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A Family Foundation:
Good for Philanthropy? Good for You?
Karen H. Putnam, Director of Philanthropic Advisory Services
In the face of economic uncertainty, political unrest
and tax reform, the uniquely American business of
family philanthropy is booming, heralded by a dramatic
increase in the number of family foundations. What
accounts for their surge in growth? One answer is the
emerging intergenerational transfer of wealth. We are
in the beginning stages of that economic and social
tsunami, with up to $40 trillion changing hands by the
middle of this century. Researchers estimate that over
half of this amount will go to philanthropy in the next
30 to 40 years. For many affluent individuals, family
foundations are the philanthropic vehicle of choice. They
offer continuity of personal values, family involvement
and structured giving.
In the spring of 2002, Bessemer Trust presented “A
Dialogue on Family Foundations” where five panelists
discussed the circumstances that led them to establish
family foundations and shared how philanthropy has
affected their lives. The panelists included Elihu Rose,
Jason Burnett, Elizabeth Hart Armstrong, Emily Tow
Jackson, and Abigail Disney. Bette Midler, the entertainer,
spoke at lunch about her giving and how she leverages
“celebrity capital” on behalf of causes she values. Several
themes emerged over the course of the event: family dynamics, engaging the next generation and effective giving.
A Delicate Balance: Dealing with Family Dynamics
Elizabeth Hart Armstrong introduced the issue of family
dynamics, using the analogy of taking a family vacation.
“Starting a family foundation can be like taking a family
vacation by car,” she said. “It can be difficult, but as
time passes you remember less of the drive and more of
the fun you had once you arrived.” On the other hand,
family members can, with good will, go their own ways.
Elihu Rose noted that as adults he and his brothers
decided to divide their parents’ foundation and pursue
separate objectives for the simple reason that siblings
are different. “We had different interests and different
philanthropic goals and didn’t see the need to convince one
another on how to make grants,” he said.
Several speakers stressed the value of a clearly defined
foundation mission statement as a way to unite family
members in common cause. They said increased commitment can result when “values and opinions collide” in the
search for shared philanthropic ground. Sometimes an
outside facilitator can be helpful in shaping the debate.
The mission statement also can evolve over time. The
Hart Family Foundation’s first mission statement was
highly detailed; within two years the full typed page was
condensed into one paragraph. Emily Tow Jackson views
the Tow Family Foundation’s mission statement as more
a philosophy than a concise statement of purpose. Both
speakers described their families’ early giving as broad
rather than deep, reflecting their desire to have their
money go as far as possible. Over time both families
decided to narrow their giving focus to make more
efficient use of their decision-making time and to evaluate
their impact.
Passing the Torch: Engaging Next Generations
For many families what matters most is involving their
children in philanthropy. Elihu Rose said, “Before you
talk about children and philanthropy you need to talk
about children and money.” For Elihu and his wife,
Susan, a family foundation was the natural way to educate
their daughters about the responsibilities and challenges
of wealth. They set up a conduit foundation for each
daughter, and fund them annually. Each daughter makes
a case to her parents for the causes she wants to support
and the amount of money she wants to give away.
Abigail Disney said growing up with a famous name
presents special challenges. When the achievement that
has resulted in wealth is not your achievement, and yet it
affects your life and the way others perceive you, both
your name and your inheritance can be an unwelcome
burden. Tempted to give all her money away, Abigail
decided instead to take control of her giving. She established
The Daphne Foundation to support causes of special
interest to her and her husband. Jason Burnett described
watching his grandfather David Packard’s eponymous
foundation grow exponentially, to the point where trained
A Family Foundation: Good for Philanthropy? Good for You?
professional staff is necessary to manage the grantmaking.
As a result he now is thinking of starting an off-shoot
of the Packard Foundation for family members of his
generation. He wants to experiment with new ideas and
to recapture the excitement that his grandfather must
have felt when he established the original foundation.
Jason also feels a sense of obligation, saying, “People with
money frequently have responsibilities they didn’t seek,
but can’t give away.”
Effective Giving
Practical suggestions emerged from the participants’
discussions of their own experience. Everyone agreed that
close, personal involvement is key. Bette Midler said
donors should “go and see what you have built, what you
have made happen… just like in golf, follow through.”
Among the speakers’ top recommendations:
Make site visits yourself. Site visits give first-hand knowledge
of the grant recipient, provide the opportunity to ask
tough questions, assess the competency of the organization’s leadership, and talk to people who work behind the
scenes, such as administrative staff and volunteers.
Stay in touch with the executive directors of your charities.
Ask what challenges the organization is facing — financially, technologically, in terms of personnel, and so on.
Solicit candid responses as to what they could do better —
and what you also could do better as a funder.
Emily Tow Jackson, whose foundation has evolved to
be a source of information on the juvenile justice system,
frequently consults with grant recipients because they are
part of her resource network. Abigail Disney invites the
executive directors to her house once a year for a group
dinner, encouraging a mutual exchange of experience.
Provide grantees with a clear explanation of your foundation’s
expectations. Clarity from the outset minimizes misun-
derstandings and establishes indices for evaluating
success. The ideal is not to be overly rigid, rather to
strike a balance between the organization’s needs and the
foundation’s goals.
Don’t reinvent the wheel. Guidelines for drafting a mission
statement, checklists for site visits, grant reporting forms,
and procedures for conducting board meetings already
exist and can be used to create documents and practices
that best meet your needs. Professional advice is also
available; you can engage someone to advise you on
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building your foundation just as you would engage an
architect to help you build a house.
Thinking Small, Being Strategic
One theme that came up time and again was that even
modest grants can have an impact out of proportion to
their size. Bette Midler has chosen to do some of her
philanthropic work “under the radar” by giving to small
causes. Among other things, she established scholarships
to allow underprivileged children to attend private school
in New York and funded music programs in New York
City public schools — everything from choir robes to a
music library.
Bette pointed out that small grants can be leveraged
by partnering with your city or state. Sometimes, for
example, money has been set aside by a municipal agency
to match a private grant. In a notably successful example
of leveraging, the Tow Foundation partnered with the
state of Connecticut in funding a program to bring paroled
youth back into the community.
They discovered that the state supported these young
people for only the first four months out of prison. The
Tow Foundation provided additional funding to prolong
support and discovered it made a big difference in the
program’s success rate. When the value of the supplemental funding was demonstrated, the state took over the
entire funding commitment.
When You Reach for the Moon, Get a Boost from a Star
While Bette Midler can often be found along side of
other volunteers refurbishing neglected parks around
New York City — she claims to “specialize in garbage”
and has been known to chase a windblown plastic bag
over several city blocks — she acknowledges that her
celebrity helped her to get people to pay attention and
to cut through bureaucracy. When one audience member
asked how other advocates of good causes could get a
celebrity of their own, she had a ready response: call
some agents. Agents want opportunities for their clients
to be in the public eye, and many celebrities would be
genuinely interested in supporting a good cause; it may
simply be that no one has asked.
A Family Foundation: Good for Philanthropy? Good for You?
The Wages of Good: Compensation and Benefits
Family philanthropy is hard work, but the compensation
is high. It is a major investment of time and effort, but the
dividends can exceed the initial investment. For Emily
Tow Jackson the personal rewards come not only in thinking about the lives that have been improved thanks to her
work, but also in the interaction she has with others who
share her family’s values. Philanthropy in Elizabeth Hart
Armstrong’s family is “an instrument of balance between
their life and their community.” Abigail Disney said that
for some people philanthropy is a lodestar, providing a
way to make a difference in society, a tool to teach children the value of money, and “a reason to look forward
to getting up in the morning.”
If you are considering establishing a family foundation or
would like to learn more about our Philanthropic Advisory
Services, please contact your Client Account Manager.
This material is provided for your general information. It does not take into account the particular investment objectives, financial situation, or needs of individual clients.
This material has been prepared based on information that Bessemer Trust believes to be reliable, but Bessemer Trust makes no representation or warranty with respect
to the accuracy or completeness of such information.
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A Family Foundation: Good for Philanthropy? Good for You?
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