February 11, 2008
What Drives Foundation Compensation and Expenses?
The Urban Institute, the Foundation Center, and Philanthropic Research Inc. have published the results of an intensive, three-year study regarding the factors that determine the levels of compensation and expenses of some of the largest private foundations. Here is a excerpt from the executive summary:
This report presents final results from the Foundation Expenses and Compensation Project—the first large-scale, long-term, systematic study of independent, corporate, and community foundations’ expense and compensation patterns and the factors behind them. Documenting the varying characteristics of the 10,000 largest U.S. grantmaking foundations, the study finds these differences—including foundation type, size, and operating activities—essential for understanding foundation finances. Not surprisingly, hiring staff and taking on staff-intensive activities raise charitable administrative expenditures relative to charitable distributions, while relying on unpaid board and family members and engaging in less staff-intensive activities lower them. Most foundation operations, however, are somewhere between these poles.
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