More Than Money
Issue #16
Sorry, there was an error: Undefined variable $issue

Family Foundations

Table of Contents

“Personal Stories”

Unresolved Conflicts

Our family foundation exploded into conflict at its first meeting. The whole thing blew up over who would be invited to my sister's graduation, and that was that. My father and sister didn't speak for years; the board never met again; and my father took over total control of the foundation.

This result wasn't a big surprise given my family's conflicted attitudes about money. My parents are terrified of being judged as wealthy, but they live in this enormous dream house and make large institutional donations that get the wings of buildings named after them. They tell me, "Don't save for retirement; that would be ridiculous," but then get mad at me for not saving for retirement! They fight constantly about money because my dad wants to give away more than my mom.

My parents are both from immigrant families that came to this country with nothing. They lived through the Depression and the Holocaust, and still sleep with a gun under their bed. Yet, over the last thirty years, my dad made an unbelievable fortune in real estate. Being successful has muted some of the deep pain I see in him. And, even though my father is very autocratic about the foundation, he has funded many wonderful things--including giving half a million dollars to an educational foundation I helped start. The extent of family participation is that I beg and my dad decides. Sometimes yes, sometimes no. There is neither room for negotiating, nor changing how the foundation is run. For all my frustration, I've learned a lot from my folks about giving. Even before our family was wealthy, giving was a part of the family philosophy. "You have to move the mountain a little bit," they said, and I say the same phrase to my eight-year-old twins. Someday I'll become the president of our family foundation, where the bulk of my parents' assets will go. Will I run it differently from my dad? I'll have a board of outside experts to advise me, that's for sure. But there's enough of him in me, that I'll probably want to make the final decisions myself.

- anonymous author

Passing the Torch

I come from a long line of Yankee Republicans who love the out-of-doors. When I graduated from high school, my parents gave me a lifetime membership in the Sierra Club. I got further interested in conservation during the 1950's, when I worked on a salmon fishing boat up in Alaska near the Tongas National Forest. The Tongas is the most beautiful place I have ever been. I naturally gravitated towards conservation when I became president of my parents' foundation in the late 1960's. Our primary funding area since then has been the support of public interest litigation on conservation issues.

My biggest labor of love, however, has been a project to protect the Tongas that our foundation started in 1979. We set up a public charity called the Boat Company, bought two wooden-hulled, converted U.S. Navy mine sweepers, and started taking influential people up to Alaska. We've taken close to four thousand journalists, lawyers, potential funders, conservation leaders, and business people on over 250 cruises to this marvelous seventeen million acre wilderness area. We're advocates, of course, but we don't sell the place. The place sells itself! Our crew members, who are trained naturalists, help our passengers appreciate the value of the area and its resources. In an unobtrusive way, we help all our passengers understand that these spectacular resources should be managed for long-term, not short-term, benefit.

My wife and I are looking forward to passing on both the foundation and the Boat Company to our three sons. Our older boys, who have worked summers with the Boat Company, love the Tongas too. They are already members of the Boat Company's board, and will join the Foundation's board at our next annual meeting.

I like to think that my efforts will live on after me, but I want to let our children chart their own course with the foundation. My parents didn't burden the future by placing restrictions on the foundation. My wife and I, and my brother, who has worked with me from the beginning, feel the same way. We'll let our heirs decide what's needed. Times change. Society's needs might be very different after we're gone. That's for our sons to decide.

I don't foresee any big conflicts among us, even during the period when our children serve on the board along with my wife and me. We're pretty confident that there will be enough money for them to follow their own inclinations, even funding things their mother and I are not so interested in, without jeopardizing the foundation's continued giving to our longstanding interests.

- anonymous author

We All Won

Our family's charitable trust has always welcomed younger family members onto the board. I joined at age eighteen, and my cousin Abby came on when she was thirteen. We were told, "If you read all the proposals and know what you're talking about, you'll be given as much respect as the rest of us."

At age twenty-six, I started to make waves. It was the early 1980's, and more and more people in the U.S. were working to end apartheid in South Africa. A key strategy was to ask companies to adhere to a set of anti-racist principles. Companies who didn't voluntarily adopt these "Sullivan Principles" were being divested from university endowments, municipal pension funds, and were subject to shareholder resolutions which opened the issue to a public vote among stockholders.

When I learned that my family's company was facing such a shareholder resolution, I went to the shareholders meeting and spoke in favor of adopting the resolution to sign the Sullivan Principles. The resolution was voted down, but instead of giving up, I encouraged the organizers of the resolution to bring it up again at the next shareholders meeting. I figured that since the trust fund owned a considerable number of shares of my family's company, if I could persuade the other board members to vote our shares in favor of the Sullivan Principles, maybe we could win.

My father, uncle, and grandfather were still involved in the company's management. From their perspective, I was being disrespectful and unappreciative. After all, their efforts had built an enterprise that had created wealth and freedom for several generations of the family. They felt personally attacked by criticism of the company's practices. When I asked to be put on the agenda for the next shareholder meeting, they retorted, "What do you know about the Sullivan Principles?! We advise you not to talk about something you know nothing about."

Their challenge spurred me to find out every damn thing I could about the Sullivan Principles in the following six months. I was determined to do all I could to overthrow apartheid, even if it meant upsetting other people in my family. The more I learned, the more clear it was to me that the company had a moral mandate to adopt the principles.

The night before the next shareholders meeting, I gathered family members together at our ranch in Colorado, showed them a movie about South Africa, and opened a discussion about apartheid and the Sullivan Principles. I explained that adopting the principles wouldn't cost the company a great deal of money, because it already adhered to many guidelines such as having decent wages and a lot of black managers. The company would, however, have to change some relatively low-cost things such as segregated bathrooms.

I argued, "At the trust fund, we claim to care about the rights of oppressed people. How can we be trying to heal oppression through the family's foundation, while profiting from it through the family's business? Tomorrow, at the meeting, let us each claim our voting power and vote our conscience!"

It was an intense night. I was crying. My uncle wasn't talking to me. I felt the questions hovering in the air: Can we live with each other? Can we love each other? The conflicts I had uncovered felt like they might destroy our family's ability to work together.

The next day, the stockholders meeting voted by a wide margin to adopt the Sullivan Principles. After the vote, my uncle complained to the gathered family, "Why are you picking on the company? What about all the other companies in the trust's portfolio? By that he meant, "Leave us alone!" But many others in my family took it as an invitation to insist on higher ethical standards for all the trusts' investments!

When I look back on that day, I don't feel that I won, but rather, our whole family won. Had we stopped where we were all comfortable, we wouldn't have grown much. Instead, we struggled together, and through it gained respect for each other. Even my uncle has come around. I recently overheard him boasting how the trust fund helped our highly traditional and successful investment firm develop into a leader in the field of socially responsible investment.

When I waged that campaign, I felt urgent about responding immediately to injustice. Young people are like that: injustice hurts in their bodies. It doesn't hurt in my body that way anymore. I don't judge the impulses of either stage of life as right or wrong; it's just that being older, I understand that the struggle for change never stops and I pace myself for a lifetime. If a twenty-year-old came into the foundation today and challenged me on my moral right to lead, I would probably get defensive. But we all need young people to push us on. My son Sebastian, who is nine, may join the trust fund in a couple of years, and I bet he'll be challenging it before long.

- anonymous author

Investing in Family

Our family owned timberland and saw mills back in 1855. The company is still entirely family-owned, but it has evolved into a holding company that is actively invested in four businesses in disparate fields. There are now more than 300 descendants, or family "shareholders"--many of whom are, or were, active in some way with the company and the three family foundations.

Every January, each shareholder gets a listing of the board and committee positions opening up. Those interested apply and are selected by nominating committees. More than sixty family members serve on various boards and volunteer committees every year. Unlike some family companies and foundations I hear about, we have been besieged by family members in their teens and twenties who want to become more involved. This interest didn't "just happen." It is a direct result of the capital investment we have been making for over twenty years in our family and its youth.

For instance, our annual meeting is four to five days long. Last year, nearly 230 shareholders attended. For the younger people, we run a full-blown camp program, which just last year involved sixty children and twenty teenagers. Every year we ask a local group or Chamber of Commerce, "Got any useful project that a hundred or so people could do for a day?" We then work together to help build trails or clean up trash--whatever is useful.

We also have many year-round programs for family shareholders. These include:

  • An Internship Program to help family members in high school and college find jobs in their field of interest.
  • An Education Assistance Program to offer family members partial reimbursement for continuing education tuition. In return, the student agrees to be "on call" to the company for three years to give advice or assistance.
  • A Shareholder-Directed Charitable Contributions Program to enable stockholders to direct company profits to the charitable organizations of their choice, based on a yearly-calculated amount-per-share. Last year just under $200,000 was given through this program.
  • An Associate Opportunity Fund to allow shareholders who want to start their own businesses to apply for venture capital.
  • A Loan Program to let shareholders borrow against their stock as if it were a publicly-traded security (because privately-owned stock provides so little liquidity).
  • A Quarterly Publication edited by a different family member each time, published by the family office to keep communication flowing among our far-flung members.

We don't hammer away at our young people that they "should" be philanthropic or successful at business. What we try to get across is simply this: you are welcome here. Whether you are involved or not, you belong. We honor you for your unique characteristics, whether a wigged-out musician, an earnest business major, or a six year old.

We're here for you when you decide you want to come.

- anonymous author

Flying Under the Radar

I know it sounds cynical, but in some wealthy families the attitude seems to be: "whichever family member can't tie his shoes, give 'em a foundation." Decisions made at a family foundation don't threaten the family's source of wealth, and who's to say any one grant is better than another? The philanthropists in the family are humored.

This is not a stereotype I appreciate. As an achievement-oriented, ex-management consultant and investor who became the paid, full-time president of my great aunt's foundation about ten years ago, I beg to differ. I've tried to bring the same aggressive tough-mindedness to our family's giving as other family members bring to the act of generating wealth. At first, my father was skeptical of my pursuing philanthropy as a career, but now he is my biggest supporter.

At the time of my great aunt's death, the foundation was barely off the ground. We had no giving record or focus, so I had to shape the vision from the ground up. We could have just sat back and waited for proposals to come in as some family foundations do--the "letter openers" I call them--but I wanted the foundation to be more proactive.

One of the first programs we devised was an annual scholar/golfer award for collegiate women. My great aunt was on the cover of Time in 1923 as the winner of the national women's golf championship. The award, located at the Women's Golf Hall of Fame, is now regarded as one of the top three awards for collegiate women golfers. With this one program, we get to promote both scholarship and athletic ability, give my great aunt the recognition she deserves, and do something of sentimental value. My great aunt would have been proud.

To make a difference at a national level, the board decided on the environment and population as our areas of focus; ones we felt my great aunt would have supported had she been alive. Soon after we began grantmaking, however, I realized that these issues were way too general for us, so we explored ways to narrow our focus. I call this the "Three Bears Theory of Giving"--investigate different program areas until you find the one that works for you (and your board of directors, of course). Ours turned out to be conserving marine fisheries--something my great aunt (who loved fishing) would certainly have approved. No one we knew was working on this issue at the time and it was an area that needed a lot of help.

The trick to success was to be creative. We've initiated matching grants, promoted joint ventures between groups, convinced other foundations to co-venture with us, and I have served on boards of national environmental groups--all the time "gently" pushing a marine conservation agenda. Hard sell doesn't work well in this business. Our foundation even published a newsletter on conservation that we distributed to over 1,900 foundations and environmental organizations. If you are passionate and focused, people start to follow your lead and seek your advice. After about nine years of working with groups to create and develop marine conservation programs, we feel we've made a major impact. There are now marine/fisheries programs at about eight of the ten biggest environmental organizations, which are supported by a growing number of foundations.

Many of my colleagues in the philanthropy world underestimate what they can accomplish with a small family foundation. My experience has shown that we are only limited by our own creativity and risk taking ability. As they say, it's not what you have (to give), it's what you do with it. We are the venture capitalists of giving. We can fly under the radar and take the risk of supporting innovative programs that the big foundations can't touch--yet. Foundations our size, with assets between $10 and $50 million dollars, can hit the beaches first, help build the needed infrastructure, and then call in the big guns once the projects we support are proven viable. Believe me, it works.

- anonymous author

Taking the Lead

Our family foundation sat on the shelf for a couple of years before we got it rolling. We didn't have a staff, a giving plan, or even regular meetings. We hadn't even made any grants.

Four years ago, when I was working at Greenpeace, I began to see our foundation as an opportunity just waiting to happen. I told everybody in my family that I would be willing to serve as a full-time program officer and president if they backed my vision of what we could accomplish. I pushed two ideas. First, I didn't want to go the traditional charity route. I wanted to support activist groups working on environmental health, social and economic justice, and community empowerment. Second, I didn't want the foundation to go on forever. I didn't propose a firm ending date, but I wanted us to give away principal as well as income while our foundation still had focus and energy. Happily, my mother and all my siblings agreed, perhaps because no one else had the time or interest to get our foundation up and running!

My mom, who is from the old school of philanthropy, has become increasingly excited about what I am trying to do. What influenced her wasn't talking with me, or reading the material I sent her. It was coming with me to the Louisiana Environmental Action Network, an organizing group working with many African-American communities fighting for their survival along Louisiana's "Cancer Alley," perhaps the most polluted stretch along the entire Mississippi River.

There, my mom learned what this fertile land had been like before the chemical and oil companies built plants nearby, and heard how the fields don't produce crops anymore. There are fewer species of fish in the river, and children are being born with deformities, and older people are increasingly dying of cancer and other diseases--at rates higher than almost anywhere else in the country. My mother saw the people's poverty first hand, and marveled at their courage in taking on some of the most powerful corporations in the world--all of whom were trying to avoid responsibility, or any future restrictions on their operations.

Any vestige of the "blame-the-victim" thinking drummed into the heads of the privileged vanished for my mother during those conversations in Louisiana. In a big turn-around, she has been an ardent advocate of funding corporate accountability campaigns ever since.

- anonymous author

A Legacy of Service

My great grandfather was a brilliant businessman who never lost sight of the need to serve God and our community. In 1892, he used a portion of his assets to found a newspaper called The Afro-American. The paper, and its nonprofit arm Afro-Charities, has been our family's major means of contributing to Baltimore's African-American community ever since. My grandfather used to say, the mission of our paper is to "lift up the little man and champion the cause of our people."

The paper has always been a family effort. When my great grandfather died, most of his ten children worked for the paper in some capacity. In 1934, my great-aunt founded a program at the paper called Clean Block. She worked very hard to bring together neighborhood volunteers and city workers every year to clean up Baltimore's inner-city residential areas. In the 1950's, another great-aunt started a program at the newspaper called Mrs. Santa, which has distributed toys, food, and household supplies to poor families around the holidays.

As the current president of the paper, I have continued both of these programs. I've also tried to maintain another family tradition: employing people who might not have the chance for employment elsewhere. I remember what an impression it made on me as a little girl when my grandfather hired an ex-convict to be his chauffeur. He told me that the dignity of a job can turn people's lives around. Many of our workers eventually move on, once they have learned a marketable skill and developed a successful job record. We see this as part of our work, and just start training someone new.

Not all of my great grandfather's descendants work at the paper now, but the paper is still the bedrock, the legacy of service, that we all draw on. We were raised to give back, to be community leaders, to be known for our service and not for our wealth. It breaks my heart when I hear about successful African Americans who turn their backs on their community. Do they really think their success is theirs alone?

These days, our family is more spread out than ever before. Yet, at family gatherings, when I am talking to siblings, cousins, nieces, nephews, aunts, and uncles, I am struck by how deep the commitment to service runs in our family. We all volunteer, many of us tithe ten percent of our income to our churches, and several of us serve on the boards of colleges and charities.

Like my grandfather, I serve on the board of Morgan State University. I am also an associate minister at my church, and I recently chaired a campaign by the Baltimore United Way to increase on-the-job giving at black-owned businesses. This level of public service is nothing unusual in my family. In fact, I am far less active than my mother. She's all over the place!

- anonymous author

A Dream Come True

After years of deeply-satisfying work as President of a successful foundation, I am now in the midst of our most exciting adventure yet. We have embarked on a journey aimed at turning over all of the foundation's assets to a new entity, which is being created by a group of eighteen grassroots leaders from the rural Southeast.

Our family foundation began back in 1984. My mother had Alzheimer's, I was an only child, and my father had died twenty years earlier, leaving my mother and me a substantial inheritance of United Parcel Service stock. My two daughters and I had trusts that more than covered our needs. Establishing a family foundation seemed wise: it saved fifty percent in estate taxes (not to mention capital gains), and provided a way to hold the assets until we could learn how to do effective grantmaking.

I knew nothing about foundations, but I had learned two important things from years of working with farmworker organizations: real solutions to community problems can only come from the people of that community; and the best grantmaking decisions require participation of grantee community leaders. From the start, we were determined to develop a grantmaking process to share decision-making power as well as wealth. The majority of the board has always been non-family members, elected by family members annually. We developed an enduring focus of supporting community organizing in the rural South.

Although one of my daughters and two cousins have served with me on the board over the years, I have been the constant driving family force for more than a dozen years. About three years ago I began to get restless, muttering to other board members that I wanted more time for my own personal interests and for my grandchildren. A former board chair proposed an unusual solution: "Why not turn the foundation over to the only people we know who could do an even better job than us... 'the real experts'... our grantee partners?" I loved the idea immediately, even though he explained it would be a minimum five-year process requiring substantial time and energy from our partners, and the foundation's commitment to training and capacity-building.

We chose eighteen of our finest grantee-partners, on the basis of each individual's integrity, experience, skills, ability to be a team player, commitment to social justice over and above their own organization, and yes, heart. We also considered diversity in terms of race, gender, age, geography, and sexual identity. Invitations were extended to spend a weekend in Cocoa Beach, Florida at our expense, "to give the foundation input on our future directions."

In the middle of the meeting, I got impatient and announced that the real reason we brought them together was to see if they'd be willing to create a new entity, which would be owned and operated by Southern grassroots community leaders after a five year transition process. They were astounded. We said, "Don't decide now. Would you be willing to meet together three more times over the next year, and decide then?" Each one said yes.

While the foundation board members knew and respected the eighteen participants, many of them did not know each other. The foundation's grantee partners have always been about eighty percent African-American; thus, so was this group, with about twenty percent from Latino, Native American, and European-American communities. Building trust among us all took time.

We selected Jane Sapp, a highly-respected and long-time Southern cultural organizer and recording artist to serve as the group's cultural facilitator. Culture is the glue Jane has used to pull the grantee leadership group together. Culture, in the words of the participants, "brings out things that are in us we don't always express... makes us cohesive and clears away the debris of the dominant culture so we can relate to each other as we are... finds our connecting points... loosens the tension." In Jane's words, "It ain't WHAT you do, it's the WAY you do it."

That first year, we spent a full day of each weekend meeting getting to know each other. Jane would ask the group questions, for example, "How do we build a building that will stand the test of time? (We broke into small groups and drew buildings)... "What seasoning does each person represent to you (salt, pepper, nutmeg, garlic)? Why?"

Between meetings, group members have supported one another during crises. With trust like this, the group makes decisions quickly and shoulders challenges without coming apart. Participants say: "I feel like family here... This is like coming home."

In years past, I cried when I thought about turning the foundation over to someone else. But no longer. This transition has been a powerful process. My dream for this foundation is coming true...

- anonymous author

© 1990-2005, More Than Money, All rights reserved