Report Outlines Role of Family Foundations

By STEPHEN G. GREENE

Family foundations account for 40 percent of the assets held by all types of grant makers

and 37 percent of all foundation giving, according to a new report.

Such foundations, in which the donor or his or her family members continue to play a significant role in their governance and grant making, form a large subset of all private independent foundations, says the report, published by the Foundation Center.

Yet despite the importance of family funds, “very little is known about the scale, scope, and contributions of America’s philanthropic families,” says Virginia M. Esposito, president of the National Center for Family Philanthropy, which supported the research. She calls the report “an important step in developing the body of knowledge necessary to serve family donors and encourage new ones.”

Studying family foundations as a class is hampered by the fact that there is no clear boundary separating them from other private independent grant makers like the Ford or Rockefeller Foundations. Indeed, donors and their families control decision making in the early years of many foundations, but that influence often wanes gradually as the donor’s generation dies off and outsiders replace family members on the board or staff. Sixty percent of all independent foundations created since 1980 continue to have such family participation, for example, compared with just 20 percent of the funds created before 1940.

The law makes no distinction between independent foundations in which family members play a role and those in which they do not, however, leaving the determination of when an independent foundation stops also being a family one somewhat problematic. What’s more, the report cautions that the sample was not comprehensive enough to offer more than a rough sketch of the field.

For purposes of the report, however, family foundations are defined as including those that have the word “family” in their name, those that identify themselves as family foundations, and those “that operate with substantial donor and/or donor-family involvement” — either having a living donor whose surname matches the foundation’s name or having at least two trustees whose surname matches that of a donor.

Varied Size

Family foundations vary greatly in size and mission. They include some of the largest U.S. grant makers, with national programs and professional staffs — the Bill & Melinda Gates Foundation and the David and Lucile Packard Foundation, for example — as well as small, local funds run entirely by family-member volunteers.

Many of the data were collected from foundations with at least $1-million in assets or that make grants totaling at least $100,000 a year. The results may therefore not fully reflect the experience of smaller funds, the report notes.

Over all, the grant making of family foundations closely parallels that of other independent foundations, the report says. In fiscal 1998, family foundations gave slightly more to the fields of education, arts, the environment, science, and religion than did independent funds. In the areas of health, human services, international affairs, and social sciences, family funds gave slightly less.

Specific population groups — children and youth, poor people, women and girls, people with disabilities, and members of minority groups — also received somewhat smaller shares of support from family foundations than from other independent foundations.

Among other findings:

• Family foundations in the Northeast accounted for one-third of the 18,276 identified nationwide — more than in the Midwest or South (both with one-quarter of the total) or the West (with 16.5 percent).
• Of the $7.2-billion given away by family foundations in 1998, the Northeast accounted for about 30 percent, compared with 25 percent in the Midwest, 24 percent in the South, and 21 percent in the West.
• The West led all other regions in gifts received in 1998, with $6.2-billion, or about half of the total for all family foundations that year. Much of that figure represents a single gift, however: the $4.8-billion that Bill and Melinda Gates gave to their foundation.
• About 5 percent of family foundations published an annual report for 1998.

In addition to statistics, the report also features profiles of seven family funds, which show the diversity represented by such grant makers. The Leighty Foundation, for example, supports programs in the three states where family members reside: Iowa, where founder Ike Leighty supports youth, education, and the promotion of philanthropy; Alaska, where his son, Bill, and Bill’s wife support environmental causes; and Colorado, where his daughter, Jane Leighty Justis, and her husband promote volunteerism and women’s philanthropy.

The Marion I. and Henry J. Knott Foundation, in Baltimore, grooms the next generation of family members for service as trustees through a year-long training program, in which they meet with the executive director, other grant makers, and charity officials. The five trustees of the Albert Kunstadter Family Foundation, in New York, all of whom are family members, make site visits to all their grantees — the bulk of which operate outside the United States.

Copies of the report, “Family Foundations: A Profile of Funders and Trends,” are available for $19.95 apiece from The Foundation Center, 79 Fifth Avenue, New York 10003; by phone at (800) 424-9836; by fax at (212) 807-3677; or via the center’s Web site, http://fdncenter.org.