Interview with Kelin Gersick
by Pamela Gerloff
What are the biggest challenges people need to anticipate
when transferring leadership of a foundation to the next
generation? Where might things "go wrong"—and
how does one "make them right"?
Based on our research, the approach we would take toward
a generational transition is to recognize that it's
a process, not an event. Family foundations are constantly
evolving. The ones that do it best, which is to say, the
ones that feel most in control and satisfied with the outcome,
are thinking all the time about where they are in their
evolution—of their policies, grantmaking, and governance;
of the readiness of family leaders to rise to new levels
of leadership; and of the ability of current leaders to
pass on the mantle of authority.
Foundations where there is relatively
long-term development of the succeeding generations are
in a much better position than foundations that haven't
provided for that. This means giving the next generations
time to, first, become acquainted with the foundation; then
to become participants; and eventually, to become active.
Typically, the longer the newer generations have been involved
in the foundation, the better.
Secondly, the more meaningful the criteria
and selection processes are for the next generation of trustees,
the better. Some use rigid representational techniques,
like age or geographical location, without regard to such
factors as interest, capacity, or point of view. Others
are much more concerned about "fit." They consider
the work that needs to be done and individual family members'
readiness to make a contribution. That generally works better
as a way to select trustees and resolve issues as a foundation
moves forward. As the foundation evolves, it's good
to keep refining the selection criteria, to maximize the
likelihood of having family members who are dedicated, prepared,
and eager to contribute.
Are there differences between transitions in family foundations
and transitions in family businesses?
There are differences in the organizational economics of
businesses and foundations. The main difference is that
because the performance of family companies is of critical
importance to surviving—to being smart and competitive
in the marketplace—and the primary stakeholders are
all in the family, more attention gets paid in family businesses
to setting performance criteria for future leaders; and
more explicit demands are made regarding the performance
and behavior of family members in their roles.
Foundations, on the other hand, are more
likely to make choices based on representation, like whose
"turn" it is to serve on the board, or equity
("What's fair?"), or demographics ("This
year we need someone from the West coast.") In general,
organizational needs in family foundations—like the
need for good management and a good infrastructure—are
not given enough attention. The people governing family
foundations are not generally held to the same standards
or given the same resources of leadership as in family businesses.
Family foundations are set up for entirely different reasons
than family businesses, of course, and it is not entirely
surprising that they have different challenges—and
Your research says, "Actions in family foundations
have very long Γ’β¬Λhalf-lives.' Without the ups
and downs of business cycles to capture everyone's
attention, foundations tend to perpetuate core issues of
the family for a longer time, returning to the same dilemmas
over and over, even as individuals change." What's
a way out of that?
Family foundations sometimes can become a primary theater
for the enactment of family dynamics. These dynamics involve
issues among siblings, families, and generations. Because
foundations are closely tied to issues like values, individual
differences become very central to the things people talk
about in foundations. The foundation is therefore a place
where, for example, family members will continue to revisit
questions like where their wealth came from and how they
feel about it; or one branch of the family may have developed
a liberal outlook and another may be conservative, so the
two branches hold different views of what the foundation
should be supporting with its philanthropy. These questions
and differences have meaning in the grantmaking discussions—so
Family Foundations: Tips for Transferring Leadership
that transitioning across generations is a process,
not an event
members of the next generation over a long period
of time, giving them time to gradually become
more knowledgeable and involved
meaningful and relevant criteria to select the
next generation of trustees
on "fit," not quotas
high standards of performance and provide sufficient
resources to achieve them
about family issues and values separately from
grantmaking, so those discussions don't
dominate the work of the foundation
the foundation up at the outset to allow for reinvention
and redesign later on
foundations tend to continually return to the same core dilemmas,
in ways that family businesses do not.
To the extent that families can separate
these kinds of discussions from the foundation itself—that
is, create enough of an opportunity to discuss issues of value
and identity without always connecting them to specific issues
about grantmaking —families have a chance to reach common
ground more easily. Those kinds of discussions may occur at
a retreat, or a family meeting, or just in talking among themselves
about fundamental issues of value.
Sometimes family foundations create a very specific mission,
but a generation or two later the world changes and that
mission is outdated. From your research, would you say it
is better to be more specific or less when creating the
foundation's initial focus and mission?
Founders who create a specific programmatic constraint that
they expect to maintain in perpetuity are taking a huge
risk. The risk is that the issue they find compelling will
become irrelevant (the buggy whip phenomenon) or that no
successors will find it compelling enough. The advantage
is that they get enormous focus and clarity.
By being less specific, the founders
are creating the opportunity to be collaboratively philanthropic
and to leave a legacy of values, not of programmatic constraints.
The risk in this is that it requires a lot more continual
reinventing by the next generation because there is no directive
to follow; but the chances of the foundation being more
broadly adaptable and finding a constituency in the future
One family foundation I know of originally gave money to
provide care for elderly nurses when they could no longer
work. Later, when it had much more money to donate, it broadened
its mission to support the hospitals and institutions where
the nurses work, including purchase of hospital equipment.
To the extent that they can find a legally acceptable way
to do that, I think that's good. Our conclusion, based
on this research, is that family foundations need to evolve—so
they need to
Does the key to continually evolving lie in how the foundation
is originally set up?
The concept and design at the beginning has many implications
far down the road. Sometimes the most important thing that
determines the success of a next-generation continuity is
a decision early on that affects things 50 years down the
road. If a founder couple with three children choose to
include only the eldest child on the board for the first
20 years of the foundation's life, that will most
likely create a very different long-term dynamic than a
founder couple who include all three of the children from
Did you find anything in your research that particularly
One interesting concept is that family foundations often do
not begin as foundations, but rather as the formalized personal
giving of the founders. This means that the foundations have
to discover and define themselves later in their lives. That's
the creative moment of the family foundation—when it
transitions from being a formal operation for the personal
giving of the donor to a family foundation with a mission
that involves collaboration of many voices to achieve. In
many cases, that doesn't happen for a generation or
Is that the most vulnerable time—that transition from
founders to the second generation—in terms of whether
a family foundation continues or not?
It's not just continuation that's needed, its
reinvention. It's a truly collaborative process. Discovering
how to do that is the primary challenge of this first transition.
Most of the foundations in our research sample found that
the transition from the first to the second generation was
not simply a succession—it was a significant redesign.
Because of that, using an outside consultant was often beneficial
to help review strategy, bylaws, and policies. Many fundamental
reconsiderations had to occur.
How long do family foundations usually last?
Theoretically, in perpetuity—but we don't really
know. Family foundations have been around for only about
100 years. We don't know how long some of them might
last. Ninety percent of family businesses don't make
it to the third generation, but family foundations tend
to live longer. They are transitioning values, not money,
which makes the difference.
If present trends continue, family foundations will
control more than $500,000,000,000 in assets over
the next few decades. There are now more than 50,000
private foundations in the United States, providing
essential support to our social service and cultural
systems, and at least two-thirds of them are controlled
National Center for Family Philanthropy
E. Gersick, Ph.D., is a senior partner at Lansberg, Gersick
and Associates (
which specializes in assisting generational transitions
in family businesses and foundations. He is professor emeritus
in the doctoral program at the California School of Professional
Psychology and a management fellow at Yale University. Dr.
Gersick is also the principal investigator for the National
Center for Family Philanthropy's (
research study of strategies for effective transitions in
family foundations, "Generations of Giving: Leadership
and Continuity in Family Philanthropy." This interview
is based upon the forthcoming research report, which focuses
on issues of leadership and continuity across generations.
for how to receive additional information about the
study, or to order a copy of the Interim Report.)
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