FAMILY GIVING NEWS:

SMALL CAN BE EFFECTIVE

July 2003, Volume 3, Issue 7

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TABLE OF CONTENTS:

EDITOR'S NOTE:
This edition of Family Giving News is dedicated to the memory of long-time foundation trustee and family philanthropist John Kunstadter. We invite you to read National Center President Virginia Esposito's special tribute to John below.

[Click on the section title to jump immediately to that section.]

PRESIDENT'S MESSAGE:
SMALL CAN BE EFFECTIVE - A TRIBUTE TO JOHN KUNSTADTER

UP FRONT...
SMALL CAN BE EFFECTIVE - SMALL GRANTS MAKE A BIG DIFFERENCE

PASSAGES SUMMER SPECIAL EXTENDED:
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SPOTLIGHT ON... NEW GUIDELINES FOR INTERNATIONAL GRANTMAKING

WHAT'S NEW AT NCFP
SUCCESSFUL SUCCESSION, WHAT CALIFORNIA DONORS WANT, AND MORE

WHAT'S GOING ON: CALENDAR OF UPCOMING EVENTS

RESOURCE REMINDERS:
MAKING SMALL GRANTS EFFECTIVE

PRESIDENT'S MESSAGE:
SMALL CAN BE EFFECTIVE - A TRIBUTE TO JOHN KUNSTADTER

A wise man once said, “small can be effective” … and one small foundation is proving his point.

The effectiveness of small foundations has been the subject of several speeches and news articles in the last year or so. The coverage escalated several weeks ago when the New York Attorney General suggested there be legislation prohibiting the formation of private foundations with less than $20 million in assets. Encouraging and supporting philanthropic excellence is a key goal of the National Center for Family Philanthropy so, naturally, we have been paying attention.

The National Center works to ensure that donors, potential donors, and their advisors have access to the best information possible. The critical choice of what vehicle(s) to use often gets made before a donor knows that thoughtful, thorough information about philanthropic options exists (we’re working to change that!). That decision determines whether the donor will give through a foundation, fund, or any one of many other options – even the option not to have any formal structure for the giving.

We try to ensure that the giving structure will meet all the donor’s goals, including those for family, finances, and the community or issue to be served.

Part of the puzzle for me in listening to the public conversation is hearing effectiveness equated with asset size. The challenge to be effective is one I’ve seen embraced by very large and very small foundations and advised funds.

Another puzzle piece is the economy of scale that some feel make larger foundations more viable. They point to the costs – both human and financial – of managing a private foundation. I certainly have met donors that were not made aware of all their options and got more than they bargained for with the demands of private foundations. But I have met many more who knowingly and enthusiastically took those demands on – even in the face of the less attractive tax incentives offered by the private foundation option.

The final, and most confusing, piece of the puzzle is the contention that abuses – legal and ethical – are more likely to happen in a small foundation. As the potential for effective giving exists in foundations large and small, I am sure the potential for abuse exists without regard to size.

This discussion became less academic a few weeks ago when I learned of the death of John Kunstadter, trustee of the Albert Kunstadter Family Foundation. Suddenly and sadly, a theoretical argument became very personal.

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The final, and most confusing, piece of the puzzle is the contention that abuses – legal and ethical – are more likely to happen in a small foundation. As the potential for effective giving exists in foundations large and small, I am sure the potential for abuse exists without regard to size.

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I met John Kunstadter more than twenty years ago when I was directing the education program for the Council on Foundations. A few years later, John suggested we think about offering conference sessions and workshops for foundations that still included the participation of the donor and members of the donor’s family (the term “family foundation” was not yet in common usage). From that moment on, John became a source of encouragement, information, inspiration, and the occasional – much needed – kick in the pants.

John and his wife and philanthropic partner, Geri, have provided leadership to one of this country’s most responsive, effective, and well-managed foundations. Their innovation and commitment is only enhanced by the fact that this third generation family foundation has $1.8 million in assets. In fact, I believe John and Geri’s regard for the preciousness of their philanthropic resources may have prompted their grantmaking philosophy and practices.

As you might expect from their New York City home base, the Kunstadter’s giving has focused in large part on the Eastern corridor of the United States. What you might not expect is that their giving has also included grants to projects and programs in China, Vietnam, Laos, and Cambodia.

In the United States, they have funded programs for the elderly, homeless, hungry, disadvantaged children, and disabled as well as schools, films, and museums. They have also funded many U.S.-based organizations working abroad on public policy, the environment, international relations, job training, and public health.

Their giving abroad has supported the building of water systems, schools, clinics, and lavatories, the purchase of pianos for a Cambodian university and vitamins to prevent blindness. They have helped to set up a revolving credit fund for farmers to substitute silk farming for opium farming, ensured that books were printed for children, and supported a gallery to display contemporary arts and traditional crafts.

Geri Kunstadter tells of funding a program in Laos to help train 33 Hmong women to be teachers. These women, with backgrounds of only one to two years of schooling, received intensive educations with scholarships that covered tuition, room, and board. How was the number of women determined? Geri reports that they divided their $5000 grant by the cost per student per year ($150). Year one was so successful that the Kunstadters took care of year two with another $5000. Thirty-three Hmong women now teach in Laos because of the Kunstadter’s initiative, flexibility, and two $5000 grants.

In the fifty years since its founding, the Albert Kunstadter Family Foundation has made grants of some $8 million. In addition to making grants consistently above the minimum payout requirement, the availability of these funds is due to John and Geri’s approach to foundation management and spending, an approach that reflects their personal sense of the privilege of trusteeship.

As reported in Splendid Legacy: The Guide to Creating Your Family Foundation (National Center for Family Philanthropy, 2002):

John and Geri are frugal with the foundation’s dollars. Not only are they not paid, but also they pay for most travel and expenses out of their own personal funds. Even postage is charged to their personal account. John states fervently, “This is money in trust for the public and not for our own personal use.”

The computer age has been a godsend for small family foundations like the Kunstadter Foundation. Email, Internet, and faxes make it possible for the couple to do most of the foundation’s secretarial work. They spend about $500 a year for help, if needed, with mailing their annual report, word processing, data entry, and answering mail. They keep the foundation’s finances on the computer and sometimes get help with bookkeeping, which amounts to less than $1000 per year (also paid out of their personal funds). An accountant completes the tax return with information the Kunstadters keep in the computer in Excel or Word.

If all this administrative and grantmaking work were not enough, both Kunstadters have been personally involved as volunteers. John served on the board of the Council on Foundations and was a founding member of the Council’s Committee on Family Foundations. Geri serves on six nonprofit boards and works with the New York City Mayor’s liaison office with the United Nations.

“In addition to the joys of serving on a small foundation board, I feel that it is important for all foundation trustees, on small and large foundations, to serve on at least one board of a small or medium nonprofit so that they might better understand how nonprofits work,” says Geri. “They will understand the importance of core funding. I would also recommend serving as staff of a small foundation. One meets the most remarkable people who spend their time doing good things for other people. One cannot find this in the for-profit sector.”

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Countless small foundations embody the values of volunteerism, imagination, long hours, and commitment to ensuring that these precious few discretionary resources are well invested for philanthropic purposes.

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The Kunstadter’s approach to grantmaking, trusteeship, and management is special. It is special because it embodies the spirit of philanthropy: the personal commitment to the public good and the wholehearted commitment to a public trust. It is also special because of the scope of grantmaking.

But it is not special because of its uniqueness. Countless small foundations embody the values of volunteerism, imagination, long hours, and commitment to ensuring that these precious few discretionary resources are well invested for philanthropic purposes.

In those instances where there are those who don’t embody the spirit and practice of effective, community-driven philanthropy, we all have the opportunity and responsibility to share information, examples, and advocate for excellence. Where practice goes beyond what the law, ethics, and common sense allow, that should be confronted vigorously.

To lose the contributions of foundations like the Albert Kunstadter Family Foundation in an attempt to link responsible practice with asset size risks what our democratic ethic of private initiative for the public good encourages. We put in jeopardy our very efforts to encourage new philanthropy by those of all financial means, by diverse communities, and by new populations.

Instead, we should pledge to ensure that all those interested in pursuing organized philanthropy have access to the best possible advisors and information. We should help them discover how their goals – for family and community – can be achieved through the many wonderful options available to them: donor advised funds, supporting organizations, family business giving programs, family office giving, and through individual giving.

We can introduce them to other donors and donor families and we can acquaint them with philanthropic resource centers, including community foundations and associations. We can provide them with coherent, objective, and thoughtful information on giving options and opportunities – written in the best interests of encouraging new giving rather than self-interest.

Finally, when the donor’s choice is a private foundation – and when the donor is committed to the work, costs, and joys associated with that vehicle – we can celebrate another donor contributing to the work of nonprofits throughout the country and around the world.

If we want to find an outlet for our genuine concern about what money is not going to charity, let’s reinvigorate our commitment to encourage philanthropic giving by the large percentage of those who do not make any charitable gifts or who have not made a provision for a charitable bequest in their estate plans. If we want to talk about increasing the dollars going to nonprofits, now there is a potentially “rich” source of new funds!

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If we want to find an outlet for our genuine concern about what money is not going to charity, let’s reinvigorate our commitment to encourage philanthropic giving by the large percentage of those who do not make any charitable gifts or who have not made a provision for a charitable bequest in their estate plans. 

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John Kunstadter’s passing is cause for great sadness. But it is the paradox of families and family foundations that, while there is sadness, there is joy and renewal in the knowledge that his legacy is carried on by his children and grandchildren. Given Geri’s leadership, as the following quote suggests, the Albert Kunstadter Family Foundation will surely continue to make an important, effective difference:

“I cannot imagine why anyone would suggest that a foundation under $20 million should not exist. We have been the first funder for many nonprofits that have gone on to be important and successful. We often give what I call ‘walking around money’ which gives new organizations money to write a proper proposal and duplicate it to send to other or larger foundations.

We have been the first funder for a number of very successful films. We always give general support funds, which is the hardest funding to find. If the organization asks for a specific project, we will always state that it is for the project or for general support in case they find the project money elsewhere. That will free our funds for something else.”

This issue of Family Giving News highlights a number of stories and resources on small foundations and small foundation giving. This includes a paper written by Paul Ylvisaker called Small Can Be Effective. Paul’s ideas are as fresh and inspiring today as they were more than ten years ago. Interestingly, this paper was the result of a series of workshops for small foundations that was part of the response to John Kunstadter’s encouragement.            

Our thoughts are with you and your family, Geri. And as for John Kunstadter, I think we must have had him in mind when we called a family foundation a Splendid Legacy. He will be greatly missed.

Virginia Esposito
President, National Center for Family Philanthropy

Download
Executive Summary

Order Family Foundations: An Overview of Funders and Trends

STATISTICS FROM FAMILY FOUNDATIONS: AN OVERVIEW
Small foundations make up the overwhelming majority of the country's more than 40,000 family foundations. The following statistics are excerpted from Family Foundations: An Overview of Funders and Trends.

This study, a collaboration between the Foundation Center and the National Center for Family Philanthropy, provided the first-ever broad-based overview of family foundation funding patterns and grantmaking interests, based on a sample of more than 17,000 family foundations.

According to the study, more than three out of five family foundations held assets in 1998 of less than $1 million. Selected statistics from the study describing the size and focus of family foundations include:

• More than nine out of ten family foundations held assets in 1998 of less than $10 million
• Over two-thirds of family foundations awarded less than $100,000 in grants in 1998
• More than nine in ten family foundations limit their giving to their local communities, states, and regions
• Family foundations provide larger shares than independent foundations for capital (33.6 percent of grants to 26.6 percent) and operating support (16.2 percent to 13.9 percent)

To download the executive summary for this study, or to order a copy of the complete report, please click on the links at left.

________


Review an excerpt of Small Can Be Effective from Foundation in a Box

________


Order Small Can Be Effective from the
Council on Foundations

SMALL CAN BE EFFECTIVE
This seminal thought paper by foundation trustee, advisor, and strategic grantmaker Paul Ylvisaker was originally published by the Council on Foundations in 1989, and later included in the collection of Ylvisaker’s writing, Conscience and Community: The Legacy of Paul Ylvisaker. The suggestions and strategies ring true today. In this essay, Ylvisaker describes 20 separate roles and functions that small family funders can play, divided into five distinct categories:

• The Financial Support Role of Philanthropy: grantmaking, lending, insuring, and investing
• The Catalytic Role of Philanthropy: initiating, accelerating, leveraging, collaborating, and convening
• The Conceptualizing Role of Philanthropy: analyzing, defining and redefining, focusing, inventing and testing
• The Critical Function of Philanthropy: commenting, approving and disapproving, advocating, and serving as the “social conscience”
• The Community-Building Role of Philanthropy: bonding/unifying, balancing, and leading.

Ylvisaker illustrates each of these activities, and describes several real-life examples of the strategies he introduces. “If [foundations] were to exploit only a fraction of the strategies available to them,” he writes, “Their individual and collective impact on American life would be vastly and beneficially expanded… It might well be worth the effort if trustees and staff were to review their grants and activities to determine which and how many of the twenty generic functions they have engaged in.”

Read more about the Steans' strategies and roles in grantmaking

STEANS FAMILY FOUNDATION - SMALL GRANTS STRATEGIES
One family foundation that has implemented many of the ideas presented in “Small Can Be Effective” is the Steans Family Foundation from Chicago. The foundation’s website describes the philosophy of their small grants approach as follows:

Having learned through experience the range of issues facing individuals and families in struggling communities, the Steans family decided to work holistically within a single community rather than spread its giving across the entire city. With efforts concentrated in one community, individual family members could become more personally and actively involved in the foundation's grants and programs and make a greater impact with their resources.

With this goal of personalized and entrepreneurial partnership in mind, the Steans Family Foundation sought a neighborhood partner. In addition to its dramatic cultural history, North Lawndale boasts significant physical assets and a vibrant array of human and institutional resources. At the same time, the neighborhood faces a familiar range of urban ills and challenges, including high poverty and jobless rates. This combination of high unmet need and local strength made North Lawndale an ideal partner.

The Steans Family Foundation concentrates its grantmaking and programs in North Lawndale, a revitalizing neighborhood on Chicago's West side. By dedicating time, money, and skills, this small family foundation works in partnership with local residents and institutions to build and enhance the North Lawndale community.  

Initiated in 1996 by the Steans Family Foundation, the Small Grants Initiative is committed to improving the quality of life in North Lawndale. With additional funding from the MacArthur Foundation, the Small Grants Initiative has grown steadily; in 1998 and 1999 grants totaled over $74,000 and in 2000 they totaled over $95,000. In early 2002, SGI became incorporated as the North Lawndale Small Grants Human Development Corporation.

The foundation lists the following eight key strategies for its approach to lasting change:

• building relationships,
• developing networks,
• seeking community input,
• being willing to take risks,
• doing hands-on philanthropy,
• stimulating policy change,
• building physical and organizational infrastructure, and
• developing individual and organizational capacity.

To enact these strategies, the foundation plays several roles: convener, leverager, catalyst, capacity builder, incubator, advocate, and grantmaker.

PORTRAITS OF FAMILY PHILANTHROPY  
The following “Portraits” of small family foundations are excerpted from the 2000 report, Family Foundations: A Profile of Funders and Trends. These brief case studies were developed by the National Center to help share the diversity and true-life stories of just a few of the many family foundations from across the U.S.

The first of these portraits was written by John Kunstadter, long-time trustee of the Albert Kunstadter Family Foundation. Please read NCFP President Virginia Esposito’s tribute to John, who passed away earlier this summer after a long life and career dedicated in large part to family philanthropy.

Click above for more information about
Family Foundations:
A Profile of 
Funders and Trends

ALBERT KUNSTADTER FAMILY FOUNDATION (New York, NY)
Written by John W. Kunstadter

In 1952, my father, Sigmund, convinced my grandfather, Albert, that it was time to organize his philanthropy and provide a vehicle in which the entire family could participate. Albert felt that all of the direct family members should contribute. So, while the bulk of the original $5 million endowment for the Albert Kunstadter Family Foundation came from Albert and my grandmother, Hortense, my parents contributed about 15%, my wife and I and my brother each contributed about one-tenth of one percent. An additional contribution was made after the 1959 merger of the family business with a publicly traded company. In 1963, about three-fifths of the corpus was given to Chicago-based Michael Reese Hospital for the construction of a pediatric research center. (My father’s sister died at the age of eight, and my grandparents were intensely devoted to the hospital, especially to the pediatric research being done there.)

Albert died in 1966, Hortense in 1971, Sigmund in 1977, and Maxine, my mother, in 1978.

Sigmund and his long-time secretary had managed all of the financial affairs of the foundation, including the grant suggestions occasionally made by my wife, Geraldine, and me. In 1978, we relocated the foundation from Chicago to New York City (we had moved there in 1965), after endowing the organizations that had been of major interest to my grandparents and parents. In the ensuing years, as the corpus has been built up, we have increasingly turned to grantees operating outside of the United States, to the point where about two-thirds of the foundation’s grants are allocated there.

The foundation has adopted a policy of paying out each year the dollar amount that we feel is necessary to support the activities and people in which we believe. This amount has gradually approached about 10 percent of corpus. Our children are involved primarily in their own communities, and feel that future giving by the foundation can be accomplished with the income from a significantly reduced endowment.

The foundation board consists of Geraldine, three of our children, and me. All of us are directly involved in the foundation’s activities, to the extent possible. We make site visits to all grantees, including those overseas. We believe in keeping our expenses low and have been supporting all but some of the overseas travel expenses out of our personal funds. Our grants are small, usually $5,000 or less. Many of our grantees have received their first foundation grant from us.

Most of our domestic grants are for general support. At least four of our grantees have received support for 25 years. It has been a wonderful education for the entire family to follow in my grandfather’s footsteps for all of these years.

RUTH M. BATSON EDUCATIONAL FOUNDATION (Boston, MA)
The Ruth M. Batson Educational Foundation in Boston is dedicated to supporting the financial needs of Black students attending schools of higher education. Ruth Batson, an advocate for children and their families, was among those who led the challenge in the 1960s for educational equality for African-American students in the Boston Public School System.

The foundation was Mrs. Batson’s personal response to the difficult and sometimes violent struggle to end segregation. She established the foundation with a gift from a community parent association in recognition of her advocacy on behalf of Boston’s African-American youth. The foundation has supplemented the original gift with additional donations and funds raised, and in its thirty years has awarded a total of $1 million dollars. Most of these grants have been in the $500 to $1,500 range and have been targeted to students’ needs not covered by traditional financial aid packages, such as travel, books and supplies.

Mrs. Batson serves on the foundation’s board with her daughters, Dorothy Owusu and Cassandra Way. Lyda Peters, longtime family friend, serves as the foundation’s president.

According to Mrs. Batson, she, her daughters and her extended family enjoy working together on a mission about which they feel strongly and care deeply. She has written, “We want everyone to know what one Black extended family has been able to do.”

Click above for more information about
Family Foundations:
A Profile of 
Funders and Trends

DOLL FAMILY FOUNDATION (Shaker Heights, OH)
As a minister, foundation executive, and philanthropist, Henry “Hank” Doll has a knack for exploring life’s possibilities, while keeping in touch with its practicalities. Growing up with a father whose company manufactured the “wringers” and “driers” that went on top of early washing machines and who also helped to found the Erie Community Foundation (PA) has a lot to do with this.

Following his father’s philanthropic example, Hank’s professional experience has included work at the Cummins Engine Foundation in Indiana, as well as at the Ohio-based Cleveland Foundation, George Gund Foundation, and Nord Family Foundation. Upon the receipt of an inheritance from his father’s estate in 1991, it seemed only natural that Hank and his wife, Mary, would establish the Doll Family Foundation. They also wanted to involve their children—three daughters and a son, now ranging in age from 21 to 31—in the governance of the foundation.

The board is comprised of the entire family, which meets once a year to review grants and reexamine the foundation’s direction. Increasingly, the family has been sharing in the foundation’s program and administrative work. In its first year of operation, $5,000 in grants was distributed. In 1999, more than $45,000 was disbursed.

Hank is putting $60,000 to $70,000 per year into the foundation, with the goal of building its endowment. At some point, he hopes that his children will choose to contribute funds as well.

Overall, he is optimistic and, perhaps more importantly, flexible about the future of their foundation. The main objective is for the Dolls to be imaginatively philanthropic—as a family.

Source: The KLeo Foundation

SMALL FAMILY FOUNDATION RESPONDS TO COMMUNITY CRISIS
This moving perspective by Leo A. Notenboom, Managing Trustee of The KLeo Foundation, describes the foundation's immediate and ongoing response to the September 11th terrorist attacks, and the special significance that this date now has for the foundation.

As described by Notenboom:

Many family foundations.... time their annual grant decisions and check writing to occur over the Christmas holidays - often as a family event, or taking an opportunity when the foundation principals would all be together anyway. We decided that it might have a little more impact to distribute grants outside of the Christmas season, when recipient organizations are traditionally lower on cash, so the KLeo Foundation cuts its annual grant checks on my birthday.  

Unfortunately in 2001, we ended up spending my birthday elsewhere, so elected to cut the checks the following day instead. My birthday is September 10th.

All KLeo Foundation annual grant checks for that year were dated September 11th, 2001.

Notenboom describes the strategies that the foundation used to respond to these events including an initial grant to the Red Cross, and, later, a large gift to a local human services provider -- the latter in recognition of the fact that many resources had been diverted from their local community to help the relief efforts in New York. He writes:

Family foundations, especially smaller foundations, are often referred to as "nimble", and The KLeo Foundation is a great example.

With only two principals, communication was simply a non-issue... The foundation's initial reaction was immediate - even before all the principals were out of bed. This speed, this nimbleness, this ability to respond quickly, represents one of the most important strengths of the small family foundation...

The family foundation can play a key role in local community reaction to crisis - by holding to its mandate, by reacting quickly, and by using that unique ability to be nimble to provide community support when it's most needed.  

The experiences and approach of the KLeo Foundation reflect a range of advantages that small foundations have over larger, more staff-driven philanthropy, including their flexibility and responsiveness, and the effect that the trustees' personal connections to a region or issue (or date!) can have on its grants.

Source: Boston Globe

So begins this moving Boston Globe article about Virak Uy, who immigrated to the United States as a Cambodian refugee in 1980. 

In 1992, Virak created a small advised fund at the Boston Foundation in honor of his father, Chea, who had died in an automobile accident in 1991. According to the article, "The fund was created to help Khmer people handle the adjustment to this country and preserve their culture. It's long-term goal is to provide scholarships for Khmer students or others studying the Khmer culture."

The article notes that the fund "is a peanut of a thing totaling about $10,000" and currently makes only one $500 grant each year - recent grants have included a gift to the Washington Irving School for books and materials about Cambodia and a grant a young Cambodian clothing designer to help promote his work.

In this case, the grants themselves are only a small part of the story. As the article concludes:

Virak Uy had no need to do any of this. Cambodian immigrants have their hands full simply making the transition. Family and honor had a lot to do with it. Culture too. Ten years from now, his goal is to have $100,000 in the fund, which is managed by the Boston Foundation. He wants to go back to school for a doctorate in Cambodian studies and then teach at the college level.

Anybody want to bet against him?

 

Source: Waitt Family Foundation

SMALL GRANTS BY LARGER FAMILY FOUNDATIONS:
WAITT FAMILY FOUNDATION'S SIOUXLAND LI'L HELP GRANTS
Many family foundations with larger asset bases also find small grants programs to be effective ways of supporting their communities, especially where they have a specific interest in a region or cause. One such foundation is the Waitt Family Foundation, established in 1993 by Ted and Joan Waitt.

The foundation's website describes the strategy and purpose behind their small grants as follows:

A small, rapid infusion of capital is sometimes all it takes to launch a program or keep it on a successful track. L'il Help is a small-grants program that provides assistance in meeting short-term financial needs to non-profit agencies and programs in the Siouxland area.

The Waitt Family Foundation retains a unique kinship with Sioux City and the surrounding area. Our family history dates back more than 100 years, while our futures remain permanently intertwined. And although the Foundation offers grants to communities nationwide, this responsive program will always be unique to Siouxland. Programs and services funded must be in the Siouxland area (20 mile radius of Sioux City).

Please see the link at left for more information about the foundation and it's "Li'l Help" grants program.

Source:
Changemakers

FAMILY FOUNDATIONS AND COMMUNITY-BASED PHILANTHROPY
Our colleagues at Changemakers have developed this briefing paper for families describing a range of ways that family foundations can leverage their grantmaking and deepen their connections to the communities in which they fund. The paper suggests that foundations consider one or more of a number of options for deepening these community connections, including:

• Join a learning community or donor circle through contributions to a local funding pool or donor circle

• Establish a community-based grants review committee of local experts to help review proposals and make recommendations to your board of directors

• Invite local community leaders with expertise in your grantmaking areas to join as voting members of your board

• Partner with your local community foundation or another local public foundation, and/or create a donor-advised fund addressing a specific issue area

• Administer some or all of your giving through a community-based public foundation 

Please contact Laura Loescher, managing director of Changemakers at 415.551.2363 for more information and for a copy of this briefing paper.

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FAITH AND FAMILY PHILANTHROPY JOURNAL
AUGUST SPECIAL
Philanthropist Alan Slifka once said:  “I believe in tikkun olam, that we are put on this Earth to repair the Earth.”  Read about Alan Slifka’s philanthropy through the Abraham Fund as well as the stories of other noted philanthropists of different faiths in the National Center for Family Philanthropy’s groundbreaking Journal, Faith and Family Philanthropy.

This excellent summer reading is being offered at the reduced price of $25 for the month of August only. Review the table of contents and excerpts, or order now using the link at left, or by calling 202.293.3424.

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Families who have made or are thinking about making grants to international organizations will likely be very interested in learning more about the IRS's plans to revise existing guidelines around international grants. These new guidelines are expected to be based on the U.S. Treasury Department's November 2002 document, "Antiterrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities." This document proposes a range of significant changes to existing guidelines.

The guidelines are intended to eliminate the possibility of charitable funds being diverted to international terrorist networks. Several leading networks of international grantmakers have come forward recently to respond to an open invitation by the IRS to comment on these "best practices" to help inform the new guidelines being developed.

This issue of FGN presents the IRS's announcement requesting comment on the guidelines; a link to the current "voluntary" guidelines; and two responses by networks leading the opposition to proposed changes.

Source:
OMB Watch

The attacks of September 11, 2001, focused public attention on the need to take comprehensive measures to prevent terrorism. Investigative and law enforcement initiatives have identified situations in which charitable organizations have been a significant source of terrorist funding. The financing has come not only from United States-based charitable organizations, but also from foreign organizations that receive support directly or indirectly from United States donors. Further, investigative efforts have also identified situations in which diversion of charitable assets occurred without the knowledge of donors.

Source:
Washington Post

CHARITIES BALK AT GOVERNMENT GUIDELINES
This article from the Washington Post describes the growing concern among nonprofits and foundations regarding the purpose and breadth of the new guidelines. The proposed guidelines are "either impossible, impractical or so costly to comply with that it would have a very serious negative impact on humanitarian relief and social and economic development work overseas," says Peter Shiras, senior vice president of Independent Sector, in the article.

Source:
Grantmakers Without Borders

GRANTMAKERS WITHOUT BORDERS DRAFT RESPONSE TO ANTI-TERRORIST FINANCING GUIDELINES
Grantmakers Without Borders, a funders’ network dedicated to promoting social, environmental, and democratic progress within developing countries, has prepared a draft response to the IRS. The draft statement questions both the rationale and likely effects of the proposed guidelines, noting that, “Not only do [the guidelines] fail to target the principal sources of funds that support terrorism, but they have a counter-productive effect of preventing bona fide efforts to eliminate the root causes of terrorism.”  

The draft statement make special note of the proposed changes likely effect on the ability of small funders to make grants internationally.

Were the IRS to make burdensome changes to the [existing] reporting requirements, it would have an adverse impact on substantial good works by charitable organizations, especially those with little or no staff and small resources...

While small grants permit grantees to contribute significantly to public welfare in their home countries, US issuers of small grants, especially when made to foreign organizations, simply cannot shoulder some potentially costly due diligence requirements as proposed in the Treasury's Guidelines.

For a copy of the draft statement or for more information about Grantmakers Without Borders' efforts in this area, please contact John Harvey or Nadine Pinède at 617.794.2253 or gwob@gwob.net.

Source:
Council on Foundations

COUNCIL ON FOUNDATIONS COMMENTS ON U.S. DEPARTMENT OF TREASURY ANTI-TERRORIST FINANCING GUIDELINES
The Council on Foundations has developed a comprehensive, point-by-point response to the voluntary guidelines issued by the U.S. Department of the Treasury (see below). Their summary response states that,

The stated objective of the Treasury Department - to guard charitable funds from diversion to terrorist organizations without 'chilling legitimate good works' - is one we share. However, the Guidelines fail to accomplish this objective by adopting a 'one size fits all' approach that would greatly increase the administrative cost of making all international grants, without helping U.S. charities identify and take appropriate precautions with respect to the very small number that are at risk for diversion.

The unintended consequence would be to jeopardize a vast amount of 'legitimate good works' by discouraging the making of all international grants, including those in developing countries where the needs for humanitarian assistance are at unprecedented levels.

See the link at left for a copy of the Council's complete set of comments.

Source:
United States Treasury

U.S. DEPARTMENT OF THE TREASURY ANTI-TERRORIST FINANCING GUIDELINES: VOLUNTARY BEST PRACTICES FOR U.S.-BASED CHARITIES
This document outlines the proposed practices and steps that prospective funders are recommended to take before distributing funds to foreign recipient organizations. Guidelines are grouped in four key areas: governance; disclosure/transparency in governance and finances; financial/practices and accountability; and "anti-terrorist financing procedures."

Please contact 202.293.3424 or ncfp@ncfp.org for details.
 

SINGLE ISSUE: $20 

WHAT CALIFORNIA DONORS WANT: IN THEIR OWN VOICES 
This unique study looks at the motivations, goals, and challenges of California philanthropists, based on candid in-depth interviews with more than 25 leading donors from a variety of backgrounds and communities. The report will be available in September 2003; to receive a complimentary PDF copy of the executive summary for the report when it is available, please send us an email with your name, address, and affiliation.

We hope that these resources will help FGN's advisor readers to be better prepared to serve their clients, and to become catalysts for philanthropy in your own right.

Information on Joining
Friends of the Family

Read What Founding
Friends of the Family
Have to Say

Click above
for full agenda
and details

Splendid Legacy: A Seminar for Family Foundations
NYU Center for Philanthropy and Fundraising, in collaboration with the National Center for Family Philanthropy
October 13, 2003 ~ New York, New York
This day-long seminar is exclusively for family members or staff of family foundations, and will focus on key issues of goal setting and management of a family foundation.

Utilizing the newly published Splendid Legacy: The Guide to Creating Your Family Foundation, this one-day seminar will explore the role of values in setting the mission and direction, succession, intergenerational and legacy issues, and key management challenges to achieve the family goals. Participation in this seminar is by permission of the instructor. For more information, please contact, Richard Marker, Adjunct Associate Professor of Philanthropy, NYU Center for Philanthropy, at 212.585.3332 or Richard.marker@att.net.

Community Investing: How Foundations Can Use Their Assets
To Support Their Mission
The IC Foundation
October 31- November 1, 2003 ~ Cambridge, Massachusetts
This workshop will cover topics ranging from strategic and institutional challenges of mission-related investing to specific case studies of various types of community investments, including community development venture capital funds and their portfolio companies, housing, and micro-credit.

Over one and a half days, attendees will hear from the nation’s leading community investing practitioners, philanthropists and advisors, and will work in small group sessions to share perspectives and learn from their peers. The workshop will be limited to 50 attendees, with a maximum of three attendees per foundation. Attendance by foundation trustees, program officers and investment officers is encouraged. For more information, contact Joe Pierpont at 610.260.0687 or jpierpont@baldwinim.com.

CREATIVE FAMILY GRANTMAKING:
THE STORY OF THE DURFEE FOUNDATION
With a relatively modest budget, the Durfee Foundation has developed an enormously creative and successful grantmaking program. How has this program evolved? What has made the work of the foundation so important to the family and the community it serves? This monograph chronicles the history of the foundation and describes its six distinctive, trustee-driven programs.

By Deanne Stone    40 pages    $20          

THE GUIDE TO SUCCESSFUL SMALL GRANTS PROGRAMS:
WHEN A LITTLE GOES A LONG WAY
Looking for ways to make grant dollars do the most good? Foundations of all sizes and types find that small grants programs give them the freedom to work more creatively, stretch dollars further and respond faster. Whether you're new to small grants or looking for new ideas for your current program, The Guide to Successful Small Grants Programs will give you the tools you need to succeed. Find how-to tips, stories from your colleagues, sample documents and resources to help you succeed!

By Carrie Avery    90 pages    $60

SMALL CAN BE EFFECTIVE
In 1988,  spent the year exploring the challenges and opportunities of smaller foundations-collecting information, taking to those involved and, finally, making a series of presentations to smaller foundation representatives. This monograph by the late Paul Ylvisaker offers suggestions and strategies for small foundations seeking to leverage their creative captial to achieve results equivalent to foundations many times their size. Subjects explored include the catalytic, conceptualizing and community-building roles of philanthropy.

By Paul Ylvisaker    12 pages    $15

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