By Kevin Laskowski, Annie Hernandez, and Katie Marcus Reker

Part 1 of 2

The National Center for Family Philanthropy and Youth Philanthropy Connect, a program of the Frieda C. Fox Family Foundation, have teamed up on the release of our latest Passages Issue Brief entitled, “Igniting the Spark: Creating Effective Next Generation Boards.” This Issue Brief is being distributed this week to participants at the 2013 Youth Philanthropy Connect Conference in Disneyland, and is available now in the Family Philanthropy Online Knowledge Center for NCFP Friends of the Family and FP Online Subscribers. Family foundations representatives may also request a copy by sending a request to jason@ncfp.org.

For family foundations and a growing number of donor-advised funds, preparing the next generation for involvement brings special concerns—and exciting opportunities. Succession is reported to be the single most important issue facing family foundations, according to nearly half (48%) of respondents to the Association for Small Foundations 2011 Foundation Operations and Management Report. At the same time, there is a broad range of experience in families with regard to how next generation family members are involved in family philanthropy. According to the National Center for Family Philanthropy’s 2011 study, Current Practices in Family Foundations, a near equal number of respondents “strongly agreed” (34%) or “strongly disagreed” (33%) with the statement “next generation members are playing a significant role in the foundation.”

The volume of funds, foundations, and other giving among young Americans from high-net-worth families is expanding to unprecedented levels. “The next generations of major philanthropists will have tremendous influence on the direction of and support for efforts to improve local communities and solve global problems over the next several decades,” write the authors of the 2012 #NextGenDonors study conducted by the Johnson Center for Philanthropy and 21/64, a non-profit consulting group specializing in multigenerational engagement.

For many families, it is important that the next generation not only gives but gives as part of the family—that it not only carries on a philanthropic tradition but that it does so together. For those with this goal, it is heartening that 90% of the #NextGenDonors research respondents cited their parents as their model of philanthropy. This research, as well as previous research conducted by US Trust and the Indiana University Lilly Family School of Philanthropy, has shown that the more—and earlier—parents engage their children in philanthropy, the more their legacy of giving will be passed along. Millennials are a generation that cares and wants to work with their peers—siblings, cousins, friends, or schoolmates—to produce measurable change. Since next generation members are crafting their philanthropic identity at a young age, families need to help find unique ways to help shape this at younger ages.

This month’s issue of Family Giving News, excerpted from the new Passages Issue Brief, “Igniting the Spark: Creating Effective Next Generation Boards,” introduces an increasingly popular method for preparing the next generation for philanthropic service: the next generation or junior board. The full paper covers the variety of purposes for establishing next generation boards and how they are typically structured, explores how foundations use next generation boards as a tool for engaging younger family members, and describes options for preparing younger family members for governance and grantmaking. It also describes steps for creating a next generation board and highlights points to remember as this new board begins its work.

“I feel prepared to take on a bigger role in the foundation because of my early involvement,” comments Zach Whitten, a college student who has been involved in The Lumpkin Family Foundation’s next generation programming since the age of 10. “I doubt I’d even be interested without this experience.”

What is a next generation board?

A next generation board is a sort of foundation-within-a-foundation or a grantmaking committee within the foundation. Very often, these boards consist of a pool of money set aside for next-generation family members to distribute. By law, these grants must be made with the formal board’s approval. The intended result is to develop a new generation of skilled philanthropists ready to join the family’s existing board or create their own approach to meaningful service.

Next generation boards allow younger family members to participate in the family’s philanthropy by involving them in current grantmaking practice. In smaller families, next generation boards may be set up for a defined period of time—i.e., until the next generation is ready for board service. While next generation boards may be a limited version of a family’s philanthropy— with younger members distributing only a small allotment of funds—next generation board members can experience everything that their existing board counterparts experience, including strategy development, site visits, proposal review, debate and discussion, and evaluation.

One of the nation’s first next generation boards was established in 1983 by the Lawrence Welk Family Foundation to engage the full family in philanthropy. Initially ranging in age from 14-24, the third-generation Welk family members were included in the family board meetings and site visits but were not given voting power. They could review proposals and participate in discussions but could not participate in the final vote.

Then, third-generation family members would meet in their own breakout sessions to distribute 10 percent of the foundation’s grantmaking budget. They could vote to further fund the senior board’s choices, fund some organizations the board had not, or present their own proposals. “They had to lobby each other and decide together how the money would be distributed,” says Shirley Fredricks, daughter of the founders and long-time president of the foundation.

“One benefit for all of us was learning about the decisions and the jargon that comes with board service,” says Lisa Parker, Shirley’s daughter and founding member of the foundation’s next gen board. “It prepared us for board service in other areas of our lives as we became adults.”

Why do families use next gen boards as a tool for involving the younger generation?

Family foundation board members frequently mention next generation boards as one of the most effective ways to encourage younger members to become philanthropic and to prepare them for their prospective roles as trustees of the foundation. “A next generation board replicates the tough decision-making, the compromise-striking, and the consensus-building that characterizes new members’ eventual service on the foundation’s board,” says long-time foundation advisor and former National Center Vice President Karen Green.

In the National Center for Family Philanthropy’s seminal 2002 Passages Issue Brief, “Opportunity of a Lifetime: Young Adults in Family Philanthropy,” author Alison Goldberg, herself a next generation family board member, outlined a variety of reasons for involving young adults and younger family members in family philanthropy. Key among these for families thinking about establishing a next generation board are:

  • To provide younger family members with a variety of skills that will help them in other aspects of their lives
  • To expand the involvement of younger family members in contemporary issues
  • To learn together through intergenerational dialogue
  • To encourage creativity and fresh thinking among all family members
  • To have access to the experiences, questions, and context that youth bring to philanthropy
  • To encourage younger family members to become active and knowledgeable philanthropists throughout their lifetimes
  • To bring generations of the family together and to honor the donor’s legacy and values
  • To learn and share knowledge and perspectives on emerging issues and communities

“It is important to gauge the younger generation’s interest, get their input on the process, and make it clear that participation is an option,” adds Frank Wideman, president of the Self Family Foundation, based in South Carolina, which created a Next Generation Adjunct Board. During the course of their grantmaking, Wideman says one of the most important lessons members of the Next Generation Adjunct Board learned was how to say no, a decision the next generation normally doesn’t have to make.

Participation on a next generation board teaches members how to “agree to disagree, have meaningful discussions, and come to decisions by consensus or majority rule,” even when everyone does not like the outcome, adds Linda Evans, president and chief executive officer of The Meadows Foundation, based in Dallas, Texas.

The Meadows Foundation created a Small Grants Committee several years ago for 3rd generation family members who were at least 21 years old. “Participation on the Small Grants Committee helped prospective board members learn the questions that need to be asked and answered to determine the pressing needs of the community and the agencies that serve them,” says Evans. “As members of our 3rd generation have rotated on the board, their participation on the Small Grants Committee has prepared them well for board service. They come on the full board with a clear understanding of their responsibilities and come willing to give the time needed to participate on committees and on the board.”

Finally, and most importantly, next generation board participation encourages responsibility and develops initiative, which can help the next generation become passionate, pragmatic, and engaged philanthropists. A Texas-based foundation, which began its next generation board with third-generation family members, ages 12 through 21, provided extensive training in all aspects of giving. Board members discovered that the next generation board members’ ambitions quickly outpaced their funding capacity. In one instance, next gen board members only had half the money required to fund a new grantee’s request for capital support; undaunted, they asked the board to match their efforts to fund the project. Impressed with the next generation’s initiative, board members backed the project.

Part 2 of this series features a discussion of how next gen boards work and how to create a next gen board, as well as a variety of other advice and tips for families planning on using a next gen board to engage and ignite the spark for younger family members.