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March 11, 2013

Arabella: Begin Next-Generation Engagement by Defining Why, then How

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Arabella Advisors

Begin Next-Generation Engagement by Defining Why, then How

 

 

March 11, 2013

By Stephanie Fuerstner Gillis

There is a lot of (healthy) buzz around the importance of preparing future generations to be effective stewards of the philanthropic assets they stand poised to inherit. Numerous organizations have developed deep expertise in these issues (our fantastic colleagues at 21/64 and Resource Generation are two good examples) and there is almost always at least one panel, if not several, focused on this topic at every family philanthropy conference. The messages are starting to sink in and many families have kick-started processes to engage Gen Xers and millenials in their philanthropy. However, in our experience, families often begin doing this work without first thinking through the desired outcome. In next-generation engagement, as with program strategy, it’s critical to begin by answering the question, “Toward what end?”

Two potential answers to this question lead to very different approaches and activities to engage future generation family members. In some cases, families seek to sustain the lives of their foundation and extend its work and impact on issues they care about for decades to come, as the foundation is designed to exist in perpetuity. For others, the primary motivation is to train next-generation family members in the tenets of effective philanthropy, grounding them in family values but not necessarily expecting them to carry forward with the existing mission or focus, or even necessarily within the foundation that currently exists. It is critical to know where your priorities lie before reaching out to future generations because your strategies and tactics will be different in each scenario. Knowing your answer upfront can help avoid superficial, less meaningful, and potentially unsuccessful attempts to connect younger family members to your philanthropy.

As an example, one of our current clients is a family foundation that serves as a case study of highly effective strategic philanthropy. Its primary goal as it approached engaging the next generation was to sustain the tightly focused and thoughtful grant making that was a hallmark of the foundation and that relied upon deep issue expertise. When a second generation (G2) board member approached us to help the foundation figure out how it might involve members of the third generation (G3), there were legitimate concerns about the potential trade-offs in doing so. The fear among G2 board members was that the effectiveness of the foundation’s work could be diluted if G3 members pushed to expand its mission, since some were not as passionate about its longstanding focus area. In the case of this client, it was critical to design education and governance structures that supported the foundation’s future by cultivating and training future board members who were passionate about the foundation’s work. At the same time, it was important to ground all interested G3 members in the values of the foundation and support them to build their capacity as effective philanthropists. Working together, we were able to balance strategic focus and perpetuity with expanded family engagement.

In another case, one of our clients launched his family foundation with a very clear plan to pursue his personal passions and interests through the foundation over a 20-year timeframe, after which point the assets would transition to next generation members to pursue their own. Knowing this upfront, the work we do with the next generation in this family is focused primarily on training, cultivating, and building their capacity to be effective and strategic philanthropists. It’s intensive and sometimes expensive to involve all the family members in so many aspects of the foundation’s work, but this capacity-building approach guides decisions about when this is important. In addition, clarity about expectations, timeframes, and future opportunities keeps next-generation family members excited about learning and engaging.
Researchers have pointed out that a relatively small group of Gen Xers and millenials is poised to inherit some $40 trillion in wealth, a significant proportion of which is earmarked for philanthropy. Because nearly a third of today’s family foundations were created in the past decade, many donors have an incredible opportunity to think now about the future of these organizations and discuss why they and their family members aspire to be involved in philanthropy. Knowing why—not just how—will help define how to successfully involve your family and keep them inspired into the future.

Stephanie Fuerstner Gillis leads Arabella’s Foundation Management line of business. She has an extensive background in evaluation, program strategy, and program design, and substantive expertise in youth development, arts education, organizational capacity building, family foundations, and philanthropy, among other areas.

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