Families of great means often try to encourage this interdependence through the creation of a family foundation, a nonprofit organization meant to give away money to charitable organizations. The idea is almost always that the act of giving to others will keep the family together and help them weather inevitable family discord.
The plans don’t always work out, but when they do, they can offer lessons to families of far less wealth about passing along shared assets to their children — be it the family business or just something that one generation hopes subsequent ones will share.
One issue that some families have encountered is that the types of philanthropy favored by one generation may not be the ones favored by the next — something that could cause strife if not addressed.
A recent report, “Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy,” produced by 21/64, a philanthropic consultancy, and the Johnson Center for Philanthropy, looked at how younger generations felt about philanthropy. It found that those who followed the baby boomers wanted to give to charities in ways that produced measurable change. The report also found that they wanted to be more hands-on with the groups they give to.
“The belief is that Gen X is cynical and Gen Y is entitled,” Sharna Goldseker, managing director of 21/64, said. “We found this high-capacity subset to be different, to be more involved and interested in stewarding their family philanthropy.”
Their desires will affect how grants are made by family foundations for decades. But the vast transfer of wealth from older generations will first have an impact on how family foundations function from within. Many are large financial organizations, but they are also a collection of family members with all the issues that any family has.
I hoped to learn more about how the generations were managing the transition.
BRINGING THEM ABOARD Succession in family foundations, not to mention family-run companies, used to happen when the founder died. With people living longer, this is happening less often, and the desire to use foundations to teach children and grandchildren about the family’s values is increasing.
As with many things with children, it’s easier to get them to do something if you’re interested in it, too.
Ms. Goldseker said the report found that nearly 90 percent of respondents cited their parents as their model for philanthropy. In her case, she said her parents started talking to her when she was quite young about philanthropy in general and, specifically, the Goldseker Foundation, started by her great-uncle, who made his money in real estate.
But she said she still had to demonstrate interest and competence to get a seat on the board, which she did in her late 20s after paid and unpaid work with various grant-making charities and nonprofit organizations.
Zac Russell, whose grandfather built Russell Investments, the money management firm and creator of the eponymous stock indexes, said he had wanted to be on the board of the Russell Foundation since he was 11 years old. He worked with the foundation’s chief executive and attended various next-generation conferences to learn as much as he could. Now 25, he will attend his first board meeting as a member this month.
“My interests have never been on the programmatic side but on how we fund those programs, how we invest accordingly, how we help people who are passionate about it,” Mr. Russell said. “I didn’t play soccer as a kid. I read The New York Times and The Economist to learn about investments.”
Younger family members are not always so eager to join the foundation. Nor are their parents or grandparents ready to have them.
Article source: http://www.nytimes.com/2013/02/09/your-money/estate-planning/family-foundations-prepare-for-next-generation.html?partner=rss&emc=rss
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