What do you want your foundation to do?

A foundation offers a chance for the whole family to come together around a shared mission of good works, and to create a legacy that can outlive any individual family member. “Private foundations are for folks who want the most flexibility in deciding how they want to drive change,” says Bill Sutton Jr., Head of Client Philanthropy, UBS Wealth Management Americas. As founder, you decide the foundation’s goals, its structure and who will serve on the board, which is why it’s essential to spend time determining exactly what you want your foundation to do—and then find a way to get there.

Key takeaways

  • Private foundations offer wealthy families unsurpassed freedom and control to pursue philanthropic goals.
  • Success depends on defining a clear mission and measuring for your activities—what do you hope to achieve and how will you define success?
  • Before launching a new charity, consider whether grants to existing ones might achieve the same goal.
  • Speak with your Financial Advisor about how your foundation’s activities and finances fit in your overall financial goals.

Establish your mission

By law, private foundations must spend at least 5% of their total assets each year for grants and charitable activities to keep their charitable designation. Beyond that, it’s up to you to define what it is you’d most like to accomplish and be known for.

“This is the time for asking, ‘What do we want to do? What inspires us?’” Sutton says. “Think about what makes you mad, and what is or isn’t right with the world.” Then, consider the resources and the “inventory of skills” that your family can bring to bear to effect positive changes, he suggests. One good first step is creating a mission statement. This need not be long or complex. In fact, brevity is a virtue with mission statements, Sutton adds. Too many details could constrict your ability to grow and adapt over time. “It can be as short, as targeted, and focused as you want it to be.” Still, the statement should clearly address what your priorities are.

In addition to guiding the foundation’s work, a clear mission can help potential grant recipients know whether you’re likely to support their work. Grants are in the public record, Sutton notes, so if your foundation has an unfocused giving pattern, it may be besieged from all corners. “Having a specific mission is a nice way to help people understand that while their ideas may be tremendous, your foundation might not be a perfect fit,” he says.

Ask your Financial Advisor about the UBS Philanthropy Compass, a step-by-step process for clarifying and defining your philanthropic goals.

Assess the landscape

Once you’ve defined your mission, speak with local colleges, universities and community foundations about what they see as your area’s most pressing, underserved needs, Sutton suggests. Look at what other foundations and nonprofits are doing to address those needs. “This can give you a glimpse into what’s working out there and what’s not,” he says. Your Financial Advisor can help you understand what kinds of expert help you may need, and can also help you make sure your philanthropic goals fit seamlessly into your overall financial strategy.

Consider supporting existing charities instead

While most private foundations make grants to existing charities, some families choose to start their own. Doing the latter gives you direct control over management and may elevate your public voice as a philanthropist and increase the money you have to work with by drawing donations from other individuals or organizations. But running your own charity involves significant additional costs and responsibilities, from staffing and oversight to fundraising responsibilities and legal costs.

Listen to Bill Sutton Strategist, Family and Philanthropy Advisory Americas

Before you take this step, make sure you’re meeting a need that can’t be addressed by supporting existing organizations. “Get to know the space well,” Sutton suggests. While there’s always room for innovative ideas, “There are more than a million public charities throughout the U.S., and there’s a ton of duplication out there, where everybody’s chasing the same dollar.” You could end up competing with other groups for charitable donations.

Form partnerships

Part of sharpening your focus is realizing your foundation can’t be all things to all people. Still, you may be able to broaden your impact by looking for ways to partner with other private foundations doing complementary work, Sutton suggests. One way to find them is through organizations or conferences. Sutton adds, “If you can combine your strengths, focus and research, quite often family foundations can get a lot more done together than they can on their own.”

Don’t wait for perfect

As important as it is to define your mission and hone your approach, don’t let advance planning handcuff you. “It’s called practicing philanthropy. Don’t wait for perfect,” Sutton says. “You’re going to make mistakes.” After all, part of the joy of operating a foundation is discovery, and what you learn from today’s projects can only make you and your family better, more effective philanthropists in the years to come. “Philanthropy is risk capital,” Sutton adds. “You should be out there taking risks and trying new things. If something doesn’t work, it doesn’t work. Move on. Just make change happen, and you will learn as you go along.”

“It’s called practicing philanthropy. Don’t wait for perfect. You’re going to make mistakes.” – Sutton

Disclosures