What’s measured This study sought the number of registered 501(c)(3) private foundations that have filed Internal Revenue Service (IRS) Form 990 for the years 2004 through 2007, using data from the National Center for Charitable Statistics. Data prior to 2004 were unavailable. Foundations designated as 501(c)(3) organizations under the Internal Revenue Code are exempt from federal income taxes because they are operated solely for religious, charitable, scientific, public-safety (testing), literary or educational purposes; amateur sports competition or for the prevention of cruelty to children or animals. Such organizations with more than $25,000 in income are required to file an annual Form 990 with the IRS to provide information on their mission, program and finances. Private foundations typically receive contributions from just a few individuals or families and therefore face stricter reporting requirements than other 501(c)(3) organizations. Only registered private foundations that filed a Form 990 were included in this study, under the assumption that compliance with this filing requirement indicates an active status in terms of both organizational activity and revenue generation. Why it’s measured The number of 501(c)(3) private foundations is a measure of philanthropic capacity, reflecting the number of charitable entities established for the purpose of redistributing wealth from donors to charitable causes. A higher per capita number of 501(c)(3) private foundations suggests that a community has a greater capacity for civic engagement in the form of charitable giving. Indicator results In 2007, the number of 501(c)(3) private foundations in the region (defined as those filing a Form 990) was 485, or 0.2 per 1,000 residents. The region saw a sharp drop in the number of foundations between 2004 (1,147) and 2007 (485), with the most significant drop occurring between the years 2004 and 2005. Much of this decline occurred in Mecklenburg County, with the other counties in the region, as well as the averages for both North and South Carolina, remaining fairly steady. Among the counties that comprise the region, Mecklenburg had the highest ratio of private foundations to population (0.38 per 1,000 residents), while Union had the lowest (0.03 per 1,000 residents). Evaluation At 0.2 foundations per 1,000 residents, the region had a lower ratio of 501(c)(3) private foundations to population in 2007 than North Carolina as a whole (0.25 per 1,000 residents). But the region had more than South Carolina as a whole (0.11 per 1,000 residents). This marks a stark change from 2004, when the region had many more foundations per 1,000 residents (0.52) than either North Carolina (0.25 per 1,000 residents) or South Carolina (0.12 per 1,000 residents). As noted previously, much of this decline occurred in Mecklenburg County between 2004 and 2005. This raises the question as to what might have occurred in Mecklenburg to cause such a dramatic drop in the number of private foundations filing 990 Forms. Was there a major consolidation of foundations during this period or did endowment levels drop below the Form 990 filing threshold for large numbers of foundations? Did donors identify alternative giving mechanisms during that period? Further analysis is needed to answer these questions. In comparing the counties, Mecklenburg led the region with 0.38 foundations per 1,000 residents in 2007, reflecting the concentration of wealth in Charlotte and its immediate suburbs. However, of the three counties with the lowest number of foundations per 1,000 residents, two (Cabarrus and Union) were among the region’s fastest growing and increasingly affluent counties, where one might have expected a higher number of foundations. The overall decline in the number of 501(c)(3) private foundations in recent years suggests a possible decline in philanthropic capacity. However, these numbers may be misleading. The Charlotte-based Foundation For The Carolinas, though registered as a public charity rather than a private foundation, plays a significant role in most of the regional counties, providing a mechanism for philanthropic giving through county-based affiliates. This has probably reduced the incentive in some counties for the creation of more traditional “family-based” foundations. Therefore, much of the existing capacity for charitable giving in these counties is probably not being reflected in this indicator because of the Foundation For The Carolinas’ role, and the fact that the Foundation’s work, as reported on its Form 990, is counted only for Mecklenburg County. For future reports, the Foundation For The Carolinas has offered its assistance in assessing the level of giving by county through the Foundation. Still, this measure should remain a good indicator over time of the growth in the region’s philanthropic capacity. Connections Throughout the region’s history, private foundations have made important contributions. Some foundations have adopted broad-based missions, such as many of the region’s corporate foundations, while others have maintained a more specialized emphasis, such as the Duke Endowment as prescribed its original benefactor. The decline in private foundations might say something about a drop in civic engagement, but it also could mean that donors are seeking alternative modes of philanthropy. The decline also may offer insights into the region’s economy. One relationship worth tracking is the region’s growing affluence by county and the number of 501(c)(3) foundations in each of those counties. The lack of a positive correlation between these two measures in recent years certainly raises questions about the region’s ability to translate its new-found wealth into greater philanthropic capacity. However, a possible shift in the nature of charitable giving could explain what is occurring.
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