Running a family foundation is a lot like managing a family-run business. In fact, it might help to think about your future family foundation as a business - an enterprise separate and distinct entity from that of your family. Likewise, think of your family members as business partners in your foundation.
What does a family foundation do?
Family foundations, like other public private and public foundations, make grants. They also give to recognized 501(c)(3) and 509(a) not-for-profit and non-profit charitable organizations, to groups or to individuals, if it is for a charitable purpose such as disaster or poverty relief and scholarships.
As of 1998, according to the Giving USA Yearbook, there were approximately 654,000 charitable organizations in the United States, not to mention numerous other disaster relief funds and individual relief programs. No matter where your interests lie, you will have plenty of options to choose from.
That seems easy enough. We’ll just write a few checks each year, right?
Not exactly. Being an effective grantmaker means more than writing checks and simply giving away your money. It means examining your values and ideals and deciding where your philanthropic interests lie. Being an effective grantmaker means educating yourself on where your money will be most effectively used, studying organizations you may wish to fund, and evaluating how successful your philanthropic efforts have been.
In addition to making grants, you must see that your foundation’s endowment remains secure and intact, and earns enough investment income to cover the legally required 5 percent payout plus any administrative expenses.
Writing a check is the easy part of philanthropy. What requires more effort is making sure that your grant money works effectively.
That seems like a lot of work. When will we accomplish all this?
Most of the work your family foundation does will take place during board meetings. Some family foundations meet twice a year, some meet every month or two. At board meetings, members (family members and maybe non-family members, such as an attorney or an individual representing an area of your philanthropic interest) will discuss administrative and investment details of the foundation, review grant applications (if your foundation uses them), and decide on which organizations to fund.
In the early stages of your foundation, and depending on your grantmaking style, your board may need to meet more often. Once board members find a comfort zone in their philanthropic giving, you may be able to cut back to twice a year – for example, once to make grants, and once to evaluate their progress.
In addition to board meetings, other items that may demand your time include grant pre- and post-evaluation. This may include a site-visit to the possible grantee before approving the grant, and also at the end of the grant cycle, to evaluate the success or failure of the grant. This may also be a good time to assess whether to make another grant to the same organization.
How do we decide which organizations to fund?
Chances are you already have an interest in some charitable organization or philanthropic funding area. If you have a specific organization in mind, you may want to meet with individuals from that organization to determine whether their needs and your foundation’s grantmaking abilities are a good fit.
If you are interested in a particular funding area, you can meet with community leaders or leaders from that field to see where your money may best be used. For example, if you are interested in funding hunger-relief programs, there may be a homeless shelter or food kitchen already operating in your community. If not, local leaders, activists, and religious leaders can often direct you to other programs in the area, or discuss with you other options available in helping to fight hunger.
If you don’t have any idea what types of organizations or program areas you may wish to fund, meet with fellow philanthropists in your area and discuss your options with them. You will find philanthropy to be a welcoming field. For help locating grantmaking foundations in your community, contact the Council on Foundations at 703/879-0600 or email@example.com
- The Foundation Center has a database of foundations and what they fund. Use the database to generate ideas as to the types of programs you may be interested in funding, and talk to those who are funding them to learn more.
- Guidestar – The National Database of Nonprofit Organizations is a free service providing information on over 850,000 IRS approved nonprofit organizations.
- The Wise Giving Alliance provides information on hundreds of nonprofit organizations that solicit nationally or have national or international program services.
Where can I learn to do all this?
Networking with your peers can often be your greatest source of information. And the best place to meet with your peers is at one of the many conferences sponsored each year by philanthropic associations.
The Council on Foundations’ Family Foundation Conference is held each February. The conference offers educational sessions on topics from management and governance issues to grantmaking, to dealing with your family. Council conferences are ideal opportunities for meeting and networking with other grantmakers, most of whom have dealt with, or are currently dealing with, the same issues you are.
In addition, the Council on Foundations runs the Institute for New Grantmakers and the Institute for New Board members twice a year – on the east coast in winter, and on the west coast in summer. At these conferences, new grantmakers will learn the principles and practices of grantmaking and governance, acquire the necessary skills to run their foundations, and network with other new grantmakers.
Affinity Groups are networks of organizations representing grantmakers based on common missions, values, grantmaking goals and personal ideals. Some examples of affinity groups include Grantmakers for Health, Grantmakers Evaluation Network and the Jewish Funders Network. Each of these groups offer information exchange, advocacy, and networking programs.
Regional Associations of Grantmakers are nonprofit membership associations that exist to enhance philanthropy in their geographic region, such as the Washington Regional Association of Grantmakers, Ohio Grantmakers Forum, and the Southeastern Council of Foundations. These groups also have their own educational and networking programs.
I still have questions. Where do I go for help?
The Council on Foundations offers a broad array of publications to meet the needs of family philanthropists.
The Council on Foundations Family Foundation Services department offers research and information on all aspects of starting and running a family foundation. You may contact us at 703/879-0600 or by email: firstname.lastname@example.org.