How much does it cost to make a $10,000 grant?
How much does it cost to make a $10,000 grant?
It depends. Experimental formula spotlights foundation costs and the funds that remain for grantmaking.
There is no single number for how much it should cost a foundation to decide and send grant funds to support public benefit activities, but whatever the number is, it is consequential since these expenses directly reduce the funds that remain.
There are many necessary expenses for a private foundation, including:
- Investment fees
- Research
- Staff time and often trustee compensation
- Facilities and other overhead expenses
Other factors driving costs up include:
- Making smaller grants
- Covering a wide geography
There can be perfectly ordinary and necessary reasons for a private foundation’s non-grant expenditures, including investment fees, research, conducting site visits, facilities, website, executive compensation, accounting, etc. Other factors of higher costs can include making smaller grants, covering a wide geography, funding individuals, etc. Foundations are sometimes seen as peculiar institutions, escaping budget discipline by dint of their generally reliable income, but they also have to make spending decisions every day.
To shine a light on the spending variations among foundations, we picked 10 foundations of different sizes from around the U.S., using a simple formula of three lines from the IRS Form 990PF:
- Total Expenses (line 26a)
- Contributions, gifts, and grants paid (line 25a)
- Taxes (line 18a)
The table shown below calculates the cost of making a $10K grant as equaling line 26 less lines 25 and 18 ÷ (grants/10,000), and shows grants as a percentage of non-tax expenditures.
Ten examples:
The result is a huge range for the cost of making a $10,000 grant, from $172 to $8,000. How do we explain this?
Like all nonprofits, each foundation has a unique story to tell about how they serve the public, and how their finances support their mission.
The Philanthropy Project is committed to following the money, making the case that, as much as possible, charitable funds should be used to benefit the public. We are watching the net funds available — and yes, while efficiency isn't the only thing — it is a thing we care about, and benefits from transparency, accountability, and budget discipline.
Does this chart use the right 990PF numbers to tell this story, or is there another approach that would work better? We’d like to hear what you think!
