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Private
foundations are “private” in name only.
Most family
foundations are private foundations, and all private foundations must
disclose their finances and giving programs to the general public.
The information is often on the Internet.
This is hardly “private.”
Fortunately, donor details need not be disclosed, but this
clearly is not the comfort
zone of privacy you would expect for your family’s philanthropy.
Other choices are available.A
simple “org chart” may not be simple.
Private
foundations in the U. S. are saddled with tight tax rules designed to
preclude the mere possibility of abuse.
Creating a single family foundation may seem simple, but it
could be the first step down a long
trail of complexity and constraints.
Moreover, using any one vehicle for the wide spectrum of a
family’s charitable giving – such as a single private foundation
– may hamper the family’s ability to fund certain kinds of
programs, and limit the ability to adapt to changes.
Better choices can be made by using multiple giving vehicles…or
using vehicles that are more complex to get started but
simple to operate. You can build a house with a hammer, but it's
easier to do with more tools and sharper instruments.Family
philanthropy needs a good business plan.
Giving is intended
to make a difference. The
discipline imposed by a sound planning process helps yield positive
results in charitable giving just as it does when the goal is making money. Outside
board members are more valuable in a family foundation than in a
family business.
Family foundation boards need more “outsiders.”
A family that runs a business has grown with it and knows it
well. The same level of first-hand
knowledge and in-depth experience is much less common when the mission is to run
a foundation.
It’s a different world with different incentives, methods, and
measures of success than the business world.
More family foundations should recruit outside advisors experienced in
philanthropy.Even a family that has an established foundation can benefit from the advice of
others. Every organization needs to
reevaluate its operations and programs from time to time.
Yet the milestones in philanthropy are more intangible, the relationships
between means and ends are less certain, and the goals are harder to define.
Passion and opinion shape both the issues and the answers. The difference
between being a defender-of-values and a prisoner-of-bias is subtle and
subjective.
The dispassionate advice of an “outside advisor” often helps
the family reach a positive consensus, particularly if the advisor has already
secured the family’s trust through years of service on the foundation board.
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