Strategic Giving: A Balancing Act

Giving families walk a fine line balancing social impact and family unity. With scarce resources and great needs, many families want every grant to have the most impact possible. At the same time, they are collectively engaged in a family enterprise whose members often have diverse interests, live in different places, and have very different preferences for what to fund.

Striking this difficult balance is the subject of the forthcoming National Center issue paper Strategic Philanthropy: Maximizing Family Engagement and Social Impact by Ashley Snowdon Blanchard, President of the Hill-Snowdon Foundation and a consultant with TCC Group. The subject was a hot topic in the National Center’s teleconference series. Our February teleconference featuring Blanchard drew record participation. On that call, she stressed that strategic focus can not only increase a family’s social impact but bring a family together.

This issue of Family Giving News offers a preview of our upcoming Passages issue paperStrategic Philanthropy, in which Blanchard shares the stories of families that found both unity and impact through strategic grantmaking.

Reasons for Strategic Focus

“For the sake of family cohesion and engagement, many family foundations base their grantmaking on the varied personal interests of their trustees,” Blanchard says. “The unfortunate result is a ‘scattershot’ grantmaking portfolio, with limited social impact.”

“Conversely, a family foundation risks excluding family members if they are not interested in a shared programmatic agenda, minimizing the unifying potential of the foundation.”

A solution to this dilemma is to get “strategic” by identifying focus areas in which board members can find common interest and excitement. Here’s why:

Giving families, despite being willing to step up to meet community needs, cannot be all things to all nonprofits. As nonprofits become increasingly sophisticated in finding potential sources of funding, families are being pulled in a number of different directions, scattering scarce community resources and making it difficult to pinpoint where those dollars might have the most impact.

Families can easily fall into what Blanchard calls the “pet project trap,” with family members mostly giving to the causes and organizations they personally care deeply about and know well. Families often allow discretionary giving so that family members can fulfill their individual philanthropic goals alongside the family’s overall mission. Yet when those individual goals are prioritized over the family’s overall mission, the value of the family foundation as both an effective grantmaker and a unifying vehicle for the family is minimized.

Moreover, those individual philanthropic goals may not be well-aligned, and can even be conflicting. Blanchard relates the story of one family who gave board members wide latitude with respect to discretionary grants. Divided along political lines, the family foundation was funding both conservative and progressive advocacy groups, effectively cancelling out each other’s grants.

Finally, families grow and exponentially so. When giving is based on trustees’ personal interests, this can be problematic. As more and more family members participate, the choice for families becomes this: further divide the pool, resulting in an ever-decreasing share for each family member, or develop a unifying strategy that brings family together around a single, coherent vision and the shared experience of making a real difference together.

Finding Common Ground

Developing a coherent strategy begins with identifying a family’s common values and vision. From there, families can identify the tactics that will help make their vision a reality.

Blanchard offers three potential methods of focusing your philanthropy.

Look to the founders for inspiration that resonates with future generations. The Overbrook Foundation looked to its founders Frank and Helen Altschul and their love of the outdoors when establishing environmental conservation as their first funding priority. Family philanthropy often begins with generous, entrepreneurial, innovative, sometimes eccentric but always inspiring donors. What of those founders’ values continues to speak to your family today? The answer might be hidden in the grants you’re already making.

Identify the underlying, unspoken trends and patterns in your existing grantmaking. When trustees of the Hill-Snowdon Foundation began shifting toward a more strategic approach to philanthropy, they reviewed their recent grantmaking, which was largely based on the personal interests of the board. When the board asked which grants were the most important or had the most impact, a pattern emerged: the “exemplary” grants were the ones that supported disadvantaged youth.

Ask family members which grants have been the most important to the family and to the community. They might be the most effective, the most inspiring, or simply the most fun. Look for what unites these grants and what might potentially unite your family.

Look for what you hold in common. As you search, you might find that what binds you together is more important than the forces pulling you apart. If organizations don’t bring you together, certain program goals might. If programs don’t inspire the family as a group, a set of values may.

While Jacobs Family Foundation founders Joseph and Violet Jacobs held conservative views, their three daughters were more liberal, leading to grantmaking tensions stemming from their different political perspectives. The family decided to focus on what they could all agree on and found that they had a number of shared values. For example, everyone agreed that they didn’t want to fund “traditional” organizations like the symphony or museums; they wanted to take risks; they wanted to do more than just “write checks” to help strengthen organizations; and they wanted to support more community-based organizations, where they felt their money would go farther. An early grant to a microlending organization got everyone excited. The notion of wealth creation and entrepreneurism resonated with the founders, while the second generation was passionate about the idea of getting women out of poverty and increasing their independence. That led to a focus on economic development, which appealed to all trustees, and a decision to fund in one neighborhood so that they could be deeply engaged and see the work first-hand. Today, the Jacobs Family Foundation’s efforts in the Diamond Neighborhoods of San Diego have come to be a model for engaged philanthropy.

The Reward for Being Strategic

The transition to more strategic grantmaking may seem challenging at the outset. It will raise questions about trustees’ values and priorities that may at times be uncomfortable. But it is also likely to be immensely rewarding. For the process to be effective, trustees must start with a clear commitment to effective philanthropy and the recognition that a foundation’s impact can be more than the sum of its grants. They must also be willing to relinquish their attachment to “pet projects,” or find some other way to maintain these commitments (e.g., through personal giving or small trustee discretionary grants, or phased exit grants to long-term grantees that no longer fit the focus). The rewards of this approach for family members—the ongoing collective learning and shared experience of witnessing progress—are matched only by the effect on the societal issue at hand.