Lessons from One Family’s Transition from Founder to Nonfamily Director

When Bill O’Neill Jr., president of the William J. and Dorothy K. O’Neill Foundation in Cleveland, decided to step aside from being “chief cook and bottle washer for 20 years,” the family faced a common dilemma: how to shift the foundation’s leadership to a successor and who it would be. The decision raised inevitable questions about succession on the board as well. The O’Neill Foundation’s careful planning resulted in a smooth transition with lessons for other families who face the same turning point.

THE FOUNDATION GROWS FROM CHECK-WRITING TO STRATEGIC GIVING

The foundation was started by Bill and his mother, Dorothy, in 1987 after the death of his father, Bill Sr., who left a sizeable estate from his years running the family trucking business, Leaseway Transportation. The eldest of six siblings, Bill founded and managed the foundation and also the family office, named Clanco Management, a reference to the family clan.

In its first decade, the foundation went from merely funneling family member directed gifts, to one with a focus on strategic philanthropy. In 1998, the New York Times mentioned the O’Neills as one of a new breed of philanthropists using a “get-in-the-trenches approach.” The family had moved from just making grants to becoming actively involved with their grantees, providing time and expertise, sometimes even serving on the boards. The foundation focused on outcomes and emphasized accountability and measurement. That same year, the O’Neill Foundation became a case study used by Harvard University’s Kennedy School of Government students examining the pros and cons of such hands-on involvement.

Beyond the grantmaking, the O’Neills focused on how to keep 44 family members—two generations of lineal descendents and spouses living all over the country—involved. This was essential because a high degree of family involvement is a core value of the foundation.

A BLUEPRINT FOR GOVERNING

Not all founders are willing to give up their foundation role, but Bill “decided to let go” so he’d have time to do other things. He gave up management of the family office first, and then turned to the task of identifying his replacement at the foundation. At this important crossroad, the foundation decided to focus not only on the “who” but on the broader question of the future governance of the foundation. Bill had two choices.

“I could just anoint a successor and walk out the door, or I could get the family involved and decide some basic questions first,” Bill explains. Those questions included whether the foundation should spend out or exist in perpetuity, what grantmaking strategies the family wished to pursue in the future, and how future board members would govern. “When you’re done, you have a plan that hopefully the whole family had input into and endorsed, providing a blue print for the successor,” Bill says.

THE PROCESS USED TO GET THERE

To begin, a small Continuity and Succession Planning Committee was formed with representatives from each of the six family branches. Bill served as staff and took notes for the committee but did not vote. “I was concerned my presence would seem to dominate.”

To gather family input, the foundation hired a consultant who helped them develop a set of questions. “I had a concern that canvassing the 44 family members myself wouldn’t elicit candid answers,” Bill says. Family members completed questionnaires, sent their responses directly to the consultant and were free to talk with her confidentially if they chose. She prepared a report and then facilitated the discussions that led to a succession plan.

The current board president is Tim O’Neill, the youngest of Bill’s five siblings. Tim recalls that on one of the first fundamental questions—Does the family want the foundation to continue?—“we decided we did want to continue, but had 35 to 40 different opinions of how. Through a lot of good facilitation and lengthy discussion, we decided we needed a professional CEO, and that we’d like to stay involved in the grantmaking. The hands-on grantmaking cements the relationships between my siblings and their children.”

HIRING AN EXECUTIVE DIRECTOR

The family wrote a job description. “We said we wanted to find the best person possible to run the foundation, and if that person happens to be a family member, fine,” Bill says. “But we didn’t have a family member who had both the talents and the time, so we decidedto look outside.”

From 100 applicants, the family selected Leah Gary, a former nurse, with a background in administration, education and health policy. She came with 10 years of experience working for a Cleveland health conversion foundation, making health care and social services grants in inner city neighborhoods. She says working for a family foundation is entirely different, especially one that was transitioning from family-run to non-family staffed.

 “The grant making revolves around the family’s interests,” she explains. With each grant request, she must first determine “Is the family interested in this? Then we can do the due diligence.”

She hired the foundation’s first grants manager. She has completely changed the foundation’s grantmaking process, adding steps and requiring a site visit, usually with a family member, for each grant request. After a year and a half on the job, she says the process is still evolving. “Just because you hire staff and put them in place, doesn’t mean everyone has assimilated that in their heads.”

She is the only non-family member on the board. The other six, one selected by each branch, serve three-year terms. “One of my number one jobs is facilitating family involvement,” Gary says. Any family member can serve on the Grantmaking Committee, which currently has 13 members. She also supports a youth philanthropy program to provide grantmaking experience to the family’s teens and young adults.

Board Chair Tim O’Neill says the next step in the foundation’s evolution will be to consider its funding focus. “We’ve had a focus area on fatherhood, but that’s wound down, so we’re asking whether we want to continue that or do something else. We will use a process not unlike the succession planning process.”

Asked what worked well and what didn’t in the family’s transition planning, Bill says “It may be too soon to tell. What I think worked was that we took a lot of care in thinking through the preliminaries, and we had as many people on board as possible.” One downside was the time it took—nearly two years. He’s also disappointed that his hope of more family members becoming actively engaged in the foundation hasn’t happened—yet.

Bill remains on the board, having been chosen by his branch as their representative. He says that when a patriarch steps down while still alive, “there’s always going to be the frustration” of having to watch others do the leading, which he admits he’s had to deal with. “I’ve been outvoted six to one. But on balance, I think it was the right thing to do. If you are a strong patriarch or matriarch, don’t do this until you are really willing to let go.”

In Tim’s view, what worked well was that throughout the process, the O’Neills focused on two overarching goals: “keep the foundation family-oriented and keep it helping the community.”

By Susan Crites Price