… in multigenerational family foundations

Renee Sovis, 21/64 Certified Advisor

 

Maybe the answer to this age-old adage would be the same whether we’re discussing family foundations or not.  At any rate, the stakes are high when we’re talking about the charitable stewardship of potentially millions of dollars.

Take this scenario, for example: The family matriarch established her foundation in her lifetime and planned for it to be funded at her demise.  She appointed her two kids, their spouses, and her four grandchildren to be part of the board of directors, but left few other directions for the management of the foundation.  “They know me, they know how I would spend the funds.  I trust them to work out any issues that arise,” she assumes.  The family, however, isn’t on the same page:

“My mother was always involved at her synagogue.  She’d want us to focus on Jewish issues, here and abroad.  She would love it if we made several small gifts each year to support programming at Hillels across the state,” states the eldest son.

“Well, she told me personally that she hopes we’ll give only to her local community.  I know none of us live there anymore, but it was important to mom,” argues a daughter-in-law.

“Grandma loved her dogs more than us; she’d want us to focus on animal welfare.  Also, I’m more interested in giving large gifts that can make a big impact now.  Why wait?” says Grandchild One.

“Can I give money to my friend’s new nonprofit in Brazil?” asks Grandchild Two.

Even among the most loving and cooperative families, this is a common situation.  As a result, uncertainty and confusion can disrupt the flow of funds being directed to worthy causes.  So what’s the best way to avoid disagreements and disappointments?  It’s simple: Avoid assumptions.

Founders can avoid assumptions and enhance impact by taking a two-pronged approach.  First, it’s important to document your wishes, your interests, and your intentions.  Mission, vision, and family values are all important considerations that will give direction and purpose to your family giving.  Do you hope the foundation is perpetual, or should it sunset after a few generations? These two scenarios change the management of the foundation substantially.  Second, start giving while living, and involve the next generation (and maybe even the next) as soon as possible.  Early involvement in the family’s philanthropy from each generation will make generosity a habit and not a chore.

What does this look like and how can it be done?  Luckily, there’s no one right answer to what it might look like; it depends on your goals and where you currently lie on the continuum of giving.  It might involve talking to your young children about the importance of community, welcoming the next generation on site visits, or volunteering as a family at the local food pantry.  If you’re farther along on the continuum, the next generation may already be sitting on the board.  A thoughtful strategy will make this a successful and fulfilling endeavor for all.

And when do you start?  Now is always the best time to start.  Whether your family is already introducing the next generation to philanthropy, or your board needs more guidance and support (like our example family), a skilled advisor can help you and your family find direction and joy from your giving.  Your shared values, your philosophy about money, and your motivations for giving are all key ingredients to explore within the family foundation setting, and these conversations take time.  Again, a skilled advisor can provide guidance so that your family can avoid what happens when you assume.

Tips for the first generation:

  • Start early. Set up your foundation with the next 5, 20, and 100 years in mind.  What does it look like?  Is it still around?
  • Your children aren’t mind-readers.
  • Be open. Understand that what the world needs may be different in a few years’ time.
  • Be humble. You have much to share and a long professional career to guide and inform your decisions.  But don’t let your experience close you off to new ideas and innovation.
  • Be flexible. Feedback and suggestions from the next generation will fuel the family foundation engine.  After all, the future is in their hands.

Tips for the next generation:

  • Ask questions. You don’t know what you don’t know — but your elders may assume you know, you know?
  • Your parents aren’t mind-readers.
  • Be open. You have new and exciting ideas.  Remember to be respectful of what has been, but be responsive to new needs.
  • Be humble. The first generation will have much experience and know-how.  Learn from them.
  • Remember, the future is in your hands.

 

About the author:

Renee Sovis is vice president of Neithercut Philanthropy Advisors.  As a 21/64 Certified Advisor, she assists families and foundations with multigenerational engagement and facilitation.