Foundation Funding in the Appalachian Region in the 1990s

123 Pages·2002·0.54 MB·English

by  Appalachian Regional Commission

Foundation Funding in the Appalachian Region in the 1990s:
Patterns, Trends and Prospects

By Greg Bischak
ARC Senior Economist

March 1999

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Executive Summary

This study of foundation funding in Appalachia examines how the Region
compares to the rest of the nation in obtaining funding from all types of private
foundations. The study is based on the most comprehensive data available from the
Foundation Center in New York City. Based on this data, the report examines the
distribution of grants from major foundations to all types of organizations in each state
and city within the Region, and the locations of both large and small foundations within
the Region. Detailed state-by-state data are reported in accompanying appendices.

A brief summary is provided of the results from three conferences on foundation
funding that the Appalachian Regional Commission (ARC) co-sponsored with the
Development District Association of Appalachia (DDAA), the W.K. Kellogg Foundation
and the Rural Local Initiatives Support Corporation (LISC) in the summer of 1998.

In addition, the study examines how successful the Local Development Districts
(LDDs) and their affiliated non-profit organizations within the Region have been in
raising funds through private foundations and what could be done to enhance the grant-
raising capacity of LDDs and other development organizations in the Region.

In short, the results show that Appalachia’s region-wide grant total in 1996 was
$298 million, up from $247 million in 1992 for all awards over $10,000 made by top
1,000 foundations. As a point of comparison, Appalachia’s share of all domestically
awarded grants was 4.6 percent in 1996, far less than Appalachia’s 8.2 percent population
share of the United States. On a per capita basis, Appalachia had a per capita average of
$13.68 in private foundation grants, as compared to the US average which was $24.50
per citizen for the $6.5 billion of domestic grant awards made by the top foundations.

There were nearly 2,000 foundations of all sizes located within the Region that
awarded grants of $1,000 or more during 1996. Total grants amounted to $592 million,
although not all of this was awarded within the Region. The assets of these foundations
amounted to nearly $12 billion in 1996. As a share of the assets of all foundations
operating in the United States, Appalachian-based foundations hold about 4.5 percent.

These data indicate that Appalachia, as a region, is under performing in securing
private foundation grant funding. A high proportion of these grant awards is concentrated
in one geographic sub-region of Appalachia, with Pennsylvania-based recipients
accounting for roughly half of all grants of $10,000 or more awarded in the region,
totaling $130 million in 1992 and $160 million in 1996. ARC’s Local Development
Districts and their affiliated non-profit organizations have won relatively few grants, with
perhaps Pennsylvania’s and North Carolina’s LDDs registering the best track record.
Overall, there appears to be a great deal of room for improving the grant-winning
capabilities of the vast array of community and economic development organizations
within the Region.

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Table of Contents

I. Introduction………………………………………………………………. 1

II. Overview…………………………………………………………………. 1

III. Foundation Grants to Appalachian Communities: 1992 vs. 1996………. 3

IV. Foundations Located Within Appalachia: Types, Assets and Giving…… 7

V. Enhancing the Fundraising Potential of ARC’s
Local Development Districts and their Affiliated Non-profits…………...11

VI. Findings, Issues and Implications………………………………………...16

Appendix A. Grants to Appalachian Cities by State...……………………...…….19

Appendix B. Listing of Appalachian-based Foundations by State……..………...29

Appendix C. Listing of Local Development Districts’ Affiliated Non-Profits..…70

Endnotes………………………………………………………………………….84

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Foundation Funding in the Appalachian Region in the 1990s:
Patterns, Trends and Prospects

I. Introduction

The Appalachian Regional Commission (ARC) conducted this study of
foundation funding in the Region to determine how Appalachia compared to the rest of
the nation in obtaining funding from all types of private foundations. In addition, ARC
wanted to analyze the distribution of grants from major foundations to all types of
organizations in each state and city within the Region, and the location of both large and
small foundations within the Region. Finally, the Commission wanted to know whether
the Local Development Districts (LDDs), and their affiliated non-profit organizations
within the Region, had been successful in raising funds through private foundations and
what could be done to enhance the grant-raising capacity of LDDs and other community-
based development organizations.

A key reason for ARC’s interest in foundation funding is that private foundations
have played an important national and regional role in stimulating innovative economic
development practices and models. Moreover, foundations have helped build community
capacity for civic and economic development activities. In addition, private foundation
funding has helped extend and multiply the impact of various public sources of funding
for economic development, especially in high poverty areas throughout the nation and in
the Region. In an era of diminishing public funding for economic and community
development, the ability of community-based organizations to seek and win more private
foundation funding is an important opportunity for leveraging additional funding.

II. Overview

Foundation funding for all purposes plays a relatively small role in total
philanthropic giving in the United States, comprising only 13.3 percent of the $150
billion in private gifts in 1996.1 Yet, foundation funding still represents a significant
source of social investment capital in program areas such as education, human services,
health, community and civic improvement, and arts and humanities. In 1996 foundation
grant awards totaled $13.8 billion, and the assets of the 42,000 grant-making foundations
totaled to $41 billion, according the Foundation Center’s annual tabulation.2 Estimates
for 1997 indicate that foundations gave $15.5 billion in grant awards, an increase of 12
percent.

In 1996, throughout the United States, the largest share of foundation grants were
awarded to education-related projects, which garnered over 25 percent of all grant
dollars, while human services projects were awarded 17 percent of grant monies. The
balance of the total grant dollars awarded breaks out as follows: health 16 percent;
community and civic improvement 12 percent; arts and humanities 12 percent;
environment 5 percent; science and technology 4 percent; international affairs 3 percent;
the social sciences 3 percent; and religion 2 percent.3

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Types of Foundations: Foundations are categorized typically into four types:
independent; corporate or company sponsored; community; and operating foundations.

• Independent foundations are the most numerous—nearly 37,000 of the 42,000 on file
with the Foundation Center—with an asset base of nearly $227 billion of the $268
billion of total foundation assets in the United States, and grant awards of $10.7
billion in 1996.4 Independent foundations derive their funds from individuals or
family gifts, with the largest being represented by such well known foundations as
Ford, W.K. Kellogg, and the Rockefeller.
• Corporate or company-sponsored foundations, by contrast, are those that derive their
funds from a profit-making company, such as the AT&T Foundation and Ford Motor
Company Fund. Corporate and company-sponsored foundations are less numerous
than independent foundations, with just under 2,000 on record with the Foundation
Center, and total assets of $9.4 billion and grants of nearly $1.8 billion in 1996.
• Community foundations are similar to independent foundations but they derive their
funds from many donors, rather than single donors, and are classified as public
charities by the Internal Revenue Service. In addition, community foundations are
usually dedicated to promoting philanthropy and grant-making within a well defined
geographic region, such as states, counties or cities. There were 411 community
foundations registered in the Foundation Center database for 1996, with assets
totaling $15 billion and grants of nearly $1 billion
• Operating foundations award few or no grants since they are set up and endowed to
operate specific social, economic or research programs as determined by their
governing board. Indeed, some independent and corporate foundations are operating
foundations.5

The immediate future outlook for growth in foundation giving is quite robust,
even after accounting for the recent stock market adjustment. Increased asset levels for all
types of foundations will continue to fuel the growth in grant-making, as foundations act
to bring giving into balance with the recent growth in the asset base. The greatest growth
in grant-making has been registered by the independent and community foundations,
which have increased their grant awards by 14 percent and 18 percent respectively.

Overview of Funding Trends within Appalachia

Appalachia’s region-wide grant total in 1996 for all awards over $10,000 made by
the top 1,000 foundations was $298 million, up from $247 million in 1992.6 As a point of
comparison, Appalachia’s share of all domestically awarded grants was 4.6 percent in
1996, far less than Appalachia’s 8.2 percent population share of the United States. On a
per capita basis, Appalachia had a per capita average of $13.68 in private foundation
grants, as compared to the US average which was $24.50 per citizen for the $6.5 billion
of domestic grant awards made by the top 1,000 foundations in the United States.

There were nearly 2,000 foundations of all sizes located within the Region that
awarded grants of $1,000 or more during 1996.7 Total grants amounted to $592 million,
although not all of this was awarded within the Region. The assets of these foundations
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amounted to nearly $12 billion in 1996. As a share of the assets of all foundations
operating in the United States, Appalachian-based foundations hold about 4.5 percent of
the assets.

Clearly, these data indicate that Appalachia, as a region, is under performing in
securing private foundation grant funding. Perhaps more disturbing is the fact that a high
proportion of these grant awards is concentrated in one geographic sub-region of
Appalachia, with Pennsylvania-based recipients accounting for roughly half of all grants
of $10,000 or more awarded in the region, totaling $130 million in 1992 and $160 million
in 1996. Moreover, ARC’s Local Development Districts and their affiliated non-profit
organizations have won relatively few grants, with perhaps Pennsylvania’s and North
Carolina’s LDDs registering the best track record. Overall, there appears to be a great
deal of room for improving the grant-winning capabilities of the vast array of community
and economic development organizations within the Region.

III. Foundation Grants to Appalachian Communities: 1992 vs. 1996

Foundation grants to all types of recipient organizations within the Appalachian
portion of the thirteen states were researched for ARC by the Foundation Center in New
York. The study examined Appalachia’s share of grants made in 1992 and 1996 using a
database that covers that top 1,000 foundations making awards of $10,000 or more. The
volume and change in grant awards were examined for the 1992 and 1996 period because
this was the largest period of expansion in foundation assets and giving since the mid
1970s.

For 1996, the Foundation Center’s data base covers about $7.3 billion in grants, of
which, $6.5 billion was awarded domestically in the United States. Total giving by U.S.
foundations in 1996 was $13.8 billion, including international awards. Thus, the sample
examined for Appalachian grant awards represents about 53 percent of all grant awards
made in the U.S. during 1996, according to Internal Revenue Service filings. It should be
emphasized that the sample therefore excludes smaller grants given by large and small
foundations.8 Nevertheless, this database is the most comprehensive available for
researching grant recipient organizations by geographic region.

Trends in Appalachian Grant Awards

In 1996, Appalachia’s total for grant awards of $10,000 or more grew to $298.2
million from $247 million in 1992. As noted above, Appalachia’s share of domestically
awarded grants was far less than it’s population share, registering only 4.6 percent of
grants as compared to 8.2 percent of the U.S. population. The growth rate of grant awards
to Appalachia was 10 percent in the 1992-96 period after adjusting for inflation, while
nationwide domestic grants awards grew by nearly 22 percent in real terms.

As Table 1 indicates, Pennsylvania ranks first by far in total grant awards, accounting
for over half of all awards in both 1992 and 1996. North Carolina, New York and
Tennessee together account for about 30 percent of the Region’s grants. Alabama,
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Kentucky and West Virginia make up the third tier of states in terms of grant dollars,
with South Carolina making impressive gains in 1996. Most Appalachian states gained
in the volume and number of grants awarded, with eight registering gains in the total
dollar amount of grant awards, and seven showing gains in the total number of grant
awards in the Appalachian portions of the thirteen states.

Strong growth in the dollar amount of awards was exhibited by two states that had a
particularly low volume of awards in 1992, but posted large gains in 1996, with South
Carolina’s awards increasing by 200 percent, and Mississippi by nearly 82 percent. In
addition, two states with a good track records in winning awards grew significantly, with
New York’s awards growing by 85 percent during the period, and Alabama by 42
percent. By and large, the Region enjoyed significant gains during a period of high
national growth in grant giving. There was, however, some slippage by Ohio, and states
that traditionally have had a strong foundation base, particularly North Carolina, which
experienced an 18 percent drop in grant awards, and Tennessee which showed a 26
percent decline in awards between 1992 and 1996.

Table 1
Grants to Appalachian Portions of States: 1992 vs. 1996

State 1992 1992 1996 1996
Dollar Value of Number Dollar Value of Number
Grants Awarded of Grants Awarded of Grants
Grants
Alabama $7,177,386 156 $10,164,852 204
Georgia $4,140,951 49 $4,762,936 54
Kentucky $9,045,027 137 $11,056,138 124
Maryland $57,000 4 $35,000 2
Mississippi $884,000 10 $1,606,677 11
New York $19,208,660 207 $35,700,525 257
North Carolina $27,961,955 430 $23,040,078 409
Ohio $5,021,861 77 $3,087,411 46
Pennsylvania $129,217,492 1,322 $160,932,232 1,898
South Carolina $5,087,783 121 $15,315,090 134
Tennessee $31,512,712 298 $23,298,528 227
Virginia $500,219 9 $384,153 10
West Virginia $8,102,496 159 $8,875,804 149
Appalachia $246,917,192 2,985 $298,194,424 3,525

Source: Foundation Grants Index 1998, The Foundation Center, New York City. This
compilation includes grants of $10,000 or more awarded to organizations in 1996 by
the top 1,010 foundations in the United States. For community foundations only
discretionary grants are included. Grants to individuals are not included.

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Grant Trends within Recipient States and Cities

Analysis of grant recipient data at the state level reveals a high concentration of
grant awards in particular cities within each state, especially in the largest cities, or those
that have a higher density of universities and non-profit organizations. Overall, there
were 367 cities in 1996 that received 3,525 grants amounting to $298 million. Most
prominent in the Region are the Pittsburgh-based recipients which accounted for about 43
percent of all grants awarded in the region, totaling $107 million in 1992 and $130
million in 1996. Indeed, Pittsburgh were excluded from the Appalachian sample, the
Region’s adjusted per capita funding for private foundation grants falls from $13.69 to
$7.82 per capita, as compared to the U.S. average of $24.50 per citizen for the $6.5
billion of domestic grant awards made by the top 1,000 foundations in the United States.

As the map on the next page shows, in addition to Pittsburgh, Pennsylvania,
several major cities stand out as leaders in receiving grants including: Winston Salem,
North Carolina; Birmingham, Alabama; Ithaca, New York; Chattanooga, Tennessee;
Berea, Kentucky; Spartanburg/Greenville, South Carolina; and Knoxville, Tennessee.
These cities consistently stand out as the leaders in grant awards, but their relative
ranking varies in 1992 and 1996 (as shown by the detailed data contained in Appendix 1).

Population size of cities, however, doesn’t account for the differences in the value
of grant awards among cities, as many smaller cities have managed to win relatively large
grant shares because of the activities of their colleges, universities and non-profits. Berea,
Kentucky and Ithaca, New York stand out as examples of small cities that consistently
win relatively large shares of grant awards. Moreover, there does seem to be an
association between the number and size of foundations actually located within the
Appalachian portion of a state, and the volume of grants received, although the
correlation does not appear to be strong once Pittsburgh is excluded from the sample.

In addition, community foundations play an important role in attracting grant
awards which these foundations then re-grant to worthy projects within their
communities. Community foundations are well represented in several states within the
Region, including foundation-rich Pennsylvania, North Carolina, New York, Tennessee,
Ohio and South Carolina, but other states have few, if any community foundations within
the Appalachian portions of the states.

Overall, this sample paints a portrait of a region that is underachieving in winning
its share of grants from the top 1,000 foundations. While these findings may partially
reflect the fact that most of these larger foundations are not located within Appalachia,
there is no direct evidence that indicates Appalachian-based organizations perform any
better in winning grants from smaller foundations, even those located within the Region.
Unfortunately, these issues cannot be readily resolved because of the lack of a single,
comprehensive data base on grants of all sizes by geographic location. It is possible,
however, to examine trends for the assets and total giving by foundations located within
the Region, although this data will not show how much is given within the Region.
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IV. Foundations Located Within Appalachia: Types, Assets and Giving

The location, number and asset value of the foundations in Appalachia were
researched by the Foundation Center using its database The Guide to U.S. Foundations
for 1992 and 1996.9 In 1996, there were 1,974 foundations located in the Region, up from
the 1,692 foundations in 1992. As Table 2 indicates, total assets rose from $8.1 billion in
1992 to $11.9 billion in 1996, and total giving by Appalachian-based foundations grew
by nearly 29 percent over this period, rising to $592 million in 1996.

It should be emphasized, however, that the totals for giving do not represent grants
awarded within Appalachia, but rather are the sums of all grants given to grantees both
within and outside the Region. Indeed, the Foundation Center’s database does not
disclose the grant recipients’ locations, so regional subtotals cannot be computed.

Table 2
Foundations Located in the Appalachian Region
With Total Giving of $1,000 or more in 1996
States Total Giving Assets Gifts Received Foundations
Alabama $41,739,349 $614,213,506 $47,816,124 194
Georgia $5,229,353 $78,316,919 $4,458,388 51
Kentucky $1,601,689 $23,053,913 $4,087,045 31
Maryland $683,419 $9,511,597 $358,364 23
Mississippi $595,383 $9,416,313 $260,742 14
New York $33,981,365 $895,285,006 $80,338,564 191
North Carolina $63,645,809 $1,268,424,996 $38,395,031 158
Ohio $11,764,314 $175,613,491 $8,811,635 95
Pennsylvania $353,528,768 $7,085,866,304 $151,592,112 833
South Carolina $14,300,811 $279,880,094 $18,070,072 71
Tennessee $45,685,384 $1,063,128,946 $31,181,853 129
Virginia $1,457,728 $17,735,887 $1,160,077 34
West Virginia $18,167,130 $410,672,233 $7,273,654 150

Appalachia $592,380,502 $11,931,119,195 $393,803,661 1,974

Source: The Guide to U.S. Foundations, 1997 Edition, the Foundation Center, New York
City, 1998. This database includes 35,765 foundations making grants of at least one dollar
during the fiscal year, although this compilation was limited to those foundations making
grants of $1,000 or more.

In total giving, assets and gifts, the top states were Pennsylvania, North Carolina,
Tennessee, New York, and Alabama in both 1992 and 1996. By all measures,
Pennsylvanian foundations represent the powerhouse of the Appalachian Region,
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