Foundations Are Leaving Their Grants in San Francisco, Mostly

A new study has found huge geographic disparities in California philanthropy, with San Francisco County getting $418 in foundation grants per person, while Los Angeles County--which hosts some of the worst poverty in the state--gets only $45 per person.

The study by the USC Center on Philanthropy and Public Policy found that grant dollars in California averaged about $28 per person in 1999, the year studied--and Los Angeles got more than any other Southern California county.

The six counties in the San Francisco Bay Area, by contrast, received 48% of California grant dollars, though the area houses only 17% of the state’s population.

“It raises questions for foundations to consider,” said James Ferris, the director of the center. “Are there areas in the state where philanthropy might direct its attention?”

Pete Manzo, the executive director of Los Angeles’ Center for Non-Profit Management, said his group found a similar disparity when it conducted a study two years ago.

“It is very stark,” Manzo said. “I would say it hurts across the board.”

“L.A. County is huge, and we do have the lion’s share of the needy population in the state here,” Manzo said. “Relative to the level of need, there’s a lot less foundation money available in Los Angeles than in the Bay Area.”

Joe Haggerty, the president of United Way of Greater Los Angeles, said the disparity may be driven partly by a misperception that causes out-of-state government grant-makers to divide funding evenly between California’s two major regions.

“People outside of California do not think of the differences between Los Angeles and San Francisco,” Haggerty said.

“They’ll say, OK, we’ll give half of the money to poor children in Northern California and half to Southern California,” he said. “They don’t think about our greater population and poverty. They may be spending the same amount of money, but if we have three times the people and much denser poverty, our per capita amount will be lower.”

San Francisco nonprofits have more success than other counties in attracting grants from out-of-state foundations, the study’s authors say.

Half of the grant dollars going to the Bay Area come from foundations outside the state--but 70% of the grant dollars for Los Angeles County come, instead, from California foundations, Ferris said.

“In Los Angeles they are not as effective in attracting out-of-state dollars,” Ferris said.

And prospective funders from outside California “have a harder time putting their hands around L.A. County because it’s so large,” Ferris said. “It’s harder for people on the East Coast and in the Midwest to understand L.A. than smaller, more well-defined communities.”

If this sounds like a bizarre arbiter of philanthropy dollars, other experts agree that the San Francisco effect cannot be underestimated.

“I think for people on the East Coast, San Francisco is a wannabe Boston, and they get that,” Manzo said. “San Francisco is the kind of place they would want to set up an office. L.A. they don’t get. The perception is that out-of-stater funders on the East Coast find Los Angeles hard to understand and plug into.”

Another factor, Manzo said, is the existence of several established Northern California foundations, such as the David and Lucile Packard Foundation, that give largely in Northern California. By contrast, the California Wellness Foundation and the California Endowment in Los Angeles give money statewide.

What the gap means is that “charitable organizations in Los Angeles County typically are dealing with more need and have fewer resources than their counterparts in the Bay Area,” Manzo said.

Foundation assets in general are heavily concentrated in California and dominated by a handful of players with more than $1 billion in endowments.

The San Francisco Bay Area’s 1,275 foundations make up 51% of the state’s total foundation assets, the study said. Los Angeles County, with 1,542 foundations, has 40% of the state’s foundation assets, which totaled $68 billion in assets and $2.9 billion in grants in 1999.

Seven of California’s 58 counties have no foundations at all, and eight counties are home to only one foundation, the study found.

But foundation growth in California and the West outpaces the rest of the nation, and Los Angeles’ share of foundation grants could expand quickly, Manzo said.

“The silver lining is there are a lot of small foundations in L.A. that don’t have a lot of assets now, but a generation from now the picture may change dramatically,” Manzo said. “I think it will, but we’re not there yet.”