Giving Compass’ Take:
• Rockefeller Philanthropy Advisors and Campden Wealth Limited conducted a survey to identify global philanthropy trends that will play out in 2020 and beyond.
• Where does your family foundation fit into these trends? Is it time to revise your strategy?
• Learn more about family philanthropy.
This report aims to capture trends in family philanthropy, particularly as they relate to strategic time horizons in giving. The results suggest that, broadly speaking, philanthropic activity within the global wealth community has been growing over the last three decades, with one in two respondents first engaging in philanthropy at some point over this period.
In parallel, time-limited philanthropy has grown in popularity over recent decades, challenging the in-perpetuity model that currently dominates globally. In fact, a considerable portion (three-quarters) of those currently engaging in time-limited philanthropy adopted it in the 1990s or later.
As established players mature and new ones come into the fold, philanthropists will need to engage in thoughtful analysis of which giving strategies are best suited to their vision, goals, and available resources. Before settling on the optimal approach, activities and structure, families should carefully consider a number of questions in order to most effectively position their philanthropic efforts:
- What is your motivation for engaging in philanthropic giving?
- What issues does your family care about most?
- Do you want to support causes locally, regionally, or globally?
- What percentage of the family wealth are you willing to give?
- What outcome and impact are you hoping to achieve?
- What philanthropic timeline are you envisioning for giving?
- What philanthropic role, if any, should the next generation play in the family’s philanthropy?
It is important to remember that no two families will arrive at the same answer to these questions. As our global survey results demonstrate, one size does not fit all when it comes to family philanthropy and strategic time horizons, and there are no right or wrong answers to these questions.
Giving vehicles: The most popular vehicles for giving are family foundations (64%), followed by direct donations to nonprofit organizations/charities (45%), donor advised funds (16%), and corporate/ business foundations (15%).
Reasons for giving: The most common reasons for giving included a desire to give back to society (75%), an interest in creating social change (55%), putting values into action (50%), and addressing social inequality (47%).
Causes supported: Education was the number one area families cited giving to globally, constituting 29% of the average philanthropic portfolio, followed by health (14%) and art, culture, and sports (10%).
Strategic time horizons in philanthropy: awareness and adoption: Generally, respondents were familiar with both the in-perpetuity (89%) and time-limited (84%) philanthropic timeframes. While the former model was twice as likely to be adopted (62%) as the latter one (32%), the popularity of the time-limited model is on the rise, with the number of those who have chosen it growing by nearly two-thirds since 2000.
Key drivers of strategic time horizon choice: The key motivations for adopting a timelimited approach are: a desire to see the impact of giving during a donor’s lifetime (30%); to narrow philanthropic focus (23%); and to transfer more of a founding donor’s wealth to good causes sooner rather than later (17%). The key motivations for adopting an in-perpetuity approach are related to its ability to: provide sustained and long-term support to address persistent challenges (71%); strengthen a family’s purpose and values (56%); and have greater impact on beneficiaries over multiple generations (41%).
The next generation: It was common for the next generation to be involved in their family philanthropy, especially among those engaged in in-perpetuity giving. For those families, members of the next generation often served on boards (54%) or made site visits (34%). Families that adopted a time-limited strategy most often involved the next generation in grantmaking (28%).
Decision-making: Strategic decision-making power tended to lie with the family. Family heads or founders were noted as the key decision-makers in 60% of cases, followed by other family members (48%). Europe aligned with this global average, while in the United States, other family members tended to hold the most decision-making authority (65%), followed by founding donors (54%), and trustees (29%). In Asia-Pacific, family heads or founders dominated strategic decision-making (62%), followed by trustees (57%), and other family members (31%).
This report, produced by Rockefeller Philanthropy Advisors and Campden Wealth, is an attempt to capture current and emerging trends in the philanthropic giving of UHNW individuals and families. In particular, it aims to explore the reasons and channels through which they engage in philanthropy, with a focus on strategic time horizons in giving.