According to the Foundation Center, there are 86,192 foundations operating in the US as of 2014, awarding over $52 billion dollars each year.  Among the biggest trends is a shift in funding practices that are less obvious, though no less important.

The fastest growing sector of foundation giving is in family foundations and donor-directed funds. These are different from a typical private foundation and the reason is right there in the name: FAMILY foundation and DONOR-DIRECTED funds. These are giving entities that are created by an individual or a family to benefit a personal interest or set of interests. This can lead to very specific funding priorities.  Rather than a foundation stating “education” as the priority and funding throughout the US, or throughout a large region, a family foundation is more likely to specify “education in XYZ town” or “education within the school district of ABC”.

As you may imagine, this affects the approach and application process.  When approaching a standard foundation, you may go to their website, find a phone number and call in hopes of reaching a program officer. Most family foundations do not have a website or a staff, and funding decisions are often made by a family member or group of family members rather than by a Board. This means that cultivating the relationship with the donor becomes the most important part of the process – just as it would be when cultivating a relationship with an individual donor!

Researching a family foundation or a donor-directed fund is also different from researching a standard foundation. Donor-directed funds are typically (though not always) managed by a bank or a Community Foundation, and therefore do not appear in foundation database searches or other online research tools. Likewise, smaller family foundations may not have a large online presence. This means you may have to get creative with your research by looking at donations to other organizations, or Board service by the donor to understand the funding priorities.

The wonderful thing about the increase in family foundations and donor-directed funds is that more people are choosing to give to charitable entities in a more organized way, and are planning to do so into the future. Many family foundations are created with the purpose of teaching younger generations the importance of charitable giving.

Finding those funds, and building strong relationships with those who have created them can be incredibly rewarding for you and your institution.

[1] http://foundationcenter.org/gainknowledge/research/keyfacts2014/

Kelly - Headshot

Kelly is a Consultant for Sims & Steele with experience in foundation and donor research, grant writing and reporting, general fundraising, and project management.