Research Leads: Wendy Ulaszek, Neus Fileu, Devin DeCiantis and Don Carlson
Our understanding of family philanthropy has made significant strides in recent years. Thoughtful research, extensive education and training, and the open sharing of experience at forums and conferences have had a profoundly positive effect on the ability of private foundations, large and small, to accomplish strategic, high-impact philanthropy. Family foundations have been at the forefront of this professionalizing trend, moving from extremely private and invisible operations to a new role as exemplars of sophisticated, ambitious, transparent, impact-focused grantmaking (e.g. Gates, Kaiser, Zuckerberg, Atlantic/Feeney, Barr, and many others).
Despite these developments, our understanding of governance in family philanthropy has lagged behind. This is especially true for our largest and most complex philanthropic families. In 2007, with the publication of Generations of Giving, LGA and NCFP approached the study of foundation governance in multi-generational family foundations. Our purpose was to understand the key challenges to high-quality organizational functioning in these foundations, and to help those families who sought continuity to successfully transfer their foundations to succeeding generations.
But much has changed in the world of family philanthropy over the intervening decade. While family foundations continue to multiply, many third- and later-generation families have gone far beyond a single foundation, and have evolved multi-faceted philanthropic structures with complex governance systems. They often have one or more “legacy” foundations created by earlier generations, a number of newer foundations created by siblings and cousins in later generations, a network of donor advised funds, extensive personal giving, values-aligned endowment management, and corporate social responsibility programs in their family-controlled operating businesses.
The family’s role in each of these grantmaking vehicles may vary widely, influenced by the personalities of leaders, the history of family relationships among branches, the logistics of location and time, and the degree of inter-generational closeness and deference. In addition, for those families who own businesses, there are often dilemmas about the appropriate influence of family values on corporate social responsibility -- whether the companies are privately owned, closely held, or publically traded. Sometimes, through sheer effort and/or exceptional leadership, it all works. In other cases, all of that complexity is disorganized, inefficient, and internally contradictory, compromising both the quality and the sustainability of the family’s philanthropic efforts.
The field has accumulated stories from these families, but we do not have a good understanding of how successful families manage their family dynamics as they fulfill their governance responsibilities in guiding these complex philanthropic activities. Our experience suggests that, while the philanthropic operations may be compartmentalized into these different grantmaking structures, the family members themselves see all of these efforts as interconnected -- expressions of different but related aspects of the family’s values, overall philanthropic agenda, and self-image. The challenge is for the family to coordinate all of the disparate components, so that its philanthropic identity is authentically represented by the work done in its name. To accomplish that, the family must recognize and address a few critical questions:
- What approach to integration vs. differentiation best serves the family’s philanthropic goals? Under what conditions do families seek to create a unified strategic approach across foundations, funds, personal giving and investing to maximize impact? In contrast, when do they maximize diversity across vehicles, and how does that work?
- How can the human capital of family participants be most efficiently and effectively allocated across all of the different philanthropic vehicles? Who should lead what? How does that evolve across generations?
- What is the proper role of controlling owners/shareholders in an operating company’s philanthropic and community social responsibility programs?
- In the most pragmatic terms, what are the exemplary structures (legal forms, boards, professional staffing), policies (director or trustee terms, rules for representation, roles for the next generation and spouses, endowment management and venture philanthropy), and procedures (meetings, leadership selection and authority, working relationships with staff) that have proven successful in these most complex philanthropic systems?
These are the world’s leading philanthropic families; they are our exemplars and truly significant social engineers. Accumulating knowledge about how successful families have resolved these dilemmas would help the network of these large, complex families learn from each other’s experience. In particular, it will highlight what are the right questions that families should be asking themselves when thinking about how to govern these vital activities. In addition, it would help smaller families, earlier on the developmental curve of complexity, to make informed choices about what governance models fit best at each stage of growth.
Purpose of the Project
This pilot research project will integrate the literature on governance of family philanthropy with case analyses of exemplary families who are already managing a multi-faceted philanthropic effort. A summary report will address:
- The governance architecture used by complex, multi-generational families to oversee their philanthropy across delivery vehicles: personal giving, foundations, funds, corporate giving, and value-directed endowment management.
- The process used by these families to allocate their available human capital to the various governance structures.
- The approaches used to address the dilemma of a unified versus diverse philanthropic agenda across different vehicles.
- The management of family dynamics in these complex governance systems.
The report will include lessons learned from the experience of these exemplary families, and recommendations for the broad range of philanthropic families who are facing increasingly challenging governance dilemmas in their complex systems.
Contact us to find out more about our research on integrated philanthropy in complex family enterprises.