As we begin a new year, it’s an opportune time to revisit the concept of family legacy, stewardship, and the opportunity to make your wealth have a meaningful impact on the world. Here are the most common questions I have gotten over the years:

What is the formula for success?

Successful private family foundations have three characteristics in common, based on my experience advising several:

• A family mission that all members believe in;
• An investment policy statement that is adhered to in good and bad times, and
• Foundation board members (typically multi-generational members of the family) that are involved, present, and sincerely interested in furthering the good their family foundation can do for the community at large.

How much of a time commitment is this?

The range of board meeting frequency is typically 2-4 times per year, with additional time commitments of those board members who might spearhead different projects – investment policy, worthwhile causes, etc.

It is a commitment that probably requires 10-15 hours per year (call it 2-3 days) plus potentially attending functions where you represent your foundation to receive thanks from those benefiting from your generosity.

How easy it is to get everyone on the same page?

There can certainly be heated discussions, but a strong, mutually agreed upon mission statement, together with the stated wishes and intentions of the founders, helps keep everyone in alignment.

How much does this usually cost?

There are two primary costs to start and run a private family foundation – start up legal and accounting expenses and annual operating expenses like asset management fees, accounting, and administering all of the gifts. In my experience, the dollar cost is proportionate to the amount of assets funding the family foundation.

How many assets would I need in order to create a foundation?

I would not recommend establishing a family foundation with less than $5 million, and realistically you should probably be starting with closer to $15-25 million for it to make financial sense.

How do I put together board for my foundation?

The board members of private family foundations are almost entirely family members, with some exceptions when the board feels they require expertise beyond what may reside within the strengths of the family members. Ideally, you have at least two (and sometimes three) generations of a family represented.

It is also possible that there are no direct descendants of a family still living, so trusted friends are often the replacements on the board to keep the entity alive. Like any board, there are elected officers who are charged with running the entity and the meetings. Any consultants engaged by the board to assist with the operation and management of the foundation typically report directly to the board.

How do I make this work financially?

Financial survival is entirely dependent on a strong investment policy, good asset management, and a decidedly long-term time horizon and perspective from the foundation board members.

And one last thing…..

The best success in keeping a family foundation alive through multiple generations is having each successive generations nurture and pass down the values of philanthropy and support for causes that are meaningful to involved family members.

We hope this has inspired you to start the year off in the spirit of philanthropy and giving to others.

If you’d like to speak about making a foundation work for your family, please set up a time to talk.

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