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Sunday, 22 July 2012 00:28

Foundations look to next-generation leaders

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WEST MICHIGAN — Family foundations serve as one of the main branches of West Michigan's philanthropic sector.

Not only have they given millions to charitable causes, but family foundations have also cultivated a regional culture of philanthropy, inspiring others to put their own time, talent and treasure to good charitable use.

"We have something like the second highest rate of philanthropy in the country," said Steve Wilson, president of the Frey Foundation. "There are so many resources here for families giving back to community."

Perhaps the greatest resource for family foundations is the next generation of their own families who, like the third generation of the Frey family who joined the foundation's board of trustees last month, will keep their philanthropic legacy alive.

Even though Michigan's nearly 2,000 family foundations are very different from other 501(c)(3)s, other nonprofits can learn a lot from the way they groom the next generation to succeed current leaders.

Plan to succeed

When Ellie Frey, Sarah Frey Rose and Mary Frey Bennett joined the Frey Foundation board last month, they each brought to the organization a wealth of academic and professional philanthropic expertise.

But that wasn't the only reason the transition was so successful. In fact, their parents were preparing to pass them the mantle before the trio had even entered the workforce.

"The appointment of three new trustees was a big step," said Wilson. "But it's one of many steps that relate to succession planning over a long period time. Significant time was set aside for that."

But it wasn't always so; the second generation of Frey Foundation trustees learned the importance of succession planning the hard way.

When Edward and Francis Frey, who established the foundation in 1974, passed away 40 years ago, their three sons discovered that following their parents' philanthropic footsteps had a fairly steep learning curve. To prevent a similar situation later, the three brothers decided that their own children would learn better by doing, and by being actively engaged in the foundation's work during their formative years.

"Over the past 40 years, they've developed an approach that works and that they've refined," said Wilson. "John, David and Ted Frey really felt it was important that sufficient time be taken to prepare the next generation for their role and understanding their approach."

Since becoming the foundation's primary spokesperson in January, Wilson has not only had to learn the family's grant making ethos, but also figure out a way to effectively communicate it to the community.

"A family foundation is just that: a private family foundation, and that brings its own unique approach," said Wilson. "It's a very personalized approach to philanthropy."

This personal touch is what made Wilson want to work with family foundations in the first place.

"I enjoy that connection," said Wilson, who also worked at Mott Foundation in Flint from 2008 to 2012. "I just really enjoy being a part of that. It's just so personally fulfilling."

The situation is less touchy-feely in the boardroom. While some families may run their foundation board meetings like Sunday dinners, "that is not the case with the Frey Foundation," Wilson said.

"When this family gets together as a board, they function as a board," he said. "The family members clearly see a distinction between what is 'family' and what is 'family foundation.' When they get together, it's about the business."

Lifelong learning

Foundations often struggle to get the next generation of leaders engaged in the business, but they have an increasing pool of resources at their disposal.

"There are a variety of ways," said Rob Collier, president of the Council of Michigan Foundations, a membership organization that, among other things, helps family foundations with their succession plans.

Collier advises families to set up grant distribution committees, encourage giving circles or, like the Frey Foundation, establish junior boards where trustees-to-be can serve before moving onto the board.

The council also offers a variety of services for family foundations — which make up 40 percent of the council's members — that families who want to start planning eventual leadership transitions can take advantage of.

"We actually do a lot of stuff with family foundations," said Collier. "One of the big events we do every year is the family foundation retreat that just concluded at Crystal Mountain."

At this intergenerational retreat, "parents, grandparents and kids" took part in learning experiences appropriate to where they were in their philanthropic career.

For families that live apart but give together, the Council offers web-based tools that facilitate local grant making from anywhere in the world.

"It's using technology to help families that are now global," said Collier. "But it's all about helping people keep in touch with Michigan."

Mission accomplished

One of the most difficult lessons for any organization to learn is when it's time to close its doors.

While shutting down is generally considered negative for nonprofits, family foundations highlight more positive scenarios like an intentionally time-bounded existence and a fully completed mission.

Many foundations, like Frey, are meant to last into perpetuity, while others are intentionally short-lived, lasting just one or two generations.

"It all depends on the donor," said Collier. "The key thing is donor intent."

A donor's will can also mandate a "pay it out and close it down," also known as spending down the corpus — a process which Dyer-Ives Foundation in Grand Rapids recently commenced.

By limiting its tenure, the foundation can concentrate its resources on resolving a single, immediate problem within the community.

The lesson for nonprofits: Consider what fully realizing your mission would look like and factor that into your planning process.

Ruth Terry is a freelance writer and consultant who curates content for magazines and corporate clients. Find her at www.ruthwrites.org

Read 1276 times Last modified on Saturday, 28 July 2012 13:59

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