Igniting the spark, part II: How do next gen boards work and how do we create one?

Part 2 of 2

The National Center for Family Philanthropy and Youth Philanthropy Connect, a program of the Frieda C. Fox Family Foundation, have teamed up on the release of our latest Passages Issue Brief entitled, “Igniting the Spark: Creating Effective Next Generation Boards.”

Giving families prepare their younger members for potential board service in a variety of ways, as indicated in the chart below. Most commonly, existing board members encourage younger family members to participate in grantmaking discussions, site visits, or board meetings, and often set aside funds for youth grantmaking. In other instances, younger family members are invited to serve on a youth or junior board, or may have their own private discussion forum. In these ways, younger family members get a feel for the nonprofit world and for the grantmaking that helps sustain it.

Your family should determine which means of involving the next generation would work best for you. As discussed in the previous section, many of the benefits of next generation boards can be captured in other ways, so it is important to gauge your trustees’ ability to accommodate the next generation board process. But without one or more of these engagement strategies, younger family members may be unprepared for the grantmaking decisions they will make as members of the existing board.

In Opportunity of a Lifetime, author and next gen trustee Alison Goldberg provides a variety of other suggestions for families seeking to involve younger family members, including:

Determine why you want younger family members to get involved. Explain your reasons, and ask what their own reasons are for wanting to become involved.
Be clear about the roles that they can play. Give them clear structures that they can fit into.
Allow them the opportunity to become involved when they are young. Don’t wait until they are 25 or 30 years old.
Consider allocating discretionary funds. Discretionary funds can offer the opportunity for young adults to connect grantmaking to their communities and interests.
Create a youth-friendly organization. If you are hiring staff, hire people that can relate well to young adults. Try to hold meetings at times and locations that are accessible to them.
Make philanthropy fun, rewarding, and relevant to their lives.

HOW DO NEXT GENERATION BOARDS WORK?

Next generation boards provide important learning opportunities for interested younger family members. Some of the most successful next generation boards include one or more of these components:

Discretionary Grantmaking Ability: The board typically allocates money from its grantmaking budget to be distributed by younger family members on the next generation board. Some foundations allocate a percentage of projected payout, which periodically varies based on interest earned on the foundation’s endowment; other foundations distribute a fixed amount for the group or per individual next gen member who participates.

Participation by Family Members of Various Ages: The age of participation may vary, depending upon the generation you wish to involve and the experience that generation brings. Some foundations have next generation boards with members as young as 8; these members might volunteer at grantee organizations, go on site visits, write book reports on their family’s history, make grantmaking decisions or help the foundation in some way. Other foundations limit participation to family members who are 18 years or older. These family members might fill more traditional roles in the family foundation such as making investment decisions or serving on committees.

Responsibility for Grant Recommendations: Younger family members sometimes review proposals given to them by the existing board, or they may identify potential grantees independently. While the board has the ultimate responsibility for making grant awards, next generation boards often do all of the other work, including identifying, debating, evaluating, and recommending proposals to move forward for the existing board’s approval.

Voting Membership on the Foundation Board: Sometimes foundations give a seat at the board table to one or more representatives of the next generation board. In this way, next generation board members gain experience and play in a role in grant decisions.

The Self Family Foundation’s Next Generation Fund Board has encompassed all of these elements. This South Carolina-based foundation created its Next Generation Fund Board in 1997, automatically allowing any family member who was 18 years old or more at the time to join. Next Generation Fund Board members meet twice a year and elect their own next gen fund chair who also serves as a voting member of the board, which meets four times a year. The Next Generation Fund Board receives up to $80,000 a year (depending on that year’s projected payout) to distribute within their chosen program areas of youth and early childhood development.

Younger board members go on site visits, meet the foundation’s financial manager for a briefing on the foundation’s assets, and receive updates on the community the foundation serves. In short, they do everything their existing board counterparts do. As a result, the family has overcome geographic distance to get to know each other, and their relationships have been strengthened by giving away money together.

The Frieda C. Fox Family Foundation’s Junior Board was created in 2006, allowing any family member aged 8 to 18 to join. Each member chooses a nonprofit in either Los Angeles or the San Francisco Bay Area whose programs align with the foundation’s mission. The member conducts a site visit, and then prepares a presentation to the board for up to $2,000 to support the organization. The members meet with the foundation board twice a year for these presentations. In addition to the individual grantmaking, the junior board goes on site visits together to learn about one another’s grantees. Once next generation members turn 18, they are eligible to serve on the board and support younger members as the junior board advisor. The junior board has been a way for members to develop their philanthropic identity and build relationships with one another and the foundation.

HOW TO CREATE A NEXT GENERATION BOARD

If you are thinking about starting a next generation board, it’s important to know how you will structure this entity, and to discuss the possibilities and options for how family members will be invited and involved. It’s also critical to start with input from the next generation on what approach would meet their needs. A first step might be to schedule some time at your next family meeting to discuss the possibilities with interested younger family members. Find out what experiences they would like to have as part of the family’s giving. Are they interested in participating in site visits and grantmaking conferences, or are they looking for something else? Does a next generation board make sense for some or all of them? If the initial answer is “yes,” set aside additional time at the next board meeting to discuss what options make sense for the foundation.

You may wish to structure your next generation board discussion around seven key components: goals, eligibility, training, grantmaking, logistics and administration, relationship to the foundation board, and compliance with the law.

Goals

It’s important to agree on the goals of this new venture. The family should be clear about what it intends to accomplish by creating a next generation board so that it can increase the likelihood of achieving its goals. Some questions the senior generation may wish to consider include:

What is your wish for the future generation in the foundation?
Why do you want the future generation involved?
Why do you want to establish a next generation board (training, service, build family unity, etc.)?
What impact would you expect from the next generation board?
Should the next generation board have its own mission and/or grantmaking guidelines? If so, how will these relate to the mission and guidelines of the larger fund?

It’s also important that these goals be fluid enough that next generation family members can thrive and contribute to the family’s current philanthropic conversations—the last thing you want to do is to set up the proverbial “Waiting Place” where younger family members can be placed or appointed, with no policies or understanding in place on what happens next. Eleanora Frey, who recently joined the Frey Foundation board after several years serving on the next generation advisory board, advises that a next generation board should have its own mission statement. She says the next generation needs to be able to define itself as both a part of the family foundation and an entity in its own right. In fact, a clear mission statement and definition of roles can help chart a cohesive direction for the next generation board’s grantmaking.

Lastly, consider what to name the next generation board. Terminology may affect the way the next generation views its place at the table. For example, a “Next Generation Board” has one connotation; for some, a “Junior Board” may have another, possibly suggesting lack of maturity or respect (or perhaps not, depending on the family). Some foundations choose a name based on the generation represented (i.e., the “Fourth Generation Fund”). Come to agreement on this subject with the next generation’s input.

Eligibility

Given your goals, you can begin to establish board eligibility criteria. In some families, any direct descendant of the donor who is more than a certain age is eligible. At some point and depending on the existing board’s goals, though, this can become complicated in terms of family size, family members’ interest, or logistics, particularly when family members are spread over a large geographic area. Family members may therefore need to establish more specific criteria. Key questions to consider include:

At what age do family members become eligible? Some boards have seen tremendous contributions from children as young as 8; others prefer to limit next generation board participation to family members who are at least a certain age, such as 13, 16, 18, or 21 years old. Some family foundations put an age limit on next generation board participation; other next generation family members participate on the board well into their 40s.

Must next generation board members be direct descendants of the donor? Will the spouses/partners of direct descendants be eligible to serve? As next generation board members get older, the answer to this question can become a sticking point in some families. Sometimes the tension between keeping the foundation “in the family” and reaching out to new members can create serious rifts. It is therefore critical at the outset to set up explicit eligibility requirements that capture the generation you’re seeking to engage while maintaining a fair and encouraging family dynamic. One family foundation with only one next generation family member, the GainesJones Education Foundation, went so far as to create a junior board made up almost entirely of non-family next gen board members. The Next Generation group, Positive Impulse, develops its philanthropic projects annually and consists of community members and fellow schoolmates of the next generation family member.

Does geography matter? Some families stipulate that members live in the area where the foundation makes grants. Others, looking to bring the family together even if the next generation has moved away, encourage and prepare for out-of-town members, using new technology and social media to bridge the distance as needed.

Will attendance at next gen board meetings be mandatory? Board attendance suggests members who are committed to the foundation’s work and its continuity. However, mandatory board attendance could preclude interested family members who live farther from the foundation from participating on the junior board. Again, taking advantage of new technology can be helpful here.

THINGS TO REMEMBER

A next generation board can be a great adventure for both the board that establishes it and for the younger family members experiencing philanthropy for the first time. However, next gen boards may not be the best option for all families.

Board members should consider what kinds of experiences they want next generation family members to have and what activities and tasks are appropriate for their ages and for the family’s unique dynamic. Instead of next generation boards, some family foundations find that a sufficient introduction to governance and grantmaking can come from other kinds of opportunities such as site visits, conference attendance, and group volunteer projects. For families with next generation boards or those contemplating them, here are a few final things to remember:

Keep the next generation’s needs in mind.

Consider the top needs of next generation boards: purpose, knowledge, respect, ownership, balance, and connectivity.

Purpose: Next generation board members should know the vision and values of the existing foundation. This knowledge may lead to next generation board members constructing their own vision and values statement that complements the existing board’s.

Knowledge: In addition to sharing the existing family foundation’s history, help next generation board members understand areas like due diligence, legal responsibility and financial investments.

Respect: Give a voice to all foundation members, whether existing or new. Communicate expectations and responsibilities, and make sure there are vehicles for support and feedback in both directions.

Ownership: Help next generation board members become strong grantmakers by celebrating their successes, allowing them to take risks, and helping them learn from their mistakes.

Balance: Be sure to strike a compromise between honoring the donor’s legacy and the interests of next generation board members. Create an environment of mutual learning and education while respecting constraints on the younger generation’s time, such as school, careers or family obligations.

Connectivity: Create mechanisms for next generation board members to interact with the existing board and to fund nonprofits that interest them.

It can be quite a task to gauge and accommodate all these needs at once, but “you can’t really make a plan for how the next generation will be trained without them” says family philanthropy consultant Karen Green. How can it be done? Holding a family meeting beforehand to discuss the opportunity with next generation board members can be invaluable. It can help existing board members identify the next generation’s interests and needs and structure the potential next generation board accordingly. Meet frequently to review how the process is moving and what can be improved.

Keep in mind that younger board members are busy too—whether it’s with school and extracurricular activities or with finishing college and starting careers. They may be interested but unable to participate, or they may be able to participate but not especially interested. Keep the invitation open.

CONCLUSION: IGNITING THE SPARK

For philanthropic families, the issue of succession is truly a special one. There are many ways for families to ignite the philanthropic spark among younger family members, and increasingly the next generation board is one of the core vehicles that families use to do so. We invite you to capture this incredible chance to grow your legacy of philanthropy through your family and leave the world better than you found it. Share what you want to accomplish in partnership with the next generation, build a program that advances that vision, and put it to work.