Family foundations created in the past 25 years account for nearly 70 percent of all family funds, a reflection of the great wealth amassed during that time period and the continued interest of more recent donors in formalizing their philanthropy, according to survey results released today.
Family members at about 60 percent of those newer foundations say they plan to contribute more, according to the study, which was compiled by the National Center for Family Philanthropy and the Urban Institute.
The study signaled generational change among family foundations. Only 21 percent of donors who created foundations before 1970 are still active in the work of their philanthropy. By contrast, among foundations established since 2010, 86 percent of their original donors are active, a sign that many decisions on succession, governance, and grant-making priorities may have yet to be made.
“Without a doubt, much of the field as we know it is at its earliest stage of development,” said Virginia Esposito, president of the center.
Survey results, which were collected by the Social & Economic Sciences Research Center at Washington State University, came largely from family members themselves; less than 15 percent of the responses came from paid staff members. The 341 foundations included in the survey each had assets of at least $2 million and annual giving of at least $100,000.
The results paint perhaps the first national portrait of family foundations, according to Ms. Esposito, and will be used as a starting point for follow-up studies every three or four years.
Cause-Related Giving
The survey discovered that foundations created in recent years are more likely to throw their support behind causes rather than focusing on specific communities. Nearly 80 percent of foundations created before 1970 directed most of their grants in a single region. That’s a reflection, said Ms. Esposito, of the loyalty the original donors felt toward their hometowns, which helped build and sustain their businesses during the post-World War II boom. By contrast, more recent donors have funneled 61 percent of their grants to specific causes, such as homelessness or chronic illnesses.
Ms. Esposito said she expected to see an even greater tilt toward cause-related giving among younger families.
“Given the mobility of 21st-century entrepreneurs, we thought we’d see much less loyalty to place,” she said.
Not surprisingly, both assets and giving at older family funds tended to be larger than at younger foundations. For instance, 9 percent of foundations established before 1970 reported assets of $200 million or greater. Only 4 percent of funds created in 2010 were that large. Similarly, 13 percent of the older foundations gave gifts totaling more than $5 million, a mark only 3 percent of the newer foundations reached.
More Time-Limited Funds
The accumulated wealth in the older foundations reflects a preference to establish family foundations in perpetuity. Only 3 percent of the older funds are time-limited, compared with 9 percent of foundations created from 1990 to 2009 and 19 percent created from 2010 to 2014.
Alice Buhl, senior fellow of the National Center for Family Philanthropy, said it isn’t clear whether more of the recently established foundations would become spend-down organizations. Forty-three percent of the newest funds don’t have a plan in place, and 14 percent said they revisit the issue from time to time.
But attitudes toward spending down have changed in recent years, she said, and donors are more likely to direct all of their assets to a particular cause if they believe it will have an impact.
“In previous years, in some ways it was a mark of failure to spend down,” she said. “It was assumed the family couldn’t work together or that they were giving up. Now it can be seen as a strategic, conscious choice.”
The survey also found:
- About 48 percent of foundations created before 1970 are exploring how to assess the impact of their giving, compared with 56 percent created from 2010 to 2014.
- Only a fourth of the older foundations have a method in place to assess their own performance, but 50 percent of the newer foundations do.
- Eighty-five percent of family foundations do not compensate board members for service beyond reimbursable expenses.
- About 83 percent of family foundations provide general operating grants.
