Rotary Foundation Basics, Part 1: How Large is the Foundation?

by Quentin Wodon

The Rotary Foundation of Rotary International is a major player in the work of Rotarians worldwide. True, most activities organized by clubs and indeed most service projects are implemented independently of the Rotary Foundation, which I will refer to as “TRF” in this post. Many clubs have their own foundations and many projects do not require a foundation to be implemented. But for most investments at scale, TRF does play a key role, so Rotarians should have at least a basic knowledge of the foundation. My guess is that this is not the case today, so I thought it might be useful to run a three post series on some of the basics of the foundation. This first post discusses assets and expenses. The next will look at categories of expenses by thematic areas. The third will discuss management and suggest a few ideas to make TRF more impactful.

RTF Report

How large is TRF In Terms of Assets?

A widely used measure of the size of a foundation is its assets. According to their latest annual report (consolidated statements of activities), TRF and Rotary International had $1.2 billion in total assets as of the end the 2013-14 fiscal year, and $1.09 billion in assets net of liabilities. This represented an increase in net assets of about $130 million versus the previous year (2012-13) when net assets were at $961 million and total assets were at $1.08 billion.

One billion dollars is no small change, but some other foundations are even larger. Within the US, TRF would rank about 71st in terms of assets according to data from the Foundation Center (for some reason, TRF is not listed in the top 100 foundations put together by the Foundation Center, so the exact ranking is not available). The largest US foundation is the Bill and Melinda Gates Foundation, which had more than $40 billion in assets at the end of 2013. A dozen other US foundations have assets between $5 billion and $15 billion, and many more had assets between $1 billion and $5 billion.

In other words, in comparison to some of the largest US foundations, TRF could be considered as mid-size, even if it remains large in comparison to most foundations that tend to be much smaller. In comparison to foundations from other service club organizations, TRF is also the largest by far. Lions Clubs International now has more members than Rotary worldwide, but the Lions Clubs International Foundation had total assets in 2014 of $318 million. This is still large, but quite a bit smaller than TRF. The Kiwanis International Foundation is much smaller in terms of assets ($28 million in 2013).

How large is TRF In Terms of Grants?

Grants matter more than assets, since this is where the foundations make a difference. In 2013-14, TRF and RI had consolidated total expenses of $350 million. About two thirds of that amount ($232 million) were allocated to program expenses. The rest went to TRF development expenses ($16 million), TRF general administration ($5 million), RI operating expenses ($73 million) and RI service and other activities ($25 million).

With $232 million in program giving last year, TRF would have ranked about 25th among US foundation according to the list from the Foundation Center. This is a pretty good ranking. By comparison, the Lions Clubs International Foundation provided $44 million in grants in 2014, and the Kiwanis International Foundation made $18 million in grants in 2013. Only one US foundation – the Bill and Melinda Gates Foundations – gives more than one billion dollar in grants per year (it gives over $3 billion per year).

Why is there such a jump in terms of ranking for TRF among US foundations when considering grants or contributions instead of assets? In large part because many US foundations rely mostly or quasi exclusively on their endowments to make grants, without necessarily a lot of extra funding coming in annually (apart from returns on equity). By contrast TRF is able to rely also on donations from Rotarians, among others through its annual fund. In 2013-14, revenues from the annual fund reached $117 million. A separate endowment fund grew by $24 million. Annual giving by Rotarians, which is invested by the Foundation, is what makes it feasible for TRF to be able to make more grants in a sustainable and long-term basis.

Annual Fund

Still, we should all realize that while substantial, $232 million in grants/contributions per year remains small in comparison to some of the investments made by other players in the field of development. Official Development Assistance flows estimated by the Organization for Economic Cooperation and Development stood at $134.5 billion in 2013 (the largest recipient was Afghanistan, with more than $5 billion in aid). And some groups such as World Vision or Catholic Charities tend to have larger footprints than TRF. For example, World Vision provides funding to the tune of $2.3 billion per year for international programming as well as relief and rehabilitation, or about 10 times the level of contributions of TRF.

Who Gives the Most to TRF?

Since annual contributions are essential for the future of TRF, it is useful to look at who gives. The country that gives the most to TRF is (not surprisingly) the US. This is not surprising because the US has also the largest membership in Rotary. For the Rotary year 2013-14, TRF received $174 million from donors in the US. This includes $90 million in matches from the Bill and Melinda Gates Foundation for polio, so that individual and other forms of giving reached $84 million. Japan came in second, with $15 million in giving, followed by India with $13 million, Korea with $12 million, Taiwan with $9 million, Italy with $8 million, Canada and Germany with about $7 million each, Australia with $6 million, and Brazil with $5 million.

Giving TRF

How about giving per member? On a per Rotarian basis Taiwan comes on top with $216 in giving per Rotarian, followed by Korea ($182), Canada ($168), Japan ($134), the US ($124, not including the Gates foundation matching funds), and Australia ($123). In other countries, average giving per Rotarian to TRF is below $100 per year. Considering that membership in Rotary costs much more than that including for meals in many clubs, these levels of individual giving are frankly too low, especially in the United States where donors benefit from a tax exemption when giving since TRF is a registered 501c(3) charity. But this is another matter that will not be discussed here.

Giving per person

So that’s is for the basic financial information on the size of TRF that I wanted to summarize in this post. The conclusion is that TRF is a relatively large foundation, especially in terms of contributions/grants disbursed annually. At the same time, in comparison to overall flows for projects in developing countries, TRF is not at the same level as a number of other players, which makes the issue of strategic positioning essential for the foundation. That will be the topic of the next post in this series, by looking at the categories of expenses of TRF by thematic area.

Note: This post is part of a series of three on TRF: Part 1, Part 2, Part 3.

 

 

10 thoughts on “Rotary Foundation Basics, Part 1: How Large is the Foundation?

  1. this looks like a typo:
    TRF general administration ($5 billion)
    Can you correct the post before I share it with our board.

    Thanks

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      • Thanks Quentin. I enjoy your work – its a perspective the normal club Rotarian rarely sees. I’d like your thoughts on valuing humanitarian work (other than grant monies) carried out in developing countries. Australians currently raise and donate almost $50m (by offering tax deductibility to foundations, trusts and corporates) for 300+ short term but ongoing projects. This money facilitates a huge variety of work under strict governing rules, but, whist it leverages the spasmodic TRF grant, and RI’s name, this money would not likely ever be able to be channeled through Club collections for the Foundation

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      • Thanks Geoff.

        There are at least two issues here if I understood your email well. First, most of the funding that Rotarians provide for projects indeed does not indeed go through TRF. In the US, I have an idea on how to estimate this properly, and I believe it has never been done. One day I will try to put the data together to estimate this. We should do such estimations because this is key to show the reach of Rotary, which goes much beyond TRF, even though TRF is very important.

        The other issue is the ability at reasonable administrative cost in time to be able to access TRF matching funds, and how to make those funds as impactful as possible – this is a longer question…

        But in the immediate, I would love to know more about the work of Australian Rotarians – we can pursue this offline perhaps…

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  2. Quentin,

    It is unfortunate that in recent years Rotary has decided to combine the balance sheets for RI and TRF. Hence your blog’s statement that RI and TRF have $1.2 billion in assets is accurate, but not very helpful. Also, the size of our Endowment Fund is getting to be big news. As 2016-2017 is the 100 year anniversary of the Rotary Foundation, look for a LOT of press about the fact our endowment alone is worth more than $1 billion.

    Really good stuff as usual.

    Ken Solow

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    • Thanks Ken

      I was not sure whether you refer to overall assets or the endowment fund itself, which is indeed a major development. As of end June 2014, the endowment fund had $170 million in assets according to the fund’s annual report, but the target is indeed to reach $1 billion by 2017, which would be a big deal. Let’s hope we get there.

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  3. Your comments regarding the estimating the Reach of Rotary would indeed be interesting and valuable to marketers, but I suspect you want to quantify this in dollar terms or changes to GDP. Do you think it will ever be possible to value the contribution of saved lives, and say, improved living standards in other terms?

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    • Geoff – I was thinking of better ways to measure donations as a start, beyond TRF contributions… Measuring changes in GDP would be a long shot, and impacts may be rather small. But quantifying some of the other benefits may be easier, at least in approximate terms. At the World Bank we systematically do cost-benefit analysis of our projects/investments – lots of assumptions needed, but there are models and they tend to be based on the literature and dountry data, and this gives at least some information on likely benefits. It seems to me that Rotary does not do this in any systematic way, so more could be done…

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