Statistical Analysis of the Operations and Activities of Private Foundations

In response to a congressional request, GAO developed and testified on a statistical profile of private foundations which indicated the financial status of the foundations and the degree to which foundations use their financial resources for charitable purposes.

The GAO analysis of private foundation tax returns for the year 1979 showed that the number of private foundations has increased by 114 percent in 9 years. During the same period, the foundations themselves experienced increases in assets, annual receipts, and expenses. When measured in terms of constant dollars, private foundations have grown financially only 13 percent in the past 2 years, while asset values have declined about 15 percent. This limited financial growth may be attributable in part to inflation and provisions of the Tax Reform Act which require most foundations to make certain qualifying distributions for charitable purposes. About 91 percent of the total expenses incurred by foundations in tax year 1979 were reported as disbursements for charitable purposes. GAO found that private foundations generally comply well with Internal Revenue Service reporting requirements. However, most foundations did not comply equally well with other statutorily required information. More consistent and comprehensive data are needed to fully assess the efficiency and effectiveness of private foundation operations and to measure the effects of the act.