During the past several years, many of us who watch and study philanthropy have taken to labeling this a “New Golden Age of Giving.” Like the first such Golden Age — the era of Carnegie and Rockefeller, among others — this is a time of both tremendous concentration of wealth and rapid change in how that wealth is deployed. In the first Golden Age, we witnessed the rise of the general-purpose foundation; today, we have charitable LLCs and donor-advised funds.
But do wealth and innovation alone make this a golden age — particularly as our nation grapples with multiple crises? Should we grant that honorific only when philanthropic money and innovation lead to real change?
The answers to these questions rest to a large degree on how family foundations and individual wealthy donors respond at this critical moment. Just as in the early 20th century, families hold much of today’s concentrated wealth and often are the inventors or avid users of the new methods for distributing it in support of causes they consider worthy. Their actions will determine whether our age of giving is truly golden.
Much of today’s scrutiny of family giving focuses on billionaire families. Is Jeff Bezos doing enough? How are the massive philanthropic apparatuses of Bill and Melinda Gates, or Chan-Zuckerberg, or Michael Bloomberg responding at this time? What will become of Jack Dorsey’s billion-dollar pledge for pandemic relief and recovery, or of MacKenzie Scott’s commitment to unrestricted gifts with a special focus on racial equity?
While these are crucial questions, we need to also keep an eye on the vast sea of individual and family donors beyond the billionaires in the news. This includes more than 40,000 family foundations, most of which are small and unstaffed. It also encompasses more than 700,000 donor-advised funds, as well as the millions of individuals and families who give outside these vehicles. These donors have the ability to make the most difference right now in many communities around the country if they can embrace the distinct advantages of family giving — and overcome its special challenges.
Distinct Advantages
Family donors are ideally nimbler than other philanthropic players. Because the vast majority of family giving involves little or no staff, families generally have fewer layers of bureaucracy to maneuver when making funding decisions. They can respond quickly to needs or changes in the environment and modify their practices to ensure swift action.
Early in the pandemic response, family foundations such as the Robins Foundation and the Mary Reynolds Babcock Foundation — among many others — were able to quickly convert program grants to general operating grants, relax reporting requirements, or provide emergency funding to those struggling during the pandemic. Other individual and family foundation donors made new multimillion-dollar commitments to the Movement for Black Lives within days of the call for increased investment in racial justice.
In their best incarnations, family donors are also embedded in the communities they serve and have a clearer understanding of local needs. Many also have a passionate focus on a specialized issue area that engenders deep connections with grantees. These long-term, high-trust relationships allow families to respond more effectively when a crisis arises, making them better donors.
For example, the donors behind many women’s funds and giving circles, such as the Women’s Foundation California or members of the Women’s Funding Network, quickly recognized that stay-at-home orders during the pandemic could have a dangerous, hidden consequence: an uptick in domestic violence. In response, many reached out to provide extra funding to their existing front-line partners confronting this problem in their communities.
Family foundations, such as the Akonadi Foundation in Oakland, Calif., the Max M. and Marjorie S. Fisher Foundation in Detroit, and the Barr Foundation in Boston, responded rapidly to meet genuine needs in their communities as the pandemic unfolded. All three moved quickly to provide more than $1 million in funding to those they knew would be hardest hit by Covid-19, including immigrant-led organizations, racial-justice movement builders, and the residents of marginalized neighborhoods in their cities. Because these foundations were already deeply embedded in those communities, they could adapt immediately and distribute funds effectively.
Special Challenges
Family donors also face obstacles that other donors do not. For one thing, they are families. And families have those infamous “dynamics” — dynamics that can constrain a family’s giving, and sometimes end it all together.
Family donors are also notoriously risk averse. They often hesitate to take chances on unproven approaches or new organizations, to depart from the founder’s intent if they are stewarding a multigenerational giving vehicle, or to tackle tough and sensitive issues such as racism or inequality that may divide family members ideologically or politically. Family donors face distinct organizational and governance challenges as well, from geographic dispersion to engaging busy younger family members.
These sorts of challenges can hinder the response to crisis. For instance, families with foundations or donor-advised funds whose mission statements don’t explicitly target racial injustice might disagree about when and how to fund outside their stated mission. Opportunities are lost when these donors shy away from funding what they may consider unconventional organizations, such as those currently leading movements for change.
Toward a More Golden Future
To make their giving truly golden, family donors need to embrace their nimble natures and close community and grantee connections while maneuvering around those obstacles that prevent them from living up to their potential. Here’s what they should do:
Increase giving. They can start giving right now, as many family foundations already have, by creating emergency funding programs, dipping into endowments, and contributing to a community foundation-sponsored effort or another Covid-response fund. They can get cash directly in the hands of those in need, as the Charles and Lynn Schusterman Family Foundation has done. They can even start a family conversation about spending more of the foundation’s endowment partially or entirely.
Improve giving. This includes adopting policies that speed up funding, such as streamlining and fast-tracking applications and reporting, and covering operating expenses. Better funding practices also mean tolerating more risks, including funding small and new organizations, giving directly to individuals in need, and stepping outside grant-making comfort zones. The Char and Chuck Fowler Family Foundation did this in Cleveland when it worked with others to launch an emergency-loan fund for artists, musicians, and others who lost income during the pandemic. And just as important, family donors should identify and work to overcome racial bias in giving practices.
Rethink practices for working with grantees. This requires letting go of the traditional donor-grantee power model, listening more, and allowing those closest to the need to guide funding decisions. It also requires recognizing and heading off “movement capture” — when activists and movements change plans to fit perceived (or explicit) grant-making priorities. One solution is supporting the “organic leaders,” those with the experience and credibility necessary to drive movements for change. Another is embracing trust-based grant making, including offering support beyond that which is explicitly provided by the grant and soliciting grantee feedback.
Adopt new governance policies. Even if it feels uncomfortable, family donors need to find ways to share power and include the voices of grantees and others. To accommodate real-time responses to near-daily crises, ad hoc family meetings and regular check-ins should become standard. The lockdown is a good time to start family conversations about new approaches, including evaluation practices focused on equity, and investment policies that focus on underserved communities or invest in community-development financial institutions.
These changes may seem daunting, but family donors don’t need to go it alone. Many other family foundations have overcome their anxieties and reinvented themselves. Most are willing to share what they’ve learned.
Donors need to acknowledge upfront that these aren’t just short-term fixes, akin to responding to last year’s Notre Dame cathedral fire, in which donors moved fast and gave big but then returned to their regularly scheduled giving life. This fire won’t go out anytime soon. It requires a long-term, reinvented response from all kinds of donors. It requires new norms of family giving, which just might prove better in the long run.
We would all love to say we are part of a Golden Age of Giving. But being truly golden requires making big change, not just moving big money in new ways. Family donors can lead this change.
