Family foundations are navigating a period of rapid change, with evolving practices reshaping how they approach their missions and the communities they serve. The Philanthropic Trends 2025 Report, produced by the National Center for Family Philanthropy (NCFP), is the third in a series of comprehensive studies conducted every five years to track the evolving practices of family foundations. By analyzing data over time, the report provides critical insights into how family philanthropies are adapting to societal challenges, offering a decade-long perspective on trends shaping governance, grantmaking, and community impact.

These changes are not merely adjustments—they represent an opportunity to rethink how family philanthropy can address complex societal challenges with greater efficiency and effectiveness. Below, we explore five trends that are driving this transformation and what they mean for the future of family foundations.

A Shift Toward Community-Centric Philanthropy

One of the most significant trends is a shift toward community-centric philanthropy. Historically, grantmaking decisions were often guided by the values and preferences of donors and boards. Today, there is a growing recognition that the most effective philanthropy centers on the needs of grantseekers and the communities foundations aim to serve. In 2025, over 70% of family foundations reported that their strategies were driven by their missions and community needs—a notable increase from past years.

This evolution emphasizes the importance of engaging stakeholders, including grantees and community leaders, in shaping philanthropic priorities. By fostering collaboration and building trust, family foundations are better equipped to align their efforts with the realities on the ground. A community-centric approach ensures that grantmaking reflects the lived experiences and pressing needs of those it is intended to support, creating sustainable and meaningful change.

Unlocking Inactive Capital Through Mission-Aligned Investing

Family foundations are increasingly leveraging their full endowments, not just their annual grantmaking budgets, to advance their missions through mission-aligned and impact investing. This approach channels resources into companies, funds, and initiatives that align with their values, such as renewable energy, diverse entrepreneurs, education, and economic empowerment. By doing so, foundations ensure their assets contribute to their goals every day, amplifying their impact while maintaining financial sustainability.

This shift represents a powerful way to extend the reach of philanthropy beyond traditional grantmaking. Investments in areas like clean energy startups or minority-owned businesses not only deliver financial returns but also create transformative social and environmental outcomes. While some foundations remain cautious about the perceived risks, others have demonstrated that mission-aligned investing effectively balances fiduciary responsibility with meaningful change. It’s a strategy that turns inactive capital into an active force for progress.

Simplifying Grantmaking for Impact

For many nonprofits, the process of applying for and managing grants can be a time-consuming and resource-intensive endeavor. Recognizing this, family foundations are taking steps to simplify their grantmaking processes. Many are reducing application requirements, streamlining reporting obligations, and conducting pre-proposal research to ease the burden on nonprofits. These changes not only save time but also allow grantees to focus more on their missions and less on administrative tasks.

Despite these improvements, challenges remain. There has been a decline in general operating and multiyear grants over the past decade, even though these types of funding are crucial for nonprofit sustainability. Flexible and unrestricted funding empowers nonprofits to innovate and adapt to challenges, enabling them to maximize their impact. Simplifying grantmaking processes while prioritizing flexible funding is essential for ensuring that nonprofits can achieve long-term success.

Engaging Younger Generations

Engaging the next generation is essential for the sustainability of family philanthropy. Younger family members bring fresh perspectives and innovative ideas, but their participation has been declining due to time constraints, geographic dispersion, and generational shifts in priorities. These challenges underscore the importance of intentional efforts to involve younger generations in philanthropic decision-making and governance.

Foundations that create structured opportunities for youth engagement are seeing promising results. Junior boards, discretionary funds for youth-led initiatives, and immersive experiences like site visits help bridge generational gaps and foster a shared commitment to the foundation’s mission. Additional shifts from in-person meetings to tech enabled hybrid meetings to allow for virtual attendance Younger family members who feel empowered and connected to the work are more likely to carry the foundation’s values forward while bringing new energy and ideas to longstanding initiatives.

Increasing Spending and Granting Rates

Family foundations are also recognizing the importance of increasing their spending and granting rates to address urgent challenges. While many foundations still adhere to the 5% minimum distribution required by law, an encouraging trend shows that over a third of foundations have recently raised their payout rates. This shift acknowledges the pressing need for resources to tackle systemic issues like education inequities, economic barriers, and climate change.

Foundations that commit to higher payouts can amplify their impact while still maintaining their financial health for the future. This approach calls for thoughtful planning but demonstrates the bold action required to meet the demands of today’s complex challenges. 

Conclusion: A Turning Point for Family Philanthropy

Family philanthropy stands at a crossroads, with the opportunity to embrace practices that better align with the needs of a changing world. The trends outlined in the Philanthropic Trends 2025 Report—from shifting toward community-centric approaches to unlocking inactive capital—underscore the urgency for family foundations to adapt and innovate. However, these shifts are not without challenges. Resistance to increasing payout rates, declining generational engagement, and inconsistent adoption of learning cultures threaten to slow progress. If family foundations are to remain relevant and impactful, they must confront these barriers with intentionality and a willingness to take calculated risks. The choices made now will determine whether family philanthropy continues to lead the way or whether they lag behind in addressing the pressing issues of our time.

– Andrew Tudor, CAP, CFP®

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