The Biggest Wealth Transfer in History Has a Strategy Problem

 

By Dr. Jenny Vazquez-Newsum, Principal at Dowling Street

Somewhere between $84 trillion and $124 trillion will move from the baby boomer generation to heirs and to charity over the next two decades, depending on which research firm is counting. A meaningful share of it is headed toward philanthropy, and it's arriving into vehicles built to receive it: donor-advised fund assets grew 30 percent in a single year to $326 billion, and combined DAF and foundation assets are projected to reach $2 trillion by 2026, according to the DAF Research Collaborative. In The Philanthropic Initiative's 2026 study of philanthropic conversations between advisors and their high-net-worth clients, 38 percent of donors say their strategic needs already exceed what their advisor can offer.

That gap isn't unique to philanthropy, and it isn't new. Family-owned businesses fail at the same transition with almost identical consistency: only about 30 percent survive the handoff to a second generation, and roughly 12 percent make it to a third, according to the widely cited Small Business Administration figures on family business succession. The businesses that beat those odds rarely do it with more capital. They do it with governance and a real plan for resolving disagreement before it becomes a crisis, which is exactly the muscle most new philanthropic vehicles haven't built yet either.

That gap is real, and it's worth naming. But the more useful question isn't whether a strategy gap exists. It's why so many strategic plans, even the ones built by capable people with real resources, fail to hold once the workshop ends and the document gets filed. After years spent almost exclusively on this problem across nonprofits, membership institutions, and mission-driven organizations of every size, a small number of failure patterns show up again and again, regardless of sector or budget. They're worth naming plainly, because most of the standard advice available to a family office or a new philanthropic entity doesn't address any of them.

Failure One: Skipping Real Diagnosis

The single most common reason a strategic plan doesn't survive contact with reality isn't a bad idea at the center of it. It's that the plan was built on an untested read of the current situation: the version of events the founding story tells, rather than what's actually happening in the organization or the family right now. Diagnostic error is the most frequent culprit in strategic planning, more common than poor execution and more common than an uninspired vision. A plan that skips a genuine, sometimes uncomfortable assessment of where things stand isn't a shortcut. It's a plan built on sand, and it tends to fail quietly, months after everyone has already moved on to implementation.

Failure Two: Mistaking Input for Buy-In

Almost every strategic planning process includes some version of stakeholder engagement: interviews, surveys, listening sessions. Almost none of it produces real ownership, because gathering opinions and building commitment are different jobs. The difference shows up in one specific place: whether people can see, concretely, how what they said changed the outcome. A process that collects input and then proceeds as though the direction was already decided produces a room full of people who nodded along and privately disagreed. That room ships a plan that photographs well and dies within a year, because the people meant to carry it out never actually signed on to it. They complied with a meeting.

Failure Three: Avoiding the Disagreement the Plan Actually Needs to Resolve

Every organization or family navigating a strategic inflection point is holding at least one unresolved question that different people would answer differently: who this is really for, how much control any one person or generation should hold, what the institution is and isn't willing to become. These aren't questions a market analysis answers. They're the actual substance of the work, and most planning processes route around them because they're uncomfortable and slow the process down. That avoidance doesn't make the disagreement go away. It just guarantees the disagreement resurfaces later, usually at a worse moment, usually with less goodwill in the room to resolve it. A planning process has to build a structured, repeatable space for exactly this kind of conversation, or it hasn't actually done the strategic part of strategic planning. It's produced a nicely formatted list of priorities that everyone privately knows won't survive the first real test.

Failure Four: Importing a Framework Built for People Who Already Agree

Most of the strategic planning toolkit in wide circulation, competitive matrices, five-year roadmaps, cascading KPIs, was built for organizations that don't have to manufacture agreement on what winning looks like. A company can plan on the shared premise that revenue and margin matter. A family's philanthropy, or a decades-old institution navigating its own transition, rarely gets that premise for free. Applying an IQ-only framework to a problem that's fundamentally about human alignment produces technically sound plans that nobody feels ownership over, because the framework was never built to do the alignment work in the first place. Rigor and emotional intelligence aren't a tradeoff here. In this kind of work, they're the same discipline, applied to different halves of the same problem.

What Closes the Gap

The organizations and families who get this right tend to share one structural habit: they treat the planning process itself as a rehearsal for the culture they're trying to build, opposed to a separate exercise that produces a document and then disappears. If part of the goal is a board that governs rather than manages day to day operations, the planning process has to start practicing that shift immediately. That is, through how the board is actually engaged, rather than simply recommending it as a bullet point in a future-state vision. If part of the goal is candid internal deliberation instead of polite deference to whoever is most senior in the room, the working group doing the real analysis has to be built to protect that candor on purpose, sometimes by deliberately keeping the most senior person in the room out of it. This is precisely the approach we take at Dowling Street after innovating through lessons from working with organizations for the last decade. The structure of the process isn't logistics sitting underneath the real work, the structure is a meaningful part of the real work.

The same logic applies to what happens after the plan is finished. A plan is only as valuable as the organization's capacity to actually use it, and for a family philanthropic operation running with two or three people wearing several other hats, that capacity must be built deliberately, rather than assumed. A strategy that requires infrastructure the team doesn't have isn't a strategy. It's a wish list with better formatting.

Why This Moment Makes It Urgent

None of this is a knock on the advisors currently having these conversations. Wealth managers, attorneys, and accountants are genuinely good at building the vehicle. Most seem to know that strategic facilitation isn't their job: the same TPI research shows the overwhelming majority already refer clients elsewhere once the conversation moves from which vehicle to use toward why. That's the right instinct.

What makes this a live question right now is the sheer scale of capital about to move through exactly these vehicles over the next two decades. Every dollar that lands in a new foundation or a newly formalized giving fund without a real strategy behind it is a dollar that will drift, get renegotiated with every advisor or generational handoff, or simply sit there, technically deployed and functionally directionless. The families and institutions positioned to do the most good with what's coming are the ones building the discipline to diagnose honestly, resolve real disagreement early, and structure the process itself as practice for the culture they want, before the capital arrives and the pressure to move fast makes all of that harder to do well.

Sources:

 
Sana KhanStrategic Planning, Philanthropy, Family Offices, Nonprofit GovernanceComment