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Wednesday, December 13, 2017

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Trends in Family Philanthropy
Jason Born, Senior Program Director, National Center for Family Philanthropy

January, 2011

The National Center for Family Philanthropy published 15 trends they see for hte future this week. Please enjoy their predictions:

#1:       The proportion of families deciding to sunset/spend out in pursuit of their mission will continue to grow.    

The strategy of identifying an area of great and immediate need and making a strategic decision to apply all of the assets of a foundation has been around for many years – see the Julius Rosenwald Fund’s support for schools and African American institutions in the 1930s and 40s or the Aaron Diamond Foundation’s aggressive support for cutting edge AIDS research in the early 1990s for just two examples; more recent examples include the Girl’s Best Friend Foundation, which shut its doors in 2007, and the Albert A. List Foundation, which closed in 2004.

In the past decade this approach has taken off, with a growing number of funders of all shapes and sizes announcing their plans to spend out. According to an April 2009 report from the Foundation Center, Perpetuity or Limited Lifespan: How Do Family Foundations Decide?, more than 1 in 10 family foundations “plan to limit their lifespan or are in the process of spending down while a larger segment (25 percent) are currently undecided, either because they have not yet discussed this issue or because of uncertainty about the family’s future involvement in the foundation.”  Large foundations such as Atlantic Philanthropies have been joined by smaller but no-less-committed family foundations including the Beldon Fund, the Eckerd Family Foundation, the Quixote Foundation and many others. Lenore Hanisch, co-executive director, trustee and daughter-in-law of the Quixote Foundation’s founder, explains her foundation’s approach to “spending up,” as they call it in a recent post for the Tactical Philanthropy Blog, "The reality is we didn’t decide against perpetuity at all.  We decided we could generate a more significant perpetual impact if we put all our assets into action now, in lieu of institutional immortality." See the National Center’s Passages paper, Alternatives to Perpetuity: A Conversation Every Foundation Should Have, for concise examples of several other foundations who have taken this approach.

#2:       As individuals remain healthy and active until later in life, more seniors will continue playing a significant role in their family’s philanthropy.

More creative options will be developed to allow for participation from a broad range of perspectives and ages, with a particular focus on how to retain the experience, energy and commitment of the elder generation. Family foundations will need to create and refine both new approaches to board terms and limits, as well as creative ideas for committees, advisory boards, and mentorship. For more on this issue, see National Center Senior Fellow Alice Buhl’s August 2010 “Ask the Center” article for Family Giving News, “Emeritus Board Members: Curse or Blessing,” and her November FGN feature article, “Family Involvement: The Spectrum of Options.”

#3:       The field will welcome a new generation of leadership.

Family foundations will see a steady influx of new leadership from younger family members and community leaders. Over the next 10 years leadership changes will take place at thousands of prominent family foundations, and throughout the infrastructure of philanthropic support organizations. Those taking over will bring a new set of perspectives, skills and strategies for the organizations they inherit. Resource Generation’s Making Money Make Change conference and 21-64’s Grand St. network are two examples of programs seeking to identify and support emerging next gen leaders in philanthropy. At the same time, family foundations around the country are experimenting with a variety of models for junior boards and next generation leadership training for the under 21 crowd. The Hill-Snowdon Foundation in Washington, DC elected a board chair at the age of 26 and invited family members interested in joining the foundation board to be a nonvoting member of the board at 16 and voting at 21. Many others, including the Self Family Foundation, the Y & S Nazarian Family Foundation, and the Surdna Foundation have created formal structures for this training and investment in next generation leadership.   And still others, such as the Lumpkin Family Foundation and the Frieda C. Fox Family Foundation are combining forces to learn from one another about how best to do this important work, as described in the November 2010 Family Giving News article, “Fast Friends... Linking Youth from Foundation Junior Boards.“

#4:       Changes to Federal and state law regarding philanthropy will evolve more rapidly, and donors, families and those who support the field will need to tell our story better, and continue to make the case for family philanthropy.

In Ten for Ten: Philanthropy from 2010-2020, Lucy Bernholz from Blueprint Research & Design writes that "The rules will change—federal tax law, nonprofits and politics, municipal and state tax exemptions, IP regulations, B corporations and the entry of the SEC into social investing—by 2020 philanthropy in the US and trans-nationally is going to be operating under fundamentally different rules." This will hold true – perhaps even to a greater extent – for rules applicable to family foundations, advised funds, supporting organizations and other vehicles. Issues such as board compensation (for private foundations), successor advisors (for advised funds), and the ever-evolving concept of the prudent investor are sure to be explored by the current Congress and those yet to come. For more on the current laws governing private foundations, see our August 2010 Passages issue paper by Karen Green and Andras Kosaras, Managing Risk: Board Oversight of Foundation Investments.

#5:       The value of family involvement in philanthropy will be better measured, better understood, and better articulated.

In September 2010, the National Center released The Power to Produce Wonders, the first-ever report documenting the value of family philanthropy to the family, to communities and to democracy. Among other questions, the report asked, “What value does family philanthropy represent as a component and reflection of the proper functioning of democracy and democratic institutions in the United States?”  The report also identified several core value-added characteristics of a family’s involvement in philanthropy, including: passion and entrepreneurial spirit, roots, commitment and continuity, responsiveness and flexibility, and values. Over the next decade, the National Center and our partners will develop better methods for analyzing and quantifying the contributions that each of these characteristics brings – and readers of Family Giving News will be the first to hear about our results!

#6:       Significant new family philanthropies with global reach will be established in countries around the world – and they will look to the United States for both example and inspiration.

Private family philanthropy has taken off in major economies around the world, and is poised to emerge in places such as China, India and Brazil in the years ahead. But many of the newly rich in these countries have not yet embarked upon philanthropy at significant levels. A March 2010 report by Bain Consulting reported that philanthropic donations in 2006 as a percent of GDP amounted to 0.6 percent for India, 0.3% for Brazil, and 0.1% for China, compared with 2.2% of GDP for the United States. Tax incentives for giving in the U.S. have helped create our country’s longstanding and diverse tradition of philanthropy. As National Center President Virginia Esposito writes in the introduction to The Power to Produce wonders: The Value of Family in Philanthropy, "Americans, by choice, tradition, and the workings of a tax system organized to promote citizen development and responsibility, give more money to favorite causes than any other people on earth.” This is good news for the thousands of millionaires and growing number of billionaires in these rapidly developing countries, who may draw upon the examples, experiences and lessons learned from American family philanthropy.

To read more go to http://www.ncfp.org/newsroom/family_giving_news/2011/2011-january_lead-article

#7:       International giving from the United States to other countries will continue to increase.

#8:       Individuals will become significant donors at younger ages, and many will choose to involve their family in decision-making right from the start.

#9:       Family philanthropists will have a variety of powerful ‘at your fingertips’ sources for finding information about nonprofits, and for funding evidence-based solutions for a variety of key issues.

#10:     Family philanthropies will be increasingly drawn to dedicating a larger portion of their endowments to activities that align their investments with their grantmaking mission and objectives. 

#11:     Geographically dispersed donors and families will have greater flexibility in their choice of giving vehicle for shared family philanthropy, with new types of vehicles offered by a growing variety of institutions.

#12:     Family foundations will become increasingly creative in how they use websites and social media to showcase the results of their initiatives and the work of their grantees, as well as to interact and learn from other funders, and from the communities in which they work.

#13:     Generational succession, next generation involvement and planning for transitions will continue to top the list of most requested information from the National Center for Family Philanthropy.

#14:     There will be more and more and more programs and classes on giving… but not necessarily directed at those who give. 

#15:     There will be a growing recognition of the unique roles and challenges of family foundation CEOs and trustees… and their needs will be better met.

To read more detail go to http://www.ncfp.org/newsroom/family_giving_news/2011/2011-january_lead-article



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