Family Foundations

The range of choice is almost infinite: health, education, science, human services; the cause of women, children, minorities, the poor, both at home and abroad; all the arts; community betterment; technological advance; immediate amelioration or fundamental and long-range reform – indeed everything but direct engagement in politics, and even that arena can be touched through research, education, and advocacy.

Charities and Foundations

Over long years of evolution, foundations have emerged from their origin in charity to being globally recognized as an essential social institution. Modern societies have grown incredibly complex, no longer susceptible to simple ideologies, monolithic governance, or single outlets for human energy and creativity. A pluralistic network of profit, nonprofit, and public agencies, sometimes working cohesively and sometimes competitively, is required to sustain the accumulating weight of human needs and potential. It is not accident that as society has become more complex, the role of foundations has become more essential and appreciated. Nor is it accidental that foundations are spontaneously and dramatically emerging around the globe, even in the formerly rigid societies of Japan, the Soviet Union, and Eastern-Central Europe.

Private wealth has always been influential. But when it is transformed into a foundation, it takes on another image and dimension. No longer is the use of wealth simply the expression of personal whim and ego; rather, the credibility of a considered evaluation of community welfare is the expectation – if not always the record – of modern philanthropy.

If the institution of private philanthropy is a remarkable social invention, its availability to families is equally remarkable. Society has offered families what is in effect a permit to engage independently in matters otherwise thought to be the public’s business. Philanthropy becomes a legitimate and ennobling process, elevating the accident of kinship into the loftier realm of civic participation and responsibility. The often narrowing confines of individual giving open into the broadening vistas of social concern.

Risks and Hazards

Success in a family business or acquisition of a family fortune does not transpose easily into successfully operating a family foundation. Family businesses and fortunes are usually disciplined by the bottom line and hierarchical, often patriarchal, management; family fortunes sooner or later become divided or inherited and end up under individualized control. Foundations, with a single corpus and collective decision-making, are quite another proposition. They not only invite an intensifying stress on tensions already evident among family members but intrude yet another dimension of differences – those that arise from the subjectivity inherent in determining social needs and priorities. There are few if any certain guidelines in deciding which social needs to focus on, which instrumentalities to work through, which criteria to adopt for judging success.

In that subjective and volatile environment family tensions can flare up, and existing differences can become exaggerated, leading to factions and sometimes feuds. Governance can become an anguishing issue: in the first generation, how to overcome the tendency to bow obsequiously to the founding donor; in subsequent generations, how to include a spreading avalanche of family members without being exclusive or overwhelmed.

Conclusion

Despite the risks and hazards, the returns on a family investment in philanthropy are extremely high, both internally and externally. When such an investment is well executed, a family can achieve the cohesion that comes with a sense of higher purpose and cooperative effort. Externally, society honours those who practice philanthropy, and the families who have kept the faith and held together have achieved public standing almost as an aristrocracy.


This article has been extracted and modified from Ylvisaker, P.N.. (1996). Family Foundations: High Risk, High Reward. "The Best of Family Business Review (FBR): A Celebration." Family Firm Institute, Inc. Boston, USA.

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