PMA Consulting, LLC

Foundation Succession Planning and the Generation X (and Y!) Trustees

For years, the nonprofit community has heard of the tremendous “philanthropic transfer of wealth” that would take place over several decades beginning in the late 1990s. According to researchers like John J. Havens and Paul G. Schervish at Boston College, as the parents of baby boomers pass away, their assets would be liquidated and foundations, charitable remainder trusts and donor advised funds would serve to shelter the inheritances. Estimates have run from $10- to $40-trillion in funds passing between the generations by the year 2050.

Ten years later, evidence of this shift is beginning to take shape. Patton McDowell & Associates has recently worked with two such foundations, one where the patriarch is seeking to create a succession plan to steward the foundation for years to come, and another where the children and grandchildren of the foundation founder are seeking to define purpose and structure in the wake of a tremendous loss.

Generation YIn both cases, the differences between how the two generations perceive philanthropy makes for an interesting dialogue, not to mention the on-boarding of Generation X (and Y!) trustees as junior board members.

For foundation trustees, the need for a strong succession plan is critical. That plan typically begins with engaging current and prospective stakeholders in discussion on topics of history, process and philanthropic focus.

Too often future trustees are not invited to engage in grantmaking efforts early enough. In other cases, the board is unclear on process, making it difficult for future generations to carry the founders’ work forward. Facilitated planning can lead to clarity of focus and renewed energy for philanthropy by all involved.

For nonprofits, the time to review your prospect research is now. Foundations that you may have perceived as uniquely targeting specific issues may be refocusing their efforts in light of (or in preparation for) leadership change. At the same time, longstanding foundation supporters of your organization may be considering new opportunities. In both cases, it is important to engage trustees in conversation about the future of their philanthropy.

The great “philanthropic transfer of wealth” has begun. How it will affect various stakeholders is largely a function of how well those individuals prepare for it.

-Photo Courtesy of JWMPAP