In recent years, much of the growth in the philanthropic world has come from family foundations. They now account for more than half of the approximately 77,000 independent foundations in the U.S., according to the Foundation Center. In our firm's work with these foundations, we have found that they present unique challenges compared to other private foundations.
While the purpose of all charitable foundations is to make a difference in addressing societal problems, family foundations have the additional goal of engaging family members in a common endeavor. These two purposes can conflict, since solving complicated social problems requires focus and strategic grant making. However, all family members are not necessarily engaged by the same issues; nor do they always share the same views on how to address them.
In the vast majority of cases, descendents and other members of the founding donor's family control funding decisions. Typically, the foundations begin by providing grants to nonprofit organizations that reflect the founder's personal interests. However, as decision-making moves to the second, third or subsequent generations, the interests of family members diverge, resulting in a more diverse portfolio and diluted social impact.
Many foundations assume that to maintain the interest of family members, grants must reflect their personal preferences. While the favored nonprofits may be worthy of support, the result is diminution of the foundation's impact.
It doesn't have to be that way. Foundations that develop a unifying strategy can be both more effective and more successful in engaging family members, according to Ashley Snowdon Blanchard, board president of the Hill-Snowdon Foundation and a senior consultant at TCC Group.
