AiP Conference Chicago April 24, 2014 Successful Transitions in Family Philanthropy

2 Introduction The Great Generational Wealth Transfer: By 2052, at least $41 trillion in wealth transfer from one generation to the next Transitions aren’t linear: players—and complexity—grow exponentially from one generation to the next

3 Transition: The Good Opportunity to instill philanthropic values in next gen Work together as a family toward common purpose Ensure continuation of philanthropic legacy

4 Transition: The Bad Exacerbate differences in interests and values Power struggles, fear of letting go of legacy Further sense of obligation or requirement

5 Goals of this Session Understand factors that contribute to positive, healthy transition—and common barriers and pitfalls Understand how you can help pave the way for smoother transitions

6 What is Success in Family Philanthropy? Family philanthropy’s “Double bottom line:” Social impact: the desire to have a meaningful impact on the world Family engagement: the desire to engage the family in collaborative philanthropy which is individually and collectively rewarding

7 Family Foundation Lifecycles Family foundations generally aren’t born that way Typically go through an evolution in attempt to balance social impact and family engagement goals: Controlling trustee foundations Collaborative family foundations Family-governed, staff-managed foundations (Source: Gersick, Generations of Giving)

8 Controlling Trustee Foundations Most foundations start here, some retain this model through transitions Family engagement often a vague notion—want to offer access, without truly sharing control Few policies and processes, especially regarding family engagement and succession Core dilemma: Founder’s purpose vs. family dream

9 Collaborative Family Foundations Transition from founder vision to family vision Transition occurs during windows of opportunity –Founder’s realization –Death of founder –Inclusion of 3 rd or 4 th generation Challenge: to identify that vision and develop structures to support it Core dilemma: true collaboration vs. co-existence

10 Family-Governed, Staff-Managed Foundation Staff hired to handle administrative and grantmaking responsibilities, family shifts to governance role Challenge: retaining board engagement Core dilemma: family governance vs. family management

11 Tips for Success Be explicit about goals and motivations: How critical is the achievement of particular programmatic goals—now and in the future? How critical is family involvement? What does this ideally look like? How important is perpetuity—and why? How willing are you to cede authority, and in what circumstances?

12 Tips for Success (cont.) Look for common ground Start very, very early Avoid stasis: engage in ongoing reflection, negotiation, planning Be realistic and respectful of family members’ interests, values and resources, and adapt to accommodate as appropriate Get outside help

13 Resources TCC Group: Kelin Gersick: Generations of Giving (National Center for Family Philanthropy) National Center for Family Philanthropy: Benton Foundation: