Philanthropy: The Value of Creating a Family Foundation
Family foundations are not solely the domain of the Bill and Melinda Gates or Mark Zuckerbergs of the world. Many small family foundations are flexing their muscles in the nonprofit and philanthropic worlds, zeroing in on issues they care about and where they feel they can make an impact.
According to GivingUSA.org, family foundations are on the rise.
As middle-class offspring, particularly Baby Boomers and Generation Xers, begin to inherit their family’s wealth, many are creating family foundations to serve philanthropic causes that resonate with the family or that continue a relative’s legacy.
Marshall MacCready, who along with his siblings established the MacCready Family Foundation shortly after their father died, says it makes perfect sense to establish a foundation when assets pass to the next generation.
“It was easy for us because we are a like-minded family. When we inherited the money, we sat down with advisors and spoke about our motivations. We could have taken a lump sum, and divided it between us, but when we saw the benefits of establishing a foundation it made perfect sense,” says Marshall.
“My initial reaction was ‘nobody deserves this much money,’” said Knox. She and her husband, along with the other MacCready siblings, had already established careers and comfortable homes for their families.
The family agreed to create the foundation, but instead of seeding many nonprofits with smaller grants, the MacCready philanthropy strategy focuses on giving unrestricted multi-year operating grants to a handful of small, youth-focused nonprofits. The goal of giving larger grant amounts is to help often overlooked smaller organizations make a larger impact on the community they serve. The MacCready’s giving strategy is what sets them apart from other family foundations that tend to give restricted grants earmarked for a specific program and to several organizations.
The MacCready Foundation currently supports three nonprofits in the Los Angeles area:
My Friend’s Place, which provides homeless youth with resources and a safe space; Youth Speak Collective, which gives young people a leadership role in their communities; and RootDown L.A., an initiative that focuses on growing fresh produce with youth in underserved communities. They also support the Community Science Workshop Network (CSWN) that focuses on giving Bay Area underprivileged youth the opportunity to discover science.
“One of the most important things the MacCreadys have done is to help us sustain ourselves over time,” says Megan Hanson, executive director, RootDown L.A. “They gave us an initial capacity building grant and have since provided consistent contributions that help cover core operating costs and have at times been leveraged as mandatory matching funds to win federal grants. There are few foundations that do these multi-year investments and the donation is integral to our sustainability.”
Helping causes the family cares about is just one of the many benefits of creating a family foundation. It also pulls the family together, fuels discussions on how the family can do more and inspires younger family members to engage with the organizations it supports. In fact, the youngest MacCready Foundation member, Knox’s college-aged daughter, is not only actively involved with the foundation but is also pursuing her own philanthropic interests. She says more than anything she has inherited a culture of giving.
“My parents didn’t tell me about the foundation until I was 18 and by then it was already a lifestyle,” she says. “There’s no doubt that having this foundation is a responsibility, but with it comes the knowledge that I can help make a real difference, the benefit of positive shared experiences with my family, and meeting all the selfless people that do such good work in the world.”
This younger family member spends her free time volunteering at My Friend’s Place in Hollywood and has witnessed first hand the benefits of the family’s annual grant.
Last year the MacCready Family Foundation did something no foundation had done previously with My Friend’s Place. It agreed to provide matching funds for a challenge campaign that proved extremely successful. The campaign not only raised enough money to reach the financial goals for a year, it galvanized the community to participate and helped the larger community take notice. Its success also means the creative workshops instrumental to its clients’ success have been doubled.
Scott Nelson, certified financial planner for Sagemark Consulting in California, says that it’s possible to create a private foundation with an initial gift of $5,000, far less than most people think.
“There’s no doubt a family foundation keeps the family connected, especially when adult children live far from home. It’s a great way to pass their values on to future generations;” he says.
This has certainly been the MacCreadys’ experience who say operating a family foundation has exceeded expectations.
“It’s been great for our family dynamic,” says Tyler MacCready. “Part of the initial process was evaluating family values. The idea of philanthropy showed up as a value and it has been so good to discuss important issues of philanthropy as a family rather than just split up an inheritance. There is no doubt our foundation brings the family together in a mission inspired by common values.”