Family Giving and Fairness: 8 Lessons Learned

Many of the philanthropic families who call on me for help in doing their best possible work in the best possible way invariably reach a point where they say they want a system that is fair to the family. Most start by wanting family fairness as a means to doing good grantmaking. However, over time, the goal of family fairness becomes the overarching, overwhelming goal — an end unto itself. Over the course of a few years (maybe less) the entire system exists in service to that end. And it can become a dragon that is not easily satisfied, constantly needing more and more feeding and attention and leading to more and more stress.

Most people are striving for fairness when it comes to participation in the giving – whether it is board service, a donor advisor seat, a staff position or the like. What is fairness in your family foundation or fund? Without a lot more information, I really can’t say. But I can say what I have learned about family fairness over the years…

1. Fairness is a moving target. Just when you think you’ve got the perfect formula for ensuring family fairness, your brother goes and has a new baby and the whole balance is thrown off. Be careful about crafting such a specific formula that it can’t withstand the changes and vagaries of family as well as the changing needs of the giving program.
2. You have to know what you are trying to be fair to. Is it the donor’s hopes and intentions? Is it the individual family members’ prerogative – their “right” to participate? Is it to the system you created and which now just doesn’t fit current realities? Hopefully, whichever it may be, it is also an effort to be fair to the public trust and the best interests of the foundation or fund.
3. Fairness doesn’t mean a free pass. Many families design a system for participation but then are frustrated when eligible family members don’t take the work seriously or meet the demands of service responsibly. A fair system should not mean one without expectations. After all, it is also fair to the foundation and the other family members that all be expected to meet well articulated responsibilities.
4. Fairness does not equate to entitlement. Much like #3, a system designed to give everyone a fair chance to participate can prompt a sense of entitlement among some family members. Clues to the possibility of an entitled family member can be found in phrases like “my turn” or “my interests.” Encourage all family members – especially the younger ones – to have charitable giving and volunteering opportunities of their own. That’s the place to express individual values and charitable goals. A family philanthropy is a place for shared values and goals and, for some, a seat at the family board table may never be possible.
5. Fairness isn’t just the prerogative of the second generation. Foundations usually begin with a donor/founder to whom the family feels both love and loyalty. Interestingly, involvement in the family giving moves almost immediately to a system of participation based less on the donor and more on the adult children of the donor. It just seems to make sense to an awful lot of families that the responsibility for governance or grantmaking be divided along second generation branch lines. What can be created is a family and foundation identity that is drawn more from the second generation branches than it does from the donor.
6. Be cautious about draconian measures to maintain your sense of fairness. Your fair system may be intricate. It may involve terms and rotation, discretionary grants, board/advisor seats based on generation or branch, or more. It is time to review that system when it is so complicated as to choke you in the detail. It is also time to review your system if drastic measures are needed to enforce it. Breaking up or spending down a foundation can be viable means to ensure ongoing effectiveness but not solely to maintain an elusive sense of fairness. If you’re at that point, give yourself the opportunity to remember why this work is important, what goals you have for family and giving, and what all the options are for carrying that work into the future.
7. Fairness is tougher in perpetuity. Beware of systems carved in stone in the early days of the foundation or fund and designed to guide you forever. If you intend that the foundation will go on in perpetuity, give yourselves and your descendants a fighting chance. Revisit your policies and practices as appropriate and ensure you are balancing the donor’s values with your changing family and changing giving environment.
8. When it comes to fairness, the foundation/fund comes first! If a donor’s goals were to family fairness only, other vehicles are infinitely more appropriate for realizing those goals. One can make equal bequests, buy a vacation home and assign weeks, you name it. In the case of a family philanthropy, family goals co-exist with the charitable goals of the foundation or fund. In fact, the public trust that is the giving program means that the charitable goals come first. Rather than asking how you will select among family members for board or advisor seats, start by considering what first rate governance would look like at your foundation. Let the family talents and interests be engaged in response to that vision. To paraphrase John Kennedy, ask not what your foundation can do for you, but what you can do for your foundation.

One of my great teachers in this work, Alice Buhl, has been telling me for 30 years that life isn’t fair. I’m sure she hasn’t been discouraging me from working toward fairness or even hoping for it. Just not to expect it. What I’ve found along the way is that life isn’t fair, but it is often, surprisingly, so much better than fair – it can be excellent.

Here’s wishing you excellence in your giving.

Ginny