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Young Philanthropists Are Changing How Families Give

A new survey reveals family foundations increasingly focused on social issues

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THOUGH THE TRADITIONS OF FAMILY FOUNDATIONS dates to the late 19th century, newer foundations and younger leaders are helping change the way families give. As is revealed in the National Center for Family Philanthropy’s Trends 2020 study, family foundations today are addressing global challenges, diversifying their boards, and aligning their investments with their philanthropic goals.

"With seven out of ten family foundations established over the last 30 years, younger foundations and family members are informing how families give," says Claire Costello, Managing Director for Philanthropic Solutions at Bank of America Private Bank. "The new survey, Trends 2020, gives board members and staff a range of benchmarks to better leverage philanthropic capital and prepare themselves to be ever more effective with their giving during the coming decade and beyond." Some of the survey's most important findings are highlighted below.

“Nearly 70% of family foundations were founded in the last 30 years.”

Increased focus on issues over geography 

Nearly two-thirds (64%) of family foundations concentrate their giving on a particular geographical area, such as their hometown or location of the family business. However, those established in the past 30 years—about 70% of the total—are more focused on specific issues than on geography. In fact, 8 out of 10 (81%) of those established before 1970 concentrate their giving based on geography, compared with only 46% of those created since 2010.

In contrast, 40% of the oldest foundations (those created before 1970) say they are focused on issues, whereas 82% of the youngest foundations (those created since 2010) focus on issues. Prominent issues include education; poverty, hunger, and homelessness; and, increasingly, economic opportunity.

Younger, more diverse leadership

About one in three foundations say they plan to add younger family members to their board over the next four years and almost the same number plan to give younger generations more say in operations and giving decisions.

At the same time, founders remain actively involved in most family foundations, the survey reveals. Not surprisingly, founder involvement is highest among the newest foundations (95% for those created after 2010) and decreases as foundations, and their founders, age. Foundations consider founders’ involvement to be beneficial in several ways, including their ability to share their values, interests and community connections.

While the majority of board positions are held by family members, nearly 30% now come from outside the family, the survey shows, and many foundations are looking to diversify board membership. About one-third have diversity, equality and inclusion (DEI) initiatives in their future plans; and DEI considerations are significantly more common in family foundations formed in the last 10 years. Some 21% of foundations now say they plan to increase the racial diversity of their boards over the next four years while in 2015, just 4% said so.

Investing for impact

Foundations are increasingly engaging in mission/impact investing—aligning the investment of their charitable assets with their philanthropic missions and/or broader social and environmental concerns.  Foundations’ use of mission/impact investing has doubled since 2015. Plans to institute or expand mission/impact investing are up overall from 2015 with nearly one-fourth of all family foundations saying they will do so in the near future. Newer foundations are also much more likely to use program-related investments, or PRIs, which are like grants in the form of loans to be used for charitable activities.

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