Engaging Next Generation Seen as Biggest Headwind for Private Foundations in 2024
Involving the next generation (NextGen) in charitable activities is a priority for private foundations this year, but engagement may be a headwind, according to a new survey from Foundation Source, a provider of cloud-based SaaS solutions and management services for private foundations. The 2024 Client Survey offers a glimpse into how private foundations are approaching charitable giving, the challenges they are up against, and the opportunities they will pursue in the year ahead.
Out of more than 200 foundations with assets between $250,000 and $500 million, most (62%) said they will involve NextGen in charitable activities in 2024, while 35% expect that engaging younger family members – the presumed future leaders of a family-led foundation – will be a challenge. About one in three also said they want to learn new ways to get family members involved and 29% want to learn how to build a legacy with a foundation.
"The next generation will inherit more wealth than past generations and their commitment to social change and desire to live a life of purpose have great implications for the future of philanthropy," said Joseph Mrak III, Chief Executive Officer of Foundation Source. "It's an unmissable opportunity for service providers and advisors in the charitable landscape to connect with emerging leaders and deliver high-quality tools, education, and expertise to help facilitate their giving and amplify their impact."
Foundations also cite measuring impact (29%), creating bigger impact (27%), devoting sufficient time to foundation matters (26%), and prioritizing granting opportunities (26%) as additional challenges they anticipate in the year ahead. They hope to seek new grantee partners (30%) and collaborate with other funders (24%) to support their charitable activities. Many will also focus on responding quickly to disasters and emergencies (18%), and work with a financial advisor or wealth manager on charitable planning (17%).
Generosity on the rise
About 44% of foundations surveyed plan to give more money to charitable causes in 2024 than they did in 2023. Nearly 1/3 (31%) also plan to support more grantees, while 27% plan to increase the size of individual grants and 29% plan to increase the total number of grants they distribute. Meanwhile 72% aren't planning any changes at this time, an indication that they will continue to implement their long-term giving strategies.
When it comes to their investments, 16% of foundations are considering changes to their endowments in response to the markets and economy. About 22% of foundations plan to add funds to their endowments. Other planned changes include increasing alternatives allocation (8%), exploring impact investing (8%), and increasing equity allocation (7%). Six in 10 do not plan to make any changes to their endowments.
Foundations are using a range of vehicles and approaches to drive impact and meet their philanthropic goals. Other than private foundations, philanthropists are pursuing giving with direct gifts (47%), donor-advised funds (19%), impact investing (9%), charitable trusts (7%), and planned or legacy gifts (6%).
"While tailwinds from the market downturn and economic instability took a toll on assets, foundations remained committed to their missions and our clients gave nearly 52,000 grants totaling more than $1.5 billion in 2023," said Gillian Howell, Head of Client Advisory Services. "We are encouraged by their generosity but also recognize that creating a better world is an uphill battle that requires unrelenting effort and discipline from those who have the power to effect positive, lasting change."
"We echo the sentiments that Gates Foundation CEO Mark Suzman shared in his annual letter: 'more urgency, more resources, and more bold new ideas' are needed to unleash our potential to address the world's most dire issues," Ms. Howell added.
About the survey
The 2024 Client Survey is a digital survey conducted between December 28, 2023 and January 31, 2024 with Foundation Source clients. Responses are from 225 private non-operating foundations with assets between $250,000 and $500 million.
The preceding press release was provided by a company unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of the staff of NonProfit PRO.
