More Than a Third of Family Foundations Are Either Uncertain About Lifespan or Expect to Spend Down, New Foundation Center Report Shows
New York, NY -- April 30, 2009. While existing in perpetuity continues to be the norm for the majority of family foundations, a quarter say they are currently undecided about their lifespan options and a small segment (12 percent) plan to limit their lifespan, according to the first large-scale study of family foundation lifespan plans, jointly released today by the Foundation Center and the Council on Foundations. The report, "Perpetuity or Limited Lifespan: How Do Family Foundations Decide?," benchmarks the intentions, practices, and attitudes of nearly 1,100 active family foundations and sheds light on future behavior as this very large and predominantly young segment of philanthropy matures. Nine out of 10 of the roughly 40,000 family foundations currently tracked by the Foundation Center were created since 1980.
"As these young foundations face transitions in leadership from the first to the second generation, questions about sustainability, family capacity or commitment, donor intent, and foundation impact may lead them to consider their options. This study provides a first look at what drives the behavior of these foundations, which are at the epicenter of one of the largest waves of generational wealth transfer in U.S. history," said Bradford K. Smith, president of the Foundation Center.
The survey was conducted in June 2008, prior to the year-end financial crisis. Key findings include:
- Foundations most likely to opt for a limited lifespan are small foundations established since 1980 that do not employ staff and whose founder is still living, though the percentage who expect to spend down is still modest.
- Foundations with a living founder are three times more likely to expect to spend down than those whose founder is deceased, and they are almost twice as likely to be undecided.
- When the decision to spend down is made at the foundation's inception, the leading factors are the desire of the founder(s) to have a greater impact during their lifetimes and to be involved in how the money is spent.
- When the decision is made later, the most frequently cited reasons are a shift in the founder(s)' attitude, family issues, and a belief that subsequent generations will create their own philanthropies.
- The two leading reasons for deciding to exist in perpetuity are a desire both to have a long-term impact on the community and for family engagement across generations.
The study was conducted by the Foundation Center in collaboration with the Council on Foundations. With assistance from the Association of Small Foundations, the Center surveyed more than 5,800 active family foundations and received responses from 1,074, representing a broad cross-section of family philanthropies by size, location, age, staffing, and other characteristics.
The study was made possible in part by the Aspen Institute, with additional support from The Wallace Foundation. The Foundation Center's Research Institute is funded in part by The Wallace Foundation, which supports and shares effective ideas and practices to help institutions expand learning and enrichment opportunities. To learn more, visit the Knowledge Center at www.wallacefoundation.org.
The complete report can be downloaded at no charge from the Center's web site.
About the Foundation Center
Established in 1956 and today supported by close to 600 foundations, the Foundation Center is the nation's leading authority on philanthropy, connecting nonprofits and the grantmakers supporting them to tools they can use and information they can trust. The Center maintains the most comprehensive database on U.S. grantmakers and their grants -- a robust, accessible knowledge bank for the sector. It also operates research, education, and training programs designed to advance knowledge of philanthropy at every level. Thousands of people visit the Center's web site each day and are served in its five regional library/learning centers and its network of more than 400 funding information centers located in public libraries, community foundations, and educational institutions in every U.S. state and beyond. For more information, please visit foundationcenter.org or call (212) 620-4230.
About the Council on Foundations
The Council on Foundations, formed in 1949, is a nonprofit membership association of grantmaking foundations and corporations. Members of the Council include nearly 2,000 independent, operating, community, public, and company-sponsored foundations, and corporate giving programs in the United States and abroad. The assets of Council members total more than $307 billion. The Council's mission is to provide the opportunity, leadership, and tools needed by philanthropic organizations to expand, enhance, and sustain their ability to advance the common good. For more information, visit the Council's Web site at www.cof.org.