“Crystal Ball” for 2024: How will the Stock Market Impact Grant Funding

Let’s look at a foundation grant prediction for 2024. The past few years has been a wild ride on the stock market. It is impacting everything from retirement accounts to college savings accounts. And yes, the ups and downs of the stock market are also impacting foundation grants.

This is the first of a six-part series on 2024 predictions for foundation giving. In this series, Millionaire Grant Lady and Associates are sharing our insights into foundation giving. These predictions are based on the most up-to-date information available as well as our in-the-trenches work with our nonprofits. To date, we have won more than $103 million in funding for our clients. Every day, we use these insights to win more dollars for a wide variety of organizations all across the United States, and these insights can help increase your funding, too.

How does the stock market influence foundation giving?

Foundation philanthropic giving is based on what foundations are receiving on their investment returns. While some foundations have an up-to-date website that shows what they are giving and to whom, for most foundations, we must rely on their 990s to show who they are giving money to, in what amount and for what purpose. If you are unfamiliar with what a 990 is, this is an IRS form filed by charitable foundations that is publicly released. You can find 990s through a Google search.

While 990s are vital to understanding funder behavior, they also are more of a snapshot of past giving than of current giving. This is because we do not have access to most charities’ 990s until they are 18 to 24 months old. For example, I was researching a foundation today whose most recent 990 was from 2021. Because 990s are outdated, we instead have to find another source of current data to help us understand current trends and to make predictions about future trends in funder behavior.

One predictor of charitable giving is the stock market. In general, the IRS requires foundations to spend 5% of the previous year’s investment returns on “charitable purposes.” Yes, the IRS rules are complex, but in general, for many foundations, the 5% rule holds true. Since most investments are held in or tied to the stock market, we can use the previous year’s stock market returns to predict, in general, if national giving from foundations will be up or down for the year.

Here’s a look at both the Dow Jones and S&P returns per year and year closing price for the recent past.

We have seen a lot of volatility in the market over the past four years. The stock market fell significantly in 2022 which likely contributed to less foundation giving in 2023. Because foundations made less money on their investments, and maybe even lost money, foundations had less money to give.

In 2023, the stock market rebounded to 2021 levels and even showed modest gains compared to 2021. This means that many foundations earned more money on their investments and will have to distribute more money in 2024 for charitable purposes. This is our first foundation grant prediction.

Foundation Grant Prediction 1: Foundation giving will increase compared to 2023. Now is the time to apply to more foundations.

If you need help growing your grant funding, contact us today.