A couple of announcements before we tackle today’s topic. In acknowledgement of Indigenous Peoples Day, just the annual reminder for all of us that less than one-half a percent of philanthropic dollars go to Native American-led nonprofits in the US, which is disproportional to the Native American population, which is 2.6%. So, funders out there, increase your giving. The rest of us, donate to Native orgs and support Native businesses and individuals.
Meanwhile, a couple of webinars that might interest you. This week on October 17th at 4:30pm Seattle time, there’s a virtual rally for Harris/Walz, with specific focus on getting more representation for the nonprofit sector in the new administration.
Also, you may have read this amazing essay “You’re not feeling imposter syndrome, you are an imposter: Identity and belonging in nonprofit work” by the brilliant Esther Saehyun Lee. Next week, on October 24th at 12pm Pacific Time, I’ll be in discussion on this topic with Esther and our colleague Aleeka Morgan (director of Nurturing Wāhine Fund). It’s FREE; captions enabled. Register here [None of us are getting paid for this, so expect a casual conversation probably filled with cussing].
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A few months ago, I was having a (non-alcoholic) drink with a friend. As usual, we were talking about philanthropy and equity and the existential challenge brought about by late-stage capitalism—what, like your Friday evening conversation topics are soooo much more exciting!—and I was saying “you know, I was thinking about family foundations” and my friend immediately said, “What? That they shouldn’t exist? I agree.”
This was a bit surprising coming from my friend, who is a board member of a family foundation. On the other hand, she has always been very progressive on the topic of wealthy people paying their fair share of taxes and not hoarding wealth. That’s why we’re friends….and also because few people would put up with my nonprofit-themed dad jokes.
Family foundations, like other organizations, often do some good work. There are family foundations that are able to move quickly, and are more creative and flexible, and they can be very helpful in addressing a variety of problems in society.
However, some of the worst funding practices and behaviors I’ve heard about have also come from family foundations. The ones that shift priorities all the time based on the random whims of family members. I’ve had lunches with CEOs of family foundations, their faces sallow, eyes sunken and haunted as they recall terrifying stories of having to deal with the egos of various family members, egos that are often accompanied by ignorance and hubris. Like the family that fired all the foundation’s staff because the latter were pushing the foundation to be more aligned with equity.
Sometimes I talk to colleagues outside the US about ridiculous stuff we do here, and they’re shocked that we just accept some things as normal. For instance, the idea that nonprofits would ask their staff to donate a portion of their wages back to the organization that employs them is a pretty bizarre, nonsensical concept to people who don’t live in the US. (It’s an archaic, unethical practice that no org should continue to use).
Along those lines, after two decades in the sector, I am still a bit puzzled why the family foundation is a legitimate concept for our sector. I don’t get it. When a wealthy family sets aside funding—in many cases to avoid paying higher taxes—and creates foundations, that money is no longer theirs. So why does it make any sense for the family to have complete control, packing the board with other family members and creating rules to concentrate power among relations by blood and/or marriage? I heard of one family foundation that allowed a non-family community member to join the board, but they had no voting power because they weren’t actually a family member!
A serious issue is that because of how wealth is concentrated in the world, most of these families are white. And they tend to marry other white people. So family foundation boards are glaringly white. They can bring in as many staff of color and consultants as they want and discuss DEI and even have genuine success implementing it, but power is still concentrated among white families. How do we address inequity when this significant dissonance is accepted as normal?
Then there’s the problem of families using their philanthropic work in all sorts of shady ways, such as vehicles to hire relatives and pay them salaries. Sometimes, even among well-meaning folks, their philanthropic work is basically a family bonding activity, like you and I might take our siblings and kids to go pumpkin-picking during the fall, but here wealthy families get to pick and choose various causes to support. On occasion, the philanthropic work is basically family therapy for siblings, parents, kids, and grandkids to work out various traumas and dynamics.
The whole thing is super weird. Sus, as my kids would put it. We have to acknowledge that this concept makes no sense. Philanthropy should be about equity and justice, not serve as a family-bonding hobby, group therapy, self-betterment vehicle, catalyst for family reunions among people who don’t see one another often, or, I imagine, elaborate schemes for vengeance among sibling rivals, or whatever.
I know it’s going to take a while to address the problem. But in the meantime, family foundations can start by doing a few things:
Reflect on why your family started this foundation: Be honest. It’s OK to say, “the family was drifting apart, and we thought it would be a meaningful way to bring everyone together.” Or “our wealthy grandparents left us a bunch of money and in their will requires us to manage this foundation.” Whatever the original reason for starting this foundation, and whatever purposes it serves now, assess whether this reason still guides your family and if it’s aligned with your foundation’s stated vision and purpose, or whether it contradicts it.
Remind yourself and your family this is not your money: My friend and colleague Jessamyn Shams-Lau encourages philanthropists to repeat this mantra on the regular: “It’s not your money.” It’s really not. Your family gave it up when y’all created this foundation. Spend some time repeating this mantra and reflecting on it until you fully believe it. Then discuss with your family which actions don’t really add up if you truly believe it’s not your money. Would your board look this way? Would the way you determine which issues to tackle look this way?
Shift decision-making power to people and communities: Funding priorities should be determined by the people most affected by injustice, not family members and what random issues tug at their heart strings during any given year. Also, a lot of family foundations will make decisions based on when family members can get together, whether it’s quarterly or every six months or whatever. But injustice and the work of addressing it don’t pause while your family finds a time that works for everyone. Stop allowing your whims and convenience to guide the work and start shifting power to staff and others who have lived experience and expertise.
Get community members onto your board: If you truly believe in equity and justice, it makes no sense for your family to hoard this much power by only allowing relations by blood, marriage, or adoption on your board. As nice and smart as you and your relatives are, you will never have the same knowledge as people who have experienced the injustice your family claims to care about addressing. Your foundation can only hope to be effective if its board reflects the community it serves. Work to get at least half your board to comprise community members with lived experience. And ensure they have the same power on the board as family members.
Support efforts to reform tax codes: Maybe my friend above is right, and family foundations should not exist. Really, foundations in general shouldn’t exist. Heck, most nonprofits shouldn’t exist. Most of us are here because of inequitable tax codes that allow wealthy individuals and corporations to avoid paying their fair share of taxes. Family foundations can play a vital role in reforming tax codes. Yes, success would mean yours and other family foundations may not exist. But is that not what we’re all supposed to be working towards?
Again, this is not to say family foundations don’t do good work, or that family members on foundation boards are not oftentimes really awesome people (#NotAllFamilyFoundations). I know many family foundations and many board members who do incredible things. But we’re talking about structural issues in philanthropy here, and family foundations as a structure are weird, and we can and must do better.
