Project overview

Project Background

In 2020, charitable giving reached nearly half a trillion dollars in the United States. Of that amount, almost a fifth of giving came from foundations.[1] Foundations play an especially vital role in providing support and risk capital for charities. Some impacts of foundations’ philanthropy are plainly visible throughout Colorado. For example, it is difficult to look around our communities without seeing the direct influence of our state’s philanthropic foundations evidenced most prominently by the names on medical, cultural, and educational buildings. While named buildings and programs explicitly remind us of the contributions made by foundations, the breadth of foundation activity typically escapes our attention. As of 2020, Colorado’s non-operating private foundations held approximately $15.6 billion in assets, which translates to more than half a billion dollars in annual giving.[2]

This project documents the foundation landscape in Colorado, including the characteristics of foundations and patterns in grantmaking, and also highlights how foundations leverage assets for greater social impact. A primary goal of the work is to inform the public and stakeholders about Colorado’s foundations, specifically non-operating private foundations, and help bring light to organizations that are often poorly understood both in their origins and activities. Highlighting promising practices in grantmaking and reporting provides guidance and examples for peer organizations.

[1] National Philanthropic Trust. “Charitable Giving Statistics.” Accessed at: https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/

[2] The asset total is based primarily on non-operating foundations included in the IRS Exempt Organizations Business Master File (BMF) Extract updated on May 10, 2022 (see https://www.irs.gov/charities-non-profits/exempt-organizations-business-master-file-extract-eo-bmf).

Data and Research Approach

In order to document the landscape of Colorado’s private foundations, data were initially collected from the Internal Revenue Service’s Exempt Organizations Business Master File Extract (EO BMF) using data updated through May 10, 2021.[1] Organizations with reported Foundation Codes equal to 02 (Private operating foundation exempt from paying excise taxes on investment income), 03 (Private operating foundation (other)), or 04 (Private non-operating foundation) were retained. The initial list of foundations totaled 2,246 organizations with combined reported assets of $13.7 billion. The data represent the most recent available filing information from the IRS when the project began with 98% of the data covering filings made during the tax years 2018 to 2020. Five prominent Colorado foundations were originally omitted based upon the IRS EO BMF data, which reported no asset amounts for the foundations. The omitted foundations were added into the dataset based on asset reporting from the filed Form 990-PFs. Dollar amounts are not adjusted for inflation due to the short timeframe of the study. Importantly, almost all of the financial information (excluding the national comparison) pre-dates the COVID-19 pandemic and is considered to be more reflective of long-term foundation activity.

The foundations were sorted in descending order based on reported assets and the small number of operating foundations were removed from the sample based on the Foundation Codes. Of the initial 2,246 foundations, 191 (8.5%) identified as operating foundations. Data collection proceeded for the largest 100 non-operating private foundations based entirely on reported assets. So, the largest 100 is not a statement about the most effective foundations, but rather the largest which is highly correlated with grantmaking activity. The largest 100 foundations represent approximately 84% of total non-operating foundation assets in Colorado. The information collected included website presence, availability of financial statements, grantmaking activity, and selected financial information. The majority of data comes from the publicly-available IRS Form 990-PF, which is the annual filing required for private foundations and includes grantmaking details. Foundations file the IRS Form 990-PF in either paper or electronic format. We located the most recent IRS Form 990-PF using either ProPublica’s Nonprofit Explorer (https://projects.propublica.org/nonprofits/) or the IRS Tax Exempt Organization Search tool (https://apps.irs.gov/app/eos/copyOfReturnsSearch).

For paper filings, we used optical character recognition (OCR) tools whenever possible to convert the PDF to a readable format before recording grant details in a master spreadsheet. When available, electronic filings available in extensible markup language (XML) format allowed us to directly download the grant details. The current shift to mandatory electronic filing of the Form 990-PF will greatly ease the burden of processing grantmaking information in the future. The key information for each grant includes the grantee’s name, city, state, zip code, status (e.g. public charity, government), purpose, and grant amount. We added missing information, like zip code or city, based on Internet searches or the use of Google APIs as needed. Although the IRS Form 990-PF includes a purpose field for each grant, the responses are inconsistent across foundations and difficult to aggregate. As mentioned previously, in lieu of self-reported purposes of grants we used the National Taxonomy of Exempt Entities (NTEE) Codes, specifically the NTMAJ-12 codes, of the grant recipient when available, the self-reported purpose for grants to individuals, and an additional General Government code for grants to towns, cities, counties, and states.

Although the largest 100 foundations represent a large share of the sector’s assets in Colorado, we recognize that the nearly 2,000 remaining organizations comprise an important part of the state’s foundation landscape. Although resource constraints kept us from documenting all of the foundations’ grantmaking activity, we also selected and coded the activity of a 10% random sample from the remaining foundations with more than $2 million in assets (332 additional non-operating foundations). The $2 million threshold suggests foundations that grant at least $100,000 in grantmaking annually are captured. Although not detailed in the report, the random sample of smaller foundations allows us to determine whether grantmaking behaviors are consistent with Colorado’s larger foundations.

The primary data collection consisted of documenting grant activity from the Form 990-PF. The quantitative information was supplemented with a limited number of key informant interviews and exemplary cases identified during the primary data collection.

[1] https://www.irs.gov/charities-non-profits/exempt-organizations-business-master-file-extract-eo-bmf

About the Author

Todd L. Ely is associate professor in the University of Colorado Denver School of Public Affairs where he directs the Master of Public Administration (MPA) program. Driven by the desire to improve financial stewardship, his research and teaching focus on the financing of state and local public services and public and nonprofit financial management. He is the co-author of Essentials of Public Service, an introductory public administration textbook. Todd received his PhD from New York University’s Robert F. Wagner Graduate School of Public Service. He can be reached at todd.ely@ucdenver.edu.

Acknowledgements

A special thanks to the University of Colorado Denver’s Presidential Initiative on Urban and Place-Based Research for supporting the work.

Suggested Citation

Ely, T. L. (August 2022). Foundations of Colorado. Denver, CO: Center for Local Government Research and Training, University of Colorado Denver.