Big Bull Market Boosts Foundations

When the 1980s dawned, the Dow Jones Industrial Index stood at less than one thousand. By March 1999, that same index had crossed the ten thousand mark. There were 13 billionaires in the United States in 1982; by 1997, that number had jumped to 170 (“Philanthropy in America,” 1998). The wealth generated by this twenty-year bull market was unprecedented in U.S. history.

Foundations, of course, bobbed along on this rising tide of money. In 1980, the Foundation Center's Foundation Directory counted approximately twenty-two thousand foundations of all types, with the largest in asset value being the Ford Foundation at $2.76 billion. Only the Robert Wood Johnson Foundation joined Ford above the charmed $1 billion mark. The 1998 edition of the Foundation Directory told a very different story: no fewer than thirty-one foundations topped $1 billion in assets. In February 1999, the Chronicle of Philanthropy published a survey of U.S. foundations, which showed the Lilly Endowment in the first slot with more than $15 billion in assets (Blum and Dundjerski, 1999). The tenth largest was the Andrew W. Mellon Foundation at $3.3 billion—meaning that the largest foundation of 1980 could not crack the top ten of 1999. Although the size of the larger foundations is impressive, the vast majority of foundations in the United States remain smaller: almost three-quarters of them as of 1997 had assets of $10 million or less. Many of these are locally based family foundations. Even after the bull market ends, it is likely that new foundations will continue to form at a brisk pace for several years as owners of successful enterprises reap the benefits of their commercial ventures.

The sheer growth in the number and size of foundations has resulted in a corresponding increase in the number of foundations interested in policy work. Prior to the 1990s, most foundations did very little policy work, or, at most, they responded to threats. Few had an ongoing interest in magnifying impact by interacting with governments or large institutions. This began to change, for a number of reasons, during the 1990s. Throughout the decade, the number of regional associations of grantmakers began to grow, and these “trade associations” included policy work in their agendas. The president of the Council on Foundations, Dorothy S. Ridings, made it her mission, as soon as she took office in 1996, to increase the capacity of foundations to tell their stories and to enhance communications with policymakers in particular. The Association of Small Foundations, formerly an affinity group of the Council on Foundations, became a freestanding nonprofit organization in 1996 and began encouraging its members to participate more actively in the policy process. A measurement of the growth of foundation participation in policy activities is the rising number of grantmakers taking part in the annual RAGs on the Hill Day, sponsored by the Forum of Regional Associations of Grantmakers (RAGs). The first such day, in 1993, attracted fewer than twenty participants from around the nation to visit with members of Congress in Washington. The seventh, in 1999, drew more than one hundred. As philanthropy grows in size and importance during the years to come, it seems likely that its involvement in the policy arena will continue to expand and intensify.