Family Philanthropy - A Look at the Issues

Funding as a Family: Engaging the Next Generation in Family Philanthropy.

While grantmaking as a family can take as many different forms as families can themselves, models for family philanthropy do fall broadly into three categories. The family foundation model enables families to create a formal structure for their grantmaking, in which a board made up principally of family members will oversee the activities of a philanthropic foundation. In the family business model, a family will carry out its grantmaking through the corporate foundation or corporate philanthropy program of a family business.

The final category brings together other models for family philanthropy, including the creation of a family fund at a community foundation and a host of more informal activities, such as family giving initiatives organized around the kitchen table. In these latter initiatives, younger generations are often invited to take the first steps towards learning about their families’ philanthropy, in preparation for deciding if they want to become more deeply engaged in the future.

Although it is also found in the USA and in Europe, the family business model is particularly prevalent in Latin America, and other parts of the world where the family foundation model is still emerging. The USA is home to the largest number of family foundations in the world, and more than half of the independent foundations in this country are family run. The UK has the second largest number of family foundations, and British family foundations make a significant contribution to the funding of this country’s nonprofit sector.

The presence of family foundations is also notable in Germany and Italy.

Engaging the next generation in family philanthropy can bring many benefits, both to families themselves and to their grant-making. Philanthropy creates a forum for families to pass down values and build legacy together, and to address issues around wealth and inheritance. It also provides an opportunity for family members to practice collaborative decision making, a collective skill that can be useful in other areas of family life, particularly for business families. Family foundations offer younger generations the opportunity to develop key professional skills, around communication, teamwork and financial management.

Engaging the next generation in family philanthropy can also act as a catalyst for the reexamination of philanthropic mission and approach, as younger members of the family bring new ideas and experiences to the family’s grantmaking.

Family philanthropy can also bring challenges, especially as older generations seek to engage younger members of the family in their grantmaking. The generation gap and the different life experiences of children and grandchildren can lead to conflict and differences of opinion around philanthropic mission and strategy. Families operate according to different family cultures, and it can be helpful to identify tendencies in the ways that family members relate to one another when seeking to involve the next generation in the family’s philanthropy.

Family philanthropy can also bring challenges, especially as older generations seek to engage younger members of the family in their grantmaking. The generation gap and the different life experiences of children and grandchildren can lead to conflict and differences of opinion around philanthropic mission and strategy. Families operate according to different family cultures, and it can be helpful to identify tendencies in the ways that family members relate to one another when seeking to involve the next generation in the family’s philanthropy.

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