The abdication of King Juan Carlos of Spain comes as a shock. Yet he follows counterparts in Belgium, Holland and Qatar to become the fourth monarch in just over a year to hand the throne to his son. Age and ill health are common features in justifying leaving the helm, but Juan Carlos also expressed the need to ‘make way for a new generation’.
This transfer of royal power has caused me to reflect on the challenges facing donors who decide to pass a family foundation onto the next generation. A foundation represents decades of hard work and wealth creation, as well as a desire to cultivate and articulate shared family values.But families facing leadership transitions will typically confront similar fundamental questions. How we will work together? How can we integrate the next generation? What should we focus on? And how can we honour the family legacy?
Philanthropy in this context can be the glue that holds families spread across continents and generations together. We work with a large family foundation at NPC and all three of the founder’s children are actively involved in the running of it. Each sibling lives in a different country and has their own interest area, but they come together for several week-long board meetings every year to make funding decisions as a family.
But a foundation can become a thorn in a family’s side, too. Donors can struggle to relinquish their personal passion to a younger generation, and we have seen families torn apart when this transition is handled badly. Siblings have sat in tears across the boardroom table, unable to agree on a single issue, and family members have even refused to be in the same room as one another.
So what makes a family foundation work across the generations? Clear guidelines need to be in place, in writing, which reflect the founding donor’s wishes, passions and values, but that can be adapted as the world around changes. We witnessed the fallout from a father handing over the running of his foundation to one of his daughters who had more time and inclination than her siblings.
She began directing the foundation’s spending towards her own interests — her local church and specific developing countries where she had a connection — to the dismay of her siblings. A clear, agreed strategy may have avoided this.
It can be helpful to include non-family members on the board, who often bring expertise and an objective, independent voice to decisions concerning the foundation whilst understanding the family’s history. The Barrow Cadbury Trust, for example, is managed by non-family staff who are required to respect its historical Quaker roots and tradition of social and penal reform, while the chair remains a family member.
Defining the role and tenure of each family member is also crucial. We know siblings who resent their sister’s role as chair because there is little clarity as to how long she will hold this position or what their own involvement should be.
Finally, one of the hardest things of all is for a living donor to hand over his foundation to his children. It is tough to step back and let them learn by their mistakes. The younger generation can often inject new energy, ideas, and structure to a foundation, improving its efficiency and impact. Let’s hope so. And let’s hope the new King of Spain enjoys similar freedom to shape, modernise and improve the monarchy he has inherited.
Plum Lomax is deputy head of Funders Team at NPC