Grant spending by charitable foundations reached its highest level last year, finally beating the £2.5bn that was given out before the financial crash of 2008, according to a new report from the Association of Charitable Foundations.
The 2016 Foundation Giving Trends report, produced by Professor Cathy Pharoah of the Centre for Giving and Philanthropy at the Cass Business School, shows the amount foundations gave in grants in 2014/15 increased by 12.5 per cent on the previous year to £2.7bn.
But in real terms, the amount still falls short of pre-recession spending levels, when spending levels would have equated to £2.9bn in today’s money.
"The increase in overall grant-making was partly due to an unusually large £185m increase in the giving of Wellcome Trust, but even after excluding Wellcome, there was still a healthy growth," the report says.
The report ranks the Top 300 Foundations by the value of their grant-making and provides aggregated data on the size, shape and nature of foundations’ contribution to UK civil society.
The Wellcome Trust was by far the largest grant-maker by value, giving £673m, more than 10 times any other foundation in the year to September 2015. The Leverhulme Trust was second with grants worth £81m made in the year to December 2014. The Children’s Investment Fund Foundation was third with £81m given out in the year to August 2014.
The top 20 grant-giving foundations contributed slightly more than half of all funding.
The reason for the difference in accounting periods is that foundations do not all use the same year-end so the data tracked spans 2014 to 2016.
The report says that the rise in spending came despite a "bumpiness" in foundations’ finances.
It says foundations’ combined income fell by 2 per cent to £2.9bn in 2014/15 on the back of a much lower growth rate in assets than in the previous two years.
Voluntary income fell by 19 per cent to £1.3bn on the previous year, which report puts down to a series of very large gifts having boosted such income in previous years.
It says: "While this year’s drop is consistent with the longer-term pattern in voluntary income, nonetheless in an environment of weak economic growth and potential global market uncertainties following the EU referendum, it could potentially herald the start of a downturn in the value of major new gifts."
The report notes that foundations’ investment income surged by 12 per cent in real terms to £1.3bn over the past year – bringing it in line with voluntary income.
It also shows that giving by personal and family foundations now accounts for almost two thirds (62 per cent) of total foundation grant-making, having grown by about 5 per cent per year over the past decade to £1.7bn last year.
Corporate foundations’ contributions have risen by 40.6 per cent in real terms over the past five years to £232.3m from the top 50 corporate foundations in 2014/15, although they still only represent about 8 per cent of all foundation giving, it says.
For the first time this year, the report, which is produced annually with support from the Pears Foundation, explores how foundations’ money was spent, analysing 16,500 grants and detailing which sectors received the most funding. Education topped the pile in 2014/15 followed by health and arts and culture.