The IRS requires private foundations to payout five percent of its assets each year. Funders have traditionally treated that five percent as the default payout, but many are beginning to think about five percent as a minimum rather than a ceiling, balancing their payout with their purpose and lifespan goals.

NCFP’s Trends 2025 study shows that just 25 percent of family foundations are now spending the minimum five percent, a significant change from Trends 2015 when 38 percent of respondents reported doing so. Twenty-six percent are spending between six and ten percent annually, a 62 percent increase over the last decade, and 20 percent report that they anticipate increasing their foundation’s payout rates in future years. From listening to and talking with our network, we know that family foundations increase their payout rates for many reasons, including a significant opportunity to meet their mission, a time of increased need in the communities they support, legacy grants, or because they intend to spend down.

Making Big Bets

Following the death of second-generation family member Bruce Duchossois in 2014, the Duchossois Family Foundation (TDFF) shifted from being a pass-through foundation to being endowed with a $100MM gift from Bruce. Simultaneously, the third generation became more closely engaged in the work of the foundation, with a particular interest in funding wellness and economic opportunity. The board ended up recommending a cutting-edge grant funding at the intersection of immunology and the microbiome, resulting in the creation of the Duchossois Family Institute at the University of Chicago. The foundation contributed $50MM over five years, matched by a personal gift from Janet and Craig Duchossois.

The foundation had never made a single grant of this size toward a new science, and the gift sent them far over their five-percent payout minimum, but the family was comfortable with taking some risk in this investment and was willing to make a big bet. Despite such a large gift, the foundation’s endowment has continued to grow and they have continued to spend at higher rates in recent years— 9.1 percent in 2022 and 11.8 percent in 2023. “With positive investment returns, we’ve proven that the endowment can still grow even when spending more,” said foundation president Mary Ann Roeser in a recent conversation with NCFP.

Read the full article about private foundations' annual payouts by Maggie McGoldrick at National Center for Family Philanthropy.