To ensure that it is best equipped to deal with change, factor change into the equation. As the old adage goes, fail to plan and plan to fail!
Dealing with transition as and when it happens is short-sighted. It’s important to bear in mind that change is a process not an event – sure, there may be unforeseen once-off incidents affecting the family business and family foundation from time to time, but most changes can be anticipated and planned for.
Changing impacting family foundations
Common change events which impact family foundations, and which should therefore be considered during strategic planning, include:
- Illness or death of the original foundation founder or donor
- Divorce of family members
- Disputes or conflict between family members and/or branches of the family
- Separation by location, where family members no longer live close together
- Growth of a family, where the family adds many family members
- Contraction of a family, where the family fails to add new family members
- Inter-generational differences regarding where the focus of the family’s philanthropic efforts should lie.
Changes Should Not be Crises
Human beings are not fond of change – a sense of unpredictability coupled with a fear of the unknown often propels us into crisis mode. Under these conditions, clear, good and rational thinking and decision-making becomes more difficult. Remember, change should not signal a crisis! By acknowledging change and planning for it, we can embrace it. Prior planning for common change events means that transitions will be smoother, less stressful and more controllable. Ultimately, good planning promotes resilience in the face of change, promoting continuity and helping make the family foundation more robust and dynamic.
Use Scenario Planning
As a family business owner, you’ve no doubt used scenario planning in your business – no reason why you should not apply this valuable planning technique to your family foundation, as well. By identifying and sketching our various situations or conditions which could affect your charitable foundation, you can make tactical decisions which combat or deal with each scenario. For example, what processes to follow if a senior family member passes away, whether to allow ex-spouses to continue to sit on the board in the event of divorce or how to tackle grant-making after receiving a sudden influx of assets.
Involve the Next Generation
The founder of a family foundation is often a tough act to follow. As the driving force behind the family’s philanthropic efforts s/he probably called all the shots. The longer they hold the reins, the harder it is for them to let go. But let go they must if the family foundation is to continue its work when they’re no longer around. The sooner subsequent generations can get involved, the better. A three-tiered approach – involving the up-and-coming generation, the current generation and the older (retired) generation can facilitate a smooth transition across generations. Consider:
- Establishing a junior board, where younger members of the family can generate and implement their own ideas, gain an understanding of and an affiliation towards the family foundation’s core values and purposes, and watch and learn from the older generations
- Establishing a senior council – retired family members still have much expertise and experience they can pass on, so tap into this knowledge by having them serve in an advisory capacity to both the current and junior boards
- Reminding the serving board that they’re stewards of the family legacy and that they, too, will pass on the baton to the generation behind them and take up a place on the senior council.