Most private foundations are actually closely knit family foundations, according to a survey released Thursday by the Foundation Source, a support and resource organization for private foundations.
Family members are intimately involved in most private foundations and a major goal of foundation creators is to pass on philanthropy as a way of life to future generations, according to the Family Engagement Survey. The survey included 203 foundations, most with less than $50 million in assets, which is the asset level that makes up 98 percent of the 90,000 private foundations in the United States.
“For many high-net-worth donors, private foundations are family enterprises, so engaging the family is a critical success factor,” says Page Snow, chief philanthropic officer for Foundation Source. “Clients often tell us that their foundations provide an opportunity to transmit values to younger generations, bond through shared good work and establish a family tradition of giving back.”
When respondents in the survey were asked to name the most important family benefit of having a private foundation, 41 percent chose establishing a tradition of giving, followed by 35 percent who said making an impact on an issue or in the community. Smaller percentages selected a variety of other options.
“Although they expect their foundations to make a difference to the causes they support, they want their foundations to make a qualitative difference to their families as well. Therefore, when asked to compare the significance of ‘family engagement’ with ‘having an impact,’ we were not surprised to find that 62 percent of respondents said they were equally valuable,” the survey says.
For most private foundations, board membership and trusteeship is limited to immediate adult family members who are committed to the cause, the survey shows.
Regardless of when youngsters become involved in the foundation, 97 percent of the respondents agreed only children over the age of 18 should be eligible to be board member or trustees. “In fact, 55 percent felt that offspring should be in the 26 to 40 age range before assuming their place at the table,” Foundation Source says.
Board members and trustees for the foundation should be selected based on their level of interest in and commitment to the foundation, according to 61 percent of respondents. Most agreed the board members and trustees should be immediate family members. Only 27 percent of respondents permit non-family members to serve on their foundations. Sixty-three percent allow the founder’s spouse to be a board member and 93 percent allow the founder’s children, but only 35 percent allow children’s spouses. Nineteen percent allow step-children or adopted children and only 2 percent allow divorced spouses to participate.