AiP Conference ChicagoAiP Conference ChicagoApril 24, 2014April 24, 2014

Successful Transitions in Family Successful Transitions in Family PhilanthropyPhilanthropy

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Introduction

• The Great Generational Wealth Transfer: By 2052, at least $41 trillion in wealth transfer from one generation to the next

• Transitions aren’t linear: players—and complexity—grow exponentially from one generation to the next

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Transition: The Good

• Opportunity to instill philanthropic values in next gen• Work together as a family toward common purpose• Ensure continuation of philanthropic legacy

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Transition: The Bad

• Exacerbate differences in interests and values• Power struggles, fear of letting go of legacy• Further sense of obligation or requirement

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Goals of this Session

• Understand factors that contribute to positive, healthy transition—and common barriers and pitfalls

• Understand how you can help pave the way for smoother transitions

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What is Success in Family Philanthropy?

• Family philanthropy’s “Double bottom line:”• Social impact: the desire to have a meaningful

impact on the world• Family engagement: the desire to engage the family

in collaborative philanthropy which is individually and collectively rewarding

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Family Foundation Lifecycles

• Family foundations generally aren’t born that way• Typically go through an evolution in attempt to balance

social impact and family engagement goals:• Controlling trustee foundations• Collaborative family foundations• Family-governed, staff-managed foundations

(Source: Gersick, Generations of Giving)

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Controlling Trustee Foundations

• Most foundations start here, some retain this model through transitions

• Family engagement often a vague notion—want to offer access, without truly sharing control

• Few policies and processes, especially regarding family engagement and succession

• Core dilemma: Founder’s purpose vs. family dream

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Collaborative Family Foundations

• Transition from founder vision to family vision• Transition occurs during windows of opportunity

– Founder’s realization– Death of founder– Inclusion of 3rd or 4th generation

• Challenge: to identify that vision and develop structures to support it

• Core dilemma: true collaboration vs. co-existence

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Family-Governed, Staff-Managed Foundation

• Staff hired to handle administrative and grantmaking responsibilities, family shifts to governance role

• Challenge: retaining board engagement• Core dilemma: family governance vs. family

management

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Tips for Success

• Be explicit about goals and motivations:• How critical is the achievement of particular

programmatic goals—now and in the future?• How critical is family involvement? What does this

ideally look like?• How important is perpetuity—and why?• How willing are you to cede authority, and in what

circumstances?

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Tips for Success (cont.)

• Look for common ground• Start very, very early• Avoid stasis: engage in ongoing reflection, negotiation,

planning• Be realistic and respectful of family members’ interests,

values and resources, and adapt to accommodate as appropriate

• Get outside help

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Resources

• TCC Group: www.tccgrp.com• Kelin Gersick: Generations of Giving (National Center

for Family Philanthropy)• National Center for Family Philanthropy: www.ncfp.org• Benton Foundation: http://benton.org