Small to Mid-Size Foundations Exceed Minimum Distribution Requirements by Large Margin


Categories: Press Releases

FAIRFIELD CONN. – June 29, 2010 –Foundation Source, the nation’s leading provider of support services for donor led and family foundations, announced findings that a large majority of its small and mid-size private foundation clients made charitable gifts in excess of their IRS minimum distribution requirement (MDR) last year. These foundations are “non-institutional” and are generally led by individual donors and families.

The IRS requires that private foundations distribute at least 5% of average investment assets annually for charitable purposes. According to data collected from Form 990PF filings of nearly 500 Foundation Source clients, 83% exceeded this minimum distribution requirement by at least 0.25% of average investment assets. More than half (58%) exceeded the MDR by at least 5.0% of average investment assets.

The foundations studied generally fall into two groups. Nearly two-thirds (63%) regularly give more than the 5% requirement and entered 2009 with enough grants carried forward from previous years to have already satisfied their 2009 MDR. Nonetheless, these “Zero MDR” foundations continued to give generously, with 84% giving more than 5% of average investment assets, 56% giving more than 10% and 34% giving more than 25%. Nearly half the foundations in this group (45%) increased their giving percentage as compared with 2008.

The second group of foundations, representing 37% of the total group studied, tends to make annual gifts that are equal to or slightly more than the 5% MDR. The data shows that this group stepped up in 2009 as well. 63% increased their giving percentage as compared with 2008, while 21% gifted at the same rate, and only 16% decreased their giving percentage.

The data contradicts the reported decline in 2009 giving among large, institutional foundations as recently reported by the Foundation Center and The Center on Philanthropy at Indiana University1. It further supports Foundation Source’s findings published in May showing that the number and size of grants under $1 million grew by 15% over the previous year among 700 of its private foundation clients.

Foundation Source President Andrew Bangser said, “99% of all family foundations are under $100 million. These generous foundations represent more than half of all foundation giving in the US, nearly $16 billion in 2007. The picture of giving trends is far more complex and interesting than indicated in published reports that focus on the large institutional foundations. The data shows that most family foundations have not limited their giving to the minimum amount required by the IRS. And small and midsize family foundations stepped up dramatically in this tough economy to assist a wide variety of people, organizations and causes. It’s time to recognize this important and overlooked segment of philanthropy.”

According to Bangser, Foundation Source’s findings — like its May 2010 report of a 15% increase in grant making — were drawn from real-time data captured as the company processes grants for its client foundations, rather than from survey responses. Charitable disbursements (“giving”) cited in this report included grants and qualifying charitable expenses. The study did not include foundations in their first year of operation.

Commenting on the significance of the findings, Page Snow, Chief Philanthropic Officer at Foundation Source, said, “Foundations led by individuals and families play an important and largely unrecognized role in helping to lessen the impact of the recession for less fortunate people and deserving causes. This data also demonstrates that smaller foundations tend to give away more than their IRS requirement.”

About Foundation Source

Recognized as Philanthropic Group of the Year by the editors of Private Asset Management, Foundation Source is the nation’s leading provider of support services for private foundations. The company’s full suite of back-office, online and advisory services allows foundations to focus on their mission, strategy and family priorities, and spend less time on administration and compliance tasks. The result: better run foundations with greater social impact.

Foundation Source offers a full range of award-winning services to over 900 private foundations coast-to-coast representing over $4 billion in foundation assets. Foundation Source provides its services independently and through partnerships with the nation’s leading private wealth management firms, trust and estate attorneys and CPAs. The company is headquartered in Fairfield, CT with regional offices in Atlanta, Boston, Chicago, Denver, New York City, Philadelphia, Salt Lake City, San Francisco, Los Angeles and Seattle.

Page Snow
Chief Philanthropic Officer
Foundation Source 
(203) 319-3710

Jonathan Cohen
Cohen Strategic
(203) 722-1858


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