The Philanthropy Collaborative

Economic Impacts of 2010 Foundation Grantmaking on the U.S. Economy

This report, sponsored by The Philanthropic Collaborative, assesses the economic impacts of 2010 Foundation Grantmaking on the domestic economy. First, the study measures the immediately tangible, short-term economic impacts of foundation grantmaking by utilizing a 2010 IMPLAN input/output model. The study finds the immediate short-term results of U.S. foundation grantmaking, including multiplier effects, to be 973,112 jobs and $63.58 billion in GDP.

Second, the study estimates the longer-term, more substantial impacts of foundation grantmaking. The direct short-term impacts were bridged to their broader, long-term social economic benefits by applying return-on-investment ratios (ROI's) uncovered in the groundbreaking study The Social and Economic Value of Private and Community Foundations by Robert Shapiro. The study finds that, in the long-term, U.S. Foundation grantmaking contributes to 8,888,624 jobs and $570.56 billion to the GDP. Grantmaking also can be linked to $117.96 billion in total federal, state, and local taxes.

Then, to expand upon the national analysis and evaluate the impact of grantmaking on local communities, the report examined eight case studies of foundation grantees from across the country. Each unique case study provides an overview of the program and an economic analysis based on data from personal interviews, operating and construction budgets, and annual reports. In some cases we track the impact of specific grants, while in others we look at entire programs.

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DePaul Industries - Oregon and Southwest Washington: DePaul Industries mission is putting people to work; providing individuals with disabilities the opportunity to earn a lifetime stream of income that otherwise might not exist. The impact of providing an average lifetime income can have a net present value of over half a million dollars, so the multiplier effects of such workforce training and job placement can be tremendous. By its 40th anniversary in 2011, DePaul had trained or employed more than 15,000 people with disabilities and paid wages and benefits over $150 million. Last year alone, DePaul generated earned revenue of about $30 million and employed 2,000 people with disabilities. In the long-term, we find DePaul's work contributes $194.80 million to the annual GDP and is responsible for almost 4,000 jobs in the community.

Educare - Lincoln, Nebraska: On October 8, 2011, local partners broke ground on a new type of school in Lincoln, Nebraska: a state of the art early education center aimed at nurturing the city's disadvantaged families. Educare is a research-based program that prepares at-risk children, under five years old, for school by investing in their first five years of life and learning. This center will prepare families and their infants, toddlers and preschoolers for a successful life that otherwise may have been out of grasp. Educare of Lincoln has the capacity to help 150 to 200 children living in poverty improve their chances in life. When we include the long-term multiplier effects of early childhood education throughout the life of the child, we find that Educare of Lincoln will eventually contribute to about 524 jobs and add $30.79 million to the GDP. And all of these long-term benefits come from an initial capital investment of just $10.4 million, and an annual operating cost of about $2.6 million.

Georgia Aquarium - Atlanta, Georgia: Cofounder of Home Depot Bernie Marcus gave a $250 million gift to seed development of Georgia Aquarium and help revitalize downtown Atlanta. Today, the aquarium is one of the country's biggest attractions. The aquarium has drawn more than 13 million visitors since it opened in 2005, revitalized a once stagnant downtown, and generated about $1.6 billion for the greater Atlanta metropolitan area. When all the long-term social and economic benefits and the multiplier effects are included, the original seed grant from Mr. Marcus contributes about $190.98 million to the GDP and is responsible for about 2,691 jobs.

Mesilla Valley Community of Hope - Las Cruces, New Mexico: The Mesilla Valley Community of Hope (MVCH) serves the area's homeless and unemployed population, providing them with the resources they need to better their lives and eventually transition out of homelessness. Looking at MVCH as a whole, we find the economic returns from human services programs indeed take time to realize. However, the returns are significant. Even though the MVCH has annual operating revenues of just $718,900, this balloons to almost $6.4 million in long-term transactions in the economy, and 66 jobs which receive over $2.2 million in compensation.

Chattanooga RiverCity Company - Chattanooga, Tennessee: In 1986, the RiverCity Company was created as a private nonprofit to implement a plan revitalizing Chattanooga's riverfront and downtown area. Twenty-six years later, Tennessee residents not only view downtown as a destination, but some have even relocated there to be closer to the thriving riverfront. When all the long-term social and economic benefits of the program are evaluated, and the multiplier effects are included, we find a total yield of $14.15 million in GDP and 192 jobs. At the highest level, we also know the program has attracted approximately $3.0 billion in construction investment since 1992 to downtown Chattanooga. If we assume this works out to about $100 million a year in construction, that adds about 2,000 jobs and $285.67 million in transactions to the economy.

Cherokee County Community Indicators Project - Cherokee County, South Carolina: When leaders, neighbors and friends come together for a single purpose, they can have huge impacts on entire communities. In Cherokee County, South Carolina, the United Way of the Piedmont, the Cherokee County Community Foundation and the Upstate Workforce Investment Board formed a partnership in 2009 to conduct a community indicators project that would eventually be called "Cherokee 2020". The project was seeded with the help of two generous seed grants totaling $15,000. Over the long-term, the total economic impacts of this relatively modest investment grows significantly to almost $900,000 in transactions and half a million dollars in additional GDP. Also of note, the indirect taxes of about $28,000 recouped from the efforts of Cherokee 2020 easily surpass the original $15,000 investment.

Casper College Early Childhood Learning Center - Casper, Wyoming: The Casper College Early Childhood Learning Center (ECLC) provides life-enhancing opportunities for parents and children alike. Established in 1990, the ECLC serves as a preschool and childcare facility for the children of Casper College students and employees. It allows nontraditional students, those who did not begin college directly after high school, the opportunity to receive a higher education, by providing them with childcare. This gives parents the opportunity to train for a better job and a better paycheck, ultimately creating a better life for both parents and children. When all the long-term social and economic benefits and the multiplier effects are included, we find a total yield of $6.45 million in additional GDP and 99 jobs.

Mississippi HOPE Credit Union - Utica, Mississippi and Mid South Communities: More than 32 percent of Mississippians are unbanked or underbanked, meaning they either don't have a bank account or have limited access to financial services. Without access to financial services, how do you access credit for a car loan, business loan, a home mortgage or to put your child through college? HOPE is making a difference by offering affordable mortgages and financial services to disadvantaged communities in the Mid South. HOPE is able to fulfill their mission in part thanks to funds from private foundations. This includes a $250,000 grant from the Kresge Foundation in 2009 to support general operations. Over time, the $250,000 in operating expenses eventually causes almost $4 million in economic transactions and $1.6 million in total payroll. If this scale is applied to HOPE's total operating expenses of $20.3 million in 2011, the total economic impact is easily in the hundreds of millions of dollars.