Richard A. Marker

One of the first truisms one learns upon entering the foundation field is the old saw: "if you've met one foundation, you’ve met one foundation."  While an exaggeration to be sure, the idiosyncratic nature of foundations is as diverse as the giving patterns, styles and cultures of individual philanthropists and donors.    Not surprising, of course, since most foundations [other than corporate ones] were established by individual donors/philanthropists, their families, their accountants or their trust attorneys.  The motivations for establishing them can be tax benefits, family involvement, immortality, or to regularize one's giving when income can vary radically from year to year. 

Indeed the character of a foundation is usually established early, when the donor/founder is still involved.  But by the third generation, it is very rare for the leadership of a foundation to remain in the hands of volunteer family members [even when they are still involved on the board].  By the third generation, variations in motivation, wealth, geography, values, and family commitments typically mean that a family foundation can be a meeting ground but rarely a primary commitment for many within the family.    Thus, it is fairly common that, by the 3rd generation, a continuing family foundation will be professionally administered or directed [sometimes by a member of the family designated for that responsibility/honor]. 

In the Jewish world, the overwhelming majority of foundations are still controlled by living donors.  Only in the last decade have we begun to see a growing number of survivor foundations, which are functioning after the death of the founder.  Within the next decade this number will grow and reflect the tremendous transfer – and much discussed - of wealth.

In my work with families and foundations, first and foremost, I must determine who is the client.  A foundation where the founder maintains full control and expects it to die shortly after he/she does is really to be treated like a personal giving vehicle.  The client is clearly the donor.  Recently after I gave  a presentation about transferring values across generations and learning how to share decision making, the first comment was made by a community leader who exclaimed:  "I don’t understand this entire discussion; I made the money and I’ll decide how to spend it!"  Not surprisingly there was little incentive for others in his family to participate in his "family" foundation.

Sometimes, the donor sincerely does want to involve other generations – but is doubtful that subsequent generations share, or even understand his or her values.    The perception of the founder may indeed be correct, but often, s/he is not.  Many times, the other members of a family do share the basic underlying values but differ on how they should be implemented philanthropically.  A founder may support healthcare, perhaps by naming a research center or a hospital wing; younger members of the family may be more interested in alternative care or more hands on interventions.  A founder may wish to endow organizational to which s/he has a long standing commitment; younger funders may see little value in tying up assets which could do more now, and allow the foundation to respond to new and emerging challenges not anticipated by Mom or Granddad. A founder may wish to limit giving to the community where the family made its wealth; as children and grandchildren disperse, there is little enthusiasm for this kind of restriction.  In these cases, the client is the "family."  A sensitive and thoughtful advisor can help translate between generations, mediate discussions about legitimate and abiding values, and help initiate a course whereby there is a greater buy-in by and gratification for all family members. 

• In family foundations of this stage of development, the advisory process differs little from that which applies to a family without a foundation.  There is a family culture, a distinct source of wealth, a greater or lesser degree of openness to risk, a desire for or against recognition or anonymity, and a range of priorities, and often the absence of systematic decision making.  Jewish community foundations which work with family foundations will be most successful if they themselves have a culture of being donor centered and deal as honest brokers in the advisory process.  If a federation foundation policy makes that impossible, it is probably better to invite in an independent philanthropy advisor for some segment of work with this family foundation.
• Once a foundation becomes staff directed or administered, the process begins to change.  Typically a staff directed foundation has a more formal process of grant application, more formal accountability and reporting expectations, and more defined focus and restrictions.  Depending on the foundation, all requests must be reviewed and vetted by professional staff.  A well-run foundation has a clear set of deadlines and procedures.  There is less likelihood that any individual trustee can determine the outcome of a grant request on a discretionary basis.  [Many foundations allow board members limited discretionary grantmaking as a way to obviate the pressure on the board to bypass the foundation’s mission and focus.]
  
  In the case of staff directed/administered foundations, federations are competitors for annual or special grants.   Such foundations will not typically feel a sense of noblesse oblige to umbrella charities such as federations, but may welcome innovative and special project requests.  Family foundations at this stage of development are particularly sensitive to a need for grants to be outcome oriented, for grants to reflect the perspectives of the range of board members and to do honor to – but not obeisance to – the legacy of the founder.
• In the current environment in Jewish life, it is appropriate to comment on the so-called "mega-donors" most of whom have established foundations to facilitate their philanthropy.  For our purposes, "mega" does NOT necessarily refer to the size of the foundation rather the scope of focus.  There are numerous very large donors on the local level whose foundations give more than most of well known funders who are considered the mega-donors.  These local donors' focus is primarily local and responsive to needs and causes in their own back-yards.  They have chosen not to join in national or international partnerships in which they would find themselves removed from the institutions which are the beneficiaries of their gifts.  The mega foundations, on the other hand, typically have a broader vision and mission and see their role as being to address the major communal issues of the day.  They may choose to give locally or through federations but these are not their priorities.  These funders are most interested in projects which bridge institutional limitations and clearly address cutting edge challenges to Jewish life.  Partnerships, multi-institutional collaborations, and innovation are more likely to attract their interest than more traditional kinds of requests.
  
  In the case of the mega-foundations where the founder is active, there is typically also a senior executive and well respected professional staff – although the role and function of these professionals varies widely.  The foundations which work best are those where there is a transparent partnership between the foundation funder and the senior professional.  Where that is lacking, there is often a challenge to determine "who's on first?"
• It is also appropriate to comment on the changing nature of corporate foundations.  There has always been a delicate balance in the corporate world between using corporate philanthropy to be a good communal citizen vs. serving the marketing needs of the company.  In recent years, corporate philanthropy has veered very much toward the marketing end.  Among the many reasons are the surfeit of mergers and consolidations, the intense pressure of quarterly earnings, and increased sensitivity to perceived political sensitivities.  "Cause related marketing" or "market driven philanthropy" are two of the terms often used.  Increasingly, if a project cannot be shown to be of value to the bottom line, it is not of interest to corporate funders.  Those seeking funds from corporations should explore both sponsorships and corporate foundations as two separate addresses for support. 

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A final few comments:  foundations are now functioning in a very different climate than existed just a few short years ago.  Anyone can view a foundation's 990 and see a complete list of grantees and board members.  States attorneys-general are paying close attention to ethical and best practices for grantmaking foundations, The federal government has raised expectations that private foundation philanthropy will step in to replace reduced public funding. And younger funders have mandated that their charitable investments must be justified by measurable returns.  Private foundations are no longer the vanity plates of the wealthy, but are serious commitments of the philanthropically inclined.  As more and more family foundations come of age in the years to come, it behooves all of us who work with them to be aware of their growing sophistication.  Rigor will define their own work and the demands they will make of us.

Richard A. Marker is an independent philanthropy advisor and is Senior Fellow at NYU’s Center for Philanthropy, where he coordinates the program in grantmaking for philanthropists and foundation professionals.  He speaks widely on trends in philanthropy, and works with philanthropists, foundations, and asset managers throughout the country.  Before sitting on this side of the table, he spent close to 30 years in the Jewish non profit sphere and in the academic world.