Wednesday, December 8, 2021

Family foundations shift their priorities over time, as new generations call the shots

The research brief is a brief about interesting academic work.

big idea

As times change and new generations take over their leadership, the family foundation changes its priorities significantly.

This was our main finding when my graduate research assistant and I studied the records of 424 family foundations operating up to 1955, which lasted at least a decade, looking at what and where they funded. Although wide in size, they averaged over US$6 million in assets and an average of $560,000 was spent annually on grants to nonprofits.

There are over 40,000 family foundations in the US, established either by an individual donor or by multiple members of a family. They are required by law to pay at least 5% of their assets annually as grants to charitable organizations.

We found that 65% of foundations continued to support the organizations where their founders lived, a quarter century after our first observation of their grant-making. Often, this meant that even long after the original donor’s death, the foundation made grants to the local area.

Eventually, however, the foundation gave less money to its founder’s community. This is understandable because future generations of trustees and board directors – usually including adult children, grandchildren or great-grandchildren of the original donors – often have fewer and weaker connections to the founder’s hometown. This is because those board members probably live elsewhere.

We also observed that these family foundations gradually reduced religious causes from a funding priority. For example, one foundation in our data reported grants to Catholic churches and schools in 1964, but did not list this emphasis in its grant-making until the 1990s.

The decline, especially notable among foundations that support Christian causes, is part of a national trend: Americans are becoming less likely to worship regularly or belong to a church, mosque, synagogue or other faith-based institution. has been Support for Jewish religious and cultural institutions declined somewhat.

Simultaneously with those declines, many family foundations were gradually giving more to charities associated with social movements.

For example, in the 1950s foundations that made donations to local hospitals, literacy, and care for the elderly were high-priorities that took on new priorities in subsequent decades. She increasingly funded causes involving conservation, civil rights and women’s rights.

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Over the past 20 years, we have seen the Foundation begin supporting groups that help the homeless, fight racial inequality, address mental health concerns and seek solutions to climate change, with There are also organizations focusing on many other issues that have attracted public attention. recent years.

In general, we observed that the longer the foundation, the more its priorities changed.

Charitable giving is an inter-generational effort for many family foundations.
Alistair Berg/DigitalVision via Getty Images

why it matters

One of the reasons why wealthy people build their foundations is because it is their destiny to support their ideals long after they are gone. But as time goes on, others — including the original funder’s own descendants — will make funding decisions. And they can go in different directions.

Many of the major major foundations, such as those founded by Henry Ford, John D. Rockefeller and Andrew Carnegie, have become more liberal over time.

Our data shows that small family foundations have also shifted to new grant-making priorities, including support for progressive goals such as racial inequality. The opposite situation – shifting to the right to focus more on conservative preferences over time – was not evident in our data.

Some conservative philanthropists, such as Searle Freedom Trust executive director Kim Dennis, have publicly encouraged foundations led by people who share their ideology to accelerate the distribution of their wealth. He argues that this is the best way to prevent more liberal trustees and staff members from turning to the left in the future.

what is still not known

When foundations make grants that help launch new types of organizations, they are playing a catalytic role. But the foundation can wait until a social movement brings a previously radical or unfamiliar issue to the public’s attention. In that case, they are not changing what is on the agenda. New research will be needed to compare historical grant-trends to indicators of social movements that have gathered popularity and influence.

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This article is republished from – The Conversation – Read the – original article.

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