Here you can find information about how Carnegie Corporation of New York manages its budget through a spending policy, as well as financial and investment reports.

SPENDING POLICY

The Corporation adheres to a spending policy that is designed to weather short-term market fluctuations to provide better predictability and long-term stability in grantmaking. This helps sustain the Corporation’s grantmaking efforts in bad times as well as good, allowing us to fulfill Andrew Carnegie’s legacy of using private wealth for the public good in perpetuity.

To lessen the impact on the budget from short-term market volatility, the Corporation uses a process known as “smoothing.” A common form of smoothing is to target spending at a specified percentage, not of the current market value of the institution’s assets, but of a moving average of market values.

The Corporation uses an equally weighted, 12-quarter lagging average of the assets’ market value to calculate its 5.5 percent yearly spending target.

When smoothing the budget, actual spending percentage in any given year deviates from the spending target by a different amount each year. When markets are up, actual spending drops below the yearly spending target because the 12-quarter lagging average market value is below the current value. And, when markets are down, actual spending rises above the target percentage for the same reason. Over the long run, budget smoothing should result in an actual payout rate of 5.25 percent, compared to the target’s 5.5 percent rate.

During periods of extreme market dislocation, such as the period from late 2008 through early 2009, the Corporation retains the ability to adjust its spending allocation in order to enhance preservation of capital for the long term. During these periods, unduly high levels of spending could jeopardize the Corporation’s mandate of preserving purchasing power net of spending.

In the Deed of Gift establishing the Corporation, Andrew Carnegie clearly spelled out that the foundation was created to carry out its philanthropic work in perpetuity, so that “even after I pass away the [wealth] that came to me to administer as a sacred trust for the good of my fellow men is to continue to benefit humanity for generations untold.”

For the 10 years ending September 30, 2014, the Corporation awarded 5,012 grants totaling $1,187.7 million and incurred expenses of $174.3 million for program management, direct charitable activities, and administrative expenses, excluding investment expenses, and $40.5 million for taxes, for a total of $1,402.5 million. The graph below illustrates the change in expenses by category over the 10-year period ending September 30, 2014.

Appropriations and Expenses by Category, Fiscal 2014
Appropriations and Expenses by Category, Fiscal 2014

Reports

The Corporation’s annual report contains both a report on financials — which includes financial highlights, an independent auditor’s report, balance sheet, statements of changes in net assets, statements of cash flows, and notes to financial statements — as well as a report on investments, which is a narrative from the chief investment officer on performance of the Corporation’s portfolio for the fiscal year ending September 30th.