Succession planning in family foundations is crucial in ensuring the longevity and continued success of the foundation. With the shifting of leadership roles, it is important to have a plan in place to transition smoothly and maintain the foundation’s vision, mission, and legacy. This not only protects the foundation’s assets but also sets a clear path for future generations to follow. CEOs and trustees of family foundations have a responsibility to the foundation and its beneficiaries to plan for succession.

What is succession planning for family foundations?

Succession planning for family foundations answers the questions: “What is the future of our family foundation?” and “Who will make decisions for using the funds and what criteria will be used to make those decisions after the donors or current leaders are no longer around?”

“No longer around” could mean they are deceased or incapacitated, have chosen to step back, or perhaps your current executive director plans to retire.

Succession planning ensures the vision and goals of the founding family members are clearly defined, otherwise it might lead to confusion and misunderstandings among extended family members and future trustees, or even be left up to interpretation by the courts.

It is crucial to proactively address the future of the family foundation and ensure that the intentions of the founders are preserved and realized.

15 ways succession planning can help your family foundation

The benefits of succession planning for family foundations are almost endless.

A succession plan can:

1. Preserve the legacy and impact of the foundation and its donors.
2. Clarify donor intent for the foundation.
3. Strengthen governance by answering questions such as: How will decisions be made now and in the future? What changes should we make to our board composition and terms to support the foundation?
4. Clarify trustee and executive director roles and responsibilities, and what involvement they anticipate when the donors are no longer involved in the foundation.
5. Build the leadership capacity of the foundation, such as through executive advisement and coaching to help the executive director effectively lead the foundation through change.
6. Ensure the foundation’s assets are protected and managed effectively, even as leadership changes or if assets dramatically grow through a planned gift. This helps to minimize the risk of mismanagement and ensure the foundation’s resources are used for their intended purpose.
7. Help you prepare for the planned or unplanned departure of your executive director so that you can minimize disruption to the family and foundation and engage the right person to lead your foundation into its next phase.
8. Create guidance on whether the foundation should exist in perpetuity or spend-down, the spend-down time horizon and goals, and what triggers the spend-down.
9. Help prepare for the unexpected by conducting scenario planning and developing plans to mitigate or address them.
10. Create an opportunity to strengthen operations, such as streamlining grantmaking, strengthening operations, or assessing impact.
11. Provide stability during times of change.
12. Avoid disputes among family members, minimizing the risk of conflict in the family and disruption to the foundation’s operations.
13. Minimize the risk of legal and regulatory issues.
14. Transfer knowledge across generations.
15. Be summarized into a clear, written document so that decisions and plans are transparent to other family members, future board and staff, and other stakeholders.

When should a family foundation create a succession plan?

Just like with voting, it should be done early and often! In all seriousness, the best time to create a succession plan is today. Long before you have an urgent need. It’s far better to have your family foundation succession plan in place now when everyone is healthy and no one plans to leave than when the family is in crisis due to an unexpected death or departure.

A succession plan should also be reviewed and refreshed regularly. This could be done annually or every few years. Things change. Your goals for the foundation may evolve as you learn more about philanthropy and your family’s interest in the foundation.

The economy, your assets, community needs, and regulatory requirements will all change. Your kids might have kids, and suddenly their interests and availability will shift. And now you will have future generations to consider. These changes might spark your desire for a different future for your family foundation. 

Wondering where to start? 

If you think you need a succession plan for your family foundation, let’s talk. I’m always happy to schedule a free call to discuss your needs. Together we can determine if a succession plan would help you and what immediate steps you can take. Don’t wait until a crisis hits.

Creating a family foundation succession plan is easier than you think. Getting the pieces in place now will give you peace of mind. And future generations will thank you.