The Future of Family Philanthropy

We live in a modern age of gold. As a close observer of the world of family giving, this is a moment of historic significance for families and what the future holds for philanthropy. The forces of change are spreading across the landscape of philanthropy. Unique wealth creation and rapidly growing inequality. Movements re-energized to combat persistent injustices that are systemic. A rigorous examination of the big-givers. Globalization.

The thing that makes this the most significant moment for family-based philanthropy is that it is a moment of critical decisions with substantial implications and potential. Change is possible, but first, we must confront the tough questions that the field has traditionally yet to address. Suppose families take a moment to reflect on their charitable goals, speed, power, and methods and make a conscious decision about the path they will take in a rapidly evolving world and the world of philanthropy. In that case, they will not just grow their influence, but they could transform how we think about our entire field and bring about more significant social change.

What is meant by family charitable giving? Family philanthropy is, at its heart, an act that is being a group rooted within the principles of family, carries its name and legacy, and involves its members. As a business, we support and appreciate family philanthropy as an opportunity to bring families together and also as a way to give back to our community. Family-based philanthropy could be comprised of two or 200, a generation or 10; it may be solely managed by family members or incorporate independent communities and voices. If you donate to the help of your loved ones or your family member, whether through a donor-advised fund, foundation giving circle, or something else, you are part of your family’s philanthropy. This means that this significant moment will be your time to shine.

New Challenges in a New Gilded Age

Before the outbreak of the racial or social justice protests of the last few years, the world where the family foundations operated was changing rapidly and profoundly.

A huge wealth gap has increased in size each year. This concentrated wealth at the highest levels is passed down in families via an unprecedented (and is now documented) transfer of wealth from generation to generation. The present landscape of family philanthropy is one where power is more concentrated than it was in earlier times and one in which the power of the donor is susceptible to open doubt and criticism. Donor families continue to enjoy much autonomy, but the calls for accountability are becoming louder and gaining more power.

In the same way, the issues that urgently require assistance from donors are growing and are becoming more complex. Growing inequality in the economy and society is a broader structural problem that is not easily solved with simple redistributions of resources or well-intentioned initiatives to improve the chance to improve one’s life. Achieving justice for all races and ethnicities is a battle against systemic barriers and implicit biases, not just personal changes in behavior. Globalization has brought more global issues, and the necessity for globally coordinated solutions, often ones that defy the kind of simple-to-follow impacts and stories donors appreciate when they give locally. The growing complexity of already complex issues and increased scrutiny make it much easier for families to fall victim to frustration and fatigue.

It is not only external forces pulling families’ philanthropy to this momentous time. Numerous families are pushing forward with transformative change too. They are making bold choices, taking new chances, and pushing the boundaries of what is expected. We can discuss and identify our significant issues and learn from the families already pushing the boundaries. In this article, we discuss some of the challenging but vital questions that family is tackling in philanthropy by presenting several examples of families already at the forefront. Giving families can be powerful tools to improve the social sphere and is essential to the philanthropy system. Families should and can step up to the problem. Many are already doing so. Some need help figuring out what to do. We hope that the suggestions and examples provided below provide direction and ideas.

Families Are Giving More Than Ever

Practically speaking, the trend is that more families are giving larger, longer-term, and flexible donations. They are looking at long-standing beliefs about minimum distributions, raising their payout rates, and considering the long-term impact of their charitable efforts. Many donors also allocate significant amounts of capital to pursuing a purpose and using a more comprehensive range of investment vehicles and vehicles.

The General Service Foundation (GSF)–a family foundation based in Northern California that uses all of its resources to create a more sustainable and just world. One of these funders recently decided to reconsider the goal of their capital for philanthropy and to increase the rate of their donations. In 2016, Executive Director Dimple Abichandani approached GSF’s board of directors asking for a single increase in funds to help grantees following the presidential election. As she did, she started to think about the reason why the foundation’s spending policy was not designed in a way to be able to meet the external and ever-changing requirements of their donors. The following years saw GSF management have changed their spending policies from a formulaic approach to one that was informed not only by their permanency and investment objectives but also by the foundation’s mission and the current situation. In May 2020, the foundation’s policy prompted them to raise their payout to 10 percent over four years to address the profound gender, racial, and economic inequality exposed and amplified by COVID-19.

At the beginning of the disease in the early days of the epidemic, the Mary Reynolds Babcock Foundation, with a mission to assist people and communities escape poverty and achieve greater economic and social justice, was aware of the devastating effects COVID-19 would cause the communities they grant to. As a result, the Winston-Salem-based foundation nearly doubled its grant budget in 2020 and provided the following year’s financial aid for most grantees with no need for a proposal.

The two foundations exemplify increased giving and a shift away from default positions to more focused, purpose-driven giving. Now, the question is: Can this trend be sustained? How many families are likely to opt to be bolder and use their assets’ full potential with a purpose?

This brings us to the very first set of vital but challenging questions that families’ charitable giving must face, both in industry and within the individual family:

• As the capital market expands, How can we use the increased resources to make more social benefits? What can the world benefit from gaining from increased giving efforts?
• What obstacles stop us from giving more effectively and with greater intention? What can we do to get over these barriers?
• What are the traditions and customary family-giving practices getting in the way of making more money to make real advancements on the most urgent problems?

Trying New Approaches, Taking New Risks

Beyond the need to reconsider purpose and speed, Many families are willingly stepping out of traditional philanthropic strategies and established practices — like using the private foundation structure for grants to established nonprofits to invent and try new things. We can see this through the creation and rapid expansion of various investments and giving instruments, such as donor-advised funds, to charitable LLCs. Families are increasingly embracing combining traditional grantmaking with values-aligned investment advocacy strategies, social entrepreneurship, political giving, and much more. There is a growing desire for new partnerships and collaborations that can increase impact among grantees and funders and between donors of various types.

The increasing desire for innovation and willingness to take risks comes from a critical analysis of donors’ family members, who consider their own responsibility for perpetuating injustice and acknowledge that the typical philanthropic investment is rarely making an impact. Certain families are determined to transcend their traditional fear of risk by taking the chance to try something new, even if it does not align with conventional definitions of success.

For example, it is For instance, Overdeck Family Foundation, a New York City-based philanthropy focused on education, 2021 announced major modifications regarding its fund-raising model in response to grantees’ feedback, especially following COVID-19. Overdeck changed its traditional model to one that focuses on relationships. This includes greater transparency regarding the grant deadlines and expectations, individualized support in addition to funding funds, more efficient reporting requirements for multi-year grants, and more excellent general operational support following trials of grants. Overdeck also decided to offer support to early-stage organizations they might have yet to support. This strategy deliberately created the space to foster innovation, evidence-based building, and expansion to their grantee partner, hoping this funding will accelerate the development of new and effective strategies to achieve their goal.

In the same way, as well the Patrick J. McGovern Foundation–a foundation devoted to the advancement of the use of artificial intelligence (AI) as well as data science-based solutions to ensure an equitable, sustainable long-term sustainable, and prosperous future for everyone with the spirit of innovation and risk-taking by focusing upon data as well as AI solutions that have a positive impact on society. It is worth noting that the McGovern Foundation recently merged with the Cloudera Foundation, a feat of collaboration and risk-taking in and of itself. This resulted in The Data and Society program, which aims to establish data science and AI capabilities within nonprofit organizations. The program will assist nonprofit partners in becoming more effective in bringing about change and provide the risk capital needed to test, create, and grow from these innovative approaches.

Are families beginning to accept the chance to be agile and explore new ideas in the hope of a more significant impact? As a profession, will we more often incorporate risk into our definition of stewardship that is good?

Family philanthropy should consider specific complex issues surrounding the current trends toward the future of innovation and risk-taking

• How can we overcome our fear of criticism and risk and test new methods and concepts? How can we embrace the discomfort and bring about growth and change?
• What is the best way to assess the speed of innovation and experimentation, and who is best placed to assess it?
• What is happening to traditional philanthropy in an ever-changing, changing world? What role could it continue to play amid other innovative approaches?

Reimagining Partnerships and Power

A growing number of charitable families are also starting to engage in a discussion about their privilege and power–a dialogue fueled by the increased criticisms from the sector that nobody can (or should) ignore. Donors are asking fundamental questions about their roles and responsibilities as wealth owners in a society that is unequal mainly as well as — in the same spirit of experimenting with new ideas mentioned earlier in the essay, are looking for ways to invest better the wealth they have, methods to build more trusting partnerships and a more significant share of power.

This is evident in the emergence of the trust-based philanthropy model, participative grantmaking, community-based philanthropy, and others. Several philanthropies are adopting practices such as redesigning their governance models by including board members from communities and focusing more on listening and using feedback in their plans, working with staff members who have lived through similar experiences, and increasing transparency with grantees and the public. Certain families are shifting their decision-making power with community-based grantmaking models, and others are looking to form collaborations or join grantee-funder cooperatives to increase impact.

Two excellent examples of foundations challenging power and reimagining collaborations are Kataly Foundation and Chicago Beyond. Kataly’s mission is to promote BIPOC-led strategies to serve these communities and is focused on building power within communities of people of color. Their grantmaking approach and strategy are heavily rooted in community. For instance, Environmental Justice Resourcing Collective is an example of a Kataly program led by a decision-making team composed of nine members with personal experience in environmental justice. These leaders decide on grant applications and make decisions about strategy as well as the general scope of the program.

In the same way, Chicago Beyond leads with the ” Whole Philanthropy” method of funding that promotes the “with, not for” mindset and focuses on justice. Whole Philanthropy is a way to get rid “of the false dichotomy of ‘us and them ‘…it requires interacting with our partners, not in a paternalistic way, but as equals.” This method will require a radical change in the mindset of the entire philanthropic community, reorienting charity to focus on the worth of individuals involved in the work and creating relationships and sharing power which helps us progress more fairly and reasonably.

The story of wealth is changing, and along with it, the giving families are also changing. Will more families decide to share power and create trust? Do these steps move the needle in the field, despite ever-present structural forces pushing towards the opposite direction, in the direction of ever-growing wealth and power concentration?

The entire family, as well as the individual members of the group, must reflect on the following:

• How does your family wield power–even unintentionally–now, and what would a shift toward sharing power look like for you?
• What can we do to enhance our relationships instead of being dependent on changes made by our less powerful partners? What are we expected to do?
• What obstacles hinder more equitable relationships with philanthropists? How do families accept their discomfort and lead to growth and improvement?

Changing the Guard

Generational transitions are not an uncommon aspect of family dynamics. They are a typical result of the passage of time as they are an attempt to influence changes. However, the current shift in the guard is a different one. The current shift is more about transforming who is sitting in the same seats at the table of family philanthropy and more about defining what it means to be seated at a table like this in the first place.

“The “next generation” in family charitable giving goes beyond the grandchildren and children stepping into new roles within multigenerational giving families. Some young donors are building their fortunes and beginning their charitable journeys. It also includes a new generation of professionals who work in family philanthropy in various roles, from advisors to staff and more. The new leaders are eager to shake up the industry to the extent the previous generations did not seem to be.

In one way, the newest generation has more diversity than before. It is comprised of more new donors of ethnic minorities as well as professionals with diverse lives and a more significant number of women in the decision-making process for families. The diversity of their donors is apparent in their sensitivity to donating to BIPOC and women-led organizations and promoting more inclusive philanthropic decision-making processes.

The next generation of family philanthropy will also be the ones most determined to pursue the kind of experiments and better relationships discussed in earlier sections. They are more inclined to experiment, more keen to talk about power dynamics, and less bound to old-fashioned norms and practices.

Sobrato Philanthropies–a multigenerational organization that provides grants and advocacy, as well as impact investing and collaborative efforts to impact Silicon Valley and worldwide, is a prime example. In the past, Sobrato Philanthropies’ second generation of foundation members, particularly Lisa Sobrato Sonsini, was crucial in transforming the family’s charitable giving. The third generation’s voice is shifting their charitable giving. According to a new Inside Philanthropy profile, this generation has played a crucial role in expanding the foundation’s reach over its local Bay Area to address complex global issues such as climate change. John M. Sobrato notes, “It was really the third generation, but certainly, the second generation, too, that felt we should broaden our aperture and look beyond Silicon Valley… at some of the broader, more systemic problems–and take more of a strategic approach.”

The David Rockefeller Foundation’s fifth generation is believed to be charted by learning from and working from the earlier generations. The Chair of the Board, Camilla Rockefeller, a member from the 5th generation, declared, “In small but significant ways, we’re moving from a more traditional top-down philanthropic model to one where the grantmaking is increasingly defined by collaboration and relationship building with grantees.” A number of these changes are reflected in the Fund’s core principles which the fifth generation was able to develop. For example, the Fund’s principle of respect requires grantee partners as equally involved in their work and a pledge to assist those partners in ways that grantees feel are most meaningful to them.

As the members of the upcoming generation take on their new roles as family leaders and philanthropy – roles they will assume in the coming years–their desire to change and their willingness to change the rules is bound to cause a lot of tension and hand-wringing within our sector. Are families ready to welcome or even accept this change? Are new donors and professionals adhering to the established standards and collaborating with older generations who wish to remain active?

To assist in this inevitable change of guard, we should look at these pressing issues:

• What can we do as professionals to help future leaders and assist them in becoming successful? What help do they require?
• How can families transition to the new multigenerational leadership and governance, particularly families with a strong understanding of the donor’s original intention? What are the leading causes of conflict and discord, and what can family members do to work to overcome these?
• How do families harness a new donor’s enthusiasm and enthusiasm and still acknowledge donors’ wisdom and dedication before them? What can they do to ensure that “disruption” increases the impact of family donations instead of reducing it?

Where Do We Go From Here?

Family philanthropy must determine what it will do in this historical moment. The field must address the numerous complex issues being asked with openness, humility, and conviction. We must respond thoughtfully and not defensively to the current moment of increased attention and potential. It is important to recognize families who are blazing new trails, tackling uncomfortable subjects, and assisting others similarly.

How and where can we reflect on this in a collective way and modeling? How can we bring in more families – even those skeptical of or reluctant to change? How can we broaden the conversation in order to engage our friends and even our opponents? This is the problem that family philanthropy faces during what we believe to be the most transformative moment in the history of philanthropy.

The rewards of working together through this method promise to be more efficient and ethical giving, an increased sense of common purpose, and higher effect than before. The consequences for not addressing the problem will be a lesser impact, more disgruntled donors and dissatisfied partners, and a drop in overall family giving. This could mean that changes are imposed by the field instead of being led by the community.

What will make this moment significant is how we react and move the game in the most appropriate direction. Moreover, if we do not take care and are not thoughtful, it could put into doubt the purpose behind the whole enterprise.