Susan Crites Price
Susan Crites Price

Managing Transitions During the Recession

Why your clients should anticipate change, create plans and policies before they need them and revisit earlier made plans regularly.

February 19, 2009
by Susan Crites Price

Family-giving programs are constantly evolving, just like the families they represent. The change that comes with them is to be anticipated, managed and, if possible, embraced as an opportunity for renewal. The inevitable changes and transitions that come to family-giving programs are too often spoken of in negative terms. As relieved as we are to make it from one challenge to the next, change is not something to be simply weathered.

Leaders will leave and new ones will emerge. Priorities will shift. Families will move. Stock values will rise and fall. It's all to be expected. Change comes with the territory. How your family initiates, manages and responds to that change will determine the course of your giving and reveal your true legacy.

As you advise on your clients' philanthropic futures or navigate the latest changes to their philanthropy, keep the following ideas in mind.

Understand and Anticipate Change

In Generations of Giving, Kelin Gersick and his team reveal a progression through three types of governance organizations among the family foundations studied:

  1. Controlling trustee foundations
  2. Collaborative family foundations
  3. Family-governed, staff-managed foundations

These types might be familiar to foundations that were once largely the enterprises of a single donor or donors before control passed to children and grandchildren, who then took on governance roles as staff were brought in to manage the giving. No type is necessarily better than another and not all foundations and funds progress in this way, nor should they. The types do, however, point to some of the major transitions in family philanthropies:

  • Intergenerational transitions, when roles and responsibilities pass from one generation to the next as donors, trustees and other leaders leave for other projects, retire or decease
  • Decision-making transitions, when decisions that were once made by one or a few people are now made by many collaborators who must develop consensus and make decisions together
  • Management transitions, when the family members decide to govern while letting staff manage the philanthropy

Family philanthropy involves many other changes and transitions, but these often prove the most challenging. It makes sense, then, to understand and anticipate these changes and plan for them.

Create Plans and Policies Before You Need Them

Since many of the changes in family philanthropy can be anticipated, your family will benefit greatly from prior planning before something becomes an issue.

For example, the time to consider whether to allow spouses to serve on the board is not when a family member becomes engaged to someone relatives don't like. Similarly, consider whether a spouse can continue to serve in the event of a divorce. Deciding in the heat of the moment makes this a referendum on a specific person rather than what is right for the philanthropy.

Similarly, the death of the donor or foundation leader will happen eventually and sometimes suddenly. The more you prepare for an orderly transition to new leadership, the less challenging it will be for the family at what will certainly be a stressful time. If the death of the leader will result in a large influx of assets, plans also can be made for how the foundation would ramp up its grantmaking.

Developing plans and policies about board eligibility, roles and responsibilities, term limits and other aspects of governance makes for smoother transitions from one generation to the next. So too does discussion of donor intent, perpetuity, mission and geographic focus. The more clarity the philanthropy has around these issues, the easier transitions become.

Be Creative

There are lots of options and few right answers in family philanthropy. Families have been very creative in handling the increasingly multigenerational character of their philanthropies. For example, some have set up junior boards to educate younger family members and senior councils to capture the expertise of the family's elder members.

Beware of false choices. For example, families sometimes see family involvement only in terms of board membership, which for larger families, is often impossible. If family involvement can mean committees, volunteering, research, site visits, matching gifts and more, then board membership is no longer the sticking point it once was. Families create rotation policies, lifetime board memberships, adjunct boards and advisory committees to suit their families and the communities they care about.

Remember the Dual Nature of Family Philanthropy

Family foundations and funds are double-bottom line institutions, created to represent a family's charitable goals and to make a public difference. When the unexpected happens, family foundations, for instance, can rely on both the "family" and the "foundation."

Family members are not alone when tragedy strikes. Surviving spouses and children are extraordinary connections to wonderful donors past. Photo albums, scrapbooks and even Web posts are treasures.

Families find that committed, trusted and knowledgeable staff and advisors are critical in times of transition. They are managers, mediators, confidantes and more. And insofar as foundations are a part of the philanthropy field, there are also colleagues — at regional associations, community foundations, federations and national organizations — to turn to for objective advice and options.

Revisit the Plans Regularly

Families are often tempted to think that if something works, they've gotten it right. And that if they've gotten something right, it will be right forever. That's never the case. Be sure to revisit policies on a regular basis (plan to plan!) to ensure that those policies remain responsive to your family's and community's needs.

For more information, log on to www.ncfp.org.
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Susan Crites Price represents National Center for Family Philanthropy.