed founda- tions fund health at some level. The health area is most heavily supported by private and community foundations, with 60 percent and 77 percent making grants in health respectively. Corporate foundations and giving programs support health slightly less often, with 42 percent making grants in the health area. In each asset group, from less than $1 million to more than $100 million, at least half of the surveyed grantmakers report making grants in the health funding area. Within health, the largest area generating support from the survey respondents is chil- dren- and youth-related health grantmaking, with 36 percent of respondents supporting this area at some level. Other common areas are medical research, mental health, and substance abuse. The areas with the least investment include health policy, health work- force, quality of care, and oral health. Though several of the least popular areas are poverty-related, the most common primary focus area among the survey respondents is access to health care. Nearly one in four grantmakers in Wisconsin make grants toward access to health care, and it is the primary focus area of nearly 20 percent of respondents. Most funders supporting health make grants toward programs and projects, with many also providing general operating support for health-related organizations. Non-traditional funding to health organizations, including PRIs, technical assistance, and health scholar- ships, are not widely supported through grants by foundations in Wisconsin. 20 |WisconsinStateofPhilanthropy2009 Source: DFW Wisconsin 100 2008 19% 15% 11% 11% 9% 8% 4% 4% 4% 7% 2% 2%2% 2% Children Youth 15% Access to Care 19% Disease Related 11% Quality of Care 2% Medical Research 11% Public Health 9% Mental Health 7% Aging 8% Health Promotion 4% Substance Abuse 4% Reproductive Health 4% Health Literacy 2% Medical Eduation 2% Racial/Ethnic Disparities 2% Wisconsin 100 Primary Focus Areas within Health
  22. 22. Focus on EducationSnapshots of Philanthropy In 1959, Robert and Patricia Kern founded Generac Power Systems, one of the world’s largest independent manufacturers of complete engine-driven generator systems. After selling the business, they established the Kern Family Foundation to invest in the future through values, education and innovation. One of the Kern Family Foundation’s signature programs has become support for Project Lead the Way (PLTW), a highly regarded academically-rich, project- based introduction to the skills needed for careers in engineering and technology. Project Lead the Way is truly a statewide initiative in Wisconsin, involving government agencies in education, workforce development and commerce, two- and four-year college and university systems, the business sector, the philanthropic sector and middle and high schools. In Wisconsin, the Kern Foundation’s investment of more than $4 million has been supplemented with over $3.2 million in public and private funding, expanding the PLTW program to schools throughout the state. The Greater Milwaukee Foundation, Harley-Davidson Foundation, and Rockwell Automation are among Project Lead the Way’s private funding investment partners. The success of this public-private partnership was recognized in 2007 by the Public Policy Forum. Milwaukee Public Schools, a partnering district, was the recipient of the “private-public cooperation” innovation award for the district’s adoption of PLTW. where the dollars go W ithin education, Wisconsin’s grantmakers focus on a variety of projects. As a group, they do not favor one level of education over the others; early childhood, primary, secondary, and higher education are all equally cited as grantmakers’ primary focus area. Scholarship funding is a major education giving area, with 56 percent of education grantmakers funding scholarships and 16 percent reporting that scholarships are their primary giving area within education. In addition to those citing scholarships as their primary education focus, there are a significant number of foundations in Wisconsin that only fund scholarships. There are over 150 scholarship foundations in Wisconsin, and together these foundations provided more than $7 million in scholarship dollars in 2007. K-12 education is a frequently supported area of education. Over two-thirds of the foundations studied supported K-12 education, with primary or secondary education as the central focus area of more than a quarter of the respondents. Higher education is also a common focus, with 43 percent of respondents making grants toward higher education and 16 percent reporting higher education as their primary focus. Although only 10 percent of respondents report that early childhood is their primary focus area, over half of all the grantmakers surveyed indicate that they make grants in early child- hood education at some level. 10% 14% 16% 16% 14% 14% 14% Higher 16% Early Childhood 10% Primary 14% Secondary 14% Scholarships 16% No Primary Focus 14% Other Focus Area 14% WI 100 Primary Focus Areas within Education Source: DFW Wisconsin 100 2008 21 |WisconsinStateofPhilanthropy2009 “To keep our economy globally competitive and maintain our standard of living, it is critical to have our students consider engineering and technical fields as career choices,” — Robert Kern, Kern Family Foundation benefactor.
  23. 23. Inside the Organization Insider’s Guide to Foundations F oundations vary widely in their organizational structure, staff size, investment practices, administrative expenses, and overall grantmaking process. Many larger foundations are highly visible in their respective communities while many smaller foundations have a limited public presence. The limited visibility of many funders can cause confusion about reality of foundations’ day-to-day operations. In order to provide an “insider’s” look at these issues, this section examines the organizational structure of Wisconsin foundations. Administrative Expenses Foundations’ administrative expenses have been a source of scrutiny in recent years. Administrative expenses are considered to be charitable-use dollars that the founda- tion uses to help them achieve their mission. These expenses cover meetings with grantees, gatherings with community leaders, board meetings to approve grants, and other expenses necessary to thoughtfully, strategically, and successfully make grants to the communities which foundations serve. The vast majority of Wisconsin 100 foundations (68 percent) predict no change in their administrative expenses for 2009. Changes in administrative expenses often reflect changes in the staffing levels or work of the foundation. A new initiative may cause an increase in administrative expenses, for example making a program-related investment for the first time will cause higher legal and or accounting fees to make the loan. The addition or subtraction of a staff member, or a change in employee benefits will cause a change in administrative expenses as well. The stagnant level of administrative expenses likely reflects the standard operations of most foundations continued year after year. The foundations who are predicting changes in their administrative expenses, the vast majority are community foundations. Only 16 percent of private foundations and 9 percent of corporate foundations predict a change in administrative expenses in 2009, as opposed to 75 percent of community foundations. Community foundations are about equally divided between increasing and decreasing their administrative expenses next year, with 35 percent increasing and 40 percent decreasing. Community foundations’ administrative expenses may be more volatile due to the unique roles they play in their communities. For example, many community foun- dations are involved in community research and convening activities that are less common among private and corporate foundations. Additionally, operating expenses can be more difficult to obtain for community foundations, with budgets that are largely determined by their donors, and that may not have adequate access to unre- stricted funds that can be used for operations. Paid Staff One of the largest components of administrative expenses is staff salaries and benefits. Of the organizations surveyed, the majority (65 percent) have at least one staff person. This level of staffing is consistent with Donors Forum of Wisconsin members, but is not representative of the majority of foundations in the state. 68% 8% 16% no change decrease increase Wisconsin 100 Expected Change in Administrative Expenses Source: DFW Wisconsin 100 2008 22 |WisconsinStateofPhilanthropy2009
  24. 24. Inside the Organization insider’s guide to foundations Private foundations make up 86 percent of the foundations in the state, over half of which have less than $1 million in assets and tend not to have paid staff. Fifty percent of the private foundations with assets over $1 million in the Wisconsin 100 survey also have no staff. Extrapolating from this data, it is estimated that more than two-thirds of the state’s foundations do not have any paid staff. Foundations with no paid staff operate in a number of ways. Many are led by family members, others are volunteer-led, and some are led by bankers and lawyers, who may not be listed as staff but instead are listed as trustees, officers, directors, consultants, or listed under legal fees. Mostly, foundations with no staff are administrated by volunteer family members. The type of foundation dramatically affects staffing levels. Ninety-five percent of the community foundations in Wisconsin have at least one paid staff member. Half of private foundations surveyed have no paid staff at all, and all of the surveyed private foundations with less than $1 million in assets have no staff. Twenty-five percent of corporate foundations have no paid staff, but even these organizations have staff paid by their parent companies—the funds simply come out of the corporation rather than the foundation budget. Corporate foundations maintain the largest staffs overall; half of corporate foundations and giving programs surveyed are staffed by 2-5 employees. In addition to paid staff, some foundations choose to compensate their trustees. Of the 20 percent of respondents that compensate trustees, nearly half have no paid staff, indicating that the trustees are probably performing many of the functions of paid staff at other organizations. Another 25 percent are foundations with five or more staff persons and over $100 million in assets, which suggests that these trustees are required to oversee and approve a very large number of grants each year. Office Space Another portion of administrative expenses for foundations is office space. The majority (75 percent) of the respondents have a private office for their foundation, which again is representative for Donors Forum members, but not necessarily representative for foundations across the state. The surveyed organizations housed in bank trusts and law firms are nearly all private foundations. Sixteen percent of the surveyed private founda- tions are housed in bank trusts or law firms, and 23 percent of private foundations had no office at all. Extrapolating from this data, the majority of Wisconsin foundations are housed in bank trusts or law firms, or has no office at all. 23 |WisconsinStateofPhilanthropy2009 19% 16% 28% 44% 40% 3% 4% 20% 100%50% 60% 70% 80% 90% 100% 5+ Staff 50% 36% 13% 19% 16% 27% 28% 44% 40% 3% 4% 20% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% $1 to $5 $5 to $30 $30 to $100 Over $100 Assets in Millions 5+ Staff 2-5 Staff Single Staff No Staff Source: DFW Wisconsin 100 2008 Number of Paid Staff by Asset Level, 2008 Assets in millions
  25. 25. Managing Mission Insider’s guide to foundations Unsolicited Proposals Most of the foundations surveyed were open to accepting unsolicited proposals (65 percent). Most community foundations accept them, with only 19 percent indicating that they do not accept unsolicited proposals. The proportion of organizations that will not accept unsolicited proposals is a little bit higher for private foundations, at 43 percent. It seems likely that foundations with no staff or foundations with less than $5 million in assets would be less apt to accept unsolicited proposals, since they would likely lack the staff capacity to evaluate them, and would lack the financial capacity to fund them. However, small and non-staffed organizations are actually nearly as likely to accept unsolicited proposals. Seventy-two percent of organizations surveyed with under $5 million in assets still accepted unsolicited proposals. Additionally, nearly half of the foundations without offices accept unsolicited proposals, and more than half of those with no staff accept unsolicited proposals. Why would foundations with such limited capacity be so open to receiving proposals from any nonprofit that wanted to apply? The answer is simple. Foundations that give out the most in grants are well-known—they are often well-publicized companies and large foundations with a significant presence in the media. These groups receive a tremendous amount of unsolicited proposals each year. Organizations that are eas- ily accessible (i.e. those with a web presence), receive a huge volume of unsolicited proposals as well. On the other hand, small foundations run out of the houses of families tend to be much less well-known, and therefore receive fewer proposals in general, and particularly fewer unsolicited proposals. Mission-related Investing Mission-related investing is the practice of investing assets to achieve both social and fi- nancial returns. Also called social investing, or sometimes socially-responsible investing, this practice can include many different types of investment strategies, from investing in socially-responsible companies, to social venture capital, community investing, or even simply screening investment portfolios with an eye toward mission. Only 13 percent of surveyed foundations participate in any sort of mission-related investing. Among organizations in Wisconsin there seems to be very little interest in delving into the mission-related work that foundation endowments can do. Only 6 percent of those in Wisconsin screen their investment portfolios with an eye toward mission, and only 7 percent participate in community investment or program related investments. None of the surveyed organizations participated in any social venture capital. 24 |WisconsinStateofPhilanthropy2009 0% 2% 4% 6% 8% 10% 12% 14% All 13% CommunityInvestment 7% 7% 6% 4% 4% SocialVentureCapital ScreenPortfolios PRIs ShareholderAdvocacy 0% Source: DFW Wisconsin 100 2008 Wisconsin 100 Participating in Mission-Related Investing
  26. 26. Managing MissionSnapshots of Philanthropy The nonprofit sector is facing what experts call an unprecedented workforce crisis with organizations in Wisconsin and across the country struggling to recruit and retain talented staff. To cultivate new sources of talent and leadership, since 2003 the Theodore W. Batterman Family Foundation has been providing scholarship dollars for college students to complete summer internships at nonprofit organizations in Rock and Jefferson counties. “The Batterman Foundation’s success paved the way for the participation of nonprofits and other funders including Siebert Lutheran Foundation, Northwestern Mutual Foundation, and George Julie Mosher,” said David C. Wolfson of Wisconsin Foundation for Independent Colleges which manages the College-to-Work Nonprofit Internship Program. Philanthropic dollars directed towards the program benefit a variety of groups: students through hands- on experience at community based organizations; nonprofits gain from the work of capable interns; and, the quality of private college education is enriched. These interns could become the future leaders of Wisconsin’s nonprofit arena, reducing the sector’s projected workforce shortfall and strengthening communities through their leadership. Insider’s guide to foundations Why are so few Wisconsin foundations applying their endowment assets toward their mission? There are several reasons. Firstly, it is untraditional. Mission-related investing is still a new concept to most grantmakers. Additionally, program related investments and other forms of mission-related investing require a great deal of time, energy, and sometimes legal scrutiny, which can be both costly and difficult. Many foundations feel as one Wisconsin 100 respondent does, who comments that “the aim is to maxi- mize the amount to be given.” Several other foundations indicate that they have been considering or discussing mission-related investing, but that they have not yet taken any action. This trend is only slightly different across the country—very few founda- tions and other philanthropic organizations participate in mission-related investing, though the trend is growing. New Initiatives Only 1 percent of foundations surveyed are considering hiring staff in 2009. Nearly half of the surveyed organizations indicated they would take on some new initiative in 2009. Nineteen percent of organizations are conducting strategic planning in 2009, and 28 percent plan to evaluate foundation effectiveness. Seventeen percent will be starting a new initiative. Fund drives are not common this year, with only 7 percent overall indicating they are considering a major fund drive, which includes less than one-fifth of community foundations in the state. Only a few foundations indicated they would be changing their program focus, and most of those were corporate foundations and giving programs. Overall, one-third of corporate foundations and giving programs surveyed planned to change their program focus in 2009, while only 2 percent of private foundations and 9 percent of community foundations indicated they may make a change. According to Wisconsin 100 survey comments, it is likely that those changing focus will begin to focus more on basic needs in 2009 than they did in 2008. 25 |WisconsinStateofPhilanthropy2009 “To ensure that the agencies have the capacity to provide a meaningful experience for the student, we target nonprofits that are grantees of the Foundation,” — Carmen Witt, Former Batterman Family Foundation Executive Director
  27. 27. Challenges Facing the Philanthropic Sector Inside the organization When asked to identify the biggest issue facing the philanthropic sector, nearly all of the surveyed foundations cite the current economic crisis. “There are so many worthy causes and not enough money to go around,” one grantmaker states. “There needs to be more cooperation among agencies to work together to make the dollars stretch more.” The most often cited frustration among the surveyed grantmakers is simply not hav- ing enough money to accomplish their goals. “Grant requests are always greater than available resources,” one respondent observes. Another explains that she is frustrated by “so many worthy causes, and not enough money for everyone.” While not having enough funds available to make grants to all the worthwhile non- profit organizations is the most common frustration cited by respondents, seeing funds misspent is a close second. Respondents are frustrated when they see inefficien- cies, duplication of services, and unsuccessful projects. Two respondents remark that they are frustrated by “repeated investments that don’t seem to advance the work of the entity,” and “grantees’ failure to use funds as intended.” Grantmakers acknowledge, however, that their own limitations can create obstacles for the nonprofits they fund. One grantmaker explains that it is hard to find “good evaluation tools without drowning the applicants in paperwork.” The biggest issue facing another grantmaker is the need to acknowledge “that organizations we sup- port may experience being dropped by other funders, putting additional pressure on our level of funding.” “Private philanthropy, while growing, is facing the realities of picking up where government is vacating,” one respondent says. “That being the case, it is hard work to make significant quality of life improvement.” “There are so many worthy causes and not enough money to go around — there needs to be more cooperation among agencies to work together to make the dollars stretch more -Wisconsin 100 Respondent ” 26 |WisconsinStateofPhilanthropy2009
  28. 28. Philanthropic SuccessesAddressing the Impact of the Economic Crisis Amid the current economic uncertainty, Wisconsin’s philanthropic and nonprofit communities are working together to navigate new territory and prepare for the future by: Reaching out Fostering open and honest dialogue on the realities of the economic downturn in order to stay informed of key developments and respond strategically. Scenario planning Involving nonprofit staff, the board and major donors in the forecasting and planning process to sustain and prioritize mission- critical programs and activities. Calling upon leadership Executive directors are looking to their boards to provide leadership and asking them to help in a variety of ways to sustain and strengthen the organization. Increasing innovations and efficiencies Seizing opportunities to adapt to the changing times and explore new means to reduce operating expenses and more effectively serve clients and the community. Advocating for the social sector Funders, nonprofit executives and board members are speaking up to educate stakeholders, including policymakers and local media, about the importance and contributions of the charitable sector to the state’s local economies and quality of life. insider’s guide to foundations When asked to identify their greatest philanthropic successes, funders identify a myriad of improvements that have resulted from their work in philanthropy. Grantmakers were proud of large capital grants which have had a tremendous impact, as well as small seed grants for pilot programs that ended up making a being impactful. “Big bang for small bucks!” remarked a proud grantmaker. Many grantmakers were most proud of the relationships they have built with their grantees—helping them to submit stellar grant proposals, helping grantees to collaborate, making grants to improve grantees’ programs, and serving as an incuba- tor of grassroots groups yet to establish a track record. Funders were also proud of their relationships with other grantmakers—from community foundations happy with their success through their Donor Advised Funds, to supporting their philanthropic colleagues within their giving areas. One family foundation trustee was proud of the success he had in “successfully passing on the practice of philanthropy to future generations of the family.” “We are successfully passing on the practice of philanthropy to future generations of the family -Family Foundation Trustee” 27 |WisconsinStateofPhilanthropy2009
  29. 29. About the Report References and Resources About the Wisconsin 100 The Wisconsin 100 survey was designed to provide a snapshot of the giving trends through surveying a pur- poseful sample of Wisconsin foundations. The Donors Forum chose to study foundations only since unlike individuals or corporate giving programs, foundations are required to submit the IRS Form 990-PF each year, and their giving trends can be studied on a large scale (total assets, total giving, etc.). However, if one would like to know more detailed information, or anything that may not concern the IRS but would concern grantees or other grantmakers, the Form 990-PF is inadequate. The Wisconsin 100 survey was designed to create a dynamic knowledge base of current and detailed information on Wisconsin foundations. Foundations in Wisconsin range in assets from under $1 million to over $100 million. The majority of foun- dations in Wisconsin are very small—57 percent have under $1 million in assets. For the Wisconsin 100 survey, the Donors Forum chose to primarily study founda- tions with assets of over $1 million, in order to examine the trends affecting the largest foundations in the state, and to gather information from a greater proportion of Wisconsin’s assets with a limited sample size. In total, survey respondents account for nearly 45 percent of the total assets of foundations in the state. The Wisconsin 100 survey was based upon a survey conducted annually by the Ohio Grantmakers Forum. DFW’s survey was distributed to approximately 300 foundations, with 107 responding. Controlling for asset size, random selection was employed to select approxi- mately two-thirds of the foundations that received the survey. The remaining third were made up of Donors Forum members. The respondents skewed heavily to- ward DFW members, with 25 percent of the respondents being nonmembers . As the sample was not completely randomized, we are reluctant to extrapolate our findings to be representative of all foundations in the state. Since the survey was not distributed to a large propor- tion of foundations with assets under $1 million, the survey data is not representative of this group of founda- tions. Efforts have been made throughout the report to indicate where this representation of very small founda- tions is lacking. About the Donors Forum of Wisconsin TheDonorsForumofWisconsin(DFW)isaprofessional membership association of foundations, corporate giv- ing programs, and other grantmaking organizations. Its mission is to support and promote effective philanthro- py. DFW represents over 130 members organizations who contribute over $185 million, which accounts for over 47 percent of all grants distributed in Wisconsin. They also represent over $2 billion in assets, which ac- counts for over 45 percent of all foundations assets in the state. For over 30 years DFW has been Wisconsin’s resource for philanthropy and is focused on four key areas: community leadership, networking, knowledge and professional development. DFW is one of over 30 staffed regional associations of grantmakers operating in cities, states and multi-state regions across the U.S. It is a member of the Forum of Regional Associations of Grantmakers, the national organization that connects the regional associations and promotes philanthropy. About the Funding Information Center Marquette University’s Funding Information Center is one of over 300 national cooperating collections of the Foundation Center in New York City. The Center has participated as a cooperating collection since 1973. Since its establishment in 1956, the Foundation Center has been the primary source of factual information on private foundations and philanthropy in the United States. The Foundation Center, along with its coop- erating collections, is designed to provide current information for the fund-seeking public and those doing research on private foundations, philanthropy, nonprofit organization and management, volunteerism, fundrais- ing, grantmaking, and letter and proposal writing. DFW Board of Directors Eileen Connolly-Keesler,• Oshkosh Area Community Foundation Curt Detjen,• Community Foundation for the Fox Valley Region, Inc. Scott Gelzer,• The Faye McBeath Foundation Cecelia Gore,• Jane Bradley Pettit Foundation Lynn Heimbruch,• Northwestern Mutual Foundation Ed Hinshaw,• Richard Ethel Herzfeld Foundation Jody Lueck,• Mercy Works Foundation Jim Marks,• Greater Milwaukee Foundation Mary Anne Martiny,• Harley-Davidson Foundation Robin Mayrl,• Helen Bader Foundation Sally Merrell,• von Briesen Roper, s.c. Anne Summers,• Brico Fund, LLC Casandra Tate Mahoney,• Tate Family Foundation Karen Wilken,• Kern Family Foundation DFW Staff Deborah Fugenschuh,• President Samantha Dennis,• Director of Communications and Member Relations Rosemary Lillich,• Director of Programming and Special Initiatives Emmy Hall,• Manager of Research and Administration Connie Van Wagenen,• Accountant Molly Szymanski,• Research Intern 28 |WisconsinStateofPhilanthropy2009
  30. 30. For additional copies of this report, please contact DFW. Donors Forum of Wisconsin 759 N. Milwaukee Street, Suite 515 Milwaukee, Wisconsin 53202 P. 414-270-1978 F. 414-270-1979 dfwonline.org This report was graciously underwritten by