Why Study Integrated Philanthropy in Complex Multi-Generational Families?

A little over a decade ago, the National Center for Family Philanthropy and Lansberg Gersick and Associates partnered to develop and publish Generations of Giving: Leadership and Continuity in Family Philanthropy. In a follow-­up to that landmark study, NCFP is now co-­sponsoring a research project with LGA to explore how complex, multigenerational business families are using a variety of vehicles beyond their family foundations to pursue philanthropic goals—including their personal philanthropy, donor-­advised funds, corporate social responsibility programs, and values‐aligned investing strategies. Many of the families in our networks have found the coordination of all these different activities to be a challenge. We have initiated this research in the hopes to learn from the experiences of families so that we can present aggregate findings and offer guidance to the field at large.

Family philanthropy emerges as a research discipline

The professional and conceptual understanding of family philanthropy has made significant strides in recent years. Thoughtful research, extensive education and training, and the open sharing of experience at forums and conferences have had a profoundly positive effect on the ability of private foundations, large and small, to accomplish strategic, high‐impact philanthropy. Family foundations have been at the forefront of this professionalizing trend, moving from extremely private and invisible operations to a new role as exemplars of sophisticated, ambitious, transparent, impact-­focused grantmaking (e.g. Gates, Kaiser, Zuckerberg, Atlantic/Feeney, Barr, and many others).

Despite these developments, there is still much to be learned about governance in family philanthropy. In 2006, with the publication of Generations of Giving, LGA and NCFP approached the study of foundation governance in multi-­generational family foundations. Our purpose was to understand the key challenges to high-­quality organizational functioning in these foundations, and to help those families who sought continuity to successfully transfer their foundations to succeeding generations.

Multiple giving vehicles increase in popularity

Much has changed in the world of family philanthropy over the intervening decade. While family foundations continue to multiply, many third- and later-generation families have gone far beyond a single foundation, and have evolved multi-­faceted philanthropic structures with complex governance systems. They often have one or more “legacy” foundations created by earlier generations, a number of newer foundations created by siblings and cousins in later generations, a network of donor advised funds, extensive personal giving, values-­aligned endowment management, and corporate social responsibility programs in their family-­controlled operating businesses.

The family’s role in each of these philanthropic vehicles may vary widely, influenced by formal regulations (e.g., trusts, organizational bylaws and incorporation documents, and family constitutions), the personalities of leaders, the history of family relationships among branches, the logistics of location and time, and the degree of inter-­generational closeness and deference. In addition, for those families who own businesses, there are often dilemmas about the appropriate role of family owners in corporate social responsibility—whether the companies are privately owned, closely held, or publically traded. Sometimes, through sheer effort and/or exceptional leadership, it all works. In other cases, all of that complexity is disorganized, inefficient, and internally contradictory, compromising the quality, the impact, and the continuity of the family’s philanthropic efforts.

How do families manage governance of multiple giving vehicles?

The field has accumulated stories from some of these families, but we do not yet have a good understanding of how successful families manage their family dynamics as they fulfill their governance responsibilities in guiding these complex philanthropic activities. Our experience suggests that, while the philanthropic operations may be compartmentalized into these different grantmaking structures, the family members themselves see all of these efforts as interconnected—expressions of related aspects of the family’s values, overall philanthropic agenda, and self/family image. The challenge is for the family to coordinate all of the disparate components, so that its philanthropic identity is authentically represented by the overall scope of work done in its name. To accomplish that, the family must recognize and address a few critical questions:

1. Does integration or differentiation best serve the family’s philanthropic goals? Under what conditions do families seek to create a unified strategic approach across foundations, funds, personal giving, investing, and CSR to maximize impact? In contrast, when and why do they maximize separation among these vehicles, and how does that work?
2. How can the human capital of family participants be most efficiently and effectively allocated across all of the different philanthropic vehicles? Who should lead what? How does that evolve across and within generations?
3. What is the range of roles that controlling owners/shareholders assume in an operating company’s philanthropic and community social responsibility programs? What works, and what causes confusion and ineffectiveness?
4. In the most pragmatic terms, what are the exemplary structures (legal forms, boards, professional staffing), policies (director or trustee terms, rules for representation, roles for the next generation and spouses, endowment management and venture philanthropy), and procedures (meetings, leadership selection and authority, working relationships with staff, information-­‐sharing and communication) that have proven successful in these most complex philanthropic systems?

These are some of the world’s leading philanthropic families; they are our exemplars and truly significant social engineers. Accumulating knowledge about how these families have resolved dilemmas will help the network of large, complex families learn from each other’s experience. In addition, it will help smaller families, earlier on the developmental curve of complexity, to make informed choices about what governance models fit best at each stage of growth.

LGA looks forward to continuing our strong partnership with NCFP toward understanding and supporting family philanthropy in all of its forms. Our presentation at NCFP’s 2019 National Forum on Family Philanthropy in Chicago will include lessons learned from the experience of this sample of families, and recommendations for the broad range of philanthropic families who are facing increasingly challenging governance dilemmas in their complex systems.

For further enquiries about this research program, please contact the LGA Project Director, Wendy Ulaszek, Ph.D. at Ulaszek@lgassoc.com.