Total assets of foundations in the United States declined by 18.9 percent in 2022, from $1.304 trillion in 2021 to $1.057 trillion, signaling that foundations may begin reducing payouts in 2023 and beyond, an analysis by FoundationMark finds.

The $246 billion decline in assets is the largest year-over-year dollar decline ever and the second-largest decline by percentage since the 25 percent drop following the 2008 stock market crash, FoundationMark CEO John Seitz told the NonProfit Times. FoundationMark’s analysis included the review of the publicly available Internal Revue Service filings of more than 40,000 foundations with assets of $1 million or more, representing 97 percent of all U.S. foundation assets.

The year-over-year percentage decline in foundation assets (a combination of publicly traded equities and other investments) mirrors the performance of broader stock market indices, including the S&P 500, which saw a drop of 20 percent in 2022. Increases in asset value during the bull market that began in the spring of 2020 (11.2 percent, 8.3 percent, and 12.4 percent in 2020, 2021, and 2021, respectively) resulted in a 14.8 percent increase in expenditures since 2019.

Foundations would likely require an 18 percent increase in investment performance [in 2023]—an outcome viewed as highly unlikely by most economists—to offset last year’s losses and maintain their grantmaking levels of the past two years, Seitz told the NonProfit Times.

(Photo credit: Getty Images/Adam Smigielski)