Knowledge and Insights
Whether you are a family foundation or a grant-seeker, we thought you would find some interest in these trends.
Family foundation giving almost doubled between 2002 and 2013 and the number of foundations increased by 44% over this timeframe.
This impressive growth can be attributed to three factors:
- An increase in the creation of family wealth.
- A growing sense of doing good; individuals’ realization that they can have a positive effect on serious issues through philanthropy is growing.
- Entrepreneurs are becoming wealthy earlier compared to previous generations; they seek meaning beyond their business ventures.
The growth of family foundations can also be attributed to its appeal to donors. They are perceived favorably because they offer donors more control, flexibility, and transparency.
In an effort to better understand the rapid growth and evolving trends in family philanthropy, the National Center for Family Philanthropy conducted a survey of 2,500 family foundations.The survey results reveal key trends for family foundations and spark a bigger conversation. What new tools and resources can be utilized to help family foundations reach their goals? What does the future look like in this field? Are the potential trends alarming or exciting? These are just some of the discussions emerging. The survey findings are also invaluable for nonprofits hoping to gain a better understanding of donor’s current mindsets.
For many nonprofits, funding opportunities are a top concern; family foundations are no exception. Understanding the mindset of your donors is critical. Family foundations present a unique opportunity to donors because they can involve and educate family members, sharing values from generation to generation.
Below, we highlight what we believe to be the four most important trends from the first National Benchmark Survey of Family Foundations. It is important to note, as defined by this study, that older foundations are defined as originating pre 1970 and newer foundations created post 1990. To be eligible to participate in the survey, a foundation’s annual giving had to total at least $100,000. The trends identified below apply to family foundations of varying sizes across the country.
- Place-Based Vs. Issue-Focused Giving – Many family foundations began with a geographic orientation. Historically, giving was motivated by the desire to give back to the community. The study revealed that 80% of foundations originating before 1970 focused their efforts on place-based giving. Whereas 60% of newer foundations, those created post 1990’s, favor issue-based giving. The biggest takeaway is the trend towards both place and issue-based giving, with one-third of all family foundations reporting a focus on both.
- Founder’s Presence – Traditionally, family foundations were products of an estate and only created after a donor made provisions in his or her will. With little to no direction, this left the next generation guessing, when defining important factors, such as a mission or cause. The founder’s presence is one of the biggest trends revealed, with 86% of foundations created since 2010 reporting a founder’s participation and 2/3 of all surveyed family foundations reporting their founders are still active.
- Assessment – Both new and old foundations reported value in assessing the impact their giving is having. 56% of newer foundations and 46% of older foundations are working to figure out how to best assess their giving. Furthermore, both new and old foundations reported they find value in self-evaluations. Whether or not a foundation has a system in place is dependent on its age.
- Impact Giving – Charitable giving for many family foundations was once inspired by community support, alma mater loyalty, religion or a personal experience. The survey findings revealed a new trend of effective giving. Donors want to give responsibly and measure their impact. 56% of newer and 48% of older foundations have reported looking into ways to assess the impact of their giving.
This further extends to the type of support being provided. Family foundations are focusing on long-term and flexible support. This is evident by the survey results – 83% provide operational support, 68% provide multiyear grants and 63% report making grants specifically to build the capacity of their grantee partners.
Based on the trends discussed in this article, family foundations are progressing and making changes that will shape the field in the near future. Changes in leadership, growth in assets, refocused initiatives and growing interest in measuring and evaluating outcomes will collectively progress the field into unchartered territory. These changes will surely affect the way nonprofits and donors coexist. To further discuss the trends in this survey and/or prepare your family foundation for the future, contact me at firstname.lastname@example.org or 609-689-9700.