The influence of a younger generation of philanthropists on U.S. family foundations is moving these charitable organizations into more intentional, issue-focused giving and has led to greater diversity in governing boards, according to the Trends 2020 study from the National Center for Family Philanthropy (NCFP) released on Wednesday morning.

The study, conducted in collaboration with Bank of America which also provided fundingshowed that 70% of family foundations today were established since 1990, a striking fact thats influencing foundation governance, grant-making, and investing, says Virginia Esposito, NCFP founder and president.

Even family foundations that were founded before 1990 are including younger voices on their boards and in decision-making. The study found more than half have multiple generations serving on the board, while about 10% have three or more generations. They are also adding more voices to reflect the communities they serve, with 35% including at least one person of color, and 11% including at least one member of the LGBTQ community.

Also significant: mission and impact investing has doubled since the first survey was conducted in 2015. That includes program-related investments made as part of a foundations annual required payout of 5% of the value of their net investment assets, as well as impact investments made from the foundations endowment itself.

Youre talking about a doubling of the number of family foundations that are using new practices with a whole lot more ready to either institute them or expand them, Esposito says.

The study is based on a random, statistically significant sample of more than 500 family foundations with assets of at least $2 million or annual giving of at least $100,000.

The overall results are useful for peer-to-peer learning, providing a context for family donors, to try some of these alternative ideas of practices on for size and to determine what works best for them, says Claire Costello, managing director of Bank of America Private Banks Philanthropic Solutions Group. Often they dont have this broader context to see what others are doingit tends to be an insular practice.

Among several findings, the study found that family foundations today are giving fewer grants per year, but those grants are larger in size. They are also shifting toward giving more multi-year grants, and grants that support general operating expenses or provide capacity building funds, which help organizations strengthen their systems and operations.

This reflects the personal nature of the family philanthropy and the fact that they identify grantees whose values and vision and priorities they share, and theyre willing to invest in them, Esposito says. This may be why you are seeing less of a whole lot of small grants and people beginning to be more thoughtful and perhaps more generous in significant contributions.

When Armando Castellano and his sisters, Carmela Castellano-Garcia and Maria West, became involved in the foundation their parents, Alcario and Carmen, set up shortly after winning a $141 million California lottery jackpot in 2001, they, working with their parents, narrowed their focus to three issues: arts and culture, leadership development, and education, primarily focused on the Latino community in Santa Clara, Calif., where they grew up.

The second generation also shifted from making grants toward one-off programs and events to providing multi-year grants for general operations, Castellano says.

Its very hard for organizations of color, especially, to get general operations money, he says. Theres a distinct difference of the amount and the ability and access to the philanthropy as people and the dollars. Even larger ones that have been around a long time.

That the Castellano family remains focused on their home county is common especially for more established foundations, but the shift to a focus on a specific set of issues reflects a common generational shift, one that earlier research by the NCFP had noted.

Even of those [foundations] that are place-based, 95% are issue-based within the geography, Esposito says. Were seeing families more likely to not only build off of a sense of goodwill and shared purpose, but to the coming around of some issues that they can commit to over a longer period of time.

The study released Wednesday found that 82% of family foundations formed since 2010 are shifting their focus from giving in the specific geographic region where they are based to giving to issues that matter to them as a family. Only 40% of foundations created before 1970 have an issue focus.

People are making money these days in a global economy, so the notion of a hometown where the familys business was nurtured, where the family prospered, where they want [the foundation] to thank employees and customersthat kind of economy has been changing and people have become more issue focused, Esposito says.

The areas of concern for families, however, is shifting. While education remains a top issue for 38% of families surveyed, its only cited as the number one focus area for 23% of family foundations founded since 2010. Also, only 28% of family foundations established before 1970 put poverty at the top of their list of concerns, compared with 64% of the newest foundations, the study found. Among new foundations, economic opportunity was cited by 41%.

Eleanor Frey Zagel, vice chairman of the Frey Foundation in Grand Rapid, Mich., led her third-generation family members into an exploration of how they could support the homeless in Grand Rapids, and also in northern Michigan countiesareas facing very different dynamics.

They started late last year with a call for innovative ideas to accelerate access to sustainable, quality housing opportunities in Kent County, where Grand Rapids is located, ultimately awarding a $150,000 Housing Innovation Award to the Inner City Christian Federation.

While this approach to identifying a grantee was different to anything the Frey Foundation had done previously, Zagel says their efforts to improve housing and security for the community grew out of roots planted by the second generations focus on making an impact. They just have different tools at their disposal today, she says. Were moving the needle differently.

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Family Foundations Today Want to Make an Impact - Barron's