Six Keys to Successful Family Foundation Creation
In recent years, the number of family foundations has grown in the U.S. at an unprecedented rate. Nearly 70% were established after 1990, which means that most family foundations are barely one generation old (Foundation Center). By conservative estimates, family foundations also represent more than 60% of the approximately 90,000 grant-making foundations in the U.S. and there are more family foundations than all other forms combined. (National Center for Family Philanthropy).
There is little doubt families associated with successful businesses have been a part of this large increase in the creation of foundations as they establish platforms to manage much of their philanthropic activities. As these families mature into subsequent generations, they are likely to engage in several key developmental exercises, including the creation of a family constitution, the development of a family council and the formalization of philanthropic practices by establishing a family foundation.
In fact, many families readily list supporting their communities and/or social issues as one of their top priorities or values in moving the business and family forward into the future. The National Center for Family Philanthropy found that older and larger family foundations are more likely to focus their giving geographically, while the newer family foundations (those formed since 2010) are significantly more likely to focus their giving on issues such as education, poverty and social services.
In working with families around these processes, we have identified several key best practices in the development and continuity of family foundations.