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Yes we can, say Robert J. Shapiro and Aparna Mathur, in a newly published study: The Social and Economic Value of Private and Community Foundations. (Shapiro is the head of Sonecon and author of the new book >)
The study was sponsored by The Philanthropic Collaborative, "a new coalition of charities, foundations and elected officials dedicated to educating policy makers regarding the economic value of foundations and the work they do to improve America's communities."
According to the authors, this is the first such broad analysis of foundation grantmaking ever conducted in the U.S. In general, the study found an estimated average return of $8.58 in direct economic benefits for every grant dollar invested in 2007. "As a result," the authors report, "the $42.9 billion in grants and other support provided by private and community foundations in 2007 produced some $367.9 billion in direct, social and economic benefits." The report points out that this benefit greatly outweighs the estimated $8-$13 billion lost to taxes by the tax exemptions granted to charities and foundations.
In addition to the direct benefit, the study also found that foundation expenditures in 2007 helped generate nearly $512 billion in additional household income through some 900,00 nonprofit jobs and some $145 billion in additional government revenues.
The authors studied categories of grantmaking, and sample findings included:
>> Every grant $1 invested in human services generates nearly $11 in economic benefit.
>> Every grant $1 to arts and cultural organizations generates close to $10 in economic benefit.
>> Every grant $1 invested in health produces about $7.60 in economic benefit.
These examples are, of course, only the tip of the iceberg. You can download the 42-page report here.
We'd love to hear what you think. What should the nonprofit world do with this information? Who needs to know this?
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We need data on the regional multiplier effect of foundations grant making, not just an understanding of much they leverage by sector.
This remarkable report is significant in that it uses econometrics to asses the economic benefit of foundations’ grant making. They report this by sector, for example:
2.6 billion in grants for the environment and animals related programs produced an estimated $74.9 billion in benefits.
It is significant to know the estimated “multiplier effect” benefit for grant making is each sector. There is already lots of information out there that speaks to the ebbs and flows for giving for different sectors.
Because most foundations are regionally focused, and because the “multiplier effect” they rely on in their methods is almost always locally produced, it makes sense to have data on how far foundations dollars go in different regions.
In conclusion, I applauded their researchers for their work. They have laid the groundwork for a stream of important work to follow.