What can be learned about how wealthy families are pursuing philanthropy, based on recent giving activities of nearly 1,000 private foundations with assets between $1 million and $500 million? A Kiplinger article, “5 Trends in High-Net-Worth Philanthropy,” summarizes the trends:

1. Philanthropists Are Giving Away More.

Private foundations increased their giving from 2020 to 2021. The foundations in the study gave away a total of $689 million in 2021, an increase of $40 million over the prior year, and an average of $727,129 per foundation.

2. Philanthropy Is Becoming More Concentrated.

At the same time, these foundations funded 500 fewer grants in 2021 than in 2020, indicating a shift from getting aid to as many recipients as possible to increased targeting of dollars in an effort to create greater impact.

3. Foundations Are Going Above and Beyond More Often.

In 2021, the foundations in our study disbursed an average of 7.2% of their assets, with smaller foundations (those with assets between $1 million and $10 million) giving away 8.9% of their assets. Both percentages are higher than the annual mandatory distribution requirement of 5%, signaling a strong commitment to go above and beyond for charitable causes.

4. Pre-pandemic Norms Are Reemerging.

In addition to fewer, more concentrated grants, other evidence suggests that philanthropists are starting to revert to pre-pandemic giving patterns, such as a shift from pandemic-era general-purpose grants to more historic specific-purpose grants. In the group of private foundations studied, “religion related” received 4.0% of the grants in 2020 and 2.9% in 2021.

5. Foundation Size Influences Makeup of Endowment Portfolios.

Smaller foundations have the highest allocation to equities, ending 2021 with 61.5% exposure. They also maintain the highest level of cash at 12.4%. Conversely, larger foundations have more complex portfolios. Their allocation to alternative investments, such as private equity and hedge funds, is 23.5%, which is nearly five times the exposure of smaller foundations. Also 8.4% of their assets are in a unique mix of life insurance, program-related investments, closely held stock, receivables, annuities, inventory, and other nontraditional assets.

Learn more by reading the complete 2022 Report of Private Philanthropy. See also more articles on financial trends at ECFA News Affecting Your Ministry.