The Foundation Center in Washington, D.C. defines a family foundation as one that derives its funds from the members of a single family, with at least one family member serving as an officer or board member. By this definition, there are over 40,000 family foundations in the United States in 2016, making grants totaling more than $21.3 billion a year. This represents a sizable increase from the roughly 3,200 family foundations in 2001, then giving $6.8 billion annually. However, there is enormous range among family foundations in size and scope. More than 60 percent of today’s family foundations have assets of less than $1 million. Half of all family foundations make less than $50,000 in grants annually.
Although statistics were not compiled in quite the same way at the time, it is estimated that the Rockefeller Brothers Fund joined company with approximately 470 other family foundations when it was founded in 1940.
The astonishing rise in family foundations may be explained by several perceived advantages, including tax breaks. But perhaps more compelling, family foundations offer donors the means to shape and control their giving. They also can design programmatic objectives to have greater impact than individual donations to established charitable organizations. Furthermore, family foundations have fewer restrictions than donor-advised funds, which are administered through investment funds and do not necessarily provide the chance to design a comprehensive philanthropic program.
Launching family foundations is often the expression of donors’ desires to establish a lasting legacy and to instill in future generations the importance of giving. But family foundations face certain common pitfalls as well. They may initially unite family members through a shared sense of mission that could become less shared as the family grows and diffuses over time. If not chartered to operate in perpetuity, they run the risk of splintering or disbanding when family members hold conflicting values or disagree on priorities.
Read the full article about The Rockefeller Brothers Fund at 75 by The Rockefeller Brothers Fund and Barbara Shubinski at the National Center for Family Philanthropy.