Henry Ford left a major fortune to his foundation that was to be administered after his death. When he created the Ford Foundation, he made it clear that his intention was to avoid estate taxes and retain control of his business.
But, he left very little in the way of lifetime examples or instructions on how the foundation’s funds were to be distributed. As a result, his foundation has been accused of funding programs that were antithetical to Mr. Ford’s real interests and desires.
Will your successors have any idea how to manage your private foundation when you are no longer here? What you thought was a gift to your heirs could be a major source of stress, frustration and resentment for them. Like any of the estate planning you do, creating a succession plan could be the greatest gift you leave behind while ensuring that your intent is carried on in perpetuity.
ESTABLISH A PRIVATE FOUNDATION WHILE YOU ARE ALIVE.
If you create a foundation during your life rather than at death, you are far more likely to promote a philanthropic legacy that will get passed down through generations. Your personal, in-the-flesh guidance and passion will motivate your successors to implement your philanthropic vision.
ARTICULATE YOUR VISION.
State your vision clearly. The trick is to effectively communicate the impact you want your foundation to make, yet be flexible about how to achieve it, so that your successors can carry that vision forward, despite changes in society and technology.
Develop a succession plan that ensures your values live on through your foundation’s giving.
INVOLVE THE NEXT GENERATION EARLY ON.
By involving your children and grandchildren while they are young, you groom your successors through exposure to your philanthropic passion. Even young children can get involved in the foundation’s philanthropy by identifying programs that directly impact them. Such experiences will prepare your heirs for future foundation leadership positions. As they grow older, you can increase their involvement at the board level and prepare them to lead the board in carrying on your legacy.
GIVE THIRD-GENERATION FAMILY MEMBERS A REAL VOICE.
One way of ensuring your grandchildren’s interest and participation is to enable third generation heirs to make grant decisions. This will ignite their philanthropic passion, teach them your values and empower them to embrace the foundation’s charitable vision.
DEVELOP AND TRAIN SUCCESSORS.
Without a succession plan, the foundation’s board may be left without direction when you can no longer govern. You can avoid this by having a process for identifying future successors and minimizing potential family dissension.
CONSIDER PROFESSIONAL ADVICE.
Attempting to go it alone in succession planning can lead to inaction—it is just too big a task for most people to accomplish on their own. Whether you engage a lawyer, financial planner or foundation management professional, obtaining professional advice to create and implement your succession plan is a common best practice. Outside professionals can facilitate meetings, create key documents and coach your successors.
John D. Rockefeller, Sr. instructed his heirs to use his foundation’s assets for the “wellbeing of mankind,” which was extremely general and vague. However, his active philanthropy during his life left an extensive track record for his heirs to follow. Unless you have an extensive charitable track record yourself, it is unlikely that your heirs will be able to fulfill your charitable vision.
So, don’t leave your children in the dark about your charitable intentions. Start your foundation while you still have the opportunity to teach your successors by example. By encouraging their active involvement in the foundation’s governance, you will inculcate philanthropic passion in them and teach them your values from an early age, to carry on your legacy.
This article was originally published in the December 2016/January 2017 issue of Worth.