By Hannah Shaw Grove, Chief Marketing Officer, Foundation Source
Just like the individuals and families who establish them, private foundations evolve with the passage of time. And because nearly 90% of private foundations are set up with the intent to exist in perpetuity, their success depends on their ability to prepare for and manage change.
Such change can spring from myriad transitions within a foundation’s life cycle, the six most common being:
o When leadership moves from the founders to the family as a whole
o When the family grows through marriages, births and adoptions
o When younger generations assume leadership and board positions
o When family members disperse geographically
o When the foundation experiences sudden growth in assets
o When a trusted advisor or key staff member departs from the foundation
In our more than two decades of hands-on work with private foundations, we’ve helped countless clients prepare for and weather these transitions. As you face these turning points, here are some considerations for each juncture to ensure your foundation will flourish.
Transition 1: From Founder to Family
As life goes on, a foundation’s leadership will inevitably shift from the founders to someone new. In most family foundations, the reins are usually passed to another family member who’s on the board. Transitions of this sort can be challenging as family and board members chart a new course together. To keep your foundation on track in this situation, discuss these questions together:
· Is our founder’s original philanthropic intent “written in stone” or can we modify it to address changing times?
· How will we update our leadership and succession plan?
· How can we best work together? Do we need new rules of engagement?
· Do we need to invest in board training and capacity development?
Transition 2: Family Growth
When founders establish their foundations, rules of engagement are typically conveyed to family members and other involved parties through decisions and joint experiences. However, as your family grows and changes through marriage, births, adoptions, divorce, re-marriages, etc., you’ll need to consider:
· How do we define “family”?
· What are the implications for our governance?
· What are the implications for our grantmaking?
· Are our ‘rules of engagement’ clear?
· Would formalizing and/or documenting our engagement criteria benefit our family?
Transition 3: Next-Gen Involvement
To ensure a foundation’s long-term success, multigenerational collaboration is imperative. Ideally, first and second generations will be open to relinquishing some control and entertaining new ideas, and younger generations will respect the foundation’s mission and legacy as they become more involved. You can assess your foundation’s next-gen engagement efforts with these questions:
· How are we acknowledging the passions of our younger members?
· Do we provide opportunities to practice informed grantmaking?
· Should our board membership be assumed or earned?
· Should our experienced board members serve as mentors?
· Are we open to trying new philanthropic strategies?
Transition 4: Geographic Dispersion of Family
As your children and grandchildren grow up and move to different corners of the country or globe, maintaining a viable, effective foundation depends on continual family engagement. Considerations to help this happen include:
· Should we strictly maintain our original scope and intent or expand it?
· If we have a regional focus, can it be extended nationally or globally?
· Should we chart an entirely new direction?
· How can we enhance our internal communication?
· Should we allow discretionary grantmaking so family members can support causes in their respective hometowns?
Ultimately, increased engagement in the foundation will result in stronger family unity. A foundation is an effective tool for bringing diverse and distant family members together.
Transition 5: Sudden Growth of Foundation Assets
When a foundation experiences rapid growth in assets, perhaps from the sale of a family business or when the foundation is named the beneficiary of a bequest, the amount of charitable funding it’s required to distribute each year will grow as well. Although this increased payout requirement doesn’t take effect until the completion of the next fiscal year, the foundation will need to bring its grantmaking and operations in line with its larger endowment. To do so effectively, its board will need to answer these questions:
· What do we want to accomplish as a foundation?
· How do we expand our scope?
· Do we want to start accepting external requests for support?
· How will we increase our capacity without adding too much overhead?
Transition 6: Departure of a Trusted Advisor or Staff Member
Many foundation boards worry that operations will be crippled by the departure of a long-time advisor or an essential staff member whose expertise and contributions seem near impossible to replace. If you’re in this boat, this transition may create opportunities to expand and enhance your efforts. Consider the following:
· Do we have untapped internal talent that can step up?
· What are our available options?
· Is this a good time to change our processes or upgrade our technology?
Managing change can be challenging for a foundation but with the right mindset, preparation and support from experts, critical transitions can be seamless.
Hannah Shaw Grove is chief marketing officer for Foundation Source, the nation’s largest provider of foundation management solutions. She may be reached at hgrove@foundationsource.com.
