Family foundations distribute significant funds to good causes each year and play an important role in society. They also have a unique opportunity to strengthen unity within the family and the business behind them.
With that opportunity comes a responsibility: to honour what the founder intended. As society changes, and as the family moves from one generation to the next, a foundation must stay clear on how best to carry that purpose forward.
This article explores the value of developing a strategy for a family foundation. It also provides practical input to how a board can address the process.
What is the purpose of developing a strategy when the foundation charter already defines a purpose that cannot, and should not, be changed?
The foundation charter should always be the starting point when articulating a strategy, since it sets the boundaries for how donations should be distributed to charitable and public-benefit causes, as well as to the family. Since the purpose for the foundation is often written decades ago by a founder who is no longer with us, structured discussions are typically needed to ensure a shared interpretation within the board, and potentially with representatives of the family.
In many family foundations, the current family members are from the last generation that have known the founder personally. This connection is a strength, but also a vulnerability, since the next generation will not have the same connection. This is a key reason for developing a strategy since it clarifies the founder’s intentions and depicts them as clear priorities and practical actions. When done well, it ensures that donations are distributed in a way that is anchored in the founder’s intentions and creates meaningful value for receivers.
What is the focus in a strategy?
Interpreting the foundation’s purpose is always the first step in the strategy process, as it sets the direction for the rest of the strategy. While the importance may vary, our experience is that the following themes and key questions are always relevant to consider when developing a strategy:
These key questions are often accompanied by other considerations that are particularly relevant to the specific family foundation. The final, and important, element of a foundation strategy is to clarify how decisions will be put into practice. This typically requires a clear plan for each key question, setting out what needs to be done, when, and by whom.
A clear strategy can help family foundations fulfil their responsibilities towards the founder, the family and society. The process also creates value by bringing the board closer together and ensuring a clear plan for the years ahead.
If you would like to learn more about how we work with foundation strategy, or what a process could look like in your foundation, please contact us for an informal meeting here.
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