This month’s Family Giving News is devoted to a brief look at the top ten trends in family philanthropy, about which the National Center will be releasing a new Passages issue paper this fall.

 

Trend 1: Rising Number of Families Participating in Philanthropy

Consider that between 1990 and 2002 the number of active grantmaking foundations doubled from approximately 32,400 to more than 64,800 and that family foundations and other family philanthropic ventures currently control more than $200 billion in assets. Despite tough times, long-established family philanthropists have shown the desire and determination to see their philanthropic agendas through economic rough patches, while diversified giving options like donor-advised funds are opening the door for the newly philanthropic.

Trend 2: Issues Related to Generational Succession

As wealth and the control of a family’s philanthropic trajectory pass, or prepare to pass, from the hands of the World War II generation to their descendents, senior family members begin to address issues of succession and donor legacy. When adult children assume stewardship of family giving they begin the work of reconciling their parents’ or grandparents’ philanthropic mission with the world in which they live. Will they continue to give in their communities or will they direct their philanthropy outwards in response to rapid globalization? In adapting to current circumstances, how will they ensure that the founders’ original intent is not lost?

They also begin to ask hard questions about the legacy that will pass to their own children: Do their children have an interest in the family’s philanthropy? If not, how can they, as parents, foster an interest? Will their children or grandchildren honor the original donor’s intent or will the pressures of an ever-changing world leave their mark?

As the transfer of wealth begins to occur, experts too are looking ahead and postulating what influence successive generations will have on the world of philanthropy. How will Baby Boomers differ from their parents as donors? What plans will they make to ensure that their children will carry on the legacy of giving? How will the skepticism of social change and large institutions exhibited by Generation X influence their giving style? And what of the up-and-coming Millennial?

Trend 3: More Hands-On Giving by Younger Donors

The concerns of some senior donors about the disinterest of younger generations are proving to be unfounded, as more and more young donors are becoming philanthropically active. New forms of philanthropy, like “venture” or “high-engagement” philanthropy allow funders or investors to become personally involved in their giving, working closely with grantees and providing more than just financial backing. New large-scale donors, beneficiaries of the 1990s technology boom, are revolutionizing philanthropy in large areas of the country with optimism and new hands-on approaches. According to the National Center’s 2004 study, What California Donors Want, a characteristic of high-tech entrepreneurs is the ‘can-do’ attitude with which they embraced philanthropy. They not only brought money to philanthropy but also an eagerness to apply their business skills to solving social problems.

Trend 4: Changing Definition of Family

Today, it’s difficult to define the “typical” American family: between divorces, remarriages, domestic partnerships, adoptions, surrogate family members, and geographic dispersion, trying to pin down even a perfunctory definition becomes impossible. According to Deanne Stone, author of our most recent Passages issue paper, Families in Flux, the fluidity of family relationships and shifting dynamics directly and often profoundly affect family giving. And despite the fact that many families accept change as a constant force influencing both the family and its philanthropy, few are prepared to deal with such circumstances when they arise. Stone recommends that families make plans or draft policies well before the issue of “Who is family?” even reaches the table: decide who should be eligible for board service and make provisions to encourage philanthropic participation by family members who are not eligible—before you and your family are forced to make a decision about beloved Aunt Glenda or sullen cousin Ted.

For more information, please see:

Trend 5: New Giving Vehicles and the Role of Wealth Advisors

There are far more giving options available to donors than there were 10 years ago: supporting organizations, donor-advised funds in community foundations, giving circles, donor collaboratives, and venture funds to name a few. There are even more options when it comes to the mechanisms for funding these vehicles—charitable remainder trusts, charitable lead trusts, gifts of real estate, and a broad and ever-growing range of new options. The number of avenues open to donors can be overwhelming, particularly to the new or inexperienced who may not even know where to begin. Luckily for donors, in recent years wealth advisors—accountants, attorneys, investment officers and family office staff—have responded to demand and become increasingly more interested in the varying philanthropic vehicles available to their clients. Even banks and other financial institutions, universities and large nonprofit organizations have successfully launched philanthropic services branches to disseminate information and better advise potential donors of their philanthropic options.

Trend 6: Calls for Greater Accountability and Effectiveness

Increased scrutiny of nonprofit structures and practices brought about by the recent Senate Finance Committee hearings, has intensified the desire among many family philanthropists to turn a critical eye on their own giving. In response to Congressional demands for higher payout rates, many family foundations are stepping up measures to increase effectiveness and ensure accountability. This raises questions about how donors define these terms: do they define them by looking inwardly at their own practices and structures or outwardly at the practices and structures that they fund? Families must decide how philanthropic success would look to them before they can take steps to achieve it.

For more information, please see:

Attitudes and Practices Concerning Effective Philanthropy by Francie Ostrower

 

Trend 7: Issues of Geography

In today’s increasingly mobile, global world, fewer and fewer people are spending their lives living in a single location. The portability of the job market and a trend towards more diversified career paths mean that people are much more nomadic than they were a generation or two ago. Since people are less rooted in a “hometown” than their parents or grandparents were, there is concern that there will be a move away from community-based giving and towards a more national or international giving agenda. For America’s affluent immigrants the need to maintain giving to their native country as well as support causes in their new communities is often very strong. This sort of philanthropy, called “Diaspora philanthropy” is beginning to be quantified and explored by foundations which are developing ways to respond.

For more information, please see:

 

Trend 8: Issues of Perpetuity and Donor Intent

Although issues of perpetuity and donor intent have always been of central concern to family philanthropies, recent events—the furor over the relocation of the Barnes Foundation, scandals involving extravagant spending at the John D. and Catherine T. MacArthur foundation, and increased government scrutiny of foundation spending—have brought these issues back to the fore.

With new donors emerging in increasing numbers and at younger ages, the concept of “giving while living” has garnered much attention. Today’s donors are much more intimately involved in the causes they support than many of their predecessors have been, donating as much time, experience and energy as they do financial backing. For this reason, donors who established foundations in the 1990s and early 2000s are far more likely to “spend out” their foundations either in their lifetimes or by some specified date after their deaths, than to exist in perpetuity.

For those families who do opt to maintain their giving after the death of the founding donors, donor intent is a key concern. A strong sense of donor intent can help a family remain focused on their philanthropic goals and navigate through many challenges: managing geographic dispersion, coordinating the efforts of a diverse third or fourth generation, and disagreements about funding allocation, foundation spending, or issues of succession. For many family philanthropists, donor intent is deeply allied to evaluating the effectiveness of the family giving agenda: to assess whether or not they are succeeding, they must first take a hard look at the founders’ original goals.

Trend 9: Increased Grants for Nonprofit Operating Funds

The most recent figures from the Foundation Center’s Foundation Growth and Giving Estimates report that 19% of foundation grant dollars go to general operating support grants, up about 5% from 5 years ago. Family philanthropists are realizing that being effective and impacting their communities is as much about persistence and planning as it is about funding interesting programs or projects, and they are beginning to alter giving strategies accordingly. In the spring 2004 newsletter from the Neighborhood Funders Group, Sharon King of the F.B. Heron fund says: “75 to 80% of the F.B Heron Funds’ grants go to operating support. Foundations that give operating support recognize that either they accomplish their goals through effective organizations, or they don’t accomplish them at all.” By funding nonprofits through general operating support, donors provide their grantees with stability which enables them to plan and build sustainable, adaptable systems to serve their communities in the long run.

For more information, please see:

 

Trend 10: Community Foundations Working with Families

Since many donors want to directly impact the community in which they live or in which they grew up, the first place they look to donate funds is generally in their own backyards. In response to the growing demand for local, efficient, low-fuss philanthropic outlets, many community foundations have begin to develop strategies and services for working with families. As a result of these offerings and the steady increase in popularity of donor-advised funds and other new philanthropic vehicles, many of the nation’s community foundations have found themselves, for the first time, working in the field of family philanthropy. While these developments have opened up a world of new possibilities for both donors and the community foundations they support, there are challenges to be faced. In June at the Rockefeller Brothers Fund Pocantico Conference Center, The National Center, along with The Philanthropic Initiative (TPI), convened a group of community foundation CEOs and other field representatives to discuss how community foundations could work with families to foster cooperation and facilitate giving. A report on the Summit will be available from the National Center and TPI later this year.

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