Philanthropy as a training ground for the next generation

Philanthropy is the entry point family offices most often use to bring the next generation into decision-making, because it involves real money and real governance at lower stakes than the investment portfolio. UBS's Global Family Office Report 2026 found that a third of offices with limited next-generation involvement are considering philanthropic initiatives as a pathway to engagement, and that 55% of offices manage philanthropy in-house. Bank of America's 2025 Family Office Study found that 51% of offices expect philanthropic goals and strategy to gain importance when control passes to the next generation, and that offices led by the second to fifth generations are more likely than founders to measure philanthropic success by how it builds the next generation's confidence. The giving vehicles themselves, foundations and donor-advised funds, double as teaching structures.

How much family offices give

The scale of family office philanthropy is large enough to make it a serious training ground. The 2025 RBC and Campden Wealth report found that almost 90% of North American family offices make philanthropic donations, most exceeding $1 million, with an average of $15 million. Bank of America found that offices engaged in philanthropy typically give annually and that nearly half give $500,000 or more; among those offices, 84% gave directly to charitable organisations, 73% used private foundations and 68% used donor-advised funds. Morgan Stanley and Botoff Consulting's 2025 compensation report found 89% of US single family offices provide philanthropic services. UBS's 2026 data shows 55% handling philanthropy in-house, 13% outsourcing it and 32% not offering it.

Philanthropy is also more common where governance exists. Bank of America found 68% of offices with governance structures support the family's philanthropic mission, against 51% without.

Why philanthropy works as training

A grant-making budget contains most of the elements of an investment process: a mandate, a committee, due diligence, a decision, monitoring and a measure of outcome. It differs in that errors are bounded by the grant budget and are not compounded, and in that the next generation's values are an input rather than an obstacle. Deloitte's 2026 survey of 1,587 family businesses found the next generation already active in philanthropy and community engagement at 51% of businesses, level with technology as the most common area of involvement.

The metrics families use show the dual purpose. Bank of America's offices measured philanthropic success mainly by long-term impact (54%) and contribution to life satisfaction (51%), but 34% also cited increased family unity, 31% increased next-generation skills and 27% increased next-generation confidence.

What a structured programme looks like

Offices that use philanthropy deliberately as training tend to sequence it by age and responsibility, consistent with the UBS finding that offices see 18 to 29 as the age to start educating heirs and 30 to 39 as the age for active engagement in decisions.

The foundation board is where the training crosses into investing. A private foundation holds an endowment with an investment policy, managers and a spending rate, so a next-generation trustee learns allocation and oversight on a portfolio that is real and separate from the family's main capital. Donor-advised funds offer less governance but simpler administration, which suits earlier stages.

Education on the subject is still patchy: Bank of America found 44% of heirs had received education on philanthropy and board participation, and 39% had not but could benefit, the largest gap alongside leadership training.

Limits of the approach

Philanthropy as training has three recognised limits. First, the next generation's causes often differ from the founder's. Bank of America's 2024 Study of Wealthy Americans found younger donors far more likely to support homelessness (41% against 21%), social justice (33% against 18%) and the environment (32% against 17%), which can turn a training exercise into a values dispute if the family has no process for it. Second, philanthropic governance can be token: a committee with no budget authority teaches little. Third, giving does not teach the whole of wealth management; UBS's Billionaire Ambitions Report 2025 found more than half of billionaires want heirs to use wealth for positive impact, but more than 80% want them to succeed independently, which philanthropy alone does not deliver.

Used with a real budget, a real committee and a route onto the foundation board, philanthropy gives heirs a working knowledge of governance and investing before they are asked to apply it to the main portfolio. Its place in the wider programme is set out in engaging the next generation and financial education for heirs; the forum that oversees it is described in how to run a family council.