‘Following the Money’ in North Carolina

I am continually interested in how the philanthropic sector operates. Foundations and other grantmaking entities can be mysterious institutions that redistribute wealth into a community based on some combination of strategy and whim. Making them more mysterious is the relative dearth of data and information about how they operate.

There are good reasons for this. The origins of the grantmaking corpuses are varied; the structures of the institutions are inconsistent; and the systems for tracking and reporting grantmaking often lack standardization. This means, however, that when policymakers and other interested parties try to understand the philanthropic impact in their communities, it can be difficult to do. Many of the baselines and public information sources that occurs in business and government do not exist in philanthropy.  We know that a lot of resources get sent to affect community interests, but it is hard to measure and compare across within and across regions.

Last September, the Federal Reserve Bank of Atlanta released a report that unpacks some unique information about U.S. foundations.

For example, between 2008 and 2013, the Durham-Chapel Hill metro area received more grant dollars per capita than any metro area on the east coast and was ranked seventh nationally. Of the 22 largest metro areas in the U.S., only San Francisco and Pittsburgh received more grant dollars per capita.

 

UNC-Chapel Hill and Duke University are two major drivers for the ranking. In addition,  the Durham-Chapel Hill area’s relatively small size makes a per capita number more stark. Boston, for example, with multiple tier one research universities and many major nonprofits, spreads those grant dollars among millions of residents, where the Durham-Chapel Hill measurement is spread over thousands of residents. In addition, the U.S. Census Bureau separates Durham-Chapel Hill from Raleigh-Cary for statistical purposes, a persistent annoyance for those of us who study demographic data.  Raleigh-Cary is in the top 25 percent of metro areas for this measurement, but does not stand out as much its bluer neighbors to the west.

The Atlanta Fed’s report was co-led by Will Lambe, a former program director at the UNC School of Government, led the project. Lambe is currently a senior advisor to the Atlanta Fed on Community and Economic Development,  In this role, he advises banks, foundations and governments in the Fed’s Sixth District, which serves Alabama, Florida, and Georgia, and portions of Louisiana, Mississippi, and Tennessee.

Lambe and his colleagues’ report analyzed a large data set from the Foundation Center and examined grants of over $10,000 made between 2008 and 2013 by the nation’s 1,000 largest foundations.  Report talks in greater detail about the review and the methodology. The final analysis includes nearly 169,000 grants totaling almost $15 billion in grant volume. In addition to the report, the Atlanta Fed has created an interactive tool to explore the data.

Key Findings

The Atlanta Fed’s study put together some context points in the report that are worth noting:

• In 2014, U.S. philanthropic contributions totaled $358 billion, 72 percent of which were from individual donors.
• Grants from foundations totaled $54 billion, or about 15 percent of overall philanthropic dollar. Between 2003 and 2013, foundation grants increased by 44 percent.
• The number of nonprofits in a metro area seems to influence the amount of grants, particularly large grants, that the metro area receives. Every additional non-profit per 10,000 residents is associated with a 22.8 percent increase in grant receipts in the area.
• Grantmakers tend to give more in their region. Metro areas that include at least one of the 1,000 largest foundations have a 331.5 percent greater grant volume per capita than areas that do not.
• Areas with higher per capita incomes and higher education levels tend to receive more grant dollars, particularly through larger grants.

About North Carolina

After spending some time on the tool, here are three data points and a few observations about the 17 metropolitan sub-regions in or overlapping with North Carolina

1. With the grants per capita metric, the variation across N.C. is significant

While the study breaks the metro areas into quartiles, it is a really a story of halves.

The Durham-Chapel Hill region is an outlier for the state and the nation. The spread between Durham-Chapel Hill and the Charlotte region, the next highest region in North Carolina, is more than $100 per capita.

Six N.C. metros are in the top 25 percent of U.S. metros in grant volume per capita. The Durham-Chapel Hill metro is followed by the Charlotte, Asheville, Raleigh-Cary, Winston-Salem and Greensboro-High Point sub-regions.  The Rocky Mount and Danville metro areas (the Danville metro includes parts of North Carolina) were in the second quartile.  The Burlington, Fayetteville, Goldsboro, Greenville, Hickory-Lenoir-Morganton, Virginia Beach-Norfolk and Wilmington metros were in the third quartile.  The Jacksonville and Myrtle Beach-North Myrtle Beach-Conway metros were in the fourth quartile.

2. Having a strong nonprofit infrastructure leads to more incoming grants

As the Atlanta Fed study suggests, there is a strong correlation between a community’s infrastructure for receiving grants and the amount of grant dollars received. It is an intuitive point, but it is difficult to know which is the driver.  Do grant dollars attract nonprofits or follow them?

With some small differences, the ranking of N.C. metro areas receiving the most grant dollars is similar to the ranking for number of community economic development nonprofits per 10,000 residents.

3. The grant dollars flowing into N.C. metro areas are spread distributed in many different ways

Frankly, this collection of data is a head scratcher. The Atlanta Fed study divides grants into five categories: education, community and economic development, human services, health and other. Other than being an display of differences in community priorities, it is difficult to divine any deeper meaning.

So What

This study is important for a couple of reasons–none of them related to a specific data point. First, it represents a distinctive attempt to study grantmaking patterns across the country and to begin discerning trends and drivers. It is not perfect. The report acknowledges some of its weaknesses, and the research team is thinking through how to improve upon the process in future iterations. That said, it is novel.

Second, the report demonstrates the complexity of the United States philanthropic landscape. An interested reader can spend hours sifting through the data and fail to see clear cut patterns or rules.  There are many more puzzles than answers, which suggests that this area is ripe for continued research.

On the other hand, we are starting identify some overarching patterns that influence grant receipts: income level, education attainment, percentage of people in poverty, presence of universities, and presence of foundations. These are not surprising, but they indicate that by-in-large the strength of our philanthropic communities is similar to the strength of our economic community as a whole. Put a different way: any hopes that our well off communities will generate support for our struggling areas may be difficult to realize.

 

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