Family foundations are changing. Many of us have been noticing the changes anecdotally for years. We've seen an influx of new organizations, new ideas and new approaches that are ushering the practice of family philanthropy into a new era.
With the release of the National Center for Family Philanthropy's 2015 Trends Study, we now have data to support these observations.
This new benchmark study, conducted with the Urban Institute, marks the first nationally representative survey of family foundations in the United States. It creates a profile of family foundations documenting the current number, size, age, assets and giving levels of family foundations across the nation and looks at a variety of unique aspects of family foundation governance and management practices, including the engagement of the next generation and the participation of the founding donor.
The study reveals a number of important trends that not only reflect a changing field, but also inform where family philanthropy is going.
Below are 10 trends that have captured our attention and will be shaping the field for years to come:
- Donor-advised funds and social enterprises might get all of the headlines, but family foundations are a popular choice for a new generation of philanthropists. Family foundations might be more traditional in their approach, but many new-age philanthropists are choosing to create family foundations to manage their charitable activities. Between 2002 and 2013, the number of family foundations grew by 44 percent and during that time, total giving to family foundations almost doubled - to $23.9 billion.
- Twenty-first century founders of family foundations are more engaged in their philanthropy than their predecessors. A few decades ago, family foundations were primarily the products of an estate - and the second generation was charged with interpreting the donor's wishes. But that is changing. Today's founders are much more actively involved - as two thirds of family foundations now have a founder who is still active in the foundation.
- Family foundations are increasingly focusing on issues - not on places. Charitable giving has long been motivated by the desire to give back to the community or region that nurtured the philanthropist. But many newer foundations report that they are putting less of an emphasis on the communities in which they were created in favor of giving to specific issues.
- Family foundations are more focused on effective grant making than ever before. Many older foundations focused on supporting causes in which their founders had a personal connection - whether it was their alma mater, religious institution, or home community. But many newer foundations are taking a different approach. They are instead building their grant making strategies around impact - and not necessarily personal connections.
- Newer family foundations are spending their assets more aggressively.One in five family foundations established in the 1990s and 2000s give more than 10 percent other corpus - as do foundations with an active donor. The minimum legal requirement is 5 percent - which means that a large number of foundations are giving more than twice as much away as required.
- While the idea of perpetuity will likely never die, more foundations are choosing to spend down their endowments. Twenty percent of the youngest family foundations have already decided to operate with a limited life span. This is less true among older family foundations. In fact, only about 3 percent of the oldest family foundations are operating with a limited life span.
- Family foundations remain relatively small - but they're growing. Of family foundations created since 1990, 78 percent have less than $10 million in assets. But three in five family foundations created after 1990s also report that they expect their assets to increase.
- Family foundations are taking active steps to engage the next generation.In many organizations, the emerging millennial generation is already beginning to influence giving decisions and operations. More than half of family foundations report that they are already engaging younger family members in their operations - and many of those that are not yet doing so plan to in the coming years.
- While family feuds work well on game shows, they aren't common among most family foundations. Nearly 90 percent of organizations report that most family members work well together. And three out of four agree that family dynamics do not have a negative effect on the foundation's work.
- Family foundations understand the value of capacity building and long-term relationships with their grantees. About 83 percent report making general operating grants and 63 percent give capacity building grants.