New Study Reveals Reach, Economic Impact of Foundation Grantmaking

Philanthropy is tightly woven into the fabric of American society. It’s hard to imagine life without the fruits of charitable giving, including hospice care, insulin, vaccines, civil rights, Sesame Street, the 911 system, and even white lines on roadways. These and other advances are among the products of philanthropy that support thousands of organizations serving millions of people every day.

Unfortunately, the broad importance of the sector and the size of its impact are not well known, including among public and elected officials. This is a particular concern as Congress and the White House are debating the role of the sector and considering caps or limits on incentives that encourage charitable giving. Fortunately, appreciation is growing for the far-reaching effect that foundations and charitable giving have in our communities.

Using established economic models, a new study from The Philanthropic Collaborative (TPC) examines how domestic foundation grants in 2010 ($37.85 billion) are contributing to job creation, wages, GDP, and tax revenues. According to the study, foundation grantmaking in 2010 helped create about 500,000 direct jobs for those hired to implement the grant. Within one year, the number expands to nearly 1 million jobs when the “ripple effects” are included.

The study also presents longer-term projections of economic benefits such as better health care, educational opportunities, and quality of life. In addition, the study connects foundation grantmaking to nearly 4.5 million new jobs through long-term benefits or 8.8 million jobs when including ripple effects.

To help specifically demonstrate benefits to communities, the report includes case studies that document long-term economic benefits from reduced costs of juvenile crime, health care and social services, greater employment opportunities for the disabled and homeless, revitalized urban areas, and advanced longevity and quality of life from medical cures and treatments derived from scientific research.

Other outcomes include improved worker education and productivity, as well as a thriving business environment given the importance of schools, hospitals, cultural organizations, and other charitable enterprises to a community’s ability to attract and retain businesses. Of course, philanthropic support for entrepreneurship and the ecosystem that supports it can be even more far reaching.

Foundations and the organizations they support are vital components of the U.S. economy. To view them simply through a social filter neglects their essential roles as participants in and contributors to our nation’s economy. To view them solely through an economic lens or as diverted tax resources risks jeopardizing their immense social and other non-financial contributions. The TPC study shines light on both.

John Tyler is chair of The Philanthropic Collaborative and general counsel and secretary of the Ewing Marion Kauffman Foundation. This post is based on Mr. Tyler’s foreword from the report “Economic Impacts of 2010 Foundation Grantmaking on the U.S. Economy”