A larger share of family foundations have more money than they did a decade ago, and some are awarding a larger percentage of their assets. Nearly three quarters awarded more than the 5 percent minimum payout required by law, compared with 55 percent a decade ago, according to a new report from the National Center for Family Philanthropy.
The share of family foundations with assets over $10 million has grown over the past decade from 30 percent to nearly 50 percent, according to the survey. Today 36 percent of family foundations report making $1 million or more in grants, up from 23 percent a decade ago.
More than one third of foundations said they had increased their payout over the past five years. But half indicated they had not made any change, and 13 percent said they had decreased their payouts.
Family foundations are streamlining requirements for grantees and are soliciting feedback from grantees, the survey found. More report listening to grantees and responding to community needs than in past years. But the number who provide general operating support, multi-year grants, and capacity-building grants has steadily declined to 66 percent, down from 83 percent in 2015.
“The report signals that families are making positive shifts towards effective practice. However, it also is demonstrating that change has been too slow and too superficial to yield the lasting transformation that communities need,” says Nicholas Tedesco, CEO of the National Center for Family Philanthropy. “The data indicates that there are more resources that need to be mobilized in effective ways to meet the needs of today.”
The report is based on a 2024 survey of 524 family foundations.
Support for Causes
Family foundations have also changed their giving strategies and focus over the past decade. Nearly three quarters of family foundations are following an issue-driven giving strategy compared with just over half of them a decade ago, according to the report. And those issues are changing. Thirty percent of family foundations surveyed reported funding the environment, up from 18 percent in 2020. The share of foundations that support human and civil rights and civil liberties jumped from 10 percent in 2020 to 24 percent.
The share of family foundations that fund efforts to fight poverty, hunger, and homelessness, as well as support for youth empowerment, women’s issues, and religious organizations, all shrank from 2020 to this year. The hardest hit were social and family services, which fell from 25 percent of family foundations in 2020 to just 7 percent.
Despite the shift toward causes, nearly two thirds of family foundations surveyed maintained their geographic focus from 2020 to the present.
Increasingly, philanthropic families want to have an impact on the issues that are important to them, says Avery Fontaine, who leads Philanthropy & Impact and the Institute for Family Success at PNC Private Bank Hawthorn. But she says they are not always doing it through their foundations. More families are taking a multi-pronged approach, giving through a foundation but also a donor-advised fund. Many also support political and advocacy groups and invest in for-profit ventures. She says that just because an issue is receiving less support through a family foundation doesn’t mean that the family isn’t pursuing change through other means.
“Philanthropy hasn’t fixed poverty yet, so maybe there’s a new way. Maybe there’s a combination or a capital stack that we could deploy in a portfolio approach that would move the needle further than pure grant making,” she says. “It doesn’t denigrate grant making.”
Family Dynamics
The report also found that many families struggle with working across generations. They said it’s important — 86 percent are encouraging younger generations to engage in philanthropy. However, for a minority of foundations, that intergenerational collaboration has been a challenge. About a quarter of family foundations reported that younger generations no longer live near the foundation, up from 15 percent in 2020. Sixteen percent reported conflicting social, political, or religious views between generations, up from 8 percent in 2020. An increasing number also report conflicting views about wealth.
A small but growing number of families also report that younger and older generations view racial equity in different ways, with 11 percent reporting differences, up from 4 percent in 2020. Those who reported that cooperation among generations was impeded by dysfunctional family dynamics doubled from 7 percent in 2020 to 14 percent.
“Oftentimes, the managing generation does not always empower the next generation to be involved in a meaningful way, which can discourage next-generation participation,” Tedesco says. “What are those tactics that families are using that are engaging the next generation in a substantive, meaningful way? How are families empowering the next generation to continue to grow into a place of leadership and co-ownership of this work?”
At this time of increasing tension in some philanthropic families, family foundations are doing less to engage younger generations, according to the report. In 2015, 56 percent of foundations reported taking younger family members on site visits. This year, that number fell to just 28 percent. In 2015, 62 percent of family foundations reported that they organized formal discussions about philanthropy. Now only 21 percent do. While half of family foundations provided discretionary or matching funds to younger family members in 2015, less than one third do so now.
Many younger family members want to engage with philanthropy but in different ways than older generations are used to, says Fontaine, of PNC Private Bank Hawthorn. They are more interested in volunteering and getting to know the groups the foundation supports through first-hand experience before thinking about grant making. Many of them also have conflicted feelings about wealth. Fontaine’s group has psychologists that work with families on many of these issues.
“The polarization that we’re seeing across so many aspects of our society, the way it’s affecting these younger generations, is a sense of concern and even guilt that they have these resources,” she says. “We do a lot of work with our families around how do you meet them where they are and help them view and learn to utilize wealth as a tool in a beneficial and productive way rather than a burdensome or destructive way.”
Power Sharing
Tedesco is encouraged that more family foundations are changing their grant-making processes to make them easier for grantees. Three quarters of them are considering making changes in the future. Family foundations have also been diversifying their boards. There has been an increase in the share of family foundations that report they have Black, Latino, multi-ethnic, or LGBTQ board members. Tedesco says that’s an important shift.
“This question of who makes the decisions is one of the most fundamental questions in family philanthropy,” he says. “It will continue to grow more pronounced with time. Families have to embrace and reflect upon and make meaningful movement toward sharing power.”
