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charge that as a result of this favoritism, a few selected universities and scholars had been able to dominate the field of research to their own advantage. Finally, it was to prove or disprove the accusations that foundations had been responsible for a deterioration in the standards to which our scholars and teachers had previously conformed.

Once the aforementioned studies had been completed, keeping in mind the 5 determinations which the committee had been directed to make, we concluded that the dimensions of the subject to be investigated and studied were some six to seven thousand foundations, capital resources approximating $72 billion, annual disbursements in the form of grants amounting to at least $300 million, a time span of 50 years that is, from 1903 to 1953-and a number of grants conservatively estimated at 50,000, with approximately 15 percent of these funds concentrated in 20 of 1 percent of the number of foundations, specifically Carnegie and Rockefeller, which happened to be the oldest.

In content, I discovered the subject included grants for every form of charity, and support of research, within the limits of the arts, the sciences, and the religions and the philosophies, and the many subdivisions of these well-known disciplines.

It also embraced grants to cover the cost of such physical facilities as school and university buildings, hospitals, churches, settlement houses, homes for recuperation, libraries and art galleries, and the permanent collections housed in each.

Finally I found that the subject included a myriad of fellowships awarded to scholars and artists active in fields too numerous to mention, let alone classify for the purpose of accurate evaluation.

I might mention here, Mr. Wormser, that out of many of the statistical compilations which we indulged in, we were able to graphically portray the growth of foundations, the growth of their capital resources, which show a marked growth and tend to support the chairman's opening statement that these could be expected to continue to grow from this point on.

The CHAIRMAN. Is that too extensive to be included in the record?

Mr. DODD. That is a rather long report, Mr. Chairman, of the method we used to arrive at these estimates, but it certainly could be included in the record, if you would like.

Mr. WORMSER. I suggest that it would be very valuable, Mr. Chairman to have it included.

Mr. HAYS. What is this again?

Mr. DODD. It is a description, Mr. Hays, of the manner in which we had to resort for a reasonable working estimate of the number of foundations, the size of their resources, the rate at which they had grown since roughly 1903, and the rate at which the capital resources of foundations had grown on an accumulative basis.

Mr. WORMSER. Would you like it read, Mr. Chairman?

Mr. HAYS. As I understand, it is a description of how the staff went at estimating the field that they had to work in, and it is completely factual and no opinions.

Mr. DODD. No opinions.

Mr. HAYS. All right, I have no objection.

The CHAIRMAN. Without objection, it will be embodied in the record.

(The statement is as follows:)

CAPITAL VALUES AND GROWTH OF CHARITABLE FOUNDATIONS

It is apparent from the Cox committee hearings and from the available literature on the subject that there is relatively little information from which the magnitude and growth of charitable foundations can be judged.

It seems rather illogical to devote serious and extended consideration to this complex problem without having some idea of the number, size, and characteristic of these charitable organizations that must exert such a great influence on our social and economic life.

The Russell Sage Foundation has published some excellent studies in which the actual data available have been limited to a relatively small number of foundations.

The Cox committee reported that it had sent questionnaires to more than 1,500 organizations. Based on the record in the files, there was a return from approximately 70 percent of these organizations. These returns have provided the basis for the analysis in this report.

The Internal Revenue Bureau every 4 years publishes a list of tax-exempt organizations in the United States. In the intermediate 2-year period a supplement is published. The latest major list is revised to June 30, 1950, and the supplement to June 30, 1952. These are the latest lists available at the present time and it will be some time after midyear of this year before a new list is available. It so happens that there is quite a close agreement between these publication dates just mentioned and the effective dates of the questionnaires from the Cox committee. A large number of them were as of December 31, 1951, and a small number at the end of some fiscal period prior to 1952.

Analysis of this Internal Revenue Bureau list indicates that as of this period there were approximately 38,000 tax-exempt organizations in the United States. A sampling of the pages in an attempt to identify foundations included in this list indicated that there may be an approximate total of 6,300 out of the 38,000 organizations that might be called foundations. We believe that we are within close limits of accuracy if we state that there are between 6,000 and 7,000 foundations in existence as of this period.

ACCURACY OF DATA AND DERIVED ESTIMATES

It should be realized that the ensuing tabulations cannot be accurate from the standpoint of good accounting standards. A large proportion of the small foundations is not endowed but derives its capital from recurring contributions. Some endowments are reported at book value and others at market value. These must be accepted as reported. It is believed that the greater part of the total value is based on market value. In the case of foundations with capital of $10 million and over, essentially all are endowed.

The questionnaires included in the analysis are of two types: the large and form A as described by the Cox committee. Of the total of 952 included in the financial summaries, 65 cover foundations with capital in excess of $10 million and 887 of less than $10 million capital. Approximately 150 of the form A questionnaries were excluded from the financial summaries because information on capital, income, or both were omitted from the answers returned. These were included, however, in the numerical growth data.

In the tabulations of capital, endowment capital and current contributory capital are added to obtain total values.

ESTIMATED TOTAL VALUES

Data from 46 of the large foundations as included in this tabulation were covered by the large questionnaires. These are the big-name foundations and were specifically and individually selected as such by the Cox committee. The total values applying to this group were included without change in the grand totals. Nineteen foundations with capital in excess of $10 million were included in the tabulations with the 887 that are under $10 million because nearly all of these were included with a form A questionnaire. This makes 906 questionnaires included in the form A group and these are considered to be about 15 percent of the total remaining foundations in the Bureau of Internal Revenue list as previously mentioned.

For this reason, the actual values in this group of 906 were multiplied by 6.66 to arrive at a total capital value of the foundations estimated to be in the Internal Revenue Bureau tax-exempt list. This estimate is considered to be on the conservative side and in any event sufficiently accurate as a good indication of growth trends and total values involved.

FINANCIAL CLASSIFICATION OF FOUNDATIONS

The financial classification of the foundations made in accordance with the foregoing remarks is shown in table I. The first 3 columns show the actual results derived from the questionnaires, the last 2 show the estimated total values for each size classification listed. The values shown in the last 2 columns are 6.66 times their respective values in the 2 prior columns except for the 46 large ones and the resulting grand total as previously mentioned.

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1 "Endowment classification" includes endowments as well as contributions to nonendowed or "contributory" foundations that were on hand as of end of calendar or fiscal year 1951.

Adjusted data include total endowment and income reported on Form A questionnaires multiplied by 6.66 because the 906 questionnaires included in the summary are estimated to be 15 percent of those included in the tax-exempt list.

It will be noted that the estimated total capital for the foundations is nearly $7.5 billion and total annual income nearly $675 million. Both of these figures will be subject to considerable variation from year to year, in part because of the proportion of “contributory" foundations in the smaller groups and because of varying earnings between good years and bad.

The proportions or percentages of foundations, their capital and their income in each capital classification as well as the percentage of income to capital in each class are shown in table II.

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It is of interest to note that the foundations of less than $50,000 capital are shown to comprise about 40 percent of the total foundations, 0.5 percent of the capital and 5.4 percent of the income with a ratio of income to capital of 89.2 percent. These strange ratios result from the fact that these small foundations are largely of the nonendowed or contributory type and receive frequent contributions of cash from creators and friends. Since much of their income is currently expended the ratio of income to capital is very high.

At the other extreme are the large foundations of capital of $10 million and over. These account for 7 percent of the number, 56 percent of the endowment, and 32 percent of the income. Some cash contributions are occasionally received by these and their ratio of income to endowment is about 5 percent.

An interesting feature of this table is that the ratio of income to capital decreases quite steadily as the capital classification increases as would be expected from the foregoing remarks. This decrease is evident in the last column of table I.

The great increase in foundations created in the decade of 1940-49 is featured by the large percentage of small foundations which in turn and as previously stated are composed of a higher percentage of nonendowed or contributory foundations. Based on the answers to the Cox committee questionnaires, the following comparative figures apply:

Nonendowed foundations created:

Decade 1930–39__

Decade 1940–49.

Percent of total

12.5

27.5

CHARACTERISTIC DATA ON LARGE FOUNDATIONS

Table III which follows shows data applying to the 65 foundations whose capital is $10 million and over:

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1 Includes capital of endowed and nonendowed foundations. This table calls for little comment. The slight discrepancy between the figures of 5.1 percent in table II and 4.7 percent in table III for earnings as percent of capital is explained by the larger percentage of "adjusted" earnings estimated for the 19 large foundations included in Form A group as compared with the 46 in the large group.

As previously outlined, contributions to the nonendowed organizations are considered as income and unexpended funds largely constitute the capital in lieu of securities in the portfolios of endowed organizations. This results in a higher ratio of income to capital than prevails in the endowed organizations.

It is also of interest to note the relative proportions of foundation capital included in the perpetual, limited and conditional life classifications.

The endowments of large foundations with definitely limited life comprise only about 4 percent of the total endowments of this large foundation group while the perpetual and conditional groups have 46 percent and 50 percent respectively of the totals. There seems to be very little tendency for the trustees of the conditional life group seriously to reduce their endowments. This might naturally be expected.

The numerical data show the number of foundations created each year and the financial data show the values of the endowments reported for 1951 for the foundations created each year. The accumulated endowments at 1951 values are also shown. The values just described are shown in chart I. There is no appreciable increase or decrease shown in the trend of endowment values added since 1900. The trend is essentially horizontal for these large foundations.

GROWTH OF LARGE FOUNDATIONS

The rate of growth both numerically and in capital values of these large foundations during the last 50 years is shown in table IV.

TABLE IV.-Foundations with capital $10 million and over (includes only those reporting on questionnaires)

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