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Articles, white papers, and advisories authored by Bentz Whaley Flessner’s team of philanthropy experts.

family foundation

Client Advisory – Understanding Family Foundations

In November of 2015, the National Center for Family Philanthropy released its 2015 Trends Study providing new insight and detail on family foundations. These unique organizations straddle the line between individual giving and foundation giving, making them challenging for many teams to approach. In 2013 family foundations held $363.3 billion in assets and contributed $23.9 billion. Expectations are that these numbers will continue to rise. Maximizing results requires strategically approaching family foundations to make sure your organization can take advantage of this increased giving.

The data in the report was acquired through a 45-question survey conducted on a randomly selected nationally representative sample of 2,500 family foundations in the United States. Foundations were identified through the use of the Foundation Center’s family foundation database. To be eligible for the study, a foundation had to have assets of $2 million or more or an annual distribution of $100,000 or more.

Major Findings

Family foundations are relatively small. Of the foundations surveyed, 70% had assets under $10 million, and 65% of foundations reported total giving less than $500,000 in 2014. Additionally, 62% of foundations paid out between 5% (the legal minimum) and 6% of assets, while 30% reported payout rates larger than 6%.

Family foundations focus on geography and issue areas. Two in every three foundations surveyed focus giving on a geographic location (primarily where family members have ties). Over half of foundations focus on specific issues, and one in every three focuses grant making on a particular geographic area as well as an issue. Education, training, and poverty were the most frequently supported issues.

Family foundations monitor grants in a variety of ways. 57% of foundations ask grantees to report on outcomes; 52% have grantees provide a report of activities influenced by funds; 45% require a financial report, and 35% ask grantees to sign a formal agreement.

So, what do these findings mean for your organization’s family foundation strategy?

  1. Do your homework. The majority of family foundations make giving decisions based on geographic location or issue areas. A family foundation that has primarily funded arts in the Midwest is not likely to fund an organization focused on animal rights in the Northeast. Looking at a foundation’s 990s to see where and what types of organizations have been funded can be an indispensable source of information when deciding which family foundations to solicit.
  2. Be strategic in your solicitations. 83% of family foundations surveyed reported they provided grants for general operations, and 68% said they made multiyear grants. Knowing what to ask for is as important as knowing whom to ask. Researching what types of projects family foundations are providing grants to can inform your solicitation approach and may improve your chances of getting funding, especially for those highly sought-after general operating funds.
  3. Be prepared to show impact. One-quarter of foundations surveyed expressed an interest in exploring how best to measure and evaluate grantee outcomes and impact. This is a trend among many funding streams and something that organizations need to seriously consider working into their operations if they haven’t already done so. While it may be mandatory for selected funders, program evaluation and measuring impact can be repurposed as an important stewardship tool for other donors and constituents, especially family foundations.
  4. Focus on relationships. Only one in three family foundations publicly advertise their funding priorities. Building relationships with family board members can help an organization learn about a family foundation’s giving priorities and build trust with the foundation. In addition, as younger generations become more involved with their family foundations, giving priorities and stipulations may change—40% cite the next generation cares about different issues than current leadership. Longstanding and strong relationships may help ensure that your organization and its mission stay a high priority despite generational changes.

Originally published February 3, 2015

Copyright © 2016 Bentz Whaley Flessner & Associates, Inc.

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