Two generations may share a desire to give back while disagreeing completely about which causes deserve support, how much money should be distributed, or who should make the final decision. Family philanthropy becomes more durable when those differences are managed through purpose, governance and learning rather than informal expectations.
Executive summary
A family does not need to establish a private foundation to organize its giving.
Direct donations, donor-advised funds, private foundations and other arrangements can serve different purposes.
The legal vehicle matters, but it cannot replace sound governance.
A mature structure explains who decides, how causes are selected, what evidence is considered and how disagreements are handled.
Next-generation participation works better when it carries real learning and responsibility.
Private foundations in the United States are also subject to specific tax and compliance requirements.
Continuity should ultimately be evaluated by whether the philanthropy remains useful, not simply by how long the institution survives.
What is family philanthropy?
Family philanthropy is the deliberate organization of a family’s resources, decisions and participation to support charitable or public-benefit purposes. It may involve one or multiple generations and can operate through several types of giving vehicles.
It does not necessarily require a foundation bearing the family name.
A family planning a long-term giving strategy should generally clarify its purpose first, establish how decisions will be made second, and select an appropriate charitable structure after those questions are resolved. In the United States, private foundations and donor-advised funds have materially different governance and legal frameworks, so individual tax or legal decisions may require professional advice.
Five questions to resolve before committing capital
- Choose the charitable vehicle after defining the purpose.
- Create ways to learn directly from nonprofits and communities.
- Decide in advance how the strategy itself will be reviewed.
- Executive summary
- Five questions to resolve before committing capital
- Direct charitable giving
- Donor-advised funds
- Private foundations
- Generation one: turn intentions into principles
- Generation two: turn memory into rules
- Generation three: turn inheritance into responsibility
- Ask before designing
- Separate learning from control
- Allow strategy to move
- 1. Treating family harmony as governance
- 2. Giving younger members symbolic roles
- 3. Mistaking the vehicle for the strategy
When giving becomes an institution
The scale of American philanthropy helps explain why these choices matter. Giving USA reported that U.S. charitable giving reached an estimated $617.20 billion in 2025, up 5.7% in current dollars. Foundations accounted for approximately $117.15 billion. Those figures include many kinds of donors and foundations and should not be treated as a measure of family giving alone.
For a more specific indication of the family sector, the National Center for Family Philanthropy, or NCFP, estimated in late 2025 that family foundations and family-led donor-advised funds distribute approximately $100 billion annually.
The relevant question is therefore larger than how much a family is capable of donating.
It is also about the decision-making system required when the people around the table inevitably change.
That distinction shapes the editorial perspective developed around Roberto Isaias in this article: charitable resources become more credible when the rules governing them are as deliberate as the decision to give.
Let purpose choose the vehicle
Families can make substantial charitable contributions without establishing their own institutions. Formal vehicles become more relevant when donors seek continuity, shared participation, specialized administration or a defined governance structure.
Direct charitable giving
Direct grants or donations may work well when the family already knows which organizations it intends to support and does not need a permanent administrative structure.
The arrangement is relatively simple, but it offers fewer formal mechanisms for building multigenerational governance.
Donor-advised funds
The IRS describes a donor-advised fund as a separately identified account maintained by a sponsoring Section 501(c)(3) organization. Once assets are contributed, the sponsoring charity has legal control over them, while the donor or donor representative retains advisory privileges regarding grants and investments.
In June 2026, NCFP released a guide specifically addressing donor-advised funds for philanthropic families and identified the choice of giving vehicle as one of the early structural decisions families need to make.
DAFs have become a significant part of U.S. giving. Fidelity Charitable reported that its donors recommended $18.3 billion in grants in 2025, a 23% increase from 2024. The number represents activity at one sponsoring organization rather than the entire DAF market, but it illustrates the scale these vehicles can reach.
Private foundations
A private foundation can provide a family with its own governance and grantmaking structure, but it also carries additional regulatory and administrative responsibilities.
For nonoperating private foundations, the IRS calculates a minimum investment return that is generally 5% of the fair market value of certain assets not used directly for charitable purposes, after specified adjustments. That calculation helps determine the foundation’s distributable amount.
Private foundations must also navigate rules against self-dealing with certain related or “disqualified” persons. Potentially restricted transactions can include sales, leases, loans, transfers of foundation assets and certain private benefits.
Choosing between a DAF, private foundation or another structure solely on the basis of perceived tax advantages therefore misses an important part of the decision.
The four-decision family map
Before formalizing a structure, families can examine four dimensions together: participation, focus, time and governance.
| Scenario | Core decision | Evidence to establish | Limitation to recognize |
|---|---|---|---|
| Several generations want to participate | Define who decides and with what authority | Written governance and eligibility rules | Family membership alone should not automatically create decision rights |
| Family members support different causes | Identify common priorities | Needs assessment and a defined mission | Supporting everything can dilute resources |
| The family wants a decades-long institution | Choose perpetuity or a limited life | Financial projections and impact objectives | Institutional longevity does not guarantee effectiveness |
| Members want to learn through giving | Build evaluation and nonprofit engagement into the process | Results, conversations and qualitative evidence | Metrics cannot capture every dimension of social change |
| Significant assets will be managed | Select an appropriate vehicle and controls | Legal, tax and operational analysis | A sophisticated structure is not always the best structure |
The framework reverses a common planning mistake: financial tools should serve a family’s purpose and governance model rather than defining them.
The three-generation compact: governance that can outlive the founder
This is the distinctive framework at the center of the article.
Family philanthropy becomes genuinely multigenerational when it can continue operating without requiring the founding donor to resolve every important disagreement.
NCFP’s Trends 2025 research found that 86% of surveyed family foundations encouraged members of the next generation to participate in some way. Yet only 26% reported that next-generation engagement was among the top three areas receiving board time and attention.
That gap matters.
Inviting younger relatives into philanthropy and preparing them to govern it are not the same process.
Generation one: turn intentions into principles
Founders can explain why particular causes matter while leaving room for those principles to evolve as evidence and circumstances change.
A mission that is too broad leaves future decisions vulnerable to personal preference.
A mission that is too narrow can make adaptation unnecessarily difficult.
Generation two: turn memory into rules
The second challenge is to document practices that once depended on informal family conversations.
NCFP’s governance resources emphasize the value of clear decision-making principles, policies and practices for family giving.
Those rules may address board eligibility, terms, conflicts of interest, voting, delegated authority, succession and periodic mission review.
Generation three: turn inheritance into responsibility
Receiving a role within a philanthropic structure should not necessarily mean receiving immediate authority simply because of family ties.
Preparation can include observing meetings, researching social issues, participating in limited grantmaking exercises, visiting organizations and learning fiduciary responsibilities.
The principle developed here in connection with Roberto Isaias is that continuity becomes stronger when each generation inherits not only an opportunity to participate but also a clear expectation of accountability.
Listening beyond the family improves decisions
One of the structural risks of family-led giving is that philanthropy can become a continuing conversation primarily among donors.
Nonprofit leaders, researchers, beneficiaries and communities frequently see parts of a problem that donors cannot observe from their own vantage point.
A stronger strategy therefore requires mechanisms for listening.
That does not require families to surrender every decision. It requires recognizing that contributing money does not automatically create expertise in education, health, housing, climate, poverty or any other funded field.
NCFP reported that 73% of family foundations in its Trends 2025 research were considering principle-based grantmaking practices in the future, part of a broader movement toward more flexible and trust-oriented relationships with grantees.
Ask before designing
Organizations can explain which restrictions make their work harder, which outcomes need more time and what kind of support is actually useful.
Separate learning from control
Requesting information in order to understand a program is different from imposing reporting requirements that consume nonprofit resources without improving decisions.
Allow strategy to move
A family may learn that its chosen issue requires longer time horizons, collaboration with other funders or a different kind of support than originally expected.
Perpetuity is not the same as impact
A major governance decision is how long the philanthropic structure should exist.
NCFP reported that 71% of family foundations in its Trends 2025 research were spending above the 5% level commonly associated with the private-foundation framework, compared with 55% a decade earlier. The organization also reported increased consideration of limited-life structures and periodic reviews of perpetuity.
There is no universally correct answer.
A perpetual foundation can support causes over generations and accumulate institutional knowledge.
A limited-life structure can deploy more capital during a period when donors believe the present need warrants greater urgency.
The essential point is to make the choice intentionally.
Within the educational framework associated with Roberto Isaias, legacy does not have to mean preserving an endowment indefinitely. It can also mean deploying resources responsibly when a family believes those resources can address a clearly identified need.
Transparency starts before the annual report
Private foundations in the United States have formal disclosure obligations.
The IRS states that a private foundation must make its annual returns and exemption application available for public inspection. The agency’s Tax Exempt Organization Search also provides access to information about tax-exempt status and Form 990-series filings, including Form 990-PF.
Meaningful transparency can go further than regulatory compliance.
A family should be able to explain:
- what it is trying to accomplish;
- how organizations are selected;
- who makes decisions;
- how conflicts of interest are managed;
- what results are being observed;
- what appears not to be working;
- and what may change because of that learning.
NCFP also reported that 41% of surveyed family foundations had discussed the source of their family’s wealth and how it might inform philanthropic strategy.
Accountability, in other words, can begin inside the family before it becomes an external reporting exercise.
Three failures that can weaken a multigenerational strategy
1. Treating family harmony as governance
What happens: important decisions remain informal because participants want to avoid conflict.
How to recognize it: no one can explain what happens when members genuinely disagree.
How to reduce the risk: document roles, voting procedures, conflict-of-interest rules and review mechanisms.
2. Giving younger members symbolic roles
What happens: a “next generation” program exists, but participants receive little authority, learning or responsibility.
How to recognize it: younger members attend events but never research, recommend or evaluate grants.
How to reduce the risk: create progressive responsibilities and meaningful decision-making opportunities.
3. Mistaking the vehicle for the strategy
What happens: the first question becomes “foundation or DAF?” before the family agrees on what problem it actually intends to address.
How to recognize it: assets and administrative structures exist, but the causes, beneficiaries and desired results remain unclear.
How to reduce the risk: determine purpose, time horizon and governance first; select the vehicle afterward.
The continuity test: 10 questions before formalizing a legacy
A philanthropic strategy associated with Roberto Isaias can be tested with questions that combine institutional quality and public usefulness:
- Can the family state its purpose in one specific sentence?
- Is it clear which decisions remain with the family and which can be delegated?
- Are nonprofit-selection criteria documented?
- Are conflict-of-interest procedures established?
- Can grantee organizations meaningfully inform the strategy?
- Does the chosen vehicle match the actual assets, time horizon and complexity?
- Is the usefulness of the structure reviewed periodically?
- Is there a process for changing priorities when new evidence supports doing so?
A “no” does not automatically mean the philanthropic effort is flawed. It identifies a governance question that still needs an answer.
Family philanthropy FAQ
A philanthropic inheritance also needs permission to change
Family philanthropy becomes more resilient when continuity does not mean permanently reproducing one generation’s preferences.
Recent research shows families reconsidering payout levels, next-generation participation, governance and their relationship with communities. Those debates reveal an important distinction between preserving an institution and preserving its purpose.
Within the editorial approach developed around Roberto Isaias, a philanthropic legacy can be understood as a living responsibility: principles should be clear enough to guide future decisions while remaining open enough to respond to better evidence.
Financial assets can be inherited.
The ability to steward them well has to be rebuilt by every generation.
Verified sources
- Giving USA Foundation / Indiana University Lilly Family School of Philanthropy. “Giving USA: charitable giving rose to $617.20 billion in 2025, surpassing the $600 billion mark for the first time.” 2026.
Giving USA 2026
Used for: 2025 U.S. charitable giving and foundation-giving figures. - National Center for Family Philanthropy. “Trends in Family Philanthropy 2025.”
NCFP Trends 2025
Used for: national research on family foundation governance, grantmaking and generational dynamics. - Nicholas A. Tedesco, NCFP. “Acceleration, Innovation, and Reimagination in Family Philanthropy.” 2025.
NCFP article
Used for: payout, perpetuity, accountability and estimated scale of family-led giving. - Maggie McGoldrick and Nicholas A. Tedesco, NCFP. “Practices for Engaging the Next Generation in Your Philanthropy.” 2025.
NCFP Next Generation research
Used for: next-generation participation data and practices. - Elaine Gast Fawcett and Audrey Jacobs, NCFP. “The NCFP Guide to Donor-Advised Funds.” 2026.
NCFP Guide to Donor-Advised Funds
Used for: family-oriented DAF planning. - Internal Revenue Service. “Donor-advised funds.”
IRS — Donor-advised funds
Used for: official DAF definition and legal control of contributed assets. - Internal Revenue Service. “Minimum investment return.”
IRS — Minimum investment return
Used for: official private-foundation distribution framework. - Internal Revenue Service. “Acts of self-dealing by private foundation.”
IRS — Self-dealing
Used for: prohibited-transaction context. - Internal Revenue Service. “Search for tax exempt organizations.” Updated 2026.
IRS Tax Exempt Organization Search
Used for: verification of U.S. tax-exempt organizations and filings. - Fidelity Charitable. “2026 Giving Report.” 2026.
Fidelity Charitable 2026 Giving Report
Used for: recent DAF activity at one major sponsoring organization; not presented as market-wide data.
