Family foundations were largely an afterthought in philanthropy when Virginia Esposito began working at the Council on Foundations in the 1980s. Legacy grant makers such as Ford and MacArthur dominated the scene to the point that the first national meeting of family foundations attracted only 75 attendees.
The total big donors gave was $7.8 billion, a sharp drop from the 14.7 billion donated in 2017. The causes philanthropists supported are evolving, with more wealthy Americans looking for ways to shape the world’s uncertain future.
Today, estimates suggest that 60,000 foundations are likely led by donors or their family members, with such big names as Gates, Bloomberg, and Packard setting the pace for philanthropy nationwide.
Esposito helped usher in the modern family foundation. In 1997, she founded the National Center for Family Philanthropy, a national network. At the end of this year, Esposito will step down as president and become a senior fellow at the organization. She spoke with the Chronicle about the evolution of family foundations and what to expect in the next few years:
Forever more? As recently as the 1990s, families generally established foundations to last in perpetuity. That’s no longer a foregone conclusion. The center’s most recent survey suggests that 42 percent of family foundations haven’t decided whether to sunset or pursue permanence. Some want to give away lots of money now to have the most impact. Also, for younger founders, “the notion of a perpetual institution often doesn’t have a lot of appeal,” Esposito says.
Donors take charge. Most family foundations today were born during one of two periods in which American wealth soared: following World War II and at the end of the 20th century as the tech industry boomed. Postwar grant makers are now seeing third- and fourth-generation family members stepping onto boards, while the digital-era foundations are typically led by activist founders. Both of these sets feature relatively young philanthropists eager to learn the field and participate in grant making directly — a change from a time when families typically turned grant making over to professionals.
Hometown boosterism fades. Center surveys show that only 40 percent of foundations created since 2010 focus their giving on a geographic area, compared with 80 percent of foundations created before 1970. Esposito expects this trend to continue, as modern entrepreneurs increasingly run global businesses and focus their philanthropy worldwide. Also, third- and fourth-generation family members joining a foundation’s board may no longer live near or have strong ties to the founder’s hometown.
Nonprofit leaders as foundation CEOs. Family foundations are breaking from the tradition of appointing lawyers or university presidents as their top executives. Instead, they’re opting for nonprofit leaders whom they’ve come to know and trust as grantees. “When I ask why, they say they’ve found someone who shares an interest in their issues and brings expertise in that area,” Esposito says.
Giving through multiple channels. Donors are more often pursuing their philanthropic agenda in a variety of ways. Donor-advised funds and limited-liability corporations are becoming increasingly popular, Esposito says, but foundations remain a core vehicle. Among the couples who have a modern family foundation are Facebook co-founder Mark Zuckerberg and Priscilla Chan, filmmaker George Lucas and Mellody Hobson, and Michael and Susan Dell.
Younger family members at the board table. Years ago, a family’s eldest members almost exclusively assumed leadership roles; even those as old as 60 were told to wait their turn for board seats, Esposito says. But the reluctance to include the next generation in decision making has given way to an embrace of the young. When the Lawrence Welk Family Foundation created a next-generation board, an eight-year-old dressed up and boldly made his case for why he should be included. “They unanimously voted to let him in,” Esposito says.
Change in the making. Esposito says the younger family members influencing foundations are driving change, not a revolution. “They bring a lot of fresh air and a lot of new techniques, some born of a global society and the technological age. But it’s rooted in respect and gratitude for the family’s history.”
