Development of Family Foundations in the United States and China

Home , Fan Zhongyan, Taojiang County

Research Report #28 April 2016

Development of Family Foundations in the United States

and China: Case Studies of Four Family Foundations

Carolyn Isles

Shuang Lu

Chien-Chung Huang

Huamin Research Center, School of Social Work

Rutgers University

In the recent decades, the amount and size of family foundations have increased substantial- ly in the United States and China. Yet little research has examined this phenomenon and its impact on social development, particularly in China. In this study, we use the Context, Input, Process, and

Product (CIPP) evaluation model to examine the status and roles of family foundations in the U.S. and Chinese society. Our case studies of four family foundations (two U.S. and two Chinese) suggest that these foundations were established in different contexts. Their input, process, and product vary by their mission, size, and context. Our findings provide policy implications for developing family foundations and maximizing their positive impacts on social development in the U.S., Chi- na, and beyond.

Keywords: Family foundation, Philanthropy, CIPP, China, United States 1 Introduction mental trajectory and social impact the U.S. for over 100 years. In 1913, Modern entrepreneurs are accu- (Boris, Vita, & Gaddy, 2015). As in- John D. Rockefeller Senior established mulating wealth earlier in their life- come inequality continues to expand the Rockefeller Foundation to promote times than those of previous genera- in the United States and China (Saez & human wellbeing (Rockefeller Founda- tions. Many of them seek fulfillment Zucman, 2014; Xie & Zhou, 2014), in- tion Archives, 2015). During its early outside of their businesses. While there crease in family foundations, along years, the foundation focused on pub- are a variety of approaches to charita- with their philanthropic giving, may lic health. It supported the Bureau of ble giving, it can be argued that family reduce negative effects of income ine- Social Hygiene to conduct research foundations offer donors more control, quality on vulnerable populations and education regarding birth control, flexibility, and visibility than do other (Acs, 2013; Barchi, et al., 2015). Yet re- sexual hygiene, and maternal wellbe- forms of philanthropic foundations search on family foundation is still ing (Rockefeller Foundation, 2015). The (Boris, Vita, & Gaddy, 2015). As a re- dearth, particularly in China. This Rockefeller Foundation ranks within sult, the United States has seen a sig- study investigates the current status of the top 50 private foundations for giv- nificant increase in the number of pri- family foundations in the U.S. and Chi- ing within the U.S. in 2014 (Foundation vate family foundations in the past na, examines family foundations’ con- Center, n.d.a). David Rockefeller, Jr., a decades. For example, number of fami- text, input, process, and product, and fourth-generation member of the Rock- ly foundations increased by 44% from discusses their social impacts through efeller family, currently serves as the 29,400 in 2001 to 42,300 in 2013 case studies. The findings provide pol- president of the board of trustees. (Foundation Center, n.d.a). The re- icy implications for developing family In contrast, family foundations are spective assets and giving of these foundations, particularly in China and at the early stage in modern China. family foundations increased by 105% other countries where family philan- Although no family foundations were and 92%, from $177 to $363 billion, and thropy is at the early stage. recorded in the Chinese history, family from $13 to $24 billion respectively Definition and Historical De- philanthropy emerged in China long (Foundation Center, n.d.a). velopment of Family Founda- ago. In the year of 1050, Song Dynasty, Mr. Fan Zhongyan established the Fan- Likewise, China’s economy has tion dramatically increased in recent dec- clan Charitable Estate (“Fanshi Although the term “family foun- ades (Cai & Wang, 2002, 2010), and the Yizhuang”), a private, familial charity dation” has been used widely in the release of Foundation Regulations in in his hometown. The Estate was ini- media and research, there is no stand- China in 2014 stimulated an increase in tially funded by Mr. Fan Zhongyan ard definition of family foundation. private foundations within the coun- and received donations from wealthy Nor is there a legal classification for try. The number of foundations has members of the Fan Family. With the term in Internal Revenue Service. increased from 733 in 2004, to 2,198 in farmlands as property, the Estate’s In practice, a family foundation typi- 2010, and to 4,854 in 2015 (China Foun- revenue came from farm rental. The cally refers to a private foundation, dation Center, n.d.). It was estimated Estate’s mission was to provide relief whose funds are derived from mem- that there were 35 family foundations to clan members who were in need bers of one family, and whose family in China in 2014, and their total assets and who live in that area. The provi- members are actively involved in the and philanthropic spending were $1.6 sions included various needs of daily- operation of the foundation billion and $320 million RMB respec- life: food, clothes, marriage expenses, (Foundation Center, n.d.b; Council on tively in 2013 (China Foundation Cen- funeral expenses, education and impe- Foundations, n.d.). Thus, the key factor ter, 2014). rial exam expenses, and housing loans. of a family foundation that separates it These trends reflect the growth of The Estate had a system and rules of from other nonprofits is family mem- wealthy individuals and the growing financial management. To avoid con- bers’ involvement in establishing the sense that through family foundations flict of interest, no clan members were foundation and its governing board. individuals can have a positive effect allowed to rent or sell farmlands to the Throughout the foundation’s life, at on social development (Barchi et al., Estate. The Estate’s manager was an least one family member must main- 2015; Boris, Vita, & Gaddy, 2015). elected male clan member, who had tain a significant role in the govern- However, despite this substantial rise full autonomy to handle the Estate’s ance of the organization (Boris, Vita, & and importance of family foundations business. The manager’s compensation Gaddy, 2015; Foundation Center, over the past decades, little is known was determined by his work effective- n.d.b). about family foundations’ develop- ness, which was evaluated by other Family foundations have existed in clan members. The Estate also moni-

2 tored beneficiaries in certain ways. foundations were created between vidual board members to recommend Those who broke the rules would pay 1990 and 2009, followed by 16% creat- discretionary grants for foundation penalty or lose eligibility for further ed between 1970 and 1989, 14% before funds. assistance. The Fan family’s descend- 1970, and 10% in 2010 and after. A ma- For grant making strategy, most ants continued to amend the rules and jority of them are small- to medium- family foundations (76%) reported that expand the Estate. By the 1200s, the sized. About 70% have less than $10 they are still influenced by their found- Estate’s farmlands reached over 3,000 million in assets, while only 3% of ing members’ values and wishes. Al- acres. It was sustained because of its them have assets of over $200 million. most two-thirds (64%) stated that the financial independency, rational deci- In 2014, 65% of family foundations family’s values and wishes have major sion-making, and democratic supervi- donated less than $500,000; 5% report- influence. Approximately 25% are in- sion. Its success not only benefited the ed giving more than $5 million. Foun- fluenced by community or grantseek- Fan’s clan members, but effectively dations’ assets increase with their age ers’ needs. Very few (2%) reported that assisted the local government with (Boris, Vita, & Gaddy, 2015). The main public spending priorities influenced poverty relief and social stability. Fol- program areas to which family foun- their giving (Boris, Vita, & Gaddy, lowing Fan Zhongyan’s path, govern- dations support include: education 2015). The majority (83%) also sup- ment officials of the Song Dynasty es- (45%), poverty (40%), health (19%), ports general operating grants and tablished similar charitable estates— children and youth (15%), religiously 68% provide multi-year grants. Nearly some assisted family members, some affiliated programs (14%), arts and 40% adhere to the minimum 5% pay- provided relief to local residents (Liao culture (13%), and environment (11%). out rate, 24% pay out up to 6%, and & Li, 1991). In addition, younger foundations focus 15% of the foundations have a 10% Current Status of Family Foun- their giving on certain program areas payout rate and more for the past two dation while older foundations focus on geo- years (2013-2015). In terms of account- graphic-based giving (Boris, Vita, & ability, more than half (57%) of the In the United States, studies of Gaddy, 2015). foundations ask grantees to report out- family foundations often lack method- In terms of boards and govern- comes, among which 45% require a ological rigor. Most are based on a rel- ance, most family foundations’ boards financial report. However, only 34% of atively small number of cases, which are composed of family members. Non the foundations ask grantees to set and may focus on a particular geographic -family members make up fewer than measure program goals (Boris, Vita, & area or use convenience sample rather 25% of board members in more than Gaddy, 2015). than random, representative sample 70% of the foundations. The boards’ With respect to family involve- (Boris, Vita, & Gaddy, 2015). To ad- most common activity is grantmaking ment, almost 90% of respondents dress these limitations, the Urban In- deliberations and decisions, followed agreed that most family members stitute conducted a nationally repre- by investment management, evalua- work well together. More than three- sentative survey of family foundations tion, and reflection on the foundations’ quarters agreed that family dynamics in spring 2015. Using 2012 tax forms as work. The most important factor that do not negatively affect the founda- sample frame, this survey adjusted sustains family involvement in the tion’s work. Younger generations’ in- weights for oversampled large family foundation is the impact of giving volvement is crucial to maintain a suc- foundations and smaller family foun- (70%), followed by rewards for work- cessful family foundation. There are dations with low response rates. This ing together as a family (47%), stronger several ways to assure that younger study provided generalizable implica- family relationships (43%), and oppor- family members remain engaged in the tions for family foundations across the tunity to encourage younger genera- progress of family foundations. The country and is considered the baseline tion (39%). Eight-five percent of fami- most common ones include: have for examining trends of U.S. family ly foundations do not compensate younger family members sit on the philanthropy (Boris, Vita, & Gaddy, board members for their service be- board as voting members (66%), or- 2015). yond reimbursable expenses. As for ganize formal discussions about the The key findings of this 2015 study day-to-day foundation operation, a foundation’s core values with younger involve: foundation identity, boards majority of small family foundations family members (64%), take younger and governance, grantmaking strate- depend on unpaid family members, generation members to site visits gy, family involvement, and future while large foundations depend on (56%), and provide discretionary or perspective. With respect to founda- paid non-family members. The majori- matchmaking funds for younger gen- tion identity, nearly 59% of U.S. family ty of the foundations (85%) allow indi- eration members’ grantmaking (51%).

Finally, U.S. family foundations’ poverty (9%), employment (7%), art proach. Process evaluations monitor, future perspectives vary. For example, and culture (6%), medical assistance document, and assess foundations’ about 20% of the foundations plan to (5%), capacity building of philanthrop- activities. Product evaluation assesses increase their payout rate while 6% ic organizations (5%), disaster relief the foundation programs’ impact, plan to decrease the rate. About 22% (4%), and other areas (China Founda- effectiveness, sustainability, and trans- plan to expand giving priorities, tion Center, 2014). This study, howev- portability (Stufflebeam, 2007). whereas another 22% are narrowing er, did not include information about We first utilized archive research, giving priorities. About 43% anticipate foundation identity, boards and gov- such as annual reports and foundation an increase in the number of younger- ernance, grantmaking strategy, family websites, to collect information, and generation family members on board, issues, or future perspective of the then conducted interviews with senior and 24% anticipate changes in board foundations (China Foundation Cen- leadership in the foundations if need- leadership. Half of the foundations ter, 2014). ed. The interviews were conducted also expect an increase in foundation Method with the Executive Director of Nichol- assets (Boris, Vita, & Gaddy, 2015). We conducted case studies to in- son Foundation in spring 2016 and the Information regarding the current vestigate family foundations in the Secretary-Generals of Lao Niu Founda- status of family foundations in China U.S. and China. Four cases were select- tion and Lu Jiaxiang Foundation in late is still in development. As previously ed based on country, year of establish- 2015. noted, the majority of Chinese private ment, and size of the foundation. Two Results foundations were created after the cases were selected for each country: Rockefeller Brothers Fund 2004 Foundation Regulations. It is not one older and with larger assets The Rockefeller Brothers Fund was clear whether many of these first- (Rockefeller Brothers Fund in the U.S. established in 1940 as the primary phil- generation donors will join the family and Lao Niu Foundation in China); anthropic vehicle for the five third- foundation path, or simply remain as one recently established and with generation Rockefeller brothers: John private foundations. Currently, little smaller assets (Nicholson Foundation D. III, Nelson, Winthrop, Laurence, research has explored this issue. In in the U.S. and Lu Jiaxiang Foundation and David Rockefeller. Within the first 2014, China Foundation Center con- in China). Our study identifies signifi- 10 years, each brother contributed ducted a study and identified 35 fami- cant cases and trends, instead of the funds annually, which were distribut- ly foundations in China. About 69% average or typical examples. The meth- ed to a variety of charitable caus- (n=24) were established by mainland od is advantageous, as selecting repre- es. Their father, John D. Rockefeller, Chinese entrepreneurs, and the rest sentative cases enable us to identify Jr., had considerable effects on the were founded by oversea Chinese en- how specifically these family founda- growth of the fund. He made a sub- trepreneurs. These entrepreneurs were tions contribute to social development. stantial gift of $58 million in 1951 and based in the following industries: man- However, a shortcoming of this ap- left a large bequest from his estate in ufacturing (37%), estate (26%), service proach is that it cannot provide an 1960. Together, these contributions (11%), finance (9%), mining (9%), overall representation of family foun- constitute the original endowment of transportation (6%), and other. The dations in the respective countries. the Fund (Rockefeller Brothers Fund, majority of them were from Fujian We applied the CIPP (Context, In- 2015a). (37%), Shanghai (14%), Guangdong put, Process, and Product) evaluation Initially, the fund was established (14%), and Zhejiang (9%) provinces. model that was developed by to provide a setting in which the broth- These foundations’ total assets were Stufflebeam (1983) to examine family ers could share advice and research on $1.6 billion RMB in 2013, among which foundations’ social impact. This model charitable activities. Shortly after its the Lao Niu Foundation, the largest evaluates family foundations by exam- establishment, the fund began to dis- family foundation, accounted for $710 ining their context and input, as well tribute funds to philanthropic agen- million (44%). Chinese family founda- as the process and product of the phil- cies. They did not base their giving on tions’ total philanthropic spending anthropic activities they generated. a specific cause, and therefore set rules were $320 million RMB in 2013, among Context evaluation assesses back- early on. These rules specified that which the Lao Niu Foundation repre- ground, assets, and mission within the funds would not be distributed to indi- sented 53% (169 million RMB). Chinese foundations’ environment. Input eval- vidual institutions, such as hospitals, family foundations mostly allocate uation assesses strategies, work plans, schools, churches, or community cen- their resource in education (25%), pub- and budgets of the foundations’ ap- ters. Within its first decade, the Fund lic service (18%), environment (17%),

4 mainly contributed toward war relief to expand knowledge, clarify values William Nicholson, and Michael P. and social welfare (Rockefeller Broth- and critical choices, nurture creative Vito, who is a partner of the law firm ers Fund, 1951). expression, and shape public policy”. Lowenstein Sandler LLP. During the first decade, the Fund’s The board of the Fund carefully selects The Nicholson Foundation practic- board of trustees solely consisted of grantees that follow these efforts. Ad- es geographic-based giving. It is com- family members. In 1952, the trustees ditionally, potential grantees are as- mitted to distributing grants to pro- began to allow non-family members to sessed with respect to the following grams within the state of New Jersey, sit on the board. In 1999, the Rockefel- characteristics: long-term goals, com- particularly in urban areas. To follow ler Brothers Fund merged with the mitment, synergy, initiative, engage- through with this commitment, the Charles E. Culpeper Foundation, at ment, collaboration, and convening foundation works with local agencies which point the Fund’s total assets (Rockefeller Brothers Fund, 2015b). to identify promising programs and reached approximately $670 million. In regards to impact, the Rockefel- strategies to address problems within Although the Fund has merged with ler Brothers Fund defines impact as a the community. Additionally, the another foundation, several members “contribution to social change, includ- foundation has experienced staff, who of the Rockefeller family remain on the ing shifts in understanding, behavior, seek to identify potential leaders, agen- board (Rockefeller Brothers Fund, capacity, public engagement, and pub- cies, and innovative programs that fall 2015a). lic policy” (Rockefeller Brothers Fund, in-line with the foundation’s mission. Over the time, the Rockefeller n.d.). Each program and individual This process is achieved by attending Brothers Fund has supported a variety grant is closely monitored by staff and community and local government of causes: democratic practice, sustain- grantees. The Fund conducts program meetings. When funding programs, able development, peacebuilding, arts reviews and impact assessments, the final 25% of the grant is contingent and culture, and the development of which examines the Fund’s process upon achieving outcomes, which the New York City, Southern China, and and product and provides crucial in- foundation and grantee agencies agree the Western Balkans (Rockefeller formation for future grantmaking upon prior to the implementation of Brothers Fund, 2015b). The Fund be- (Rockefeller Brothers Fund, n. d.). the grant. Program evaluation is pri- lieves that combining cause-based and According to the Rockefeller marily based on performance objec- location-based approaches are neces- Brothers Fund 2014 annual report, pro- tives agreed upon in the grant writing sary to promote change on a grand jects supported by the foundation have process. The grantee keeps track of scale (Campbell, 2013). In recent years, great social impact. For instance, some program outcome by reviewing docu- the Fund’s main priority has been grantees worked with New York City mentation, reviewing client files, and fighting climate change. It has distrib- officials to develop a plan that greatly arranging site visits. To ensure pro- uted 40% of its funds to nonprofit or- reduced the city’s greenhouse gas gram’s long-term impact, the Nichol- ganizations working on climate solu- emissions. Another grantee, the Car- son Foundation requires a sustainabil- tions. The fund awarded 288 grants in bon Tracker Initiative, has made ity plan early in the grant writing pro- the year 2014 alone, equaling $25.9 strides in reframing the discussion of cess. The foundation’s staffs, who are million, among which 72% were climate change and received the experienced in program management, awarded to U.S.-based organizations. Guardian Sustainable Business Award will work with grantees to identify The rest were distributed to interna- in 2014 (Rockefeller Brothers Fund, sustainable strategies. tional organizations, including agen- 2015b). The Nicholson Foundation has cies in Egypt, China, and Western Bal- The Nicholson Foundation assets of $66 million. It gifted $6 mil- kans (Rockefeller Brothers Fund, The Nicholson Foundation was lion in 2013 (Foundation Center, 2015), 2015b). established in 2002 by Marion G. Ni- mostly for projects on healthcare and The Rockefeller Brothers Fund on- cholson, the eldest daughter of Rub- healthcare reform. The foundation has ly provides grants to tax-exempt or- bermaid’s co-founder Errett M. Grable, funded projects that work on follow- ganizations and charitable or educa- and her husband, William B. Nichol- ing aspects of the healthcare system: tion projects. It does not fund capital son, former vice chairman of the Union service delivery reform, payment re- expenses (such as construction or reno- Carbide Corporation. Currently, the form, and decision making. Addition- vation of buildings), phased-out pro- foundation is directed by a three- ally, the foundation supports early grams, or individual support. The member board of trustees, including childhood programs. The average size Fund’s mission and program state- Jan Nicholson and Barbara Nicholson of grants is $200,000, however, they ment articulate that it supports “efforts McFayden, daughters of Marion and can range upwards to $3,000,000. No-

5 tably, in 2014, the foundation awarded lishment, Lu personally visited every needs are hardly satisfied. Since its a generous grant ($1,973,200) to the family in need. When became physi- establishment, Lu Jiaxiang Foundation Camden Coalition of Healthcare Pro- cally unable to walk, he asked his has supported hundreds of orphans viders for healthcare payment reform. youngest son, Lu Jianzhi, to make living with difficulties, and is planning Lu Jiaxiang Foundation these visits on his behalf. This tradition to gradually expand its program from Lu Jiaxiang was born in the 1920’s continues today. Over the past two Yiyang to other rural areas in Hunan in rural Hunan Province. He attended decades, Lu and his family have do- Province. only one year of school, held different nated a total of approximately twenty- In May 2015, Lu Jiaxiang Founda- positions in the county government million yuan to benefit neighbors and tion collaborated with local elementary during the 1940s to 1960s, worked as a villages. and middle schools and identified 120 member of the Communist Party Com- In April 2014, health conditions orphans as eligible recipients of its mittee and Deputy Secretary of the lead to Lu’s passing at the age of 94. In support in Taojiang County, Yiyang Party branch, and retired in his 60s. Lu October 2014, his children carried his City. These children, who were recom- and his wife have nine biological chil- vision and set up the Lu Jiaxiang Foun- mended by their schools and verified dren. The family experienced hard- dation, which is named after their fa- by the Student Financial Assistance ships during their first two decades of ther. Registered in Yiyang City, Hunan Management Center at the County raising children, especially during the Province, Lu Jiaxiang Foundation aims Education Bureau, come from 70 Great Leap Forward and the three to support the development of his schools within 15 towns of the county. years of Natural Calamity period in hometown. The foundation was initiat- Each of them receives two-thousand China. Despite their struggles, the cou- ed by Lu’s legacy and his children’s yuan financial support per year. In No- ple tried their best to share food and investment in the total amount of two vember, Lu Jiaxiang Foundation do- clothing with neighbors. Inspired by million yuan. Guided by the Spirit of nated another 2.4 million yuan to sup- their words and deeds, their children Capital and the theory of Collective port 200 orphans’ living expenses dur- are also full of filial piety and kind- Sharing, Lu Jiaxiang Foundation is ing the course of their compulsory ed- ness. committed to carry forward Lu’s life- ucation in Anhua County, Yiyang City. After the Reform and Opening time philanthropic spirit. Following Within the next five years, Lu Jiaxiang Era, the economic condition of Lu’s the idea and professional approach of Foundation plans to raise 30 million family has greatly improved. His two modern philanthropy, the Foundation yuan to support 5,000 orphans in or out sons have become private entrepre- is dedicated to help the most vulnera- of Hunan Province to complete their neurs. With support from their chil- ble population in society by actively compulsory education. The foundation dren, Lu and his wife have been able to carrying out various types of philan- also carries out a series of humanistic develop assets. Since the 1990s, the thropic activities that are related to activities, such as the outstanding stu- couple has provided rural villages mil- poverty relief. dent award and summer camp, aiming lions of yuan to construct over 30 coun- Currently, Lu Jiaxiang Foundation to improve children’s educational en- try roads, bridges, and canals. These focuses on supporting orphans and vironments and broaden their perspec- infrastructure constructions not only rural healthcare in Yiyang area. The tives. In accordance with Lu’s final significantly improved the living con- foundation not only supports statutory wishes, the foundation also plans to ditions of the local villagers, but also orphans (i.e. both parents passed raise another 30 million yuan in the enhanced these areas’ connection with away), but focuses more on supporting next two years to support rural the outside world. In 1996, under Lu’s de facto orphans – children that are not healthcare. This will include the estab- proposal, his family invested several defined as orphans by law but have lishment of rural hospitals that serve hundred thousand yuan to set up a lost one parent and whose other parent villagers, paying close attention to el- poverty relief fund in their village. is out of contact, or remarried and una- derly individuals who have difficulties During holidays, Lu’s family used the ble to raise the child. Most of these in accessing healthcare resources. fund to donate clothes and food to low children live with their grandparents Through this family foundation, Lu -income families in their neighbor- or other relatives. They are usually family hopes that Lu Jiaxiang’s philan- hood. Year-round, they donate money away from their parents for a long thropic spirit and the great philan- to the elderly and disabled population time and lack emotional support. Alt- thropic tradition of his family can be within their village, as well as elderly hough some families receive govern- conveyed from generation to genera- residents of other villages. During the ment’s subsistence allowance, these tion. first several years of the fund’s estab- children’s basic needs and nutritional Lao Niu Foundation

Established in 2004, Lao Niu Foun- fully devoted his time to philanthropy. enhancing cultural education, includ- dation is one of the largest family Under his influence, his wife and chil- ing: Lao Niu Children’s Exploration foundations in China today. Its found- dren remain actively involved in the Museum; Sheng Le Experimental er, Niu Gensheng, was born in the year operation of Lao Niu Foundation. Lao School at Inner Mongolia Normal Uni- of 1958. Due to his biological parents’ Niu Foundation continues to carry the versity, which aims to provide creative financial distress, Niu was adopted by Niu family’s values. By the end of educational and psychological coun- another family one month after his 2015, the foundation had collaborated seling services to children; contrib- birth. As Niu described, “they sold me with 142 organizations and individuals uting funds to various institutions of for 50 RMB to have a meal”. He lived from all over the world in philanthrop- higher education; and the develop- with his adoptive family for 14 years. ic development, cultural education, ment of 14 school buildings in impov- In 1978, Niu began his first job as a environmental protection, disaster re- erished regions and disaster areas. dairy farm worker at Yi Li Corpora- lief, and other charitable efforts. Lao In order to promote capacity tion, a dairy producer. With his efforts, Niu Foundation and its partnerships building of philanthropic organiza- he climbed the ranks and became the have set up over 171 programs across tions, Lao Niu Foundation established Vice President of Operation of the cor- China, as well as abroad in North Lao Niu Institute in 2014 and plans to poration. From 1987 to 1997, Niu America, France, and Africa. train one thousand professionals to helped Yi Li to become one of the best The total charitable contribution of work in nonprofit organizations within ice-cream brands in China. In 1999, a the foundation is around 1 billion five years. In 2015, Lao Niu Founda- time in which the milk market was RMB, the largest allocation being envi- tion co-founded Shenzhen Internation- weak, Niu founded Meng Niu Dairy ronmental protection (36%), followed al Philanthropy Institute. The founda- Corporation. At this time, Meng Niu by cultural education (35%), disaster tion also supports domestic and inter- had not developed a dairy farm or pro- relief and others (19%), and capacity national conferences, such as East- duction facility. Despite said challeng- building of philanthropic organiza- West Philanthropy Summit and China es, Niu created a milk empire within tions (10%). In the field of environ- Philanthropic Forum, to promote the seven years, during which the average ment protection, Lao Niu Foundation discussion and exchange in philan- growth rate of Meng Niu was 158% has collaborated with China Green thropy. For disaster relief and medical annually, becoming one of the largest Carbon Foundation, the Nature Con- assistance programs, the foundation milk producers in China. China Cen- servancy and the Inner Mongolia Bu- currently operates the following pro- tral Television (CCTV) praised Niu as reau of Forestry, and has invested mil- grams: medical assistance to low- the top economic leader in the year of lions of dollars in projects rooted in income cataract patients, medical assis- 2003, stating “Mr. Niu is a cow but has ecological restoration and protection. tance to low-income children with the speed of a rocket” (the pronuncia- Amongst these projects is the restora- hearing impairments, and assembling tion of Niu in Chinese is same as the tion of over 6,500 acres of land at He prosthetic limbs for people with disa- cow). Since 2003, Meng Niu has re- Lin Ge’er, also known as International bilities. mained one of the top milk producers Ecological Demonstration Park at The foundation has received many in China. Sheng Le, Inner Mongolia. Additional- accolades. It was ranked a top donor In 2004, Niu founded Lao Niu ly, the foundation initiated the “China on the 2014 donation list of private Foundation, a private family founda- Wetland Conservation” in 11 provinc- foundations, as well as the 2015 trans- tion. Niu donated a majority of his es of East China. Similarly, “Lao Niu parency of Chinese foundations. It family assets, including all of the Meng Bio-Diversity Preservation” is operat- was awarded “National Pioneer Civic Niu stocks, to the foundation. The ed in Sichuan Province, and protects Organization” by China Ministry of foundation focuses on two areas: envi- bio-diversity by maintaining wildlife Civil Affairs, and was named one of ronmental protection, and cultural ed- preserves and the diversity of ecologi- the Sino-Euro Top 10 Green Land ucation. In addition, it emphasizes ca- cal system. A current project entitled Foundations. One of the foundation’s pacity building of philanthropic organ- “Building Ecological Community at flagship projects, International Ecolog- izations in China, by supporting train- the Region of Mt. Everest”, which ical Demonstration Park at Sheng Le, ing and exchange of nonprofit profes- takes place in Tibet, promotes conser- Inner Mongolia, also received the Most sionals and advocating for charitable vation and enrichment of the local Influential Project Award from China laws and policies. In 2006, Niu re- community. Ministry of Civil Affairs. signed from his positions as the presi- The foundation has also estab- Lao Niu Foundation is influenced dent and chairman of Meng Niu, and lished several programs geared toward by Niu’s philanthropic values. He be-

7 lieves that a small amount of satisfac- also need to engage the next genera- led to different product. The programs tion can be achieved by creating every- tion in foundations’ activities to extend that Nicholson Foundation supports thing from nothing; but a big amount their legacy. tend to be of modest size, and health of satisfaction can be achieved in re- With respect to input, the founda- and human service oriented. Lu warding society by distributing one’s tions input resources into society in Jiaxiang Foundation provides targeted personal wealth. Niu has several inspi- different ways. The Nicholson Foun- educational support to orphans in local rational mottos: a small winning comes dation and Lu Jiaxiang Foundation areas. The Rockefeller Brothers Fund from wisdom while a large winning both practice geographic-based giving, provides large-scale grants in the area depends on good virtues; the more while the Rockefeller Brothers Fund of sustainable development. Lao Niu wealth you hold, the more responsibil- and Lao Niu Foundation distribute Foundation conducts large environ- ities you are carrying; donors should funds locally, nationally, and globally. mental and educational programs in feel grateful to beneficiaries; the level Additionally, some of the foundations China. Both U.S. foundations empha- of your happiness is equivalent to the limit their support to specific program size performance-based funding and number of people who adore you; cul- areas. For instance, the Nicholson measurable outcomes as evidence in tivate yourself first and then help oth- Foundation focuses on healthcare and the proposal guideline and final report ers for the rest of your life. healthcare reform and the Lu Jiaxiang requirement. In contrast, the Chinese Discussion Foundation emphasizes orphans and foundations adopt hands-on approach- This paper examines the develop- healthcare. The difference is largely es, implement their own programs, ment and social impact of family foun- related to the foundations’ mission and and provide less information on prod- dations in the U.S. and China. Table 1 fund size. Foundations with small or uct effectiveness. Given the lack of in- presents the CIPP model of four cases modest fund size are more likely to formation on family foundation in investigated in this paper. The key give based on geography and program general, our results call for more repre- theme in relation to these foundations’ area. These findings suggest that fami- sentative, comprehensive data collec- context is that these families have creat- ly foundations’ input depend on their tion for further evaluating family foun- ed family legacy by contributing to mission, vision, and budget. With am- dations’ impact, effectiveness, sustain- society. This is evidenced by naming bitious goals and far-reaching mis- ability, and transportability. foundations by family names, family sions, it is important for family foun- Conclusion members’ involvement in the govern- dations to design feasible work plans In the past decades, the growing ing boards, and inputting resources to and adopt strategies within their ca- family foundations have been playing philanthropic programs. There are also pacity. a significant role in philanthropy. This contextual differences. For example, Influenced by the different con- trend reflects the growing individual both Chinese foundations were estab- texts and inputs, the family founda- wealth and the increasing awareness lished by first-generation individuals tions adopt different process to achieve of contributing that wealth to the so- who were born in impoverished fami- their missions. For instance, the Rock- cial good, while sustaining family lega- lies, while the two U.S. foundations efeller Brothers Fund allows grantees cy. Yet little research has discussed the were both established by the second or to directly apply for grants while Ni- development and social impact of fam- third generation of affluent families. cholson Foundation actively seeks ily foundations. In this study, we over- This suggests that family foundations’ grantees. Both foundations in China viewed the developmental history of needs and challenges may vary by mainly conduct their own programs or family foundations in the U.S., where their social and policy contexts. The team up with other nonprofit organi- family foundations have developed for U.S. family foundations focus on sus- zations to directly implement pro- over 100 years, and China, where most taining family wealth and carrying grams. The comparisons suggest that family foundations emerged after 2004. forward family’s philanthropic mis- family foundations need to improve We used the Context, Input, Process, sions; Chinese family foundations different aspects of their process. For and Product (CIPP) evaluation model strive to acquire legitimacy, build lead- example, although the two U.S. foun- to examine the roles of family founda- ership and governance structure, and dations in our study require evaluation tions in the U.S. and Chinese society. achieve professionalization. As family of programs funded by medium-sized Our case studies indicate that, alt- foundations are in the early stage of or larger grants, the notion of program hough each of them was established in development in China, the first- evaluation is under development in different context and had diverse in- generation Chinese philanthropists China. put, process, and product that depend Different input and process have

8 on their mission and fund size, they all have generated substantial effects on social development. Our findings provide policy implications for developing family foundations and maximizing their positive impacts in the U.S. and China. For the U.S., family foundations should focus on how to maximize their social impacts through dissemination of measureable outcomes and impact evaluation. The foundations have been emphasizing measureable outcomes and impact evaluation recently, yet little information is available to the public. Disseminating the effectiveness of the programs not only increases ac- countability of the foundations to all stockholders but also maximizes potential impacts by allowing others to learn from the experiences. For China and other countries where family foundations just emerged, it is important to establish laws and policies to assist and regulate this new form of philanthropic organizations. Family philanthropy is an effective tool to use private wealth for social impact, and it is a path that many first- or second- generation wealthy family members choose. This calls for government support, the public’s understanding, and the younger generations’ involvement in family philanthropy. In addition, Chinese foundations must pay close attention to measureable outcomes and impact evaluation, in order to empiri- cally evaluate effectiveness of the programs. Despite these limitations, family foundations hold a great promise of utilizing private wealth for social development and creating family legacy.

Table 1. CIPP Model of Family Foundations Context Input Process Product

Rockefeller Broth- 1. Established in 1. Distributes 1. Provides 1. Each grant is ers Fund 1940 by third- funds locally and grants to support closely moni- generation mem- globally, to pro- efforts to expand tored by staff and bers of the Rocke- grams in follow- knowledge, clari- grantees, includ- feller family. ing areas: demo- fy values and ing program re- 2. In 1952, the cratic practice, critical choices, views and impact trust began to al- sustainable de- nurture creative assessments. low non-family velopment, peace expression, and 2. Notably, in members to sit on building, arts & shape public poli- 2014, grantees the board. culture. cy. worked with 3. In 1999, the 2. The fund 2. Select grants New York City fund merged awarded 288 with the follow- officials to devel- with the Charles grants in 2014, ing characteris- op a plan to re- E. Culpeper equaling $25.9 tics: Long-term duce the city’s Foundation, million. Of this goals, commit- greenhouse gas bringing the or- total, 72% of the ment, synergy, emissions. ganizations total grant dollars initiative, engage- assets to roughly were awarded to ment, collabora- $670 million. organizations in tion, and conven- the U.S. ing.

The Nicholson 1. Established in 1. Place-based 1. Does not ac- 1. Keeps track of Foundation 2002 by a second- giving, within cept unsolicited a program’s out- generation of New Jersey. grant proposals. comes by review- Grable family, 2. Focus on 2. Experienced ing documenta- and her husband, healthcare and staff attends tion, reviewing William B. Ni- early childhood meetings, in or- client files, and cholson. programs. der to seek poten- arranging site 2. Directed by a 3. Average size tial leaders, agen- visits. three-family- grant is $200,000, cies, and innova- 2. Final 25% of member board of range upwards to tive programs. the grant is con- trustees. $3,000,000. tingent upon 3. 2013: assets, 3. 2013: gifted, $6 achieving out- $66 million. million. comes.

Lu Jiaxiang 1. In 1996, the Lu 1. Lu’s children 1. Collaborated 1. Plans to raise Foundation family set up a donated 2 million with local schools 30 million yuan to fund in their vil- yuan to establish to identify eligi- support 5,000 or- lage, to support the Foundation. ble recipients. phans in or out of families in needs. 2. Place-based 2. Distributed the Hunan Province 2. Following Lu’s giving, Lu’s grants to recipi- in the next 5 death in 2014, his hometown. ents directly. years. family set up the 3. In 2015, the 3. Provides a se- 2. Plans to raise Foundation, hop- foundation had ries of service- another 30 mil- ing his philan- distributed more oriented activities lion yuan in the thropic spirit can than 2 million yu- to improve chil- next two years to be conveyed an, to support the dren’s education. support rural from generation living expenses of healthcare. to generation. 320 orphans.

Niu Foundation 1. 2004: Niu 1. Total expense 1. Does not limit 1. 2014: A top do- Gensheng found- is 1 billion RMB. it’s giving to spe- nor in private ed the Founda- 2. Programs: en- cific geography. foundations. tion. vironmental pro- 2. Teamed up 2. 2015: top trans- 2. 2006: Niu re- tection (36%), cul- with other organ- parency in Chi- signed from his tural education izations to pro- nese foundations. positions, and (35%), disaster vide programs. 3. Its flagship en- devoted his time relief (19%), and Over 171 pro- vironmental pro- to philanthropy. capacity building grams have been ject received the 3. Niu’s wife and of nonprofit or- set up, and it has “Most Influential children remain ganizations developed part- Project Award” actively involved (10%). nerships across in the Founda- China and be- in China. tion. yond.

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