This issue brief examines the kinds of decisions that family foundations often face and sets out practical, easy-to-apply guidelines for ensuring that the foundation’s decision-making methods vary appropriately, as conditions and circumstances change.
Finding a way to facilitate trust, communication, and proper preparation and development of the necessary skill sets of the next generation can be difficult and will vary from family to family. Today, many families are finding answers to these questions through a private family foundation. If you’re thinking about staring a family foundation, here are considerations to help guide the setup, as well as potential benefits for your family and the long-term preservation of your family’s wealth.
What happens when a founding donor isn’t around to direct the foundation’s mission and grantmaking activity? To avoid unwanted consequences and confusion, succession planning requires a comprehensive strategy that addresses the foundation’s future and provide it with a mission or donor intent statement. It should answer who will make decisions for using the funds and provide the criteria for making those decisions.
For many individuals, philanthropy is one of the more gratifying parts of estate planning. Adding in a multigenerational component—one that involves the family’s needs, interests, assets, and goals—can make it even more meaningful and compelling. With the focus on the family and through open channels of communication, philanthropy can be an excellent vehicle for transmitting family values and working together.
One of the many challenges facing wealthy families in today’s fast-paced society is the need to meaningfully involve family members, including the rising generation, in the management of the family wealth enterprise. One way to engage the family is through philanthropic giving where families can derive great benefit from working together to define their core values and shared vision. If your family decides to take this approach, forming a private foundation may be the right answer for you.
When starting with family philanthropy, a family can choose a donor-advised fund or establish a private foundation. Each option has different requirements and management issues, including start-up costs, privacy matters, control of grants and assets, and flexibility in impact investing. Serving as a general guidance for you and your experienced advisor, this chart provides comparison data between donor-advised funds and private foundations that can help you choose the option that is best for you and your family.
Philanthropy is changing and evolving more quickly than ever, with new societal challenges, new players, and new strategies. In this time of change, questions of how family foundations can optimize their effectiveness are increasingly urgent. This paper by Rockefeller Philanthropy Advisors provides an overview of the Theory of the Foundation, some of its benefits, and a roadmap that enables foundations to address urgent questions, explore fundamental beliefs or implicit assumptions about their work, public benefit, and action.
There is a passionate and growing effort among funders to focus less on change that is short-term or only at the project or program level; such funders are instead using models that reach across different sectors and approaches and dig deep into root causes, leading to more structural, systemic change. Aiming their efforts at more transformational progress on the challenges facing society today, family foundations and funders are moving forward with the Sustainable Development Goals (SDGs).
A historic agreement was reached in 2015 when member states of the United Nations came together and signed “Transforming Our World: The 2030 Agenda for Sustainable Development,” which included a set of 17 Sustainable Development Goals (SDGs). The SDGs charted a way forward to a just, secure, and sustainable future for people and the planet.
The fun and rewarding activities of a family foundation center around determining the causes and organizations the foundation will support. While working together to make a difference, it is important to remember the family foundation is also a business requiring the same effective governance practices as a family business. This is especially critical when multiple generations of family members are involved. There is no one-size-fits-all approach to governing family foundations. However, there are standard practices to incorporate into foundation oversight activities.