Family Foundations : How to Approach and Successfully Get Funding

Family Foundations: How to Approach and Successfully Get Funding Presenter: Melissa S. Brown of Melissa S Brown Associates April 21, 2011

Melissa S. Brown Principal, Melissa S. Brown & Associates, LLC Advises nonprofit organizations in the U.S. and internationally. Services for fundraising, nonprofit sector research, program evaluation, and project management. Nearly 20 years at the Center on Philanthropy at Indiana University. Managing editor of Giving USA, the yearbook of philanthropy published by Giving USA Foundation. Associate director of research. Manager of fundraising. Research Committee of the Association of Fundraising Professionals and Advisory Council for FoundationSearch. She earned a bachelor’s degree at Reed College in Portland, Oregon and a Master of Governmental Administration degree at the University of Pennsylvania. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

What we’ll cover today • Why is understanding family foundations so important? • Aspects of working with family foundations • Where to get information about family foundations • Developing cultivation strategies • Turning information into knowledge

Definitions • Family or Families in name. • Self-identify as a family foundation. • Living donor surname matches foundation name. • 2+ trustee surnames match donor’s name. • Might be foundation or trust

Key Facts on Family Foundations, Feb.2011, page 4

And it is more than recognized family foundations • 17.5 percent of wealthy households gave through donor-advised funds at a community foundation, financial institution, or in another organization. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Aspects of Working with Family Foundations

Philanthropy is a family matter for high net worth • 32 percent consider contributing to a family foundation or fund an important dimension of a family’s traditions about philanthropy. • Nearly 27 percent reported that they have family discussions about giving throughout the year. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Degree of “family-ness” • Donor(s) control Bill & Melinda Gates Foundation • Immediate family engaged – spouse, offspring Heinz Family Foundation • Extended family engaged – grandchildren, nieces/nephews Clowes Fund • No obvious continuing family connection Walt Disney Family Foundation

Clues about “Family-ness” • Board members with same last name, not necessarily the donor’s. • Number of board members – fewer means closer to original donor (typically).

Where to get information about family foundations

Tracing the history of the foundation • Assess degree of “remove” from initial donor(s). • Hard to be certain – inferences • Grantmaking over time – changes CAN reveal new board members.

Information sources • FS Links to website, if one, for foundation history. • FS links to news articles : Sen. Heinz died in plane crash 1991, his widow is chairwoman of the foundation. • 990PF listing board members – address almost always the foundation office or foundation lawyer’s office. • Director hyperlinks, if any. • Google and other resources.

Geography of grantmaking • Many—if not most—family foundations maintain the largest share of grantmaking in the state of founding. • That state might or might not be where board members live or where the foundation is currently registered.

Growth in geographic area supported CAN indicate new family members on board. Check history through Grant visualizer or Grant Analyzer. • Change or addition of priority area CAN indicate new family member.

Staffing patterns can provide clues • IRS Form 990-PF shows 5 most highly paid staff. • If only one, that is a strong clue that family members are bearing a share of the workload. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Developing cultivation strategies for different types of family foundations

At all sizes • Know your organization and its needs. • Be clear about community needs, project goals, and why your org is best for addressing. • Do your research about prospective funders to be sure you fit their guidelines or match prior grants awarded. • Initiate contact only after these steps are completed. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

One possible typology of family foundations • Donor-driven • Often do not accept proposals • Board-driven • Might accept proposals. • Want ways to keep workload manageable. • Staffed • Likely but not certain to accept proposals. • Family members make decisions, not staff.

Cultivate board members • 51 percent allowed trustees to make discretionary grants with foundation funds. • 84 percent do NOT have term limits. • 79 percent plan to continue foundation operations beyond the current generation. • 43 percent said the next generation was not yet old enough to be on the foundation board.

Board members should be personally engaged in projects they recommend UNLIKE STAFFED FOUNDATIONS • Family foundations expect board member is speaking for own interests. • Cultivate family member as active volunteer, leader, or donor. • Check your current rosters to see if any are on board(s) of foundation(s).

When there is a strong link with board member • Learn if foundation matches board member personal gifts. • Does foundation allow board members to make discretionary grants (without overall foundation review)? • Ask board member for counsel in making application, but NOT to make funding decision.

See funders as partners • Funders want your organization – and others – to put money into the project. • Foundation board members also often feel great about being asked for expertise or advice. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Friend-Raising • Networks in your area. • Peer-to-peer contacts between foundation family members and your org. • 58 percent said : Very important that "someone I know and respect is closely involved or has asked me to support the project." (Foundation Source) © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Foundations are `bonding’ time • Family foundations organize meetings intentionally to develop family relationships. • Consider how your organization might offer help even without funding: • Site for event(s)? • Provide experience of the community the foundation serves? • Insight into an issue or concern the foundation addresses?

When there is a strong link with board member • Does foundation matches board member personal gifts. • Does foundation allow board members to make discretionary grants (without overall foundation review)? • Ask board member for counsel in making application, but NOT to make funding decision. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Donor or board-driven • No staff or only part-time staff member who serves family in other ways (e.g., in family office). • Likely to be giving vehicle for family charity that would otherwise come from household checkbook or assets. • Probably does not accept proposals. • Likely to have committee structure. • All-volunteer can lead to time lags. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Donor or board-driven • Start with an inquiry to introduce your organization. Proposal comes after relationship built. • Prefers email to other forms of contact (Foundation Source). • Low-pressure cultivation strategies. May be long-term strategy. Volunteer coordination is more important than proposal writing. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Staff + Strong board • Can be any asset size. • Likely to accept proposals. • Staff is small, board members have active roles especially in site visits, proposal review. This is part of keeping the family engaged in the philanthropy.

Staff members’ roles • Information resource for applicants. • Community research, needs assessments. • Tips and suggestions for applicants of what to do and not do when submitting proposal. • Emphasis tends to be on doing “grunt work” so family members’ time used well. --Applicants can make grunt work easier © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Larger family foundations • 71 percent paid staff • Average of 2 (n = 185) • 29 percent unpaid family members as staff BUT VERY IMPORTANT: Staff do not decide. Staff review and submit selected proposals to board-based grants committee or to full board.

Larger family foundations • 84 percent have formal review process. • 78 percent provide guidelines. • 77 percent have someone review proposals before full board consideration. • 72 percent link program goals to community needs.

Staffed foundations • Be sure to read foundation’s own material. • Staff members ask for proposals based on foundation priorities. Introducing your org. to staff first is appropriate. • Ask staff members for advice about building relationship with family or board members. • Each foundation has its own expectations about board member engagement with projects submitted for funding. © 2010 Metasoft Systems Inc. | CONFIDENTIAL

Turning information into knowledge

Types of information • Research findings – usually text of some type, often electronic. • Conversations with people – can be reported in text format. • Hearsay – also can be reported. Should be noted by source.

Ethical considerations • Don’t put it in bytes if you don’t want it to bite you later. • If donor could be offended by seeing it, or see info as a violation of privacy, don’t keep it. • If you don’t want your name attached to it, don’t keep it.

Information  Knowledge • When it gives someone a reason to pursue a realistic and ethical action plan. • When it specifies parameters or helps someone make decisions. • When others on the team can use it.

Tracking it all • Prospect information management tools. • Volunteer time and knowledge management, especially in the networking needed at community level. Requires reporting-back. • Sharing information across functions such as prospect research, cultivation, proposals, etc.

Summary • Family foundations very important now, looking like they will be important in future. • Each is its own unique entity, and each can change as leadership shifts. • Information is good – knowledge-sharing better.

Resources • 2010 Study of High Net Worth Philanthropy, Bank of America Merrill Lynch • Current Practices in Family Foundations, 2009, National Center for Family Philanthropy • Family Philanthropy Beyond Borders, 2011, The Center on Philanthropy • FoundationSearch.com • Foundation Source survey of small foundations in its client base, summarized at http://www2.guidestar.org/rxa/news/articles/2009/applying-for-funding-from-family-foundations.aspx?source=aug09nwsltr • Key Facts on Family Foundations, 2011, The Foundation Center

Family Foundations : How to Approach and Successfully Get Funding