Scotland's foundations: wealth, grantmaking, and the public good

This report uses publicly available data to address key questions about Scotland’s charitable grantmaking foundations, including how many there are, where they are located, how much wealth they hold, and what is known about the public good that they contribute to. Grantmaking foundations are defined as those charities that are registered with the Office of the Scottish Charity Regulator (OSCR), are financially active, and which make grants to other organisations but do not operate their own programmes in at least one year. These foundations are of three types: 1) investors, who hold publicly listed investments; 2) income-based, who do not hold publicly listed investments; and 3) lotteries, whose primary source of income is from operating a lottery. There are 199 investor foundations, holding £3,672 million in net funds carried forward, of which £3,045 million is held in publicly listed investments, and who generate £1,758 in income. From this, they granted as much as £249 million in their most recent fiscal years. Investor foundations, and the assets they hold, are concentrated in Edinburgh and Glasgow, but with some distribution across much of Scotland. Their granting activities are most often at a scale larger than the council that they are located in, and many of them address multiple charitable purposes through their granting. Investors increase granting by £0.23 for a year over year increase of £1 in trading income and £19.68 for a year over year increase of £1 in investing income. Investing income only includes interest and dividends, not unrealised gains in investments. Investor grantmaking does not change with economic conditions, but their revenue sources do change with the economy, which indirectly affects granting. There are 96 income-based foundations, holding £219 million in net funds carried forward, who generate £148 million in income, and who granted as much as £130 million in their most recent fiscal years. Income-based foundations are more concentrated than investor foundations in the larger cities, which may reflect a need for a larger population to support their fundraising efforts. For income-based grantmaking foundations, a £1 year over year increase in donation revenue increases granting by £0.93 and a £1 increase in charitable activities income (fees for service) increases granting by £0.54. The effect of the economy is not direct, and changes in granting are in response to changes in revenue, not changes in economic conditions. There are 20 lotteries, with 18 in Edinburgh and 2 in Glasgow. They hold £92 million in net funds carried forward, raise £707 million in income, and granted up to £221 million in their most recent fiscal years. For lotteries, a year over year £1.00 increase in trading income (likely lottery ticket sales) increases granting by £0.23 year over year. The potential of minimum disbursements to uplift granting in Scotland was tested, and the results were mixed. Essentially, a poorly designed minimum disbursement policy could unintentionally decrease overall granting by up to £215 million because the significant number of grantmaking foundations under a minimum disbursement rule are under-granting by less than the value of over-granting by foundations who are above the minimum. For government, the recommendations coming from this report are to focus on updating the regulatory environment for grantmaking foundations with special attention paid to the Scottish context. For OSCR, the regulator, recommendations focus on improving the data available on grantmaking foundations and charities to enable government, researchers, donors, and the public to understand the complete financial picture of grantmaking foundations and how this picture changes over time. For grantmaking foundations, to focus on coordinating with each other and government to match grantmaking with community needs. Finally, for grantseekers, to focus on pragmatism in approaching grantmaking foundations for support.