Private Foundation Returns, 1985

Over 31,000 private foundations reported $16.4 billion in revenue for 1985, out of which they disbursed $6.3 billion for charitable purposes. Approximately 85 percent of the charitable disbursements were in the form of grants to organizations engaged in charitable activities [1, 2]. After deducting $7.2 billion in investment expenses, grant pay-ments, and all charitable-purpose operating and adminis-trative costs (all of which comprise "total expenses"), foun-dations recorded a growth in assets of $9.2 billion for the year [3]. Nearly all foundation revenue for 1985 was attributable to contributions received, net gain from sales of assets (mostly stocks and bonds), and interest and dividend income. Much of the net gain was the result of a restructuring Of investment portfolios which foundations were undergoing for 1985, and the income from these sales of assets generally was reinvested. Factors which encouraged the restructuring of portfolios are discussed below in the sec-tion, "Analysis of Change in Payout Requirement." Less than 1 out of every 100 grantmaking foundations had total assets with a fair market value of $50 million or more. However, these large foundations paid out nearly $45 of every $100 granted by foundations for 1985 [4]. In contrast, the smallest foundations (assets under $1 million) paid out roughly $15 of every $100 of grants awarded, although they accounted for 8 out of 10 foundations making grants. Foundation grants range over a broad spectrum, in terms of both dollar amount and the needs of the recipients. Grants awarded by private foundations also cover a wide variety of purposes and activities. For 1985, foundation grants supported activities ranging anywhere from the operation of an animal shelter to the training and education of the deaf to scientific research on ways to reduce the risk of nuclear war [5]. BACKGROUND A private foundation is a nonprofit corporation, associa-tion, or trust with a narrow source of funds which supports, and sometimes operates, programs that are dedicated to improving the general welfare of society. The activities of a private foundation are exempt from income taxes under section 501(c)(3) of the Internal Revenue Code. Private *Foreign Special Projects Section. Prepared under the directio