1.   Making good things happen isn’t always easy in the non-profit arena

Participating members of a family foundation client of mine felt strongly that they would have the greatest impact on society by addressing the needs of individuals who found themselves in dire straits through no fault of their own. They were discouraged to learn that IRS compliance requirements are complex and burdensome for family foundation distributions made directly to individuals.My strategy was to develop a network of family service agencies and a means by which the agencies might bring the needs of eligible clients to the family’s attention. The agencies verified the clients’ needs and assumed responsibility for overseeing the use of funds awarded. Through this system, the family’s funding was directed to the non-profit agency for the specified client and designated purpose. All donations were eligible per the regulations pertaining to family foundation distributions to qualified agencies – a relatively straightforward process. The strategy worked so well that the family went on to expand the enterprise and establish a non-profit corporation assisting individuals in need in 22 counties in California.

2. Finding the “Right Project” to fund may be the challenge of a lifetime

A young man who was executor of his aunt’s estate approached me to help him fulfill his charge. His aunt wanted him to identify a project in Israel to receive a sizable capital grant. The nephew needed help with two problems: the first was establishing the project review criteria that would reflect his aunt’s somewhat general instructions; the second was locating eligible projects in Israel. Since we were reviewing capital projects, which typically have a long lead-time for planning and subsequent implementation, we knew that the end point to the process would not be immediate.Through my network of contacts in Israel, I was able to bring several appropriate projects to his attention. Over a period of years, we reviewed each proposal using the evaluation criteria established when we launched the search. In the end, this young man felt the project he ultimately selected matched the sensibilities and sensitivities of his aunt. He expressed to me that he felt great relief and satisfaction at finding the right fit for his aunt’s legacy.

3.  Eliminating barriers among siblings by engaging them in philanthropy

Founding members of a family foundation often have several goals in mind when establishing a family foundation. Of course, they want to make a difference in the world, but they also hope that the foundation will create an opportunity for the adult children to continue to meet and share interests. In one such family, I assisted with the launch of the 2nd Generation Philanthropy Project. While engaging in the process through phone conferences and e-mails to accommodate scheduling challenges and geographic distances, the children were nonetheless able to foster a spirit of sharing and cooperation.Using a survey instrument I designed for this purpose, we were able to identify each sibling’s values and concerns about local and global problems: social, economic, environmental and health. By identifying where the siblings had overlapping interests, I was able to provide them with a menu of programs and services satisfactory to everyone. As they discussed the strengths and weaknesses of candidate projects, their conversations were concrete and productive. In the end, they were delighted with their choice and expressed gratitude that they had shared a commitment to make something positive happen in their community.

4.   Where can you learn the ABC’s of philanthropy when first starting out?

A young man approached me to help him fulfill his responsibilities as a newly appointed board member of the family foundation founded by his grandfather. The foundation was operating in a different state but he was charged with stewardship of a funding amount designated for support of Los Angeles-based projects of interest and importance to him. As a young professional building a career in the music business, he had little knowledge of the world of philanthropy.Through a series of conversations, I provided him with an overview of the social services field, instruction on how to assess human services programs and insight into how to leverage his philanthropic dollars. As he stepped up to his responsibilities on the foundation’s board, he was able to comfortably justify his own funding recommendations and ask pertinent questions regarding all grant-making activities of the foundation. He has been enjoying his new connections to the agencies he chose to support and now enjoys meeting with his parents and grandparents around the workings of their foundation.

5.  Finding the language to capture your philanthropic vision is the key to ensuring your legacy

Founders of family foundations often find themselves torn between two conflicting approaches to philanthropy: creating flexibility in the mission so future generations will be engaged in shaping an ever-evolving purpose to fit with changing times, or establishing a clear mission and guidelines to ensure the family’s legacy in a particular area.I was charged with exploring a founding family’s core values and helping them develop a mission statement capturing their philanthropic intentions. The mission statement we ultimately developed will serve as a guide for future generations who will take on the responsibility for governing the foundation. The founding couple expressed quite succinctly, “we hope through making our intentions clear, the next generations will find guidance and insight into our world and theirs.”

6. How to expand the inclusiveness of family foundation participation without creating havoc

A local family foundation, established by three brothers many years ago, was in a time of transition. Historically, a three-person board consisting of a representative from each of the three family lines managed the business of the foundation on a volunteer basis. The succeeding generation included 31 cousins. The challenge was to engage the family members without creating an unwieldy process.Over a period of months, I was able to assist the family with the revision of the foundation’s operating guidelines, orient a select number of new board members to the responsibilities of the board and establish a means for keeping the remaining family members informed about the activities of the foundation. With the broad family base now encouraged to suggest programs for funding consideration, the clarified mission and guidelines have been invaluable in keeping the foundation’s purpose and process on target. The family members have been very gratified to be included in the business of their foundation and have now organized, on their own, an annual cousins’ picnic – just for fun.

7.  Bringing focus to good intentions – an interactive process

A financial manager with a client who was planning to establish an endowment fund in her estate plan contacted me. I met with his client to help her identify her concerns for her community and hopes for the future. I was able to provide her with the social services vocabulary she needed to pinpoint what she hoped to accomplish. I helped her to delineate how the philanthropic portion of her estate would be directed. On a number of occasions, she mentioned to me how grateful she is to have her wishes on record for her trustees to follow.

8.  How to avoid foundation overwhelm and costly mistakes

A young woman inherited a foundation set up by her father but lacked experience in foundation operations. She regretted some of her charitable giving because she felt that she had too often responded to pressure from agencies or friends and because she did not have a focus for her philanthropy.Working with me, she was able to clarify her funding priorities that in turn helped her respond to unsolicited requests that did not meet her interests. We established a proposal review process to help her avoid making hasty decisions under pressure. By creating a strategy for the foundation and developing the necessary tactical processes she is able to focus on her interests and respond to requests in an effective manner.

9.  The IRS requirements and operational details of running a family foundation can be daunting for anyone

I am often contacted by financial managers, accountants, or lawyers to assist a family in bringing operations of a foundation into compliance with IRS requirements. Since family foundations are often challenged by IRS distribution deadlines, or lack required vetting procedures I help families avoid potentially disastrous penalties.In these situations, my primary focus is to educate the board members in exercising best practices in the philanthropy field. I do this by:

  1. Outlining the procedures for proposal vetting and review
  2. Drafting standardized templates for use in all phases of the review process
  3. Setting a fixed annual schedule for grant award review and follow-up.

The family members are always grateful that they are able to be in compliance and perform their stewardship duties at a professional level while maintaining the intimacy of operating their own foundation.

10.   Reducing Charges for Overseas Donations

A family foundation client wanted to provide funds to a social service agency based in a foreign country. The target agency helps refugees within its home borders and is eligible to receive funds through an umbrella organization established in the United States. The U.S. based umbrella charges a significant fee to administer the transfer of the funds – a charge calculated as a percent of the donation. The donor was discouraged that a significant portion of his philanthropic funds would be paying for the administrative overhead of the umbrella agency.I explained to the donor that the umbrella agency was providing the service of validating the eligibility of the foreign agency to receive funds from a U.S. based charity and supervising the proper use of the funding over time per requirements set forth by the Internal Revenue Service. He was delighted to learn that I could assist his family foundation with the IRS compliance without the unwieldy administrative overhead costs and advertising budget of a large bureaucracy.

Please contact Susan Grinel, Ph.D., Philanthropy Advisor, or 310-838-5131 for assistance with any matter associated with family foundation philanthropy. Susan is dedicated to helping her clients meet their philanthropic goals.

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