A growing number of family offices are shifting away from traditional charity and embracing strategic philanthropy — an approach designed to create long-term, systemic change.
Instead of simply donating to causes, they’re funding programs that build lasting solutions. The focus is moving beyond personal legacy or boardroom preferences to what truly benefits communities and delivers measurable impact.
When Katherine Lorenz recently took over her family’s Cynthia and George Mitchell Foundation, she had just taken a course in strategic philanthropy, and those lessons inspired her giving.
“I had learned that giving away money is easy but having an impact can be hard, especially in a family foundation where there are lots of different opinions,” she said.
Lorenz focuses the Mitchell Foundation’s $20 million in grantmaking on her native Texas because doing so can make a greater impact by going “narrow and deep,” she said. “It’s better than being on the surface across many areas.”
Unlike traditional charity — which focuses on immediate relief, such as donating food to a shelter — strategic philanthropy aims to address root causes and create long-term solutions, like funding job training programs to reduce homelessness. It also differs from impact investing, which seeks both financial returns and social good.
“It's about getting the job done efficiently and maximizing impact,” said Tom Hall, UBS’ global head of social impact and philanthropy.
The approach has its critics, who contend that it can be donor-focused, creating a power imbalance with grantees, said Michael Moody, a professor of philanthropic studies at the Lilly Family School of Philanthropy at Indiana University.
The strategic philanthropy approach has been around for decades, but its focus has sharpened in recent years as families seek to heighten the impact of their giving. As trillions of dollars shift to younger generations amid the great wealth transfer and causes proliferate in an increasingly complex world, donors seek ways to get the most bang for their buck.
How can donors maximize the impact of their giving? Philanthropy advisers have some suggestions:
Doing your homework: “If cancer research is important to you, you’d like to know that money goes to the right organizations,” said Brett Bernstein, CEO and co-founder of Bethesda, Maryland-based XML Financial Group. “You have to develop a keen understanding of what they’re trying to accomplish, get into the details of how much of that money goes to research,” said Bernstein, who also serves as the board chair of So What Else, a grassroots charity in the Baltimore-Washington area that helps at-risk youths with after-school and summer programs.
Give with purpose, not just pockets: “Families are looking to align their philanthropic activities with their mission, and those activities go beyond giving money but also to aligning their talents, whether that’s board service or volunteer service,” said Betty Pettine, the director of philanthropy at the Radnor, Pennsylvania-based Callan Family Office.
Teaming up for the greater good: Family offices are increasing their philanthropic impact with strategic partners. “Whether that’s other nonprofits, other funders, other for-profit corporations or some government agencies,” families can create a greater social impact, Pettine said.
Focus: In the past 10 years, the Washington-based National Center for Family Philanthropy has noticed a “sharp increase in families reporting that what's shaping their grantmaking is focused on a particular issue,” said the group’s chief impact officer, Miki Akimoto. “That number has jumped from 54% to 74%.”
What you’re seeing, Akimoto said, are trends in families “sharpening their focus” and not just writing checks to multiple charities or causes without a clear strategy.
Technology: Very often driven by next-generation members, family offices are using technology to be more efficient and keep records on activities like program-related investments and recoverable grants. Unlike previous generations, they have the tools to administer and monitor their giving, Pettine said.
“With technology comes the availability and access to data — to make informed decisions and to measure impact,” she said. As an example, Pettine pointed to the third generation of a family she works with in the Midwest that is adopting new tools to “gain efficiencies and improve their decision-making process.”
The access to data is also increasing the transparency within families or to the community about where a family’s support is going.
Less top-down and more bottom-up: Akimoto sees a widespread decline in the influence of individual board members and single voices. “Rather, you’re listening to and really thinking about the needs of the community, the voices of your grantees,” she said. “The solutions really are often done by the people most proximate to the issue. How does the community define the problem; and, equally, how do they define success?”
When it comes to having the most impact, it’s key to think long-term, Akimoto said. “None of these problems developed in one year, so you’re not going to solve them with a one-year grant.” Rather, a multiyear commitment allows a philanthropist to learn what works; to collaborate with the grantee, build that relationship; and help onboard the next generation, she said.
“How are you involving that next generation in shaping your strategy and shaping your approach so that you can successfully engage their interest in an authentic way, and you can do the most good?”