Passing the Baton: Sharing Leadership Among Generations

The following is excerpted  Passing the Baton? Generations Sharing Leadership by Alice Buhl, Senior Fellow, National Center for Family Philanthropy. Passing the Baton? is the latest entry in the National Center’s Passages white paper series, now available in Family Philanthropy Online to Friends of the Family and FP Online subscribers.

“The field has been very resourceful in promoting next generation activities,” Buhl contends. “It has done relatively little to address the succession issues for the senior generation or to consider options for shared leadership between generations.”

After considering the factors that shape succession decisions and sharing important lessons from the family business world, Buhl introduces the creative possibilities of shared leadership as well as tips for both senior and next generation members.

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In many ways the family foundation field is young. It hasn’t been until the last 20 years that its members have consistently worked and learned together. The very first family foundation conference at the Council on Foundations was in 1988 with just 75 people in attendance and it is now over ten times that!

The field is only beginning to deal with the dilemma of leadership sharing and succession. Creative possibilities have to go beyond what people have done to what people might do, given what we can learn from other fields or from solutions just now being explored or implemented.

Creative possibilities also need to allow for a phase of transition, rather than an abrupt shift––a span of time with both generations sharing leadership in different ways that energize everyone. What’s critical, in all these scenarios, is that the senior generation allow the next generation to make more decisions and even their share of mistakes.

When leadership is passed thoughtfully and in a timely fashion, the experience can be rewarding for everyone. I have watched parents enjoy seeing their children and grandchildren begin to set direction for the foundation. Parents have an opportunity to see their children develop programs that respect the legacy of the foundation but that are important to them.

In fact, possibly the most outstanding reason to transfer leadership while staying active is that the senior generation can do a better job of assuring the foundation respects the family’s historical philanthropic values. Parents and aunts and uncles can be teachers and mentors in new and very positive ways if they are willing to give up leadership. Seniors who hold on to leadership until their very late years, or even their death, risk being seen not as teachers or mentors but as the old guard who won’t change. The built up desire for leadership or change can lead to dramatic and sometimes inappropriate shifts.

Here follow five possibilities (with as many permutations as our imaginations and ingenuity can summon).

Possibility #1. Create a next generation board, and make sure it has a significant role and real grant making responsibility.

Next generation boards can be wonderful places for learning opportunities. They are especially good because members of the next generation get the opportunity to work and learn together. My worry is that next generation boards can be used as an excuse for not including the next generation in leadership in the foundation itself. In addition, a number of next generation boards have fizzled. They thrive with sensitive staff work, serious responsibilities and active cooperation and interest, but not hovering by the senior generation. Some next generation boards that started out being effective because of the age and experience level of the next generation have probably outlasted their time. Maybe next generation boards should have an expiration date.

There are, in all, numerous ways to give next generation boards more leadership opportunities. The most obvious is to increase the amount they have to distribute. That leaves the senior board still with the power of final approval but can give the next generation more meaningful work. Or, the next generation board could be assigned specific governance or administrative tasks, such as nominating new board members, or drafting a new policy on board reimbursement. They could take on responsibility for a key program area.

Possibility # 2. Transfer leadership to the next generation.

The practice of rotating leadership can make transitions easier. If leadership is already transferred among current leaders, it is much easier to transfer leadership to the next generation. One of the simplest and most powerful approaches is for next generation members to take over key officer positions. Senior generation members remain on the board but leadership is rotated among next generation members.

One foundation began this with next generation members shadowing senior generation members for a year or so. They used titles like chair-elect, treasurer elect. It is expected that within two years, the seniors will no longer be officers. The next generation will take over, but the seniors will stay on the board.

It is somewhat easier for foundations with trusted staff to transfer leadership to the next generation. The staff can continue to carry forward the foundation’s work even as new leaders learn their roles.

Possibility #3. Change the ratio of senior generation members to next generation members on the board.

One frequent model of senior generation control is for the senior generation to maintain the majority of members on the Board with next generation members rotating on and off the Board. If current senior members want to stay on the board the size of the board could be temporarily increased to allow more next generation members to serve. At some agreed point in the not too distant future, the next generation would have a majority and be able to reflect its interests and concerns more directly. Alternately, an increase in size of the board could be done anticipating that over a three to five year period some senior members would be retiring.

Possibility #4. Establish an Emeritus Title

Emeritus titles are used today, often too late to be meaningful. They are used when a board member is no longer able for health reasons to serve, or a board member has become difficult in the group. Instead, the board could agree that at a certain age, each family board member becomes Emeritus with possibly these privileges/responsibilities:

• Receive a fixed discretionary amount per year or a set lifetime gift amount that could be given at any time.
• An invitation to attend board meetings as a resource (without vote). This privilege can be abused, so careful guidelines need to be set.
• Participate in family discussions about the direction and purpose of the Foundation.
• Receive ongoing information about the foundation.
• Mentor next generation members

Possibility #5. Establish a Senior Council

Maybe the most radical approach would be to establish a Senior Council. Essentially the foundation would use the same approach as with a next generation fund in reverse. At a certain age, all family board members move to the Senior Council. The privileges might be similar to those for Emeritus (above). However, the Senior Council could also actively meet and have an amount they could allocate together. The Board could give the Council or its members specific responsibilities or the opportunity, even the right to make recommendations on a specific program area, maybe one dear to their hearts and important to the foundation’s work, but not of as much interest to the next generation.

Transition and Renewal

In the end, succession planning is about the personal choices each member of the family must make in order to achieve more productive outcomes for their collective philanthropic work. Times of transition are both a challenge and an opportunity for all family members. They require that family members consider together the role of the foundation in the family’s philanthropy. If the foundation is a key element that the family wants to support and preserve, members of each generation need to renew the energy that created, has kept and will continue to keep the foundation strong. By being thoughtful, creative, caring, listening and deliberate in their succession planning, family members can together assure the continuity of the foundation.

Tips for the Generations

If you are a member of the Senior Generation:

• Do a serious personal assessment of your role. Talk candidly with your siblings or the cousins in your generation. Talk with next generation members, and not just your own children or branch.
• Figure out a role for yourself that will also allow the foundation to move ahead. Foundation work and leadership has probably given you many talents. Are there other places you might continue to use them?
• Let go. That’s tough work. Have the courage to face change and look for new adventures. Let the next generation make its own mistakes. Mentor creatively. Trust them in the way that you were trusted––or wished to have been trusted––by your elders years ago.

If you are a member of the Next Generation:

• Respect and honor the senior generation. You may choose to make many changes over time, but doing things differently today doesn’t mean that what was done yesterday was bad or wrong, just different. Build on the strengths of the past and acknowledge them.
• If you would like to be a leader of the foundation in the future, get as much related experience and education as you can. In the family business field, family members are often encouraged to get graduate degrees and/or work in other businesses. They also often learn the business first by working in the production or customer service areas. One of the best ways to really learn about philanthropy is to work for a nonprofit and understand their service and financial needs.
• Be clear about the time you have available and be responsible about doing what you agree to do. Make specific suggestions about the leadership you and your siblings or cousins are willing to take on.
• Develop a life and interests besides the foundation. Your parents and aunts and uncles lived in a different time when there weren’t as many opportunities, particularly for women. Remember that you will sometime be the senior generation and another younger generation will soon be waiting to take over.