This article is a summary from the paper “Philanthropy in Complex, Multi-Generational Families: Balancing Individual Preference with Collective Purpose,” published by the National Center for Family Philanthropy and written by Ashley Blanchard and Wendy R. Ulaszek, partners at Lansberg Gersick Advisors
Family foundations commonly begin as vehicles for their founders’ giving and evolve to include other members with other interests. At some point in this evolution— typically catalyzed by factors such as generational transition, passing of founders, and increases in assets—families face an “inflection point,” and are forced to define the primary purpose of the family foundation. Some continue on a path of individuation, whereby the goal of the family foundation is to support the personal philanthropic priorities of family members. Others opted to transition to a collaborative approach, seeking to create a common philanthropic vision and minimize individual influence.
The transition factors that stimulate this change in the family foundation often spur the creation of additional philanthropic outlets outside of it, to meet the increasingly diverse interests of the expanding family. The families that opt for a more collaborative model in the family foundation—limiting the ability of family members to use the family foundation to further their personal philanthropic interests—create other venues for their members’ personal philanthropy, ranging from creating new foundations to implicit norms that personal giving is to be addressed through personal resources.
Findings
Our research found that families that pursued a more collaborative model for their family philanthropy were more successful than those that had more individual approaches: participants reported that the foundations had greater impact, were more satisfied with their experience, and felt closer to their families as a result. These collaborative models are also more likely to continue over generations. Interestingly, participants’ satisfaction with their experience in their family foundation was not dependent on the giving reflecting their personal interests or geography; rather, what engaged them was the act of working and learning together toward a shared goal.
At the same time, our research found that the creation of a robust family philanthropy “system” was important to provide outlets for families’ increasingly diverse philanthropic interests. The families that most successfully perpetuated a collective family foundation over generations established different vehicles for different purposes: they had firm boundaries around collaborative and individual “pots.” Conversely, the families that struggled had less clearly defined purposes for their philanthropic vehicles; that ambiguity grew into a source of significant tension over time.
The availability of other philanthropic outlets affords family members the autonomy in their personal giving that they desire. Despite recognizing the benefits of aligning their personal giving, participants in this research rarely chose to do so. They had a very strong desire for autonomy and privacy in the giving that took place outside of the collective family foundation and were willing to sacrifice perceived efficiency and effectiveness for the ability to “do their own thing.”
That autonomy in personal giving plays a critical function in the family’s collective giving. By providing family members with an opportunity to attend to their own interests, it puts less pressure on the family foundation to meet those needs and enhances families’ ability to work together in their collective giving.
Lessons
Based on the findings of this study, we offer the following key suggestions to families interested in creating and sustaining successful family philanthropy:
- Define different spaces for different purposes. Healthy family philanthropy systems include opportunities for both individual and collaborative They have clearly delineated arenas for these different activities, with the appropriate processes and structures to support their defined purposes. Families can help define these boundaries and stave off the intrusion of individual interests into the collaborative family philanthropy by providing resources—funding or support services—for personal giving.
- Limit individuation in the family foundation. Families interested in creating a collaborative family foundation must avoid putting in place individualistic processes and structures. We recommend that families keep discretionary giving to a minimum so that it doesn’t erode collaborative giving and resist the temptation to cater to individual interests. They should also avoid branch representation governance structures that are embedded in an individuated model of family philanthropy, and that encourage members to identify with their branch rather than the family as a whole.
- Prepare the next generation for the work you want them to do. Families interested in creating multi-generational, collaborative family foundations should be intentional about how they prepare and engage the next generation and avoid strategies that focus primarily on individual giving. Instead, provide them with opportunities to work together and integrate them into the work of the family foundation, so that they can learn the skills of negotiation, compromise, and communication that collaboration requires.
- Attend to the business of being family. Families need to dedicate time to creating healthy relationships—outside of the family foundation— if they are ultimately to succeed in any collective activities.
Conclusion
The structural and strategic evolution that philanthropic families undergo is mirrored by a more fundamental evolution in mindset. The most successful families in our research—those who were most energized and engaged by the quality of their philanthropy, who felt closer to their family due to their participation—had shifted from a sense of ownership to stewardship of the family’s philanthropic capital. As they got further from the wealth creation, they no longer saw the family foundation as “their money,” with participation an entitlement or obligation, but rather a public trust in which participation is a privilege and responsibility. Conversely, the families that maintained a more individualistic model were grappling with how to scale the model to their expanding family, where members were entitled to a “share” of the family foundation.
It is important to note that family philanthropy is only one piece of a larger landscape for families. Beyond traditional philanthropy, philanthropic families have myriad ways they can utilize their wealth to contribute to society: including the ways they operate their businesses, invest assets in the family office, and use their networks to elevate issues. These are all expressions of a family’s philanthropic identity and allow for much greater impact than a family can achieve through grantmaking alone. Additionally, thinking comprehensively about the many ways that families utilize wealth for social benefit provides more opportunities for family members to participate in ways that best align with their talents and interests, and it puts less pressure on the family foundation to carry the full weight of the family’s cohesion and legacy.
