Legacy Grantmaking: What Would Grandpa Want?
E-Newsletter Lead Article,
January 2010
Family Giving News
Recently the philanthropy field lost two of its most generous philanthropists, Smith Bagley and Ruth Lilly. Such events remind us that the death of a founder, donor, or other philanthropy leader is inevitable. Yet knowing it will happen doesn’t mean your family will be prepared to deal with all the issues that might arise. One in particular is legacy grants, made to honor a key family member, most often the founder of a family philanthropy.
Research conducted by the National Center on legacy gifts, sometimes called memorial gifts, found that the issue usually arises shortly after the founder’s death when the family seeks ways to honor his or her legacy (we refer to founder here as shorthand for any key family member being honored). But the issue may also come up when the family re-considers whether a nonprofit that been receiving a memorial grant for many years should continue to be funded.
“This isn’t a grant you are making because the founder expected it,” explains National Center President Ginny Esposito. “It’s something that those left behind try to figure out as a way to honor the loved one.” In her research she found that legacy grants usually fell within the foundation or fund’s giving interests, since those typically reflect the founder’s interests, but occasionally there are exceptions, such as a medical grant related to the cause of the founder’s death.
Beyond honoring the founder’s personal commitment and initiative, legacy grants can enrich the family’s philanthropy by serving as a source of inspiration to his or her successors, and may also highlight the work of a particular organization, thus attracting other donors, especially those who knew and respected the founder.
It’s important to balance the emotional and the practical aspects of making these grants, Esposito says. Although done with the best of intentions, legacy grants can cause problems if not handled carefully. For example, a family may have difficulty deciding which grantee was the founder’s favorite. This can lead to bad feelings or result in multiple legacy grants. Also, because these grants are often made during periods of grief and stress, the grant agreement may not get much attention. This can spell problems down the road if the agreement didn’t specify any expectations for performance or make clear whether the organization would receive continuing support, and under what terms. As a result, “future trustees and advisors may feel trapped because there’s no guidance in the original grant agreement,” Esposito points out. There are also cases where a family can become so identified with a large legacy grant in their founder’s name, the family members start to assume a greater role than they should by interfering in the grantee’s leadership and operation.
Esposito counsels families to “give yourselves time and space to grieve, as individuals and families, before you make legacy grant decisions. Consider creating a process to determine the best way to honor your family member, and let the grant decisions come out of that process. You can even announce the process so others know what you are doing.” The Russell Family Foundation in Washington State, for example, used such a process to decide how to honor their co-founder Jane Russell. The process resulted in Jane’s Fund.
A process is also helpful in dealing with the multiple opportunities you are likely to have for honoring a departed family member. If you have criteria for how you’ll choose, you’re less likely to respond to each one separately.
Aside from grants, be prepared for all the tributes you may be presented with by organizations that want to honor your founder. Consider how these might be handled: who’s going to attend all the tribute functions, what might be obligated by accepting a tribute? Some families also have had to deal with organizations that indicate the founder had made a verbal pledge to contribute to a special campaign or project.
Naming opportunities can pose dilemmas, too. As one family explained to Esposito, they felt they were expected to keep “bailing out” the grantee when funds were low “because who else would step in if not the family whose name was on their building.” Clarity in the grant agreement from the beginning can help head off problems down the road. Similarly, in the case of multi-year grants, think about your exit strategy so both you and the grantee know what the expectations are. Be careful to maintain a respectful and collaborative relationship with your legacy grantee. “It’s an important relationship,” Esposito says. “Benign neglect quickly becomes less benign.”
Esposito suggests that founders or other key leaders could make decisions about legacy grants easier by being willing to provide their families with some guidance. Be open to talking about how you’d like to be remembered, including how you feel about legacy gifts or naming opportunities. What organization would you like to designate to receive memorial gifts? Do you expect the foundation or fund to continue to support the causes you traditionally supported out of your personal funds? Also, be sure to make to keep records of any verbal pledges you make.
In the absence of clear direction from a founder, Esposito said, the best way to decide how to honor a founder is to think about is to go to the source and ask “What would Grandpa have wanted.” She described one woman who said that after her grandfather died, she accepted every honor her grandfather was given, went to every tribute, and made unconditional memorial gifts in his name after his death. “Finally, one day she said, ‘This isn’t who my grandfather was at all. He was an entrepreneur and a businessman. He thought carefully about the respectful agreement between himself and a grantee and negotiated that agreement. And he never showed any interest in having something named after him.’” By remembering who he was, she was able to get perspective and focus on what he really would have wanted.
Your grief will be shared by organizations touched by your loved one, Esposito adds. “Urge them to write down their stories and send them to you.” Such stories provide inspiration for the family going forward and are part of the loved one’s legacy.
Share Your Story: We’d like to hear your experiences with legacy gifts. Please send your stories to susan@ncfp.org.