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October 23, 2019 at 11:11 AM
Family foundations in the U.S. are giving more money but through fewer grants, shifting their emphasis from local giving to addressing public policy issues, doubling their use of impact investing and expanding the diversity and inclusiveness of their boards and staff, according a new study from the National Center for Family Philanthropy.
The study, published in collaboration with and support from Bank of America, found that giving amounts grew over the last five years when the last study was conducted, while the number of grants awarded each year declined, indicating that foundations are becoming more intentional with their giving.
Family foundations today are also making fewer but larger grants. Those awarding 50 or more per year fell from 43% before 1970 to 11% in this decade, according to the study. More are awarding 25 to 49 grants annually.
In addition, an increasing number of family foundations are now giving $500,000 or more annually, with giving levels and number of grants of the oldest family foundations notably higher than those of formed since 2010.
Some two-thirds of family foundations make general operating support grants and provide multiyear grants, and about half provide capacity-building ones, the survey results showed. Newer forms of grants are much more prevalent among family foundations established after 2010:
- Program-related investments – 63%
- Other mission-related approaches – 59%
- Impact investing – 47%
- Loans/grants to guarantee loan funds – 39%
Sixty-four percent of family foundations in the study said they focused their giving on a particular geographical area, such as their home town, state or region. However, those established over the past three decades — about 70% of the total — were more focused on specific issues than on geography.
In fact, only 46% of those created since 2010 concentrated their giving based on geography, compared with 81% of ones established before 1970. In contrast, 40% of the oldest foundations said they were focused on issues, whereas 82% of the youngest foundations said this.
Consistent with findings from the 2015 study, the main areas of emphasis for family foundations overall were education, cited by 38% of respondents, and poverty, hunger and homelessness, cited by 27%.
However, family foundations created in 2010 or after reported significantly different giving priorities, with 64% of these far more focused on economic inequality and/or basic needs funding, compared with 28% of the oldest foundations, which leaned more toward education funding.
The survey showed that foundations were also increasingly adding impact investing approaches to their giving; these doubled since 2015. Twenty percent of respondents reported plans to institute mission/impact investing over the next four years, and 29% said they would expand investing in this area.
Again, foundations created since 2010 were much likelier to use program-related investments and pursue other mission-related or impact investing approaches.
“The Trends 2020 findings provide insights into how family foundations are adapting to changing times, values and priorities as they strive for increased impact,” Virginia Esposito, NCFP’s founder and president, said in a statement.
“The study shows the growing influence of family foundations on philanthropy and offers families important guidance to improve their governance and operating practices and increase their effectiveness.”
