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Dividing Up Philanthropic Resources?

More and more families are creating family foundations or donor-advised philanthropic funds. Motivated by a desire to give back, to nurture family values and to reduce taxes, families find themselves faced with deciding which charities should receive funds. Some families pursue philanthropic decisions together. Others assign a certain percentage of available funds to each family member and let individuals make their own decisions. Others assign a certain percentage of available funds to each family member and let individuals make their own decisions. Still others combine the two or struggle to determine which way is best.


All For One One For All
Family foundations are suppose to be about family. If individuals make their own grants, family is taken out of it. That's fine. But our family is spread out in terms of geography, interests and even ideology. The purpose of the family philanthropic fund is to encourage family members to engage in responsible philanthropy.
If individuals are making grants, it is more difficult to assure that grants meet legal requirements, fulfill goals, purposes and guidelines of the foundation, and avoid conflicts of interest. Some people want to control everything. We understand that we should meet guidelines and goals. If individuals can decide grantmaking, it is more democratic and less political.
If individuals gift family money, they may not take personal responsibility for helping others. That defeats what this family is all about. Some will use the foundation to supplement or extend personal resources of money,time and reputation. What's wrong with that?


While a family foundation often is set up to bring the family together, sometimes conflicts over grantmaking can tear a family apart. A 1998 Council on Foundations survey found that 42% of family foundations permit foundation board members to make discretionary grants, up from 32% in 1992. Typically foundations budget a portion of their giving for discretionary grants and allot a percentage of the discretionary budget to each board member. Depending on the foundation’s size, number of trustees and other factors, the amount per individual can range from a few hundred to many thousands of dollars.

As the National Center for Family Philanthropy concludes on this question: “When designed to support the overall mission of the foundation and the involvement of family trustees, discretionary grants can be an innovative and effective tool for encouraging family participation. However, when used simply to avoid difficult situations…discretionary grants can corrode the very essence of what it means to give as a family, while also dampening the foundation’s ability to be an effective and valuable institution for communities it serves.”

As has been observed many times before, effective philanthropy is hard work.




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