Trends and Predictions for Family Philanthropy in the Next Decade… to Infinity and Beyond!

When the ball dropped on December 31st, we entered not only a new year but a new decade. And, on cue, a variety of experts and prognosticators used their personal crystal balls to offer predictions on the future of nonprofits and foundations in 2011 and beyond. Now it’s our turn!

We’d also like to hear from you: What are your predictions for the future? Do you disagree with any of our (admittedly non-scientific) predictions? Submit your responses in this month’s Family Forum, and we’ll publish selected ideas and perspectives next month.

Interested in what some leading experts have to say about the future? Scroll down to the bottom of the article for a roundup of recent predictions from other sources.

Now here are 15 Trends in Family Philanthropy for 2011… and beyond!

#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.

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

International giving by US based foundations more than tripled over the last decade, from $2.0 billion in 2000 to $6.7 billion in 2009. While much of this can be attributed to significant new investments from the Bill and Melinda Gates Foundation (ahem, a family foundation) and other large, international funders, it’s clear that donations from more modestly sized family foundations, giving circles and donor advised funds also have played a big part in this increase. According to the Foundation Center’s December 2010 report, International Grantmaking Update: A Snapshot of U.S. Foundation Trends, “Relatively younger, more globally focused donors will continue to build their foundations over coming years, bringing additional resources to the field. Among the broader universe of funders, many critical priorities—e.g., addressing the global climate crisis, improving health and nutrition as the world’s population expands, and supporting human rights and greater political stability through cross-cultural engagement and understanding—will only grow in importance.” For more about how one family is making a difference through international philanthropy, see the feature article for the April 2010 issue of Family Giving News, “The Ansara Family Fund: Partnering Beyond Borders for Long-Term Impact.”

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

Individual donors and couples are more aware than ever of the opportunities and importance of giving back, and of how involving their family can increase the personal enjoyment that they will receive from philanthropy. There is a growing library of stories and case studies of how best to do this work, and new giving circles, networks and online resources. At the same time, it is easier than ever for donors to find and compare institutions achieving measurable impact on a broad variety of important causes. All of these factors have helped to remove some of the uncertainty and barriers to starting a family philanthropy. Whether one is talking about Jeff Skoll’s support for global social entrepreneurs, Pierre and Pam Omidyar’s support for market-based approaches for large-scale, catalytic impact, or Jean and Steve Case’s support for new technologies to make giving more informed, efficient, and effective, each new donor brings a new dream for how to change the world. Facebook founder Mark Zuckerberg’s $100 million commitment to Newark’s troubled school system was analyzed, dissected and criticized by many, but his comments in mid-December announcing that he had signed on to the much-hyped (and rightfully so) Giving Pledge made it clear that he is likely to be engaged in philanthropy for the long haul: “People wait until late in their career to give back. But why wait when there is so much to be done? With a generation of younger folks who have thrived on the success of their companies, there is a big opportunity for many of us to give back earlier in our lifetime and see the impact of our philanthropic efforts.”

#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.

Groups such as Great Nonprofits, Philanthropedia, and GiveWell have sprung up over the past two years, promising a new breed of online charity ratings site that provides access to the direct experience and knowledge of issue experts, volunteers, and those served by nonprofits. These sites join more established resources such as Grantmakers for Effective Organizations, GuideStar, Charity Navigator, BBB Wise Giving Alliance and the American Institute of Philanthropy. Meanwhile, groups such as New Profit Inc.,  Ashoka, the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social EntrepreneurshipRoot Cause, and Echoing Green – among others – are developing and sharing databases and case studies of high-performing organizations and scalable solutions. Many other resources will appear on the landscape in 2011 and beyond, and many of these early entrants in this area will rapidly improve both the quality and breadth of the information they make available to current and potential donors.

#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.

According to a November 2010 report from J.P. Morgan and the Rockefeller Foundation, the marketplace for so-called ‘impact investing’ is expected to grow to more than $1-trillion in opportunities by 2020. Family foundations and funds are at the vanguard of this approach. Impact investing offers families the opportunity to align their values with investment philosophy, and to foster sustainable growth in their communities. This approach is of particular interest to younger generations in addressing such areas as climate change, building sustainable cities, and advancing sustainable agriculture. Family foundations across the country helped to found the More for Mission campaign, which now boasts more than 90 foundations representing approximately $34 billion in total assets. Family foundations such as the Jessie Smith Noyes Foundation, the Mary Reynolds Babcock Foundation, the Needmor Fund, the F.B. Heron Foundation, the Russell Family Foundation, the Jacobs Family Foundation, and others, have become models for others interested in this approach. For more on this, see the National Center’s November 2010 Teleconference, “The Power of Mission Investing: One Family’s Story,” featuring Russell Family Foundation CEO Richard Wood and More for Mission director Lisa Hagerman. (A subscription to Family Philanthropy Online is required to listen to this teleconference).

#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.

New forms of advised funds, pooled funds, giving circles, and online gift funds– combined with new and better technology for video calls and private family discussion sites – will make it easier for geographically dispersed families to share and collaborate on philanthropy proposals and ideas.

#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.

Already a number of family foundations use websites and social media in creative ways –examples include the Peery Foundation blog, the Charles and Lynn Schusterman Family Foundation’s twitter feed, the Frieda C. Fox Foundation’s virtual site visits, the Ansara Family Fund’s website and blog to highlight the evolving recovery in Haiti, and the use of private discussion boards by a growing number of funders to facilitate interactions among board members, regardless of their location. In the next 10 years, hundreds if not thousands of family funders will use social media as a way to interact with their grantees, with their communities, and with current and potential partners. This will allow funders to learn from past mistakes, to change course where needed, and to achieve better solutions and results in their giving.

#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.

In every questionnaire, survey or poll that the National Center has conducted over the past 13 years, succession has ranked as the #1 area of interest. Succession is just one of several critical transitions in the lifecycle of any family foundation that a board must navigate, and the competing priorities of honoring legacy and embracing change will continue to prompt many questions and concerns.

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

Over the past decade, dozens – if not hundreds – of classes, seminars and entire programs on philanthropy have been developed and offered by a variety of organizations, including academic institutions and universities around the country. The only downside? For decades, education for the field of philanthropy has centered on the needs of program officers, grants administrators, and fundraisers. With notable exceptions, these programs have been directed towards individuals who do not serve in the role of trustee or board member. And much of the training that has been offered for board members has not taken into account the dual role that family trustees play as both board and family member. But there’s good news…

#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.

The National Center recently announced the launch of our first-ever CEO Initiative:“Family Philanthropy Leadership: The Role of the Family Foundation CEO.” The unique position of family foundation CEO involves a complex relationship in which the CEO serves the public good and the foundation’s mission while helping a family (which may or may not be the CEO’s family) articulate and advance their philanthropic vision. This initiative, which will include an interview study, symposium and related reports and workshops, will help family foundation CEOs and boards to better understand the qualities of effective family foundation leadership, as well as its special challenges. Later in 2011, we’ll introduce the Family Foundation Trustee Institute, a complementary program for family foundation board members seeking tools for the special (and often lifelong) role that they play. Interested? Again, FGN readers will be among the first to learn about these upcoming opportunities!

2011 and Beyond: Additional Perspectives

What do other leading experts and prognosticators have to say? Here’s a roundup of recent predictions from other sources include:

 

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