VA
Insights

Following the article Challenges Faced by Family Foundations in China in last VA newsletter, VA team worked with the Rockefeller Philanthropy Advisors (RPA) to conduct a research on international family foundations, in collaboration. By digging into the first-hand and second-hand information about numerous leading international family foundations worldwide, we have observed some tested key success factors. These will respond to the three challenges previously mentioned and hopefully provide good references to family foundations in China.

Founder value and legacy

For a family foundation, founder value and legacy do matter. The values of a founder are reflected not only through program areas, but also through foundation structure and time horizon. Take the Hilton Foundation for example, it is the founder Conrad Hilton’s charge that the foundation will be perpetual. As a result, majority of board members must be direct descendants of Conrad Hilton. In addition, the foundation today still has the same priority areas established by Conrad Hilton in 1944, such as strengthening congregations of Catholic Sisters and helping children affected by HIV and AIDs.

The example of Howard G. Buffett Foundation is just the opposite: the Foundation will cease to exist in 2045. “Our advantage lies in our expendability. We do not wish to exist in perpetuity”. Gates Foundation is similar in terms of the goal of time horizon. The reason why those large individual/family foundations do not wish to exist in perpetuity is that they desire to find fundamental solutions to complex social/environmental problems in limited time.

Besides recognition of founder’s value, it is also important to clarify relationship between founder and senior leadership team. For example, Lynn Schusterman, founder of Schusterman Foundation, used to attend senior staff meetings, but her role became confusing. Now Lynn and the board make philosophical decisions, while Senior Leadership Team develops strategy and implementation plans.

Therefore, integrating founder’s value into program selection and foundation structure will help the foundation and younger generations in the family to carry on founder legacy, and also benefit the development of the family foundation in the long run.

Taking a long-term holistic approach

Unlike business or other types of charitable organizations, family foundations have patient capital and the flexibility of living longer, since they have little reporting or regulation burdens and aren’t accountable to market swings.

With the above merits, leading international family foundations take a long-term approach when facing complex social and environmental issues. They tend to figure out the root causes and develop more holistic and sustainable solutions. As Surdna Foundation said, “The issues that we wrestle with are complex and urgent and we are eager to see progress. But as a foundation, we realize progress requires patience and a long-term view.”

We pointed out in the last VA Observation article that it was easy to confuse family foundations with corporate foundations at this stage in China. The culture of seeking for immediate return from the commercial world, to some extent, influences family foundations’ approach of doing philanthropy. Therefore, the long-term holistic approach of leading international family foundations is worthy of consideration.

Collaboration with other funders and across sectors

While maintaining identity and independence, leading international family foundations put emphasis on collaboration with other funders and across sectors. It is on one hand driven by the large and complex demand, and on the other hand driven by the nature of family foundation.

Staff from Howard G. Buffett Foundation said, “Some of those capacities beyond my foundation’s circle of competence are vital to support what we’re trying to achieve.” Surdna Foundation also expressed that “Collaboration is fundamental to what Surdna is as a grant making organization.”

In VA’s view, the role of family foundations as non-political and non-profit organizations enables them to collaborate and convene in ways that for-profit or government organizations cannot. Family foundations should take advantage of this and collaborate more with other foundations and NGOs in the focus areas. For example, family foundations can collaborate with leading public foundations: family foundations could provide non-restrictive funding to help public foundations transform while public foundations have advantage in channels, project management and branding.

Importance of experts on Board

Last VA Observation article also mentioned that professional planning and management is pivotal to translate founder’s personal preference into action steps, a set of rules, and appropriate governance structure, etc. Leading international family foundations all have experts from different sectors on their Board.

Let’s take the Rockefeller Foundation as an example. The Rockefeller Foundation’s leadership and staff members bring a broad range of talents to the organization with experiences drawn from scholarly, scientific, private and nonprofit professional disciplines. The experts and talents came from North America, Africa, Asia, etc. The foundation structure and responsibilities are also very clear.

Considering domestic foundations generally lack experts on Board, an “expert council” could be a good solution as experts working for multiple family foundations can coordinate resource allocation etc. Introducing issue area experts and management advisors in addition to family members on Board would be beneficial to the strategic planning, project management and process improvement of the foundation.

VA and RPA team hope that the four key success factors above of leading international family foundations would be beneficial to the emerging domestic family foundations. In next newsletter, we will share with you eight trends we observed among international family foundations.