The following is excerpted from Generations of Giving: Leadership and Continuity in Family Foundations, by Kelin Gersick with Deanne Stone, Katherine Grady, Michčle Desjardins, and Howard Muson. This is the first in-depth study on the transfer of leadership within multi-generational family foundations. Generations of Giving will be published in September 2004 by Lexington Books. See the What's New section of the National Center's web site for information on how to save more than 40% by ordering your advanced copy today.
Resistance to succession can be hard to overcome. Trustees do not need any more cheerleading about successor development. They hear it frequently from publications and at conferences and forums. The field has developed more material on succession than on any other topic, with the possible exception of asset management.
The resistances are powerful. What separates the 'high continuity" foundations from the others is that they do succession planning anyway. The key seems to be that they do it not as a family process, but rather as an organizational requirement. They think as trustees or directors, not as parents, grandparents, aunts and uncles. This may be the most difficult part of the formalization package to put into place. The family can rely on professional staff and highly motivated leaders to initiate other organizational enhancement activities such as policy making, record keeping, legal compliance, program descriptions, strategic planning, and staff development. Once the family has resolved the dilemma of family versus staff control, these tasks themselves are easy to endorse. Even reconsideration and reaffirmation of the mission, while personal, is also largely an intellectual and cognitive task—it invites people to talk about "what I think" more than "what I feel."
Successor development seems more dangerous. For all the reasons listed above, it is easier to avoid than to initiate. That is why it is so important for the senior generations to honor the organizational needs of the foundation even in the face of ambivalent emotions. The requirement goes well beyond the obvious fact that at some point senior family members will be gone and others will need to take over. The organization has continuity needs that require logical, fair, and proactive preparation.
The stories of these thirty foundations are completely consistent with the general literature on continuity planning. The best research on family companies and other family structures emphasizes that “laissez faire” approaches to successor development are risky, and associated with lower organizational success and family satisfaction. Case histories and survey research have articulated a number of reasons: Current success is no guarantee of future success, and the strategic choices of the past are not necessarily obvious to new generations. Any organization’s particular strengths are best passed on to future leaders while the seniors are still active.
Successors need training and competence-building to minimize “transition deficits”—the dip in operational efficiency that happens inevitably when experienced leaders withdraw. New leaders need the legitimacy that completing a rigorous development program provides, so that the entire family will empower them to act on behalf of all stakeholders.
Successor development programs are also assessment and selection opportunities, for both existing and potential leaders to see what works, who excels, and how it feels to participate. There are also other risks of avoiding successor development. There are no viable contingency options. Almost a third of the cases in this sample had to deal with an unexpected crisis or death at some point in their history.
"Fending off " potential successors for too long is dangerous. By the time the parents are ready to be more inclusive, the offspring may have moved away or invested their philanthropic interests elsewhere.
The very issues that the family is trying to avoid by postponing successor development may be the most important ones that need addressing: disputes over mission, the pressure of geographic dispersal, uneven competencies and commitment across branches, poor leadership, or inadequate staff support. The particular design of successor development programs is beyond the purpose of this study. Only a few of these foundations had programs that even they found satisfactory. But some were coming to grips with the issue much more actively in recent years, and were making progress. We culled several critical lessons from these cases— a few exemplary, and others imperfect but with strong features.
Some families did not prepare for succession and continuity, they just started involving younger family members. At some moment, often triggered when the offspring reached a milestone birthday (21 or 25 or 30), they were invited to join the foundation. In a few cases, the contact was not so much an invitation as a summons.
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This foundation is based on a strong identity with the family’s church, and
has needed to deal with a wide range of lifestyles in its sprawling, complex
family. One trustee remembers: When I turned 17 I was not very religious and very much a hippie. Out of the blue, my mother called me up and said, "It's time for you to start attending the meetings." I suggested that I might not be a good fit, that I was very busy with other things, but I didn't argue much. I lived in awe of my mother, and she wanted me there, period. She said, "All of the women in this family are strong," and that was that. I wouldn't say it was the best introduction, but I am still there and figuring it out as I go along. |
While action has its rewards, it also can be risky. We have consistently concluded that personal commitment and choice are better processes for continuity than obligation. Sometimes the behavior of participating, no matter why it begins, leads the newcomer to find a place for her own reasons. As she said, “I am still there…” But it is a safer bet to have a procedure of invitation, a “pull” rather than a “push,” with a well-designed sequence of experiences that combine education and immersion. Not surprisingly, some of the largest and most complex foundations have the most elaborate successor development programs. This is particularly true if the family believes in high involvement, consensus decision making, and limiting the control of staff.
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One of the most impressive
things about the Jacobsen Foundation is the wholehearted way they bring in
new members. Children from every branch are invited to join the foundation
when they come of age (16, 18, or 21 depending on the rule at the time).
Those who are interested become apprentices for three years and are assigned a mentor. The mentor is usually a parent, but could be another member who was geographically and psychologically close to the apprentice. It is the mentor’s responsibility to teach the apprentice about the foundation and its procedures and to encourage their involvement. The mentor is also responsible for answering questions and acclimating people to the culture of the broad extended family. The Jacobsens also have a three-day training program for all new members that apprentices are required to attend. New members also attend area meetings and are encouraged to attend the annual meeting. They participate actively in the grant review process, reviewing grants alongside their mentor. The current senior generation are willing to step back from their leadership roles in order to give new members a chance to run committees and participate actively in the foundation. After they have finished the apprentice program, they become active members. Many of them go on to take leadership positions at an early age. For example, one fourth-generation cousin became a committee chair right after finishing the apprentice program at the age of twenty-one; and another was elected to be a Trustee at twenty-four. |
While the large foundations have the advantage of plenty of room in the grantmaking process for new members and many candidates (their issue is selection), the smaller foundations are more concerned with finding adequate resources in a small population (they worry about recruitment). These smaller systems often find it especially important to tailor the successor development programs to the particular needs of the individuals involved.
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Once the third generation
at the Stein-Marek Foundation decided it was time for succession
planning, they gave it their full attention. Ini- tially they did it “by
the book,” reading stories of other foundations and adopting the most
common practices. They decided on a minimum age (21), and limited access
to direct descendants of the founders. They sent out a letter to all
fourth-generation family members announcing the new apprentice program
and asking if anyone was interested in getting involved in the
foundation.
Those who responded were
invited to attend the annual meeting and all board meetings, to
participate in the discussions but not to vote. They also attend a
private orientation session with the executive director (two to three
hours) and one conference-seminar in the field of philanthropy. The
foundation pays for the apprentice expenses to attend the meetings.
The first version of the
program required the fourth generation to wait three years before they
could become eligible to become directors. This was too long and the
juniors were getting frustrated. After gaining some confidence with
their own experience, the seniors shortened the program to one year.
They also made some adjustments to accommodate special needs of some
cousins (disabilities, graduate school schedules, child care).
The seniors are aware that in the first year or two they were somewhat dismissive of the input from their nephews and nieces, but relatively quickly the relationship between the generations had changed dramatically, both inside the foundation and in general. They are now finishing their second cohort in the program, thinking about a third round, and the seniors agree that the next leader of the foundation is expected to be a fourth-generation member. |
The most basic approach to successor development in the majority of cases employed the fundamental transmission of family values through example. Similar to the assessment of successor development, the research team ranked only eight of the thirty foundations either 'high" or "very high" on "Next Generation Enthusiasm for the Foundation."
The correlation between preparation and enthusiasm was very high. In every one of the highly ranked cases, the successor generation pointed to early experiences and informal modeling by their parents as the source of their commitment to philanthropy, more than formal training programs.
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The first second-generation
trustee in this foundation was only thirteen years old when her father
died, but stories of his philanthropy influenced her desire to
participate in community organizations. When she graduated from college,
she spent one summer working for the foundation, doing site visits and
writing reports on the agencies. She still considers it the most
enjoyable job she ever held.
She remembers the year that
the foundation reached the $5 million annual giving mark as a turning
point in her determination to participate. She was suddenly aware of the
foundation’s growing influence, and she wanted to have a hand in the
grantmaking. At first she started attending board meetings as an
observer; later she was asked to become a director. Now with children of her own in their teens and twenties, she says that she believes in teaching by modeling. “I talk with them about the grants that excite me. They see how much pleasure I get from serving on the foundation. I don’t want to push them into philanthropy. I’d rather wait to see how they develop and what their interests are.” She recently was thrilled to see her youngest daughter, without any suggestion or advice, make a gift to an organization she had heard about using her own money. |
The foundations that are happiest with their successor development programs have found a middle ground between setting high standards and welcoming the broadest participation possible.
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At the McInerney
Foundation, the older generations have done a superb job of introducing
the next generation to philanthropy in a way that is thoughtful, gradual
and comfortable for everyone. The second generation modeled charitable
giving and volunteerism at home before their father started the
foundation.
When his grandchildren
reached adolescence, Mac began taking all four on summer vacations.
Aside from spending time with them, he wanted the cousins, who lived far
apart, to get to know one another. These trips were important preludes
to bringing the third generation together in the foundation. One of the
cousins said, “If we hadn’t known and liked one another before we
started giving away money together, our ideological differences might
have caused problems.”
The older generations have
been scrupulous about making third generation participation voluntary.
They invite the cousins to meetings, professional conferences, and give
them money to distribute but they don’t pressure them or ask for
explanations when the kids don’t participate. When they do participate,
the board solicits their ideas and listens respectfully to them.
At present, two of the children are working, one is job hunting, and the other is a junior in college. Three of them make use of the discretionary funds available for them, one does not, because he did not want to comply with the preparation and reporting requirements. “It was a burden to me, not an opportunity, because I didn’t have the time to research issues as much as I needed to come to the right decisions. But nobody hassled me or blamed me for saying, ‘Not now.’” The kids also agreed that at this stage of their lives, they don’t want to be publicly identified with the family foundation; the older generation understand and respect their wishes. |
Looking for suggestions of ways to overcome the resistance to successor development described above? See the July issue of Family Giving News for part II of this series of excerpts from Generations of Giving. Also remember to order your advance copy here and save more than 40% off the regular price.
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