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Abstract
The amounts of money that private foundations allocate and the duration of the grants they give affect both on the impact of foundations and the sustainability of the nonprofits they support. The authors try to determine if there is a connection between payout ratios of foundations and multiyear support to grantees. They analyze a large sample of private, U.S.-based foundations to examine payout percentages for 2006–2010, as well as actual and declared patterns of multiyear support. They find that foundations that have a higher payout tend to support their grantees for longer periods of time. A positive relationship between payout and assets also shows that this multiyear support is more frequent among larger foundations. Consequently, the authors make recommendations for nonprofit executives and policymakers to acknowledge these correlations and the differences between different types of foundations. Future research into these differences and optimal minimal payout rates is also suggested.
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