Hannah Shaw Grove is chief marketing officer and a member of the executive team at GTCR-backed Foundation Source, a specialized provider of technology, administration and advisory services for private foundations and planned gifts.

Russ Alan Prince: How did 2023 giving lay the groundwork for this year?

Hannah Shaw Grove: Last year, our foundation clients made more than 50,000 grants and gave more than $1.5 billion to charity. Both figures were up slightly from the year before and represent more than the required 5% that foundations must disburse annually, which we see as a signal that they are in it for the long haul.

When families set up their foundations, they work together to craft a mission that reflects the values and priorities of the family. They commit a meaningful amount of capital to pursue that mission and execute against their plans. All of this indicates a long-term commitment to creating positive change in the world. We expect that foundations will continue to be a meaningful source of support for nonprofits and a driver of social change.

Prince: To what extent is giving influenced by the economy or the markets?

Grove: In some ways, all giving is impacted by the economy and the markets, but it takes different forms. Individual, direct gifts, like making a one-time donation toward natural disaster relief or clicking donate on a nonprofit’s website, are impacted the most. Those types of gifts tend to be more plentiful when people feel like they are on more solid financial footing. When inflation is high or investments are underperforming, those gifts can get smaller and less frequent.

When it comes to charitable vehicles that have already been funded and the assets are specifically earmarked for charitable use, the markets can still be influential. The assets in those vehicles, like donor-advised funds and private foundations, or even planned gifts, can appreciate on a tax-advantaged basis and create a bigger pool of charitable capital.

But when market performance doesn’t keep pace with expectations, a more strategic approach is needed. For instance, many foundations are set up to exist in perpetuity. The idea is that the investment return on the endowment will outpace the annual pay-out requirement helping to sustain long-term giving. To maintain longevity, families with private foundations can give more in years when their endowment is outperforming expectations and use the excess carry forward (any amount over the required 5%) to help offset the requirement in years when the endowment is underperforming.

Right now, the markets are strong, inflation is cooling and the Fed is expected to cut interest rates later this year. Barring any major changes, those factors should create promising conditions for giving in 2024.

Prince: What giving trends are you expecting in 2024?

Grove: First, we are seeing women take a more prominent role in family giving. Among our client base, the number of women in foundation leadership roles has increased by 32%, the number of women grantors has increased by 26% and the dollar amount gifted by women grantors has increased by 76% over the past four years. This is consistent with the World Ultra Wealth Report’s finding that philanthropy is the number one interest of ultra-wealthy women and has the potential to shape what causes are supported and how.

The other thing we’re seeing is an emergence of thoughtful and strategic giving that has more in common with social entrepreneurship than old-school charitable giving. This includes innovative programs that get at the root of issues rather than solely addressing symptoms, often by changing and shaping policy.

One of our clients is focused on addressing the mental health and substance abuse crisis. Initially, they were developing resources that helped people find therapists. Now they are tackling the higher barriers for patients to access mental healthcare versus physical healthcare by working with insurance companies, regulatory agencies, and third-party administrators. Another client is focused on ensuring equitable access to public services like education. They fund initiatives that equip lobbyists and policymakers with facts to drive regulatory and legislative change and then drive public awareness with op-ed placements and media coverage. Both are doing groundbreaking work that spans government, private and public businesses, academic institutions and other nonprofits.

This type of work is more complicated and time consuming than, say, writing a check to a nonprofit, but it’s also incredibly exciting and rewarding. Bringing a group of disparate parties together can effect real and lasting change while deepening awareness and delivering improvements across sectors.

Prince: Are these trends consistent across generations, or do you see younger, emerging philanthropists diverging from their older, more established counterparts?

Grove: We recently surveyed our clients about their priorities and challenges for 2024. The number one priority was getting the next generation involved in giving. At the same time, the number one challenge they cited was getting the next generation involved in giving. They know it’s important, and they know it’s hard. Especially when different generations in a family have different interests and concerns.

There are a few ways to tackle this opportunity. The families that have the most success are the ones who experiment to provide younger family members with a bigger role and voice while they are coming up the learning curve. Having them join board and committee meetings as observers, sit on junior boards or giving them end-to-end responsibility for a discretionary fund are all proven methods. But not the only ones.

Many families with significant wealth have strong leaders with strong opinions. Those individuals have to be willing to hear from other factions within the family and make room to welcome different approaches and outcomes than the ones they envision. Working across generations within a family can be challenging and sometimes uncomfortable. But when families are intentional about including every individual and giving them a platform that makes them feel seen and heard, it fosters a shared sense of trust, stronger intergenerational relationships, and in turn, a durable legacy.

Russ Alan Prince is a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.