Needy receive two-thirds of private charitable giving

Too many American families and communities are experiencing firsthand the hardships created by the difficult economic environment. Governments are cash-strapped from falling revenues just as they face an increased need for the services they provide.

Health care creates a particular challenge. Rising costs were already draining public funds, and the demands on public resources are now magnified by the greater number of people without insurance and by the impact of increased stress and illness related to the economy, both of which mean higher demand for public and charitable medical services.

The health challenge is especially great for the most vulnerable in our society—families with low incomes, the disabled, minorities, and other traditionally underserved communities. One bright light for those hit hardest by the recession is the support that private and community foundations provide for charities serving the health needs of underserved populations.

Research I carried out for The Philanthropic Collaborative (TPC) shows that more than two out of three dollars of foundation grant-making for health-related purposes benefit the neediest in our society.

This economic study, “Broad Benefits: Health-Related Giving by Private and Community Foundations,” shows that over three recent years foundations provided more than $5.5 billion for health-related activities benefiting underserved groups.

In total, nearly 70 percent of the $8 billion in grants to the health field tracked by the Foundation Center, a non-profit organization monitoring grant-making, provided benefits for the most disadvantaged in our society. This is twice the impact indicated by previous assessments of foundation giving.

The disparity between previous estimates and the findings of “Broad Benefits” is easy to understand. The Foundation Center’s industry-standard database classifies grants according to intended beneficiaries.

According to the database, only one out of three grant dollars explicitly list minorities, the economically disadvantaged, and other underserved groups as beneficiaries of the foundation dollars and this was the source of previous estimates. In looking more closely at the data, the TPC study finds that many grants not specifically identified as benefiting vulnerable groups actually do help underserved communities.

The John W. Anderson Foundation, for example, gave $10,000 in 2005 to support the La Rabida Children’s Hospital on the south side of Chicago. Established in 1896, the hospital treats kids who have been abused or experienced emotional trauma, have developmental disabilities, or are battling chronic illness such as asthma, cerebral palsy, diabetes, Down syndrome, and sickle cell disease.

Nearly all La Rabida patients are members of racial or ethnic minority groups, and Medicaid is the source of most hospital revenue. And yet the industry-standard data from the Foundation Center does not show this grant as helping an underserved community—only that it helps children, when most people would agree that “children” in general are not a wholly underserved population.

Unfortunately, this means that previously there was no acknowledgement that most of the children served by the Anderson Foundation’s grant to La Rabida are indeed among those most in need of help.

Looking carefully at a sample of several hundred health-related grants, the “Broad Benefits” study finds that 68 percent of health-related foundation giving from 2005 to 2007 benefited under-served populations.

This detailed assessment of foundation giving shows for the first time the degree to which people most in need of support benefit from the charitable giving of foundation grants. This is also a truly encouraging and possibly overdue acknowledgement of the helping hand offered by America’s private foundations.

Foundation giving provides broad benefits to society, including both the underserved and general population. More than two out of three dollars of foundation giving for health-related causes helps vulnerable groups such as the poor, disabled, and minorities.

Such support for those most in need is especially important in today’s difficult economy. Foundation giving plays a vital role in helping to fund access to health care for underserved populations. This role should not be overlooked in the ongoing debate over health care reform.

Dr. Philip L. Swagel is a visiting professor at the McDonough School of Business at Georgetown University. He was Assistant Secretary for Economic Policy at the Treasury Department from December 2006 to January 2009.

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