In a year when we are focusing on helping philanthropic families deal with transitions most effectively, it is exciting that Family Giving News’ February edition features the recent report from 21/64 and the Johnson Center on Philanthropy on next generation donors. Welcoming a new generation to philanthropy is one of the most generative, energizing and proud transitions for those committed to giving as a family. It can also be a provocative, even complicated time.
Ideally, you’re not beginning to plan for this transition too late in the process (that is, the “kids” are in their 40s, the older generation is growing weary of the responsibilities, or, alternatively, digging in to their responsibilities/role with defensive fervor). As I’ve mentioned in previous columns, the best time to plan for a transition is before it is upon you and, therefore, much less emotionally charged. Even Solomon would have had a problem splitting the babies of two siblings vying for that one “next generation” seat on the board!
Hopefully, this is a great time for you to think about welcoming new generations and it is never too early – even if there is currently no second, third, or other future generation in sight. If you intend for the giving program (foundation, donor advised fund, etc.) to exist beyond your generation (whether in perpetuity or not), it’s time to plan. So let me share some advice I’ve gleaned from your peers about handling next generation succession successfully
First, be clear about your goals for these activities. Are you hoping to raise charitable children? Are you trying to ensure that there is governance and leadership for the future of the foundation/fund? They may seem like the same goal or even that one leads to another but they are very different and must be approached differently. Consider: you can establish the most complex selection process for appointing board members to your foundation but that won’t ensure you raise generous children who are mindful of community needs and personally active in that community. Conversely, you can raise charitable children who are deeply committed to philanthropy but you may not have determined when and how they might participate in the family’s own giving program.
Raising charitable, socially-conscious children is largely a family responsibility. It’s never too early to begin this work either. A friend says that the time to start is the first time a child says “mine!” So how to start?
- Encourage your children to explore and develop personal interests and accomplishments – including through their education and their own giving and volunteering. The more they develop their own distinct personalities and achievements, the less likely they are to look to the family name, wealth, or philanthropy for their sense of personal identity and worth.
- Address issues of personal and family wealth. It is naïve and potentially harmful to avoid the awkwardness of these discussions. Further, raise your children to be financially literate and they’ll be better positioned to understand charitable investments including those pesky but essential nonprofit financial statements and investment reports.
- Giving children money to designate to a charity can be a very nice idea. So can offering matching funds for giving and volunteer time – the latter has the added benefit of rewarding personal investment and accomplishments.
- Chronicle and share the stories of your family’s commitment to community. These can be powerful and inspiring and a great way to get all generations and branches of the family engaged in your family’s values and legacy.
- Among those stories, be sure to tell your child why giving is important to you and why it is your hope that they will find the same meaning in this special opportunity. I meet so many young people who’ve been told about family expectations but never about why this is so meaningful and why they are wanted in this process.
Ensuring that your giving program has great future governance and leadership is largely a foundation responsibility. In my experience, the first inclination is to include everybody – at least until the family is too large to accommodate that inclusiveness. The second inclination is to make sure the process is “fair.” But fair to whom: the individual family members, different generations of the family, branches of the family, someone else? I like to suggest that families start by asking themselves, “How do we ensure the foundation gets the best possible board – the one it truly deserves?” The answers to my question are often markedly different from the answers to the questions born of the first two inclinations. A few other ideas:
- Make participation about the privilege and responsibility of stewardship rather than the personal privilege of entitlement or ownership.
- Establish criteria for consideration as well as expectations of all those elected for service.
- Be clear about who is eligible to participate. Will spouses, adopted and stepchildren, life partners, and others be considered? Will you look outside the family for community or program expertise or representation? The potential pool can be as large as you need.
- Consider terms and rotations for board members to encourage renewal, fresh perspectives and more participation. A nomination process/committee can be charged with looking at the good of the whole. A well-qualified board chair can help navigate delicate, even troubled waters.
- Be clear about the professional responsibilities of service and the inappropriateness of some family behaviors at the governance table.
- As you wholeheartedly welcome a new generation to the table, remember you don’t have to do this at the expense of other qualified, experienced, senior family members. Many of the most energized and happy philanthropic families have made this a multi-generational affair.
- And while we’re talking happy families, spend some time thinking about what it is you share as a family and as a board. Many families go first to all the things that make them different (age, geography, philosophy, etc.) and miss all the richness and meaning of what it is they share. The latter is a much stronger basis for shared philanthropy.
- Establish policies to deal with circumstances when personal/individual interests and the wellbeing of the whole might overlap: conflicts of interest; compensation; discretionary grants, etc. There are lots of examples of these policies in the National Center for Family Philanthropy’s Knowledge Center.
- Offer opportunities for involvement beyond board service. Any family that makes board service the only indicator of successful participation is doomed to one day disappoint someone – likely a lot of someones.
Finally, as you add new voices and new perspectives to your board, embrace activities that renew your overall commitment and effectiveness. Nothing can surface an issue on the horizon like a good retreat, board assessment, or foundation review. The Family Foundation Self Assessment Tool offered by the National Center – the Pursuit of Excellence – might be just the process for you. And the last great resource I’ll offer you (that sounds so much nicer than shameless plug) is our Trustee Education Institute offered annually in Washington, DC. This highly acclaimed, comprehensive overview of trustee responsibilities and opportunities is great for prospective, new, and renewing family foundation trustees.
I’m excited about the attention the Johnson Center and 21/64 report and this edition of FGN give to next generation involvement. I’m reminded of a quote from Bruce Sievers, former executive director of the Walter and Elise Haas Fund from Living the Legacy: The Values of a Family’s Philanthropy across Generations:
“Over time, family members change and program priorities change. What holds the family and its philanthropy together is the legacy of its values. This legacy provides continuity and our donor family believes it is that continuity that gives the family philanthropy its special character.”