Family foundations are taking active steps to engage the next generation and in many organizations, all generations are involved in influencing giving decisions and operations as a means to educate and prepare family members for a philanthropic career.
As professional advisor to (U) HNWI, understanding these dynamics and influences between generations will play an important role in your practice. Speakers will address how advisers can support their clients going though these transitions.
At the event the audience heard first-hand from family members talking about their philanthropic involvement. This was followed by a panel discussion between advisers with vast knowledge of supporting families and engaged family members.
It is a truth universally acknowledged that family dynamics can present a challenge within any context. Differing politics, multi-generational shifts and long-held grudges are the case for all. But adding family-owned wealth, and the ever-subjective nature of values, and family philanthropy can prove to be an area not easily navigated.
At the Philanthropy Impact roundtable on “Family Philanthropy: when the future meets the present”, it was the questions surrounding the “new generation” which was of most interest. How best do families, and professional advisers, take active steps to engage, educate and prepare the young members of the family for a philanthropic career?
The cultural constructs of both ‘family’ and ‘wealth’ are generally perceived as private, rendering an evening seminar discussing both a somewhat interesting notion. But within this broad topic of family philanthropy itself, a variety of incarnations and aspects were presented.
First to speak were Lola and Lorraine Grace, a mother-daughter philanthropic pair. Lola, a former investment banker and mother of five, founded the Middle East Childrens’ Institute (MECI) which has given education and life skills to tens of thousands of children and women who have been victims of violence and war in the Middle East since 2007. Lola was inspired by her parents, her mother was active in philanthropy her whole life.
Her father was born and raised in Jerusalem, where his family had lived for 700 years. ‘When he fled Jerusalem in 1948, he lost everything; all he had left were his education and his values, which helped her rebuild his life’ said Lola, remarking that this was something the family has kept important to them in the years since.
9/11 and its aftermath triggered Lola’s desire to find ways to bring people from different religions and cultures together, to focus on commonalties and universal human values to counter fear, extremism and violence. This led her into the world of humanitarian and development assistance in the Middle East, where she ‘began to understand the disconnect between the goals of foreign policy agendas and grassroots needs of the most marginalized and destitute sectors of societies.
Starting a holistic education program in a small village in the West Bank, MECI has expanded to Jordan where it is an implementing partner of UNICEF responding to the Syrian refugee crisis providing healing and community building programs to women and children. In addition to MECI she and her husband have a history of funding research on cancer and genetics.
Lorraine, as Lola’s daughter, spoke of how philanthropy has always strongly influenced her values, and how she saw her parents use philanthropy to support their passions. This led her to setting up an NGO where photography and peaceful conflict resolution techniques are taught to children during a three-day workshop.
These two credited family philanthropy as solely inspirational; a compassionate foundation for guided giving.
Katherine Lorenz, President of the Cynthia & George Mitchell Foundation, presented a very different view. A granddaughter of the founders, Katherine is the only family member of staff at the foundation, yet the family comprises ten children and 27 grandchildren of Cynthia and George. Whilst noting that philanthropy had helped to forge incredible familial relationships that they would never have otherwise had, Lorenz was quick to point out several drawbacks.
Lorenz was less than enthusiastic about the idea of family staff, even though she is one. Firstly, entering a position that you know could feasibly stretch ahead of you for another 35 years or so ‘can stifle personal fulfilment’. A family foundation with a family member as its president is also very unlikely to fire her, Lorenz argued. From both a performance and a professional perspective, accountability suffers.
‘It’s important to ask whether the family is there to serve the foundation, or if the foundation is there to serve the family,’ said Lorenz. Family members are not always the most knowledgeable experts, so it is important to ensure that working together is an ‘opt-in’ arrangement, and that they are surrounded by specialists within their chosen field.
Myriam Vander Elst was the last to speak of the family philanthropists, describing herself as a ‘sixth generation French Catholic industrialist’. Giving is at the heart of Catholic culture, she said, alongside her family’s ‘respect and love for production and money through industrialism’.
Vander Elst described how her family were proponents of giving their time generously, yet her surprise at their unwillingness to give their money just as freely.
‘I couldn’t help be disappointed by the contradiction between faith and actions’, remarking upon how there are ‘so few bank notes in the collection baskets of churches in affluent neighbourhoods’, Vander Elst had a degree and a career in the private sector as a communications and brand strategist for world-leading agencies. But she left that behind because she ‘wanted “redemption” -she says jokingly-, and had the means’.
Not interested in ‘sentimental, self-gratifying philanthropy, at the expense of people who really need it’, Vander Elst also was surprised by the ‘compromise and tolerance for mildly effective philanthropy, attitudes you wouldn’t find in the private sector’.
Instead, Vander Elst joined French serial entrepreneur Alexander Mars’ organisation Epic as Managing Director of Europe. With an annual budget of $3million entirely founded by his own personal wealth, Mars sought to create an intermediary service, shared for free, to philanthropists who want impact but can’t afford the 40-staff expert team of an Epic.. Epic selects and backs outstanding organisations and social innovation to change the life of disadvantaged youth around the world. This is a highly-vetted selection of organisations – 3,600 NGOs worldwide applied to be on the ‘Epic Portfolio’ last year…they picked eight.
‘There is currently a huge pressure on NGOs to “behave themselves”, and that’s good,’ said Vander Elst, ‘but there should be a duty on donors to stop pleasing themselves.’ In aiming to disrupt the philanthropic market and provide a more transparent and accountable experience of giving, Vander Elst is aware that there is a lot of push-back. ‘Epic has changed my way of looking at giving, and rethink altruism’ she says.
This all-female panel (which also included Neasa Coen, Special Counsel at Withers LLP, specialising in charity law and philanthropy) was an interesting multi-perspective on family philanthropy and its development. Work with family foundations has been increasingly focused on trying to involve and integrate the next generation, and create structures to deal with the different interests of family members.
Coen suggested, for example, that endowments might be created to preserve the older generations’ interest in a field.This would mean that a foundation could endow a healthcare charity with a large sum with the endowment being managed by the healthcare charity, leaving the younger generations to focus on issues closer to their hearts by means of grants made to specific causes.
Conflicts of loyalty and interest are common within family foundations. In getting caught up in interpersonal dynamics, this can risk mitigating any worthwhile impact that a foundation could provide. Demanding perfection from NGOs whilst the foundation is struggling internally with a portfolio of values can create far more problems.
Katherine Lorenz commented also that ‘foundations starve the sector; we don’t tell charities if they’ll be funded long-term, we only talk to the Director rather than to fundraisers, when the former are supposed to be running the organisation, and then we also demand that they are perfect’. For a foundation to truly make impact, she argues, ‘donors have to go on an education process themselves’.
In acknowledging the challenge of family dynamics, preparing for difficulties ahead of time is key. Finding the right advisors, the right experts and being clear on your values encourages philanthropic giving and social investment in more positive ways.
Amy McGoldrick is the Marketing & Advertising Officer at Alliance magazine