Ways toManage Your FamilyFoundation SETTING UP SHOP Realizing Your GreatExpectations Considering AdministrativeExpenses Identifying andSecuringtheTools You WillNeed Determining WheretheWork WillBeDone Deciding HowtheWork CanBeDone Assessing WhatWork MustBeDone Managing inSupportoftheCharitableMission How toHandle Accounting andRecordkeeping Choosing Technology forGrants Management Should You Have a Website? Establishing aFoundationOffice Space Sharing Relying ontheFamily Business Using theFamily Office Using aHomeOffice Moving toaFull-TimePaid Executive Director Using Consultants Staff Sharing On theOutsideLookingIn Finding an toCompensation Alternative Developing aCompensationandReimbursement Policy Family Participation Questions fortheBoard What theLawMeans What theLawSays Should theFoundationPay Compensationor Deciding toHirePaid Staff Recruiting Family Volunteer Staff Reimbursement? ...... 126 ...... 131 ...... 128 ...... 122 ...... 124 ...... 122 ...... 129 ...... 123 ...... 123 ...... 130 ...... 121 ...... 132 ...... 126 ...... 135 ...... 130 ...... 117 ...... 119 ...... 118 ...... 134 ...... 131 ...... 129 ...... 125 ...... 117 ...... 131 ...... 132 ...... 133 ...... 129

....124 CONTENTS yDbrhA Brody by Deborah A. 12. WhatRecordsShouldMyFoundationKeep? 11. Technology HelpforYour Foundation 10. ThePaperlessOffice FIGURES 9. Ways toShareSpace 8. FamilyFoundationStaffingModels 7. Can theFoundationPayforSpousalTravel? 6. FamilyasStaff:TheGreenleeStory 5. UsingaSearchFirm 4. ManagementandMarriage 3. StaffingYour FamilyFoundation 2. HandsOn:TheMarioMorinoStory 1. HelpIsOntheWay For theTravel ofOtherFamilyMembers? ...... 118 ...... 132 ...... 122 ...... 131 ...... 120 ...... 120 ...... 127 ...... 123 ...... 119 ...... 133 ...... 125 ...... 134 115 SETTING UP SHOP: WAYS TO MANAGE YOUR FAMILY FOUNDATION 116 III. ESTABLISHING A STRUCTURE Y for managing a family foundation. afamily for managing reared thatmatter—willputyou afamily,for ingoodstead organization,or venturesmanaging acivic —perhapsyou have business,chaired afamily run in your experience Like many founders, content ofyour philanthropy. theprogramfor your goalsand foundationattheoutsetsupports family include: launch your foundationmight family A way tolookatmanagementasyou members. other board andfamily thefounderand legal requirements,and mission, operations directly tocharitable seemingly mundane activities ofdaily anapproach thatlinksthe agement, approach toman- cate anintegrated advo- grantmakers family Experienced you willneed; thetools Identifying andsecuring done; where the workDetermining willbe Deciding how thework canbedone; Assessing whatwork must bedone; ble mission; ofthecharita- insupport Managing management iskey tosuccessinthisendeavor. Sound and rewarding endeavors canundertake. afamily ofonethemostchallenging ou are atthebeginning Establishing goodmanagementprocesses andprocedures tion trustee —oncesaid: tion trustee late Paul Ylvisaker founda- —afamily accomplish somethingimportant.The tools toallow you andyour to family Office managementandoperationsare Realizing your expectations. great mostimportantly, and, administrativeConsidering expenses; meeting them. society areandhowbestto go about what theneedsof pendently determine private persons caninde- the ballotbox, to meetthetestseitherofmarketor and publicly influential.Without having tobesociallya freewheelingopportunity provideprivateinvention.They persons Foundations arearemarkable human this entire enterprise. Strong management cansupport tion. relationship with yourgial founda- andestablishing acolle- new people, meeting new information, acquiring they canleadto immediate funding, proposals donotresultgrantee in Even if forgrantees. experience fundraising process aproductive your jobistomake the tion founder, Asafounda- constituents they serve. lines ofnonprofit agenciesandthe and livelihoods ofpeopleonthefront your community —to affectthelives to have atremendous influencein That decisiongives you thepotential your fundsinapublic trust. personal you have chosentoplace foundation, afamily andrunning By starting into account. andgrantees dynamics, family mission, thattakesment structure thefoundation’s lenge ofsettingupanefficient manage- you tothe chal- asyouand inform rise focusgroups.This willhelpguide formal even conduct group of themtolunch,or Invite a andnonprofit leaders. business, vidual meetingswithlocalgovernment, about it.You mightwant tosetupindi- asmuchwill want aspossible tolearn your you area’s nonprofit community, If you are notalready deeplyinvolved in society.the broadest sense, in and, your community, your grantees, customer value?”Your are customers Who isourcustomer? What doesthe “Whatisourbusiness/mission? asking, Drucker recommends 500.” Fortune orthe small nonprofit enterprise is theessenceofeffective strategy,for the one’sDrucker,“Understanding mission PeterAccording tomanagementguru work thefoundation. for managing canprovideoverarching aframe- goals,it In additiontodefiningthefoundation’s andpurpose. goals, foundation’s values, A missionstatementrepresents afamily Thou canstnotthenbefalse toany man. asthenightday,And itmust follow, tothineownselfbetrue, This above all: Mission Charitable ofthe Support in Managing — HAMLET . ACTI.SC.3. For example: and organizations. mutations oftheseasthere are families are asmanytional decisions.There per- might affectmanagementandopera- andfoundation mission structure family These are justafew examplesofhow for theiruse. willneedextraofficespace dation,you duct meetingsordowork atthefoun- If you tocon- want members family tomanagethatoffice.staff person outgoing your cityandhire afriendly, ference room inthedowntown area of consider renting anofficewithacon- ily tobevisible inthecommunity, If you want your foundationandfam- low-cost studiospace. or by providing themwithfree or theirartwork inyourhanging offices bymight want localartists tosupport If your foundation fundsthearts,you office materials. useotherrecycled recycled paper,and foundationdocumentson print ing, in anenvironmentally soundbuild- want tohave your foundation’s office you might protect theenvironment, If your foundation’s missionisto home orbusiness. member’sset upshopinafamily you may beableassets tocharity, to much aspossible ofthefoundation’s behind-the-scenes andgive as If your toremain prefers family Questions toconsiderinclude: tofocusonfoundationmission. family freeing you andyour smoothly, run officeshould Once setup,however,the will take amountoftimeinitially. afair putting managementsystemsinplace Setting upthefoundationofficeand Ere thetoilbedone. andthouwiltbless theday Work, Work MustBeDone Assessing What managing a family foundationinclude: afamily managing Some oftheday-to-day tasks involved in minutes, and preparing briefing andpreparing minutes, distributing Coordinating meetings, and committeeminutes; board summaries,and sheet,grant a fact web asabrochure,a page, needed,such for thefoundation,if materials Writing calls; telephone Answering mail,email,and Will we acceptunsolicitedproposals? the foundation? How willwe letpeopleknow about accounting behandled? How shouldbookkeeping and is awarded? foundation undertake afteragrant What kindsoffollow upwillthe willthefoundationmake? grants How andwhattypesof many grants and review proposals? how andwhenwillwe accept If so, What records shouldwe keep? How will we managetheboard? — JOHNSULLIVAN DWIGHT (1813-1893) 117 SETTING UP SHOP: WAYS TO MANAGE YOUR FAMILY FOUNDATION materials for the board; ing their questions, monitoring grant bility generally influences many man- Soliciting and screening grant pro- expenditures, and managing grant agement decisions. posals; evaluations, if the foundation chooses Identifying and conducting due to do them. Deciding How the diligence on grantees; Scheduling and keeping records on site While some of these tasks are basic to Work Can be Done visits to potential grantees; running any office, family foundations One summer day the Little Red Hen Attending or organizing networking have one task that most other organi- found a grain of wheat. meetings; zations do not — determining how Issuing and mailing checks to grantees; best to involve and work with other A“ grain of wheat!” said the Little Red Hen Following up with grantees by answer- members of the family.This responsi- to herself.“I will plant it.” She asked the duck,“Will you help me plant this grain of wheat?” fig. 1 Help Is On the Way Not“ I,”said the duck …. When the wheat was ready to harvest, the Little Red Hen said to herself,“I will A number of organizations exist to serve grantmakers. You may consider harvest the wheat and make bread out joining or using the services of one of these organizations. Start by asking questions about the programs and services the various groups offer and how of the flour ….” best to tap into them. National membership organizations include the Council on Foundations, BoardSource, the Association for Small Foundations, and And“ now,”said the Little Red Hen, Independent Sector. Another genre of national membership groups, known as “who will help me to eat the bread?” “affinity” groups of grantmakers, provide networking and education around issue areas such as health, the arts, refugees, and children, youth, and I“ will!” said the duck.

families, to name a few. In addition, there are many local membership groups — THE LITTLE RED HEN such as regional associations of grantmakers (or RAGs). The Forum of RAGs (www.rag.org) can put you in touch with the association nearest you. A basic truth often underlies a chil- The National Center for Family Philanthropy and several university centers on dren’s story. As with the Little Red philanthropy can provide you with information and resource materials on just Hen, in many families, the day-to-day about any topic related to family giving. work of running a foundation falls to

Many of these groups hold meetings, conferences, workshops, seminars, and one individual. To avoid this, try to the like. Some new foundation trustees burn themselves out on the conference involve other family members in circuit because — not knowing what to attend — they attend everything! whatever way possible — site visits to grantees, editing board books, identi- A better suggestion is to start slowly, attend one or two national and local meet- fying projects to fund,or anything else ings, and then take it from there. Keep in mind that most family foundations exist for a very long time, so you may be involved in your family foundation for that engages them.Every family seems the rest of your life. Pace yourself. to have someone who is a good writer, a computer whiz, a networker, etc. Be

III. A ESTABLISHING STRUCTURE sure to take the time to tap into those

118 skills and interests.Ask family members what skills and time commitments fig. they can offer, and what kind (if any) 2 Hands On: The Mario Morino Story of outside help they are most com- fortable with.It may be more work up front, but in the long run the founda- When I retired from the business world in late 1992, it was the first time tion — and often the family — will be in over two decades that I could concentrate on my dream of giving stronger. Family members will feel something back to society and helping others. It was then that I launched the Morino Foundation. more invested in the enterprise, and bonded to the family team. Previously, the hectic pace of the computer software industry had all but monopolized my attention, especially during the late 1980s and early 1990s, Recruiting Family when my associates and I brought our company through a series of compli- Volunteer Staff cated acquisitions and mergers that resulted in one of the world’s largest soft- ware companies, Legent Corporation. In 1992, the company was in both a Many families choose to operate their solid financial state and a strong market position, and was under the leader- foundations, especially early on, with ship of a strong management team, so I was able to step down and begin a volunteer staff from the family. Some, new journey in the nonprofit realm. like Charlie Kettering who runs the My early vision for the Morino Foundation was simple: I wanted to play a Kettering Family Foundation, believe supportive but active role in the grant projects we would support. This role — that having a family member staff the what I call a “passive activist” — would mean assisting grantees not only finan- foundation “ensures that the family will cially, but also by serving as an advisor to them. It would entail providing appropriate contacts who could help them financially or otherwise, and in some stay involved and that the foundation cases, even rolling up my sleeves and working alongside them on planning, will fund projects that are meaningful to developing, and marketing their projects. The idea was not to take control of the family and adhere to the donor’s the projects but mainly to help the grantseekers succeed by providing the intent.” Sometimes a family member expertise, assistance, and resources to which they might not otherwise have takes on the responsibilities for the foun- ready access. dation’s day-to-day work by default, but Much of this activist philosophy stems from my business roots. I had an in the long run it is far better to think active management style, a desire to be involved in day-to-day work opera- staffing through systematically. tions, and a commitment to build and cultivate relationships with my co-workers. Over the years, I was blessed with many close friendships and relationships with people at Legent, its customers, and even its competitors. Whether staff is paid or volunteer — family or nonfamily — it is a good idea This personal approach is crucial to the Morino Foundation’s success. Our role is to be involved and supportive, but not controlling. Take the process of for board members to discuss what qual- awarding a grant. The key is to look at the potential award from both a busi- ities,skills,and experience they are seek- ness perspective and a personal one. Business sense helps me determine ing. Other steps include writing a whether a project is technically or financially feasible. My personal involve- description of what the job responsibil- ment enables me to judge whether the potential grantee is committed to his or her mission, has the skills to accomplish his or her goals, and whether the ities might be,deciding who is ultimately right chemistry exists for successful cooperation between us. responsible for hiring and overseeing the staff, conducting interviews, and finally, EXCERPTED FROM The Genesis of the Morino Foundation, 1995, The Morino Institute.

identifying candidates. FOUNDATION FAMILY YOUR MANAGE TO SETTING UP SHOP: WAYS

119 Be sure to take into account family

fig. dynamics when assessing staffing options. 3 Staffing Your Family Foundation First, what type of skills, interests, and time do board members have? Each fam- ily member brings different skills and When family members find a true fit between the foundation’s mission and professional experiences and has different their career goals and skills, having a family member as a family foundation staff can be ideal. Still, some of the biggest challenges may include: levels of time and interest in the founda- Learning how to run an office; tion. Some trustees might enjoy reading Working alone or with a very small staff; proposals and making site visits. Others Reporting to a member of your own family; might have credentials in financial and Setting work/family boundaries with family members; and asset management. If there is a lawyer on Hearing criticism from other family members. the board, he or she might be able to Family members who run their family’s foundation advise: provide pro bono legal counsel or at least Stay neutral; oversee the work of outside counsel. Err on the side of over communicating and being overly accountable for your work; Obtain consensus from the family whenever possible; and Hire an outside facilitator to help with board meetings. Think about how different family members can complement one another.

fig. 4 Management and Marriage

For many years, the husband and wife team of John and Geri John and Geri are frugal with the foundation’s dollars. Not only Kunstadter have been the staff and board of the Kunstadter are they not paid, but also they pay for most travel and expenses Family Foundation. Founded with profits made in the ladies out of their own personal funds. Even postage is charged to their “foundation” (undergarment) business, John’s grandfather ran the personal account. John states fervently, “This is money in trust Kunstadter Foundation from his business office. Later, John’s for the public and not for our own personal use.” father managed the foundation, also out of his business office, with help from a secretary. When John’s father died, John and The computer age has been a godsend for small family founda- Geri took over day-to-day operations of the foundation. tions like the Kunstadter Foundation. Email, Internet, and faxes make it possible for the couple to do most of the foundation’s sec- John and Geri were both at a point in life where they had the time, retarial work. They spend about $500 a year for help, if needed, interest, and financial wherewithal to run the foundation, and with mailing their annual report, word processing, data entry, and they believe in keeping foundation administrative expenses as low answering mail. They keep the foundation’s finances on the com- as possible. Thus, they became unpaid foundation staff. They puter and sometimes get help with bookkeeping, which amounts also had room in their New York City apartment to set up an to less than $1,000 per year (also paid out of their personal office. John recalls, “Gradually the time and space required to run funds). An accountant completes the tax return with information the foundation expanded. With such limited space, we are dis- the Kunstadters keep in the computer in Excel or Word. ciplined about throwing away things we no longer need.” Now, their older daughter comes into the city and spends about 10 hours a month cleaning out the files for them. III. A ESTABLISHING STRUCTURE

120 rprevdcnlcso neet For or perceived conflictsofinterest. must beextremely careful toavoid real and donot, others seats ontheboard; Someforfeittheir also board members. are members thesefamily some cases, In member astheirfoundationstaff. Management Survey dations thatresponded toitsmostrecent foun- thanhalfofthefamily ations,more According totheCouncilonFound- or cultivate new areas ofexpertise. skills boneuponrusty to helptrustees are available national andlocalgroups, making workshops sponsored by suchasinvestment andgrant- tunities, Many professional development oppor- withtheirfinances. and helpgrantees be willingtoreview your investments might economics professor atStanford, Or your the nephew, making program. grant- Hecouldheadupthearts time. relishes interpretive danceinhisfree who inthefamily have actuary astern you might For instance, ferent lights. indif- you members get toseefamily of having foundationisthat afamily ofthemany joys members.One family however, nottopigeonhole Be careful, might managepublic relations. socialite andvolunteer extraordinaire, the AuntLydia, as GeneralCounsel. mightserve friend, and longtimefamily attorney handle dailyoperations.Bill,an might Kennedy SchoolwithanMPA, outofthe Carol,just accounting.Cousin mightoversee thefoundation’s CPA, a retired UncleHarry, For example, employ afamily having memberatthehelm. afamily more —atleastinitially comfortable feel somefamilies Still, Kunstadters. may notbeaseasyitwas forthe tobethefoundation’s(or members) staff member afamily most families,selecting them asthefoundationevolves.Sample adjustandsupplement and and simple, Keep thesedocumentsshort tices are. what theiremployee policiesandprac- foundationspayilarly sizedfamily and outwhatsim- objective measures.Find andbenefitsbasedon and tosetsalary idea tohave policies personnel written prospective Itisalsoagood employee. forthe ajobdescription to write step towardThe first paidstaffis hiring or more). and95percent ($50million or more), 67percent (assetsof$5million more), to 29percent (assetsof$2millionor tions withassetsoflessthan$500,000) ranged from 14percent (forfounda- Thatpercentage employed paidstaff. 54 percent ofitsrespondent members iation ofSmallFoundations foundthat In its qualified orare notinterested. are eithernot members that family find Stillothers position tovolunteer. are notinafinancial members family Somefindthatother other interests. decide they needmore timetopursue board tohire paidstaff?Somedonors What prompts foundation afamily Deciding toHire Paid Staff 2001 MemberSurvey , the Assoc- the , to sendyour positionannouncement. groups mentionedabove are goodplaces the Again, might alsowant toadvertise. you throughperson word ofmouth, findtheirstaff Although many families from scratch. descriptions time developing policiesandjob written or two employees notspendtoomuch organizations thatonlyintendtohire one Goodalsoadvisesthat bookstores.” andinpopular found ontheInternet but are reference easily materials to state, legal perspective.This may from vary state employment relationship involves from a whatan timeunderstand for thefirst staff thatsomeonehiring “It isimportant believes that: human resources issues.She advisesorganizationson Associates, ofGoodManagement Kathy Good, sampledocumentsandadvice. generic canprovide more www.srhm.org, for HumanResource Management, theSociety ences asorientations.Also, foundationconfer- Staff andfamily InstituteforNew of grantmakers’ Foundations association ortheregional for stafftoattendtheCouncilon also wishtobudget timeandmoney you may In budgeting forpersonnel, Association forSmallFoundations. andthe the CouncilonFoundations, associationofgrantmakers, regional your Center forFamilyPhilanthropy, organizations suchastheNational andbenefitsare availablesalaries from foundationstaff onfamily information policies,and job descriptions,personnel 121 SETTING UP SHOP: WAYS TO MANAGE YOUR FAMILY FOUNDATION Should the Foundation necessary activities for accomplishing the bilities they are asked to take on, these Pay Compensation or foundation’s mission. expenses can range from a small amount Reimbursement? to thousands of dollars per year. Compensation generally refers to fees paid Reimbursement refers to payment for to an individual for service on the board, expenses that board members or staff What the Law Says as well as fees that board members may incur while attending foundation meet- Family foundation members and trustees receive in exchange for providing pro- ings, site visits, and other activities. are classified as disqualified persons, and fessional services to the foundation — Depending on where a trustee or staff as such are subject to special rules regu- including legal, accounting, and other member lives and what other responsi- lating self-dealing and “conflicts of inter- est”in private foundations.For purposes of this essay, we refer to the governing fig. boards of foundations as “trustees.”Please 5 Using a Search Firm note, however, that there are different legal responsibilities imposed upon gov- erning boards depending on whether Some families choose to retain a professional search firm when hiring their they are formed as a corporation or a executive director — most often when the staff person will be a nonfamily charitable trust. member. Others, such as the Meadows Foundation, which had a large extended family to choose from in selecting a new president, chose to use a search firm for the family to ensure that the process was objective. Anyone related to the founder of the

Family foundations may want to use a search firm if: foundation is almost assured of being The job market is tight; considered a disqualified person. (For The board does not have time to handle all of the tasks involved in more information,see Facing Important the hiring process; Legal Issues,p.59.) Compensating,pay- The foundation wishes to tap into a national pool of candidates; ing, or reimbursing the expenses of a The foundation wants to keep the search — and the foundation’s name — confidential; disqualified person is viewed as self- The foundation board is not experienced at vetting resumes and dealing, and may be subject to signifi- interviewing candidates; and cant fines for both the foundation and The foundation board wants expert advice throughout the process. the individual trustees. Executive search professionals usually charge a substantial fee; however, the work they do in helping you get clear about what type of person you are look- However, the law contains an impor- ing for and in helping to identify appropriate candidates can save thousands tant exception to this self-dealing rule. of dollars in the long run. This exception allows payments to dis- To find a reputable search firm, check with your national and local network- qualified persons (other than payments ing groups. Ask colleagues what firms they have used and about their expe- to a government official),provided that riences with these firms. Call the National Center for Family Philanthropy for these payments are for personal serv- information on search firms that have experience working with family founda- tions. Supplement this with research on the Internet including a visit to the ices that are reasonable and necessary to Association of Executive Search Consultants’ (www.aesc.org) website. carrying out the exempt purposes of the foundation. III. A ESTABLISHING STRUCTURE

122 What the Law Means

The law’s basic intent is to keep family fig. foundation donors and boards from 6 Family as Staff: The Greenlee Story compensating family members and other disqualified persons at levels that are higher than appropriate for the Hiring a family member as a paid staff person proved to be an excellent services they provide.The law does not move for the Greenlee Family Foundation of Boulder, Colorado. Anne Kemp is executive director and daughter of the founders. Like the specify what “reasonable and necessary” Kunstadter Family Foundation, the Greenlee Family Foundation’s assets services and compensation may be, but are about $2 million. there are a number of considerations Anne left a full-time job as a development officer at a university to run the foun- and sources to refer to when thinking dation. As a paid family executive director, she works out of her home. The board about these issues. consists of her father, mother, and a brother. The board sets her salary by look- ing at the Council on Foundations Grantmakers Salary Report. Her family con- Many foundations and trustees,reflecting ducts her annual performance evaluation, but no longer tries to do so with a formal upon the nature of foundation board written document. “At first,” according to Anne, “it was awful. My brother lost the form. Mom filled it out in crayon. And my father sent me flowers, and told me I service more generally, follow a strict was doing a wonderful job.” She adds that, no matter how professional they try interpretation of the law’s intent. This to be, “The one thing you cannot factor out of family foundations is family.” view holds that private foundations exist Anne loves her job and hopes one day to turn the foundation’s mantle over to her in order to fund nonprofits.Ensuring that brother so that he can share in the fun. She is, however, careful to point out that funds are used primarily for this purpose much of the work is not very glamorous. The administrative work is boring and is the law’s clear intent.Thus,only in very perfunctory. She answers the telephone, responds to the mail, crafts budgets, special cases should a foundation con- and prepares materials for the board. Anne also enjoys being active in the Colorado Association of Grantmakers, saying, “It helps me to keep in touch. I sider compensation or reimbursement. spend several hours a day working alone in my basement or at my office and need to schedule time to interact with people from nonprofits and other foundations.” Questions for the Board There are pros and cons to hiring family members to staff the foundation. Do we as trustees,in addition to gov- On the plus side, family members understand the family history, dynamics, ernance roles, also perform services goals, and issues. They are likely to be more invested in the foundation’s success. that are commonly considered “pro- Their presence might promote more family connection and involvement. On the fessional” or “managerial” positions negative side, they may be too intimately connected to the family to be impar- — such as managing investments, tial. They may not be the most qualified candidates. Other family members may be jealous of not having what they perceive as a “cushy foundation job.” providing legal or accounting serv- And it may be difficult for one family member to evaluate objectively another ices, supervising staff, sending out member’s job performance. regular mailings, and other activities? Is this spread equally among all of the trustees, or the responsibility of one or two of the trustees? — do we take into account the time priate and necessary for continued Is philosophy on the issue of compen- associated with site visits,meetings,and board membership? sation consistent with expectations of other board activities when deciding Have we kept accurate and complete

trustees in terms of their board service on what level of commitment is appro- records regarding the amount of time FOUNDATION FAMILY YOUR MANAGE TO SETTING UP SHOP: WAYS

123 124 III. ESTABLISHING A STRUCTURE than appropriate for the services theyprovide. fortheservices than appropriate and otherdisqualifiedpersonsatlevels thatarehigher donors andboards fromcompensatingfamily members The law’s basicintentistokeepfamily foundation Family Participation of fairness withinthefamily? of fairness providing compensationraiseissues might and inandofitself, a privilege ontheboard viewedmembership as inthefoundation? Is participation regarding branch the family family Is there atraditionorsystemwithin divisiveness withinthefamily? likely but notothers tocause trustees Is paying compensationtosome phased outoncethey getjobs? are inschool?Shouldthisendorbe sation fortheseindividuals whilethey differently? Shouldthere becompen- shouldthey betreated on theboard, If there are younger members family tion inthefoundation? branchparticipa- an impactonfamily continued participation? Will thishave foranindividual trustee’sice necessary Is payment ofcompensationforserv- pensated/reimbursed? be available were iftrustees notcom- funds significantly more grantmaking fundsavailable?grantmaking Would year are notfunded duetoalackof How many proposals received each in thefuture? past? Dowe wishtokeep theserecords by inthe boardcontributed members able atwww.ncfp.org. DC: NationalCenterforFamilyPhilanthropy, 2001)avail- Reasonable andNecessary? your policy: oftherationalefor description a short How was thepolicydeveloped? when they willnot. and be compensatedorreimbursed, ofwhentheyclear understanding will provides your witha board members it guidelines, sonable andnecessary” you have compliedwiththeIRS’s “rea- such apolicydoesnotguaranteethat can develop apolicyforthis.Although you compensation orreimbursement, If your board decidestooffertrustee and Reimbursement Policy Developing aCompensation EXCERPTED FROM best reflected inacompensationpolicy? voluntary boards? How canthesebe What are thefamily’s values regarding ftute;and of trustees; Review actualout-of-pocket expenses onthisissue; nonprofits forinformation Contact associationsoffoundations or izations; Conduct asurvey ofsimilarorgan- on thesubject; andsurveys materials Review printed Jason Born, Passages. (Washington, Board Compensation: Board Include other expenses. may to cover alsoagree somebut not andotherexpenses.You entertainment, foundationbusiness ings orsitevisits, tomeet- might includetransportation the foundation? What expenses willnotbereimbursed by agreements. anddis- minimize misunderstandings Being specificabouttheselimitswill what are thelimitsonthese expenses? and What expenses willbereimbursed, effective operationofthefoundation. ices provided forthe andnecessary sation must bereasonable fortheserv- also statespecificallythatthiscompen- Thepolicyshould for auditpurposes). couldprovesuch areport very helpful activities (althoughnotlegallyrequired, documenting timespentonfoundation ber isresponsible forsubmittingareport policy shouldstatethateachstaffmem- basis theamountwas determined.The onwhat annual orsomeotherbasis,and clearly whetheritwillbepaidonan state If compensationistobeprovided, What willcompensation bebasedupon? compensation level they set. justifythe position willhelpthefamily thefunctionsof needed toperform staff thatspecifiesthedutiesandskills forfamily Having apositiondescription forIs there staff? aposition description for othersimilarorganizations. Review feespaidforsimilarservices Reimbursable expenses Who decides what level of compensation to provide and approves requests for fig. Can the Foundation Pay for Spousal Travel? reimbursement? The policy should 7 For the Travel of Other Family Members? identify who will make these decisions. Using outside advisors may help to avoid family resentments in situations Generally, no. The assets of the foundation cannot be used to finance where family staff members are com- family reunions. Spouses and children of board members are disquali- pensated differently. This person or fied persons. If foundation assets are paid to them for travel or related committee can also ensure that com- expenses, such payment is an act of self-dealing. Obviously, if the spouse pensation and reimbursement are bud- or child is also a board member (or staff), the reimbursement of rea- geted and tracked appropriately. sonable expenses for necessary foundation activities is not a violation. But assuming the spouse or child has no official duties, such reim- bursement is self-dealing. Finding an Alternative to Compensation There are two methods for making such reimbursement payments that If your board decides that providing satisfy the legal concerns. First, treat the reimbursement as part of the reasonable compensation paid to the board member or staff member direct compensation for family staff whose spouse or child is being reimbursed. The amount of reimburse- service is not appropriate or desired, ment must show up as reportable income to the board or staff member you may still want to consider institut- on a form 1099 or W-2. ing one or more of the following options to honor and encourage their Example: A board member takes his or her spouse to a Council on Foundations conference for family foundations. If the expenses paid by the ongoing service: foundation for the spouse are counted as compensation to the board mem- Discretionary grants: Some founda- ber — and the board member’s total compensation is reasonable — there is tions allow their family staff to make no self-dealing. Why? Reasonable compensation for personal services is the a small number of discretionary main exception to the self-dealing rules. grants to nonprofits of their choice, Second, develop legitimate and meaningful duties for the spouse and/or chil- most often within the foundation’s dren that further the charitable purposes of the foundation. Providing com- stated guidelines (another option is panionship and attending social receptions with a board member would not to provide a small discretionary grants be considered meaningful foundation duties. budget to each trustee). (See the sec- Example: To train the next family generation in the traditions and operations tion on Discretionary Grants in of the foundation, the foundation approves an advisory committee composed Establishing Grantmaking Interests of children of the donor. This committee will review all applications for grants and Priorities, p. 185.) in a particular subject area and make final recommendations to the govern- Matching grants: These grants are ing board. Reimbursing these children for reasonable expenses of attending usually made in recognition of an indi- an appropriate board meeting or a training conference would be legitimate foundation expenses. vidual staff member’s personal gift to a SOURCE: John A. Edie. Family Foundations & the Law: What You Need to Know. 3rd ed. Washington, nonprofit, where the foundation DC: Council on Foundations, 2002. matches the gift according to some predetermined formula (often one-to-

one) up to a certain amount each year. FOUNDATION FAMILY YOUR MANAGE TO SETTING UP SHOP: WAYS

125 Supporting outside voluntary board On the Outside Looking In in managing small foundations could service: Some foundations encourage If the potential pitfalls of hiring a manage the foundation. A number of the service of their family staff members family member concern you, you these opportunities are available around on other voluntary boards by agreeing might want to explore hiring someone the country, often with different to make an annual gift (perhaps $500 or who is not a family member.A family emphases. For example, some manage $1,000) in honor of that service. foundation is a work in progress.Many family foundations that have what they Supporting outside family members’ families have family members as staff consider to be a social change or pro- involvement: Consider reimbursing initially and then replace them with gressive agenda. Others manage family the travel of a spouse or children of nonfamily staff or vice versa. foundations that want to pursue what the family staff member to attend they call a “strategic grantmaking board meetings or educational con- When hiring a staff person from agenda.” That is,they help donors who ferences.This type of benefit must be outside the family,again, you will need want to fund in very specific, targeted treated as compensation, but again to define the job, salary range, and areas. Others may have been started as can be a nice way of encouraging reporting relationships.You can identify vehicles to manage the philanthropy of participation by the extended family candidates either informally through individual family members and now in the activities of the foundation. professional networks,or more formally takes on other families as clients. Some of the services these organiza- When hiring a staff person from outside the family, tions can perform include identifying again, you will need to define the job, salary range, and screening potential grantees,work- ing with families to clarify their goals and reporting relationships. and interests, and managing the day- to-day administrative details of small Please note that, in each of the above through the regional association of and large giving programs. instances,the full board is legally respon- grantmakers and other nonprofit asso- sible for approving the grants and ensur- ciations and periodicals such as the Philanthropic collaborative groups can ing that recipients are eligible grantees. Chronicle of Philanthropy. If you feel be powerful tools for families to use to Still,these options encourage foundation more comfortable having professional gain prompt, affordable access to trustees to continue to develop and sup- help conduct the search and are pre- expertise and a network of like- port their own causes and interests, and pared to pay for it, you might want to minded givers.Families that opt for this send a clear message that the foundation hire an executive search firm or an indi- type of shared arrangement also have values highly the individual’s time and vidual consultant to guide the search. the benefit of having access to high- commitment to the nonprofit sector at level consulting staff and expert admin- large. (Laws on trustee compensation Sharing Staff istrative staff on an as-needed basis. vary by state. In California, for example, Many small family foundations share They benefit from sharing a central family board members can be paid for staff as a way of maximizing efficiency office to hold meetings and are in an service only if the governing board con- and saving costs. Employees can be ideal position to collaborate with other sists of 49 percent family members or shared in many ways. A community funders and grantees.In much the same fewer. Check with your state Attorney foundation, a nonprofit organization, way, some community foundations or

III. A ESTABLISHING STRUCTURE General’s office on this point.) or a for-profit company that specializes religious organizations, such as Jewish

126 Strengths ofthismodelinclude: grant focusareasandrequestsforproposals. ant actsasanexecutivedirector, assistingtheboard indeveloping process twiceayear, forinstance.Insomefoundations, theconsult- may spendextensivetimeonthefoundationduringagrantreview resources. Theconsultantisusuallypaidanhourlyordailyrate and trustees. Oranindividualmightbeaskedtomanagefinancial might receivegrantrequestsandpreparerecommendationsfor the regularly butarenotnecessarilyongoing.Forinstance,aconsultant In thisstructure,anindividualishiredtodospecifictasksthat recur CONSULTANT MODEL Strengths ofthismodelinclude: provided onaprobonopublicobasisbyoneofthetrustees. who isrelatedtothefoundation.Sometimesadministrativestaff timeis tion ormayhandleotherworkforatrustee,lawyer, orfinancialadvisor office, although theadministratormayworkformorethanonefounda- tor modelisemployed,thefoundationgenerallyhousedinaspecific bank deposits,andreconcilefinancialrecords.Whentheadministra- process, arrangeformeetings,sendlettersandgrantapprovals,make spondence andtelephonecalls,logingrantrequests,trackthe primarily withadministrativeissues.Thispersonmighthandlecorre- This modelrequiresastaff personwhoworkspartorfulltimeanddeals ADMINISTRATOR MODEL Possible problemsare: Possible problemsare: SOURCE: to maintain.Geographiclocationandtheexpertiseexperienceoftrusteeswillalsohaveabearing. family memberswanttodevotethefoundation;andhowmuchcontroloverfoundationactivitieswants depending onwhatisimportanttothefamily. Thetwomajorconsiderationsinselectingamodelare:howmuchtime administrator consultant,director, orfamilystaffmodelsomecombination.Allofthesemodelsareeffective, Family foundationsgenerallyuseavariationoffourmodelsinplanningthemanagementtheirorganization— and reflecttheir values andinterestinhisorher recommendations. The consultantneedstomaintain closecontactwiththetrustees foundation couldnotafford fulltime. It ispossibletohirespecificexpertise onapart-timebasisthatthe The costofongoingstaff andoffice spaceisnot necessary. review andleadership. The modelassumesthattrusteeshavethetimetoprovidegrant adjusting todiffering boardchairs. The administratorneedsaclearsupervisorandmayneedhelpin Trustees maintainhandsondirectionofthefoundation. Foundation trusteesarefreedfromroutineadministrativetasks. Adapted fromapresentation madeattheCouncilonFoundations 1997FamilyFoundationsConference byAliceC.BuhlandJudithK Family FoundationStaffing Models Strengths ofthismodelinclude: in thesamewayastaff personmight. full-time basis.Thefamilymembermayreceiveasalaryandfunction A familymemberservesinaspecificstaff roleonapart— or FAMILY STAFF mendations forfinancialmanagement. with thechairtodevelopboardagenda,andprovidesrecom- makes grantandprogramrecommendationstotheboard,works executive directoroverseesanyotherstaff, managestheoffice, essarily —full-timeandmaybecalledtheexecutivedirector. The the foundation’s activities.Thisstaff personisusually—butnotnec- staff persontoproviderecommendationsandoversightformostof According tothisscenario,thefoundationhiresanexecutive-level DIRECTOR MODEL Possible problemsare: Possible problemsare: Strengths ofthismodelinclude: sultant worksforthefoundationonlysporadically. Response timetoapplicantsmaybedelayedbecausethecon- staff member whoiseasilyaccessible. The foundationmaybelessvisiblewithoutaspecificoffice andas for trusteestaff because offamilyrelationships. It maybehardertoimplementappropriate accountabilitymeasures or dynamicsandmaybeseenas havingapointofvieworposition. A familymembercanbemoreeasily caughtupinthefamilyissues A familymembermayhavealonger-term commitmenttothefoundation. A familymemberknowstheanditsvaluesconcerns. of thetrustees. The staff personmightnotaccuratelyreflectthevaluesandinterests This staffing modelisthemostcostly. there arevolatilefamilydynamics. A nonfamilyexecutivedirectormayactasacalminginfluenceif developments inthecommunity. A professionalstaff personhastimetofollowopportunitiesand Trustees canprovideleadershipwithoutspendinglargeamountsoftime. . Healey. 127 fig. 8 SETTING UP SHOP: WAYS TO MANAGE YOUR FAMILY FOUNDATION 128 III. ESTABLISHING A STRUCTURE describes herjob: describes ages two foundations different family This ishow oneconsultantwhoman- member inthefoundation. forayfirst intoinvolving anonfamily the consultant—especiallyifitisyour —tohavefamily strong with rapport the founder—andpossibly theentire for isimportant thiscase,it or office.In foundationsfromsmall family ahome consultant caneasilymanageseveral Anexperienced foundations. family consultant tomanageoneormore Another optionisforanindependent Using Consultants tions foranadministrative fee. founda- managefamily Federations, andanetworkoflike-mindedgivers.expertise affordable accessto for families tousegainprompt, Philanthropic collaborative groupscanbepowerfultools develop andmodifygrant guidelines. have alsohelpedthefoundations to board.I tothe the preparation offollow-upreports requests outsidetheguidelinesand oversee Ialsodecline the foundation’s guidelines. ing recommendationsonfundingbased mak- board dockets,and come in,preparing analyzingsibilities include proposalsthat Myrespon- conducted viaconferencecalls. meetings four timesayear withinterim visits tograntees.These boards meettwoto Ialsomakesomesite orfax. email, phone, ofmymuch workisaccomplishedvia so The families live allover thecountry, invoices founda- totheaccountant.The tant’s work andreview andsubmit can bedesignatedtooversee theconsul- ally theboard chairoranotherofficer, trustee,usu- it onanongoingbasis.One work whenneededwhilenotpaying for the foundationboard torequest more itallows for Atthesame time, of time. be available uponamount foranagreed because itguaranteestheconsultantwill This systemworks well cycle. of agrant week before aboard meetingortheend suchasthe ofworkhours atbusy times, hourly rateiftheboard needsextra The consultantcanbillatanagreed-on for afixed perweek. number ofhours retainer withtheirconsultant agreement boards prefer tohave a consultant.Some withyourleast aletterofagreement contractorat Be sure toissueaformal assistance tograntees. andtechnical advice, provide coaching, isto functionofastaffperson important Another not beapparent tothem. seeasolutionthatmayhelp thefamily Sometimes thevoice ofanoutsidercan and direction foritsgrantmaking. proposals hadaclearvision asthefamily making ifthey didnotacceptunsolicited grant- plish betterandmore satisfactory to realize thattheytrustees couldaccom- One consultanthelpedhisfoundation’s the consultant should inform theboard the consultantshouldinform the consultanthasarelationship with, funding anonprofit that sidering Ifthefoundation iscon- foundation. contractwiththe in theiroriginal of-interest thatisincluded agreement conflict- should beheldtoastrict consultants Inaddition, ily dynamics.” consultants don’t getinvolved infam- cautionsthat Another trustee “The best according toonetrustee. hire out,” Administrative work istheeasiestto pure administrator. ratherthana strategically grantmaking require someonewhocanguidetheir believe foundations thatmostfamily Her trustees staffperson.” nonfamily relationship witha more permanent a stageorphase.They are easingintoa aconsultantis foundations,hiring family “For many Inherexperience, 25 years. foundationsformore than with family hasbeenworking Musser Foundations, Weyerhaeuser FamilyandtheLauraJane aconsultanttothe Judith Healey, income housing. program-related investment forlow- Now they are makingtheirfirst grants. awardedtrustees onlydirect-service the foundation hired aconsultant, before onesmallfamily For example, introduce tonew options. thefamily Such aprofessional may staffperson while conductingfoundationbusiness. consultantsforexpensesincurred burse tion shouldalsobeprepared toreim- is critically important. is critically withthefamily,which good chemistry chose ishighlyqualifiedand alsohas executive director.The individual they they hired an After acareful search, one withadministrative experience. alsowantedand education.They some- thesciences and intheirfundingareas: bothinphilanthropywith expertise The board was lookingforsomeone toidentify anexecutiveership director. known forfindingnonprofitfirm lead- executive director.They retained asearch board nonfamily decidedtohire itsfirst to more than$100millioninassets.The hadgrown from $20million ing point.It fundreached aturn- Four years ago,the he alsohired afull-timeassistant. secretary.Eventually,and hired apart-time heleasedasmalloffice became thestaff, Whenthesonoffounder office. business it was outofthefamily run dation.When thefoundationwas begun, Jones FamilyFund isa50-year-old foun- the For example, or consultantsasstaff. family years ofoperatingwithpart-time into thedirector modelafteranumber of foundationevolvesSometimes afamily Paid Executive Director Moving toaFull-Time the consultantright they shouldaddress thiswith factions, withfamily aligning himorherself feelthataconsultantis the trustees if Also, work toanotherprofessional. of therelationship andoffertopassthe away. family foundations face choices. foundationsface family Here again, the work willbedone. you must decidewhere who willdoit, decide whatwork needstobedoneand Onceyou foundation hasinevitabilities. the thebusiness ofrunning you choose, Regardless ofthemanagementmodel Will beDone Where the Work Determining and community meetingsthatthefoun- dation board andcommitteemeetings, foun- place formeetingswithgrantees, tohaveit isimportant aprofessional usingahomeoffice,office space.When may beintheirhomeoraleased filingcabinetsthat computer,printer,and fax, business phone, dedicated office, gling several clientsmay have aseparate Consultantswhoare jug- and storage. filing their basementforlonger-term spacein whilesecuring using, currently filing cabinetsfordocumentsthey are and desk, bedroom withacomputer, foundationstaffuseaspare Some family ifthestaffispart-time. particularly staff, istrative costsandisconvenient fortheir home officebecauseitsaves onadmin- foundationsusea Many smallfamily Using aHomeOffice “For many family foundations, hiring a consultantis hiring “For many family foundations, permanent relationshipwithanonfamilypermanent staffperson.” a stageorphase.They areeasingintoamore onain Shenow enjoys being foundation. the time jobinadditiontorunning tion andhastaken onanotherpart- an officeleasedfrom alargerorganiza- Kim now thefoundationoutof runs togetwork done: 4:00 inthemorning liked theflexibilityofgettingupat fromyears part-time ahomeoffice.She worked forseveral D&D Foundation, executive director ofthe Kim Dennis, for thesepurposes. oreven thepublic library, grantmakers, associationof theirregional nonprofits, ing spacefrom otherfoundationsor often creative aboutborrowing orrent- foundationsare dation may host.Family of aseamlessweb. soit’s abit gotten toknowthroughwork, arepeopleI’ve ofmy friends my life.Most work hasalways of apart much beenvery guess whatitcomesdowntoisthatmy I I was washing disheswhilewetalked. orknew kids screaminginthebackground enough thatIdidn’t iftheyheard worry instances whereIknewthepersonwell my homephonenumber but only inthose I didn’t occasionally want gave to.I people would have beeneasytoshutworkout,but It etc. laundry, sorting cooking dinner, I was oftentalkingonthephonewhile 129 SETTING UP SHOP: WAYS TO MANAGE YOUR FAMILY FOUNDATION 130 III. ESTABLISHING A STRUCTURE provide staffingfor: offices areMany prepared family to cost-effective model. office isaviable, foundationfromfamily thefamily the running one, starting considering If your hassuchanofficeoris family wealthy families: anorganizationthatadvises change, According totheFamilyOfficeEx- Using theFamily Office ronment theboard expects. about whattypeofwork styleandenvi- work preferences whilebeing very clear toberespectful oftheir it isimportant memberoroutsider— whether afamily When working — withastaffperson makes thisaneven steeperchallenge. foundationfromRunning afamily home and work lives isvery important. separatingtheirhome for many people, cautionsthat, withahomeoffice, person andstaff foundationtrustee family Justis,a Jane Leighty ment thatfitstheirlifestyle. given theflexibilitytocraftanarrange- ily foundationisthatthestaffoften Part ofthebeautyworking forafam- the tradeoffsforbothoptions. whichpointsoutsomeof meetings, downtown and easilyavailable for family group. foraspecific keeping andreporting) from strategic assetallocationtorecord- thefinancialneeds(ranging to support ness orrealizationofsignificantliquidity, oftenafterthesaleoffamily busi- created, A family officeistheorganizationthat not pay overhead expensesandusesallof thefoundationdoes Suzanne Hazelett, According toExecutive Director office. withthefamily financial advisors staffandtwo onesupport sharing Indiana alsoenjoys thisarrangement, Tobias Foundation in The RandallL. public affairs. planning,grantmaking,and strategic sively onboard development, foundation professionals tofocusexclu- allows the arrangement operations.This andcashflow financialreporting, eting, budg- market ratestohandlebillpaying, officestaffatfair tracts withthefamily Thefoundationcon- foundation staff. withaseparate office, alongside afamily isrun ation inGigHarbor,Washington, RussellFamily Found- For example,the tofocusonthegrants. trustees frees thefoundation’sfoundation,which ment responsibilities forthefamily invest- tive,financial,recordkeeping,and officeshandleadministra- Some family offices have aphilanthropic component. abouthalfoffamily Office Exchange, managerfortheFamily membership Mihailidis, According toMariann ofexistingstaff. the jobdescriptions responsibilities orcanbuild theminto foundation tohandlefamily person canhire adedicatedstaff The family Administration andcompliance. and Investment management; Program assessment; Grantmaking services; Trustee responsibilities; house financialadvisorandacontroller. dation receives thebenefitofanin- your fingertips,”says Hazelett.The foun- office? family at “Financial expertise witha the biggestadvantage ofsharing is foundation mailingsorprinting.What suchaslarge office, ations ofthefamily thing above and beyond thedailyoper- Butthefoundationpays forany- free. the family-office-owned equipmentfor want tosetupthefoundationasapass- model works well thatmight forfamilies This pany avoids conflictsofinterest. attention itdeserves and thatthecom- board toensure thefoundationgets rate board beseparatefrom thefamily Sherecommends thatthecorpo- pany. inthecom- depend onthepersonalities business meansthefoundationwill ofafamily foundationaspart family a running According toFredricks, the foundation’s executive director. became Shirley Fredricks his daughter, business, ceeded himasheadofthefamily WhenLawrence ness. Welk’s son suc- vehicle fundsfrom thebusi- forcharitable the foundationwas usedasapass-through and president from business, thefamily Foundation executive director was avice Lawrence thefirst Welk example, For sometimes even professional staff. support,equipment,and space,secretarial foundation canusethebusiness’s office The a blessing foranew foundation. whichcanbe the family’s business office, foundationsoperateoutof Many family Relying ontheFamily Business through because they will not have to foundation, and one-fourth shared staff Identifying and come up with the funds up front to either with a family business or with endow the foundation.Plus,they can use another foundation. Securing the Tools the company’s management resources to You Will Need run the foundation. For example, a sec- Establishing a Foundation Office It may be best to think about your retary from within the corporation han- Many family foundations choose to set office equipment holistically.Things to dled the administrative work for the up an independent office, especially consider include selecting, installing, foundation and a financial officer han- when they have more than one staff and maintaining office furniture and dled the asset management and financial person.They may also have extra offices filing cabinets, phones and voice mail, functions.Also, Fredricks was originally available for trustees and consultants as a fax machine,and computer hardware an employee of the corporation. She well as a conference room for board and and software. later became a foundation employee committee meetings. Having an office when its bylaws were changed. can give the foundation a presence in An easy approach to setting up an office the community. Many leased office is to hire a specialist to locate furniture, Because family foundations are often suites allow the lessee to share a recep- equipment, and office space. You can one-person operations, working out of tionist, copier, fax, computer equip- specify if you would like to have new or a family business office can provide the ment, and furniture. used equipment and furniture, office stimulation of other professionals. For example, when starting out, Emily Tow Jackson operated her family foundation, the Tow Foundation, as the sole staff fig. Ways to Share Space person, and worked from her family’s 9 business office, which had 130 employ- ees. Now, her foundation’s activities The Consumer Health Foundation and Trellis Fund, both located in have grown to the point where it has its Washington, DC, share space, equipment, ideas, and friendship. On a own office and a separate staff. practical level, the relationship saves on overhead costs. The two foundations split the rent and allocate use of the equipment. They also share the expenses Sharing Space of publications and periodicals. “You can spend thousands of dollars on jour- If your family does not have a family nals and library materials,” says Hope Gleicher, executive director of a family foundation called the Trellis Fund. “So, we share subscriptions. We also route business or a family office,and you would materials that one foundation, but not the other, receives.” still like to share space, many options for doing this are available in the nonprofit Bruce Hirsch, executive director of one of four family foundations in San world. According to the Council on Francisco that has shared office space says: “It allows you to be with people who are doing similar work to yours and to learn from each other. If there Foundation’s Trends in Family Foundation is any challenge, it is in making joint decisions and in ensuring that everyone Governance, Staffing, and Management, is getting a fair shake cost wise.” He stresses the importance of monitoring 43 percent of the family foundation costs, engaging in open discussions, and making joint decisions. respondents share office space. Of those, EXCERPTED FROM the Council on Foundations, Family Matters newsletter (Vol. 6, No. 2, Spring, 2001). almost half share with a family business.

One-fifth-shared space with another FOUNDATION FAMILY YOUR MANAGE TO SETTING UP SHOP: WAYS

131 132 III. ESTABLISHING A STRUCTURE in providing theirprogram descriptions tions (more than100todate)interested web founda- presence tograntmaking basicweb and designservice of charge,a Center (www.fdncenter.org) free offers TheFoundation technical support. and updates, sitemaintenance, hosting, for nonprofit organizationsandhandle There are groups thatdevelop websites little ornocostby anotherorganization. you may want asitehostedfor At first, and resources foryou andforapplicants. whichsaves time applications online, andgrant ofinquiry also acceptletters andmailnumerous copies.Youprint can guidelines sothatyou donothave to to postyour foundation’s missionand allow youmanagement purposes.They they canalso be helpfulfor dations, public awareness foun- toolsforfamily functioning ascommunications and Inadditionto organizations today. Websites are essentialtoolsformany Website? a HaveShould You when problems arise. set upyour officeandtroubleshoot tohelp need outsidetechnicalsupport you may in-house computerskills, Dependingonyour istrative functions. A computercanhandlemany admin- nesses oreven through theInternet. from auctionsofrecently defunctbusi- andcomputers used officefurniture you may want toexplore purchasing Ifcostsare aconcern, and onon. space inahigh-rent orlower costarea, to share information easilybut privately.to share information touch withoneanotherandenable you cankeep in board members members.It made available exclusively tofamily site ispassword protected andcanbe want toconsideran “intranet.”This web- you might to—awebsite, precursor Inadditionto—orasa mation online. orotherinfor- taxreturns, newsletters, requests forproposals, lists, grants applicationinformation, and guidelines, o rnsmngmn.Ahandfulof management. for grants Computer software isanessentialtool for GrantsManagement Choosing Technology 10 conversion toCD-ROM,Berry says. nificant reduction”fromthe370 pagesthatwentoutinthelastshipmentbefore paper stillgoesouttoboardmembers —30pagesorsoformeeting,a“sig- members, whomaycalloremailBerrywithquestionscomments. Some use, theboardbookonCD-ROMinPDFformatisalsomailed toallboard posted onthefoundation’s boardmember-only website.Forconvenienceof format.Allarethen essary, proposalsarescannedandconverted tothePDF that applicationsandreportsbereturnedbyemailinPDFformat. Wherenec- Accompanying eachinvitationisafullAdobeDesktoppackage, suggesting says Berry. Thefoundationreceivesproposals byinvitationonly. “The choicewaseithervolumesofpaperortomakeuseelectronic media,” their homes.” also wasafactor. Boardmembers“arefittingthefoundation intoacornerof a verysmalloffice,” saysBerry, whosebackground incomputerengineering tributing toasignificantreductionofpaper. Whatledtothisdecision?“Ihave he willhaveacomprehensiveon-linegrantsreviewsysteminplace,con- staff member oftheSandyRiverCharitableFoundation,saysthatinfall It’s notasfarawayyoumaythink.NateBerry, programdirectorandsole Remember theclaimsthatInternetwouldusherinpaperlessoffice? fig. The PaperlessOffice know as you go along.If you thinkyouknow asyou goalong.If you wantout whatinformation to Thenfigure simple systemlike Excel. witha Foundation recommends,“Start Jane LeightyJustis oftheLeighty best —atleastinitially. tions sometimesthebasictoolsare the of Philanthropy doesthe vendors’directory,as well asa technology for foundations,as frequently about publishes articles zine, maga- The CouncilonFoundations’ agement software forfoundations. man- companies specializeingrants Foundation News&Commentary tl,forsmallfounda- Still, . Chronicle , tax return,Form 990-PF.Totax return,Form this facilitate foundations)must fileanannualfamily Every private foundation(whichincludes with thefoundation’s executive director. thisfunctionintandem ally supervises foundation treasurer orboard chairusu- bookkeeping andaccountspayable.The tohandletheirday-to-daying firm hire anoutsideaccountantoraccount- Many smallfoundations method in’t.” yet there is “Though thisbemadness, feel like old Polonius inHamlet: you may other recordkeeping systems, and bookkeeping, dation’s accounting, yourIn settingupandmanaging foun- and Recordkeeping How toHandle Accounting programs. andregional annual meeting, website, listserver, through anewsletter, to efficientandeffective grantmaking management anditsrelevanceabout grants provides toexchangeinformation aforum organization’s grantmaking. andadministrationoftheir nology, tech- procedures, sible forthepolicies, staff from foundationswhoare respon- group ofmoremembership than300 a Network (www.gmnetwork.org), resource istheGrantsManagers auseful ment software packages, manage- some off-the-shelfgrants Once you are ready toconsider that information.” andreport manipulate, you torecord, packages andsystemsthatwillallow consider system, will needafancier This group 990-PF isthemostcomplicated tax the According to theIRS, ifany. tion, andstafftheircompensa- trustees thefoundationmust listthe addition, In andgrants. expenses, investments, accurate andcompleterecords ofits thefoundationmust keep filling, form Tog hsb ans,yet thereismethodin’t.” “Though thisbemadness, you may feellikeoldPoloniusinHamlet: systems, andotherrecordkeeping bookkeeping, accounting, In settingupandmanagingyour foundation’s 11 Internet fornonprofits.Theseinclude: Some excellentresourcesforhelpwithtechnologyneedsexistonthe ing proposalswithtrusteesviaemailcanbeahugetimeandmoneysaver! receipt oflettersinquiryorgrantapplicationselectronically. Moreover, shar- MS Word orExcelattachments.Your foundationcanalsoacknowledgethe forms ontheirwebsites,whileothersprefertoreceiveemailsorwith letters ofinquiryandgrantrequestselectronically. Someopttohaveelectronic have theirgrantmakingguidelinesavailableonwebsiteandcanreceive Email andtheInternethavetrulyrevolutionizedgrantmaking.Foundationscan fig. a living,growingsolutionsnetwork. nects nonprofits,funders,techassistanceproviders,andtechnologistsinto Technology Works forGood(www.technologyworks.org). TWFGcon- of technology. nonprofits’ technologyneedsandadviceonhowtomakethebestuse Techsoup (www.techsoup.org). Thissiteprovidesrecommendationsfor classes, technologyseminarsandconferencesconsulting. organizations makethebestusesoftechnologythrough:computer/Internet Exchange andInternetAcademyoftheFundforCityNewYork helps Fund fortheCityofNewYork (www.fcny.org). TheNonprofitComputer Technology HelpforYour Foundation out ofahomeorinanoffice andis foundation operates Whether afamily tax-exempt organizationsisessential. inworkingand hasanexpertise with ant whoworks forotherfoundations having anaccount- there is.Thus, form 133 SETTING UP SHOP: WAYS TO MANAGE YOUR FAMILY FOUNDATION 134 III. ESTABLISHING A STRUCTURE including: factors istrative expensesare affectedby many Admin- andsimilarexpenses. printing, travel, rent, legal andprofessional fees, andbenefits, typically includesalaries Administrative expensesfor foundations expenses are reasonable? whatadministrativedo you determine Buthow tion asefficientlypossible. wants itsfounda- Every family torun Expenses Administrative Considering meeting colleagues. be helpfultoyou inidentifyingand can associationofgrantmakers regional your were from starting scratch.Again, what they would do differently ifthey like ordislike about theirsystems.Ask organize theirrecords andwhatthey foundationsandaskhowfamily they visitotherlocal how to getstarted, Ifyou about are uncertain foundation. a systemthatmakes sensefortheir cancomeupwith tion administrators andfounda- organized inmany ways, Records andfilescanbe function. recordkeeping remains anessential managed by volunteers orpaidstaff, The number ofstaffandconsultants. and The sizeandnumber ofgrants; recipients;The sizeandnumber ofgrant ornational; regional, islocal, Whether grantmaking Activities otherthangrantmaking; ofthefoundation; The purpose eoeivle nlclcue.Jane become involved inlocalcauses. and visitgrantees, munity meetings, com- and nationalassociations,convene local money tohire andretain staff,join Itrequires timeand the community. thatthey haveimportant avisible role in Some smallfoundationsdecidethatitis abadthing. expenses are notnecessarily Keep inmind thathigheradministrative 12 RETAIN PERMANENTLY: SOURCE: FINANCIAL DOCUMENTS(KEEPFOR6YEARS): GRANTEE RECORDS(KEEPFORAT LEAST6YEARS): Washington, DC:CouncilonFoundations, 1997.SeealsoChapter3,FacingImportantLegalIssues als withnotesonthereasonsfornotfundingproposal. returned totheapplicants.Somefoundationskeepalogofrejectedpropos- Materials relatedtounsuccessfulgrantapplicationscanbediscardedor fig. procedures; and Any correspondencefromtheIRSapprovingfoundation’s grantmaking The IRS’s favorabledeterminationletter; Form 1023,theapplicationfortax-exemptorganizationsfiledwithIRS; Minutes oftrusteemeetingsandcommitteeactions; Articles ofincorporationorinstrumenttrustandBylaws; Contracts. Financial statements;and Form 990-PF; Cancelled checks. Grant progressreports;and Financial reports; Letters oftax-exemption; Grant agreements; Initial grantrequestsandsubsequentcorrespondence; Ruling fromstateauthoritiesgrantingtaxexemption. Martha CooleyandtheCouncilonFoundations, What RecordsShouldMyFoundationKeep? n o omtes t..Oftenitis etc.). ing forcommittees, volunteer- field (attendingconferences, or withinthephilanthropic grantees to accomplish—either with your thought ofinrelation towhatyou want Administrative costsare best incur.” themore expensesitislikely to be, a foundationwants to itsgrantmaking more activeLeighty Justis advises,“The Management . FamilyFoundationLibrary. to try something different!” to try is working to make changes —even ifsomething don’t beafraid mostimportantly, And, outdifferent ideas. step atatime.Try adviceis:“Takeprocess.Her thingsone afoundationisaniterativethat running believes Lawrence WelkFoundation, president ofthe andformer trustee Shirley Fredricks, for years tocome. operating smoothlyandingoodstead vision andwillkeep your foundation will helpadvance your philanthropic systems andprocesses intoplacethat Good managementisaboutputting and realize your expectations. great are your ready adventure tobegin great andnow you intoyourhas fallen lap, fortune perhapsamysterious Like Pip, thatfalls intohislap mysterious fortune andofthe Estella, beautiful andheartless hislove forthe convict ontheKentMarshes,of the Pip andofhisencounterwithMagwich, oforphan isthestory in1860-61, Dickens by written Charles Great Expectations, Great Expectations Realizing Your special outreach intothecommunity. conduct purchase officeequipment,and officespace, to hire andtrain staff,secure tion topay extraadministrative expenses founda- family forastart-up necessary itmight stillbeagoodidea , .... 135 SETTING UP SHOP: WAYS TO MANAGE YOUR FAMILY FOUNDATION