Transitions: Opportunities and Challenges for Family Philanthropy

“Foundations change, like it or not. The fundamental issue is whether they will change by chance or for significant reasons. The latter comes about only through conscious effort.”

— Frederick deWolfe Bolman, Jr.

Even if your family foundation or fund is very new, chances are you have already experienced at least one transition in the lifecycle of your giving program. What have been the key turning points in the life of your fund from the founders’ initial concept to the present? Which transitions can you see in the years ahead? How do you remember those past experiences? Did you plan for them or were they thrust upon you? Were the outcomes more positive and promising or tense and tumultuous?

In the quote above, Dr. Bolman encourages us to be the architects of our philanthropic futures rather than the victims. In this article we introduce some of the opportunities and challenges that transitions bring to family philanthropy.

For a more complete overview on this topic and suggestions of successful approaches for dealing with transitions, read our Passages Issue Brief, Family Philanthropy Transitions: Possibilities, Problems and Potential.

The nature of transitions

All families, charitable or not, experience transitions. They can be joyful: births, marriages, graduations, and retirements. Of course, there are unhappy transitions as well: divorce and death are significant periods of sorrow and grief. No matter the intensity of the emotions they generate, all transitions have the potential to affect the course of family life.

Similarly, all formal organizations, including family enterprises, go through changes in their institutional lifecycles. Start-up, changes in staff or board leadership, periods of great financial gain or loss, mergers and acquisitions, a new business strategy, and many others alter the evolution and direction of the enterprise.

Family foundations and funds experience both – often at the same time. Family giving programs are subject to changes both in family composition and the lifecycles of organizations. Further, the unique circumstances of families in business together (including philanthropic business) create a whole set of key transitional moments in the evolution of the enterprise.

In recent the years, The Mayer and Morris Kaplan Family Foundation experienced a significant leadership transition. To read more about this foundation’s story, see our Passages Issue Brief, A Legacy Lives On. 

Transitions as opportunities

It is the way of families to be apprehensive about change. Very happy, well-adjusted, and successful families want to make sure that dynamic stays the same. Families that have struggled through difficult times fear re-surfacing old demons and exacerbating family tensions. A little apprehension may be appropriate; but it’s encouraging to realize some of the opportunities of working through lifecycles together.

Opportunity #1: Renew, reimagine and reinvigorate!

Even the healthiest and most well-functioning foundations/funds can slip into lethargy if left unattended. A transition offers the chance to think about your achievements and what has accounted for them. Look for “bumps” and how you might have handled them better or even avoided them. Consider a great board and make plans for developing ongoing participation and leadership. Maybe it’s time for a self-assessment or to invite others to offer insights?

Opportunity #2: Find a new solution for a new time.

You may have developed practical systems and structures for dealing with a host of grantmaking, management, and governance situations. But even the best solutions eventually are challenged by new problems, new times, and even new technology/information. “It has always worked in the past” may not be enough of a rationalization to sustain weakening systems into the future. Look at areas where you’re just beginning to have a few problems. Review the practices of other family funds you admire. Consider a conference where good practices are discussed. You might get a few ideas that help you extend your winning ways.

Opportunity #3: Balance a respect for legacy with the needs of the future.

Perhaps the most frequently cited barrier to taking advantage of a transition is the concern that any change will be disrespectful to the founders. The inspiration and values of the founders are constants in the life of all foundations/funds. For many families, mission is also a constant. The future is built on those constants. Everything else is likely strategy or technique designed to support the start-up and early organizational development. Philanthropic founders are often entrepreneurs who succeeded because they had a strong sense of the future; they valued creativity, even risk taking. Your creativity and risk, guided by values and hopes, can keep your eye on the future while grounded in your special past.

Opportunity #4: Determine policies based on principles.

When trustees, advisors, and staff take the time to deal with impending change, they give themselves a major advantage over those forced to deal with change in its midst. It’s the difference between preventive medicine and emergency room treatment. That time gives you the opportunity to think about the best interests of the family’s philanthropy. Planned change usually factors in values, effectiveness, best practice, and healthy family participation. Change that is forced by dramatic circumstance (an unexpected death, a grandchild turning 21, a new marriage, etc.), is usually driven by that circumstance only with little time for thought for the bigger picture.

Transitions as Challenges

Challenge #1: Maintain the inspiration and “glue” that brought you to this work.

Enthusiasm and energy are often part of the impetus for launching a family giving program. Usually, the founder is responsible for that. Whether it’s through charisma, a larger-than-life presence, or dominance as the family leader, a founder can command respect, participation, and agreement. Out of love, respect, or duty, children, grandchildren, other family members, and friends rally to the grantmaking table. When a family leader retires or passes away, the family can flounder a bit as they search for new motivation for participation. Spend time understanding the legacy not only of the founder but the legacy of family leadership and participation. What motivates you all to make a difference in your community? Which talents can you draw on from new leaders and generations to advance the work? How can your grantee partners help you appreciate the privilege of philanthropy? These questions can frame a helpful conversation during these and other important transitions.

Challenge #2:  Look for commonality as well as difference.

While some think of family foundations as homogenous, family members are distinctly different people. Geography, political beliefs, religions, generations, and branches of the family can shape perspectives and opinions. All of this – and more – can make us feel very different, even isolated, from one another. In stressful times, we feel those differences even more keenly. Don’t let an overemphasis on how you are different keep you from appreciating and building on how you are alike. Doing so can lead you to decisions that split the family and the funding and keep you from the joy of working through those differences to extraordinary results.

Challenge #3: Beware the quick fix.

When thrust into a new situation or transition, it can be easy to make a decision to help you get by. For example, the first child of the next generation gets married to someone you’ve known for years and you happily (and maybe even appropriately) add the new spouse to the board of the foundation. No thought is given to the overall concept of spouses or to developing a plan for future in-laws. In cases of sudden transitions, there is no time to consider a long-term solution. In such cases, a good interim process can give you that time. When faced with any new situation in the family, take the time you need to think of the big picture. It can not only result in more thoughtful policy, it can save you headaches and heartbreaks in the years ahead.

Challenge #4: Determine policies based on principles.

Yes, this is the same caution as it was opportunity. At its best, a family is a caring community and no one wants to see any member hurt. Members don’t want to choose one over another, and definitely don’t want to hold one another accountable. In philanthropic work, that caring (unwittingly carried to extreme) can lead to chaos. To keep the peace, we make choices that favor personalities over principle. Again, ask yourself: What is in the best interests of the family’s shared philanthropy? Is the public trust inherent in the philanthropic commitment at odds with family interests? In most every case, there is a solution that preserves the first and works for the latter. Fulfilling the duty owed both to founders and the public policy that makes private giving possible is the true North Star for orienting your policies and practice.

It Takes Inspiration, Information, Creativity, Fortitude, and a Little Bit of Luck

Successfully navigating family philanthropy transitions takes all of that and more. Equating competent board service with showing up at meetings having read the docket overlooks the opportunity (obligation?) to genuinely and thoughtfully govern. It takes work and that means it takes the commodity many family members and trustees have little of: time. But all that time and thoughtfulness are investments in the excellence of your grantmaking and the basis for your justifiable familial pride in the contributions you make to the causes and communities important to you all.

“The returns on a family investment in philanthropy are –or can be –extremely high, both internally and externally. When such an investment is well-executed, a family can achieve the cohesion that comes with a sense of higher purpose and cooperative effort. Family members report an excitement and fulfillment going far beyond what they had known as blooded (though often bloodied) members of a tribe.”

— Paul Ylvisaker, Family Foundations: High Risk, High Reward, from Conscience and Community: The Legacy of Paul Ylvisaker