Webinar: Planning for Legacy and Succession
Transcript of the video:
BRIAN HOWELL: Hello, everyone. I’m so pleased to be here today with our guests to talk about planning for legacy and succession from a charitable perspective. I’m Brian Howell, one of a team of charitable consultants at Schwab Charitable. And in my role, I work with donors and advisors, as well as non-profits to help them reach their charitable goals with maximum impact.
At Schwab Charitable, our mission is to increase charitable giving in the United States. And to support that mission, we’ve collaborated with the National Center for Family Philanthropy to create and deploy resources to support families who wish to explore philanthropy together. Tony is going to talk a little about the fruits of that labor, but I can highlight that the deliverables include guidebooks, roadmaps, videos, and other resources that help to address timely and relevant topics for donors and their families as they seek to maximize their collective family philanthropy. The series we’ve developed addresses five of the most common topics currently on the minds of philanthropic families, and we’re chatting through legacy and succession planning today.
So with that, I’m very pleased and honored to be joined by Dinaz Mansuri, Executive Director of the Mayer and Morris Kaplan Family Foundation, and Jessica Kaplan Lundevall, Chair, the Mayer and Morris Kaplan Family Foundation. And with that, Tony, I’ll turn it over to you.
TONY MACKLIN: Thanks, Brian. So we’ll provide a quick overview of the legacy and succession topics, and then bring in Jessica and Dinaz to talk a little bit about their family’s examples of how they’ve worked through some of these issues.
As Brian mentioned, there are five parts to this Navigating Family Philanthropy Series: Defining Your Philanthropic Purpose, Choosing Your Philanthropic Vehicles, Choosing Social Impact Strategies, Thinking Through Governance and Family Dynamics Issues, and then today’s topic, Planning for Legacy and Succession. As Brian mentioned, each of the topics has a guide which individuals or couples can fill out, and it gives you the context for decisions and some background of how other families think about the topic. There’s a roadmap that a whole family can come together around, either brothers and sisters, or cousins, or kids and grandkids, and sort of help you think about what your whole family’s take is on the issue. You’ll also see a little four- to five-minute video on Schwab Charitable’s website that can give you a quick overview of the topics, or that a financial advisor or wealth advisor could send out to a family to give them some overviews of the topic. So you’ll see each of those for the five topics on the Schwab Charitable website.
A couple quick definitions before we dive into legacy and succession. Across the five guides, you’ll see that we use the term ‘philanthropy’ in a pretty big picture idea, that it’s all voluntary action for public good or using all of your resources for public good. So not just charitable giving to tax-deductible organizations, but you’re volunteering, if you choose to use impact investing, if you are building social enterprises or mission-oriented businesses, and all the rest of it. And so you’ll see families thinking broader about what philanthropy means for them.
Likewise, we use family philanthropy to mean however you define family. And so it could be your biological family, it could be adopted family members, married in family members, families of choice. The guides can even work for groups of coworkers or friends that are working together in philanthropy. So call family what you want, that makes sense for you.
In this Legacy and Succession Planning Guide, you will see a new term, Philanthropic Continuity Plan. And it’s a five-step process for you to think about how do you envision a future in which you won’t be actively managing your philanthropic vehicle or social impact strategy? So what happens when you decide to step down or when you pass away? And just like having a continuity plan for a business or for a non-profit organization, there are a lot of benefits for you and for the people who come after you. You create some more shared understanding about how the transitions might work. You think about what kind of knowledge and skills you need to build into your successors. You think about some more thoughtful stewardship of values, mission and resources. And you may even get a chance to think more strategically about how you’ll make sure the grantees that you’re interested in or the non-profits you’re interested in can make a difference over the long term.
So the first step of a philanthropic continuity plan is thinking about your legacy. You’ll see in the guide that we think about legacy in a very living kind of way. And so what is it you intentionally accomplish during your lifetime and what do you intentionally want to leave behind after your lifetime? And all that is probably based on things you’ve learned from your family or from your past or your heritage. So you’ll see ideas about legacy that combine past, present, and future, and you’ll see a worksheet that asks you like what really defines and fuels your legacy as a person, and then what defines and fuels your legacy as a broader family.
The second part of your philanthropic continuity plan is really deciding the lifespan of your philanthropic vehicle, or if you have a social impact strategy of some kind. Most commonly, there are three choices for philanthropic vehicles. For some people, they complete all of the philanthropic work during their life, just want to get it done and see the joy in it and not worry about what happens after them. For some folks, they set up a limited lifespan or spend-down kind of vehicle, where they say, ‘I want this to have, have a lifespan for 20 years after my death’ or ‘for two generations.’ You see this a lot in modern foundations. You see it in the news a lot. And then the third is the classic idea of having a very long-term or perpetual vehicle where it can go on for generations and make an impact in communities for generations. You’ll see a worksheet in the guide that helps you decide which lifespan is right for you, or if you’re still experimenting with what’s right for you. And all three of those are equally good options across philanthropy, but you’ll decide what makes sense for the kind of impact you’re having in your family and in the communities that you’re serving.
The third piece is the transition process itself. How do you balance the continuity across generations or across the people involved? And how do you balance succession, giving them a voice that helps them rise up and say, ‘Here’s what makes sense for me in current times and what we’re working on.’ As you think through that kind of transition, it can be a hard thing for many founders of a donor-advised fund or a family foundation, for instance. And so they think about ideas like, ‘What happens when I need to step down or when I’m no longer active?’ And that can be a hard thing for some people. And so the guide helps you really think through where do you want to be in 10, 20, 30 years? Where do you want to be if you want to take some time off from the philanthropic vehicle that you’ve founded. It helps you set a vision, helps you plan for your own transition, and then helps you think ahead about how do you want to plan for shifts in rules and responsibilities and uses of resources. So who takes up new roles with your philanthropy, how you might use resources differently in the future than you’re using them today?
The fourth piece of a philanthropic continuity plan is successor preparation. It’s always a big topic in family philanthropy. ‘How do I make sure kids and grandkids and cousins and spouses and anybody else who will be coming along will feel ready to take up the mantle and take an active role in this philanthropy?’ ‘How do I make sure we understand what our shared values are and our shared principles around the philanthropy?’ You’ll see a couple of terms highlighted in the guide. First, is this tip of thinking like a generosity coach. So just like people have coaches all throughout their lives, in sports or as executive coaches when they’re adults, how do you become a philanthropy coach or generosity coach for the other people that are going to be involved in your philanthropy? And then how do you really think about implementing intergenerational governance? The old model used to be, ‘Well, we’ll just hand things off to a new generation.’ And very much families today enjoy making decisions together, kids and grandkids, aunts and uncles with nephews and nieces. And so how do you create decision-making structures where everybody can think together? In the guide, you’ll see something like 30 tips for getting kids and grandkids engaged. So if you haven’t done that yet, you’ll get some quick ideas on how other families have done that well.
And then the last piece of it is what happens at the end of your philanthropic vehicle? If you have a planned end, like during your lifespan or during a limited life term after your lifespan, what should happen with the resources that are left over? What should happen with the people who were involved? What happens with the grantees and communities that you were working with and benefiting? So what does that ideal transition or disillusion look like? And even if you plan for a perpetual vehicle or a very long lifespan vehicle, do you have some contingency and plans in place? For instance, many families may say, ‘Well, we want this to be perpetual, but if nobody wants to be involved anymore or the kids can’t get along, then we have this other route we want to take to make sure things go as according to plan, at least as best we can determine.’ So you’ll see a version of dissolution plans just to get you thinking ahead.
Ultimately, this guide really asks some deep questions for you. It’s probably one of the longest thinking guides that we have of these five to help you really plan ahead. First is what is the true spirit of your gift of a philanthropic vehicle to your family or to the community? So what is it you’re really trying to accomplish? It comes back to the purpose of it. Second is how will your family and the community see and experience that gift? That is, have you created a legacy that they can see and understand versus just assuming they get what you’re trying to do? And do they see the benefits of your generosity in the way that you want them to see that generosity? And then, lastly, is that gift of a philanthropic vehicle, whatever you’re passing on, is it more than a lifeless object in a financial plan or estate plan? And so you might have the technical documents done, but do you and your kids and your grandkids, whoever else is involved, and your advisors really think through how do we put the values and the purpose and the intention into this philanthropy beyond the tax write-ups or the estate plan documents? So big questions for you to be answering as donors, big questions for advisors to be asking their clients and big questions for families to tackle together.
With that, we’re going to bring in Jessica and Dinaz, and see how their family and the family foundation have tackled similar issues. They didn’t have this guide to start off with, but they’ve probably thought through a number of these topics as the families moved through generations. I’m going to take these slides down. We’ll just chat with the three of us, and Brian can jump in when he’s ready as well. So Dinaz and Jessica, thank you so much for joining us and telling us a little bit about your family foundation’s work and legacy and succession.
So maybe, Jessica, let’s start with you. You’re the family member in this. How does your family define legacy, at least what have they talked about?
JESSICA KAPLAN LUNDEVALL: I think… well, this has been going on. I’m already the fourth generation involved with the foundation. So we’ve been involved in this process for a while, actually. And now I’m involved in transitioning, we’re transitioning to bringing on, onboarding the fifth gen. So… or, you know, the rising generation is our fifth. And I think we’ve talked a lot more about how we relate to each other, how we run our foundation more than… you know, I don’t think we’ve really had a conversation so much around how do we view the legacy of our foundation. It’s really, as far as like, you know, what’s our impact? What are we doing? It’s more about making sure we just do the right things, I think, for each other in running the foundation and our involvement in our community, the communities where we’re giving
TONY: Dinaz, you get to watch the organization from an executive director’s standpoint. How would you define sort of the foundation’s legacy and purpose?
DINAZ MANSURI: Yeah, thank you. So I think what Jessica says resonates. I think what I see with this family is that it’s not sort of identifying legacy as some prescription of how these next generations are supposed to give or what sorts of issue areas they’re supposed to focus on. It’s more about legacy in terms of who is this family, right? What are the family’s values, particularly around giving and giving together as a family. And that’s the legacy, right? That this is a responsibility that we have to do as a group, and we’ve chosen to do it together as a group, and that’s a responsibility that we take seriously. And above all else, we’re going to do it together, and it’s going to be messy, and it’s going to be complicated. But in the end, it doesn’t actually matter what we’re giving to, it’s that we’re doing it together, and we’re doing it with integrity, and we’re doing it by continuing to learn, and as Jessica said, funding in our communities, listening to our communities. To me, that’s the legacy. Again, it’s not specific to what they do, but it’s what is rooted in, which is family togetherness.
TONY: Jessica, did you see parents or grandparents or aunts and uncles living out those generality values? How did they talk about that when you were coming up into the foundation?
JESSICA: Absolutely. I think, at the time… we’ve talked about this because when the question came up, it hadn’t occurred to me how significant it was, the trust and the confidence that my grandfather gave us. And I remember sitting in meetings, and we’d be having these, you know, really intense conversations, making a decision, and we’d be all excited, and my grandpa would just chime in and say, ‘You know, I don’t really agree with it, but I’m got to listen to you, and I’m going to let… you know, you go ahead. And if you guys want to decide that, that’s fine, I’m good with that.’ And, you know, we’d all kind of laugh and, you know, be happy. And now that I am in that older generation position, having to step back and say… I realized how magnanimous that was, that he could just let go and give that and pass that on. You know, I realize that’s a difficult thing to do. And he gave us that trust. And I think now being in the position of having to pass on the trust and being more involved with the younger generation, I draw a lot of inspiration from those memories, and also from how we’ve been working together with our other family members for the last, you know, 30 years that I’ve been involved.
TONY: That’s an important point. The audience will see in the guide and the roadmap is this idea of how can you hold some things tightly, the values and the purpose, but allow new voices to interpret those in the way that they need to so that it sort of stays alive and people can breathe into what it feels like to be part of that legacy of generosity. So it feels like your family’s a great example of what other families can learn from.
Jessica and Dinaz, for the family foundation, it was founded a number of years ago. Was it actually written down? Is it a perpetual foundation or is it ‘we’re sort of feeling our way through that lifespan issue?’
DINAZ: I could start. So we’ve had conversations about perpetuity, and I think we’ll continue to have conversations about per perpetuity. So what I always say when people ask me like ‘How long is the foundation going to exist? Is it, you know, set to exist in perpetuity?’ I always say yes with an asterisk, which is this idea that there’s no real plan to sunset or… you know Jessica’s grandfather and great-grandfather didn’t have a prescription around how much time this was going to exist, you know, once they had passed. So there’s no timeline. But having said that, I think at every stage you sort of have to examine who is sitting around the table right now? What are their intentions for if they want it to continue and how they want it to continue, right? And if a particular group of people around the table at that time decide that they want this to sunset, then I think that the founders kept that open because they understand that this is the dynamic thing and that they didn’t want to prescribe how it was going to end or not end.
And so it’s a conversation that comes up, I don’t want to say frequently, but, you know, we had it with Jessica’s generation when… you know, 10 or 12 years ago when we were started sort of thinking about what leadership at that generation looked like. We’re having it again as the fifth generation come on, right? If the fifth generation didn’t really want to be involved or didn’t really want to come on, you would have a different conversation around sun setting, right? But we now have, I think, a pretty vibrant group of next gen who, at least for now, wants to be involved in the you know, foreseeable future. So that conversation looks very different, right?
So to me, these things are not… they’re dynamic and they have to shift based on who is sitting around the table
TONY: That perpetuity with an asterisks, I hear versions of that a lot at the National Center for Family Philanthropy that works with families. I suspect Schwab Charitable the same, that people don’t want to burden future generations with something they don’t want to be active in. And so they have these asterisks of ‘Every seven years or every 10 years, we want to revisit this.’ Or if a new generation comes on and doesn’t have the energy or can’t get along, then we have this contingency plan, right, like back to the slides, or we have a succession plan that doesn’t involve the family that something else happens to make sure the legacy can live on, but maybe it’s in a different format or with different people involved. It makes a lot of sense.
Jessica, talk about the planning of leadership transition into your generation, and what are you planning ahead for the rising generation, the fifth generation coming up? Are there certain training you’re doing, or how are they sort of… how did you find your way into leadership and how will they find their way into the next version of leadership?
JESSICA: I think for starters, we’ve always had an open door, and it’s always been very much of a family event. So when we’ve come together for meetings, it hasn’t been just the one person on the board. I mean, we bring our kids and then there is always like a childcare situation. Sometimes the kids would come, sometimes they wouldn’t, sometimes the cousins would be playing. And that in and of itself fostered, you know, our family togetherness because we met several times a year. And for no other reason than talking about issues that were bigger than ourselves. And I think that is probably one of the most important things about the foundation that has kept us together, was just discussing, deciding, having these conversations that are on a bigger platform.
So we started that way. And if the kids wanted to sit in on a meeting, they did very often, some more than others. Some of the younger generation became trustees, right when they turned 18. Recently, a handful of them in their late twenties, early thirties have become trustees. So it’s just very much been individual with their level of engagement and their interest.
And so faced now with this huge group of kids, actually… kids, you know, they’re all like well into adulthood right now… we have organized… they’ve, actually, started to take on meeting, and talking about things and talking about foundation events. And we have put together sort of a trustee in training program, which we never had before, because I think it was a lot more informal when I came onboard. But because we’ve got such a big group of cousins right now, we have much more of a formal plan for making sure they understand their responsibilities and how to fulfill those. And so that’s been going on for a few years now.
TONY: Dinaz, from a sort of practical standpoint, like who is involved… in what in what roles… as you’re thinking about these transitions, what do the family members do? What do you do as a staff member? Are there other advisors involved in helping them think through the transitions?
DINAZ: Yeah, you know, it’s funny because people say like these transitions as if they’re… I mean, to me, I look at transitions as process, right? It’s like it isn’t something that just happens at one time, it’s happening all the time. And I’ve been with this family long enough where I’ve seen one, and I’m starting to see the next sort of… and they all sort of go together.
You know, Jessica, when they transitioned from the third generation, second and third generation, as sort of the leaders of the foundation into Jessica’s generation, which is fourth, that was about 12 or so years ago, 11 or 12 years ago, when Jessica’s grandfather died. And, you know, Morgan was 98, so there should have been… but… and Morgan was going to live forever. And so there weren’t a lot of conversations. There was always this like, ‘Well, yeah, at some point the fourth gen will, you know, sort of take on a leadership role, at some point, at some point.’ And then Morgan passed away pretty suddenly, along with one of our other founders in the… so Morgan was second gen, and along with one of our founders in the third gen, and it sort of made us… it forced us to look at leadership transition at that time for Jessica’s generation.
That was a much more… and interestingly enough, while Jessica’s talking about her involvement, her generation’s involvement with the board was much more organic over time. That’s how they got on, it was very organic, but the leadership transition sort of was forced upon them. It was like, ‘Oh, we need to talk about this.’ And we went through a process with the board about 10, or, you know, 11 years ago just going back to basics, right? Again, who is sitting around the table now? Our legacy and our values haven’t changed, but we need to see who is sitting around the table now and figure out what does this group see as how this foundation is going to move forward? And so that’s how the leadership transition happened, I think, with Jessica’s generation.
And so for the past 10 years or so, all of our board chairs have been of the fourth gen, right? So that transition happened. And now as we’re looking at this fifth gen, which there has been a more intentional process of bringing them into the fold and into the mix… as Jessica said, this family has always had an open door policy, and we’ll continue to do that, where the fifth gen has just been participating and comes in or doesn’t come in, but there has, alongside that been a more formal trustee training program, if you will, where staff will put together some… you know, the last three years it’s been over Zoom. But we’ve done family retreats where it’s like bringing all the cousins together.
You know, these fifth generation, their parents are cousins, right? So they didn’t grow up in the same household. They didn’t even really grow up knowing a lot of their other cousins. Our fifth generation spans 30 years. So we, first, had to figure out like how does this next generation of fifth gen members know each other, get to know each other in a way that they in the future want to sit around a table and make decisions around philanthropy, right? And so that process has been more intentional over the past couple of years.
But I think, to Jessica’s point, you know, her generation has been very open, and because of the pathway that was paved by her grandfather in terms of letting them have a voice and expecting them to have a voice at the table, I think her generation has done that for the fifth gen. And they are coming up in a way that, one, they’ve seen it, but we’ve also been intentional about having a more formal process for them.
TONY: Two things occur to me. One is for folks who are watching this webinar, you are both leaning into one of the other guides, which is on governance and decision-making. And so oftentimes these transition processes or points then cause you to come back and say, ‘How do we make decisions together as a family?’ or ‘How do we restructure the board to make sure it works for a particular generation or a set of cousins or something?’ So I think that makes a lot of sense, to sort of tag that governance idea back in.
The other thing you brought up is… and I expect Brian sees this at Schwab Charitable, as well… the transition into the third generation and from third to fourth is one of the hardest things. That’s where you have to create more structure than probably most families think they want to have or that have in place because they’re used to running things by people who grew up with each other, or at least they knew each other. And I mean, you could see these cousins and cousins of cousins generation. And it’s harder for them to say, ‘We all group with similar values.’ ‘We’re not in the same geography.’ And so both this guide and the rest of the guides help families really think forward to say, ‘Make sure you’ve got some things in place so you don’t have to sort of backfill it when there’s an unexpected death or an unexpected emergency in the family.’
Brian, what are you seeing from other Schwab Charitable clients around these kinds of succession and legacy choices?
BRIAN: Well, it’s interesting, Tony, you said, you know, that third and fourth generation, you need to have maybe more construct, you have more formality because of the spread in ages and that they don’t know each other as well. We oftentimes, I hate to say, but find that sometimes that’s where we find dissolutions of foundations because they don’t have that next generation that really wants to bite, right… come in, get the training over time. And so, you know, I give credit to our guests today that are five generations deep and already looking at, you know, what does that sixth generation look like? And being 30 years among that fifth generation is pretty amazing, too. But I could definitely see where they will have to be on their toes because there’s got to be struggles, I suppose, when you start getting that deep.
For us, with Schwab Charitable, we find ourselves, you know, a little different. We’ve got thousands of families that we help with a donor-advised fund account. We’ve got families that really are along this massive spectrum in giving, right? Some families that are just starting to get introduced to philanthropy and starting to incorporate their family. And then we have families that are multiple generations. I don’t often get an opportunity to work with families that are five generations deep now or working on that fifth generation, but certainly multiple generations.
What we find, and, of course we get more involved, I think, as we start to include a donor-advised fund into the mix, a combination of vehicles… and I know vehicles was yet another, you know, chapter that we work on through this series. But I guess I bring that into play because, you know, we find that some boards or foundations choose not to have a junior board, right? And I think your family is the same way. You don’t have a junior board, but you certainly have a process to introduce the newer generation and train that newer generation.
I’ve worked with a family specifically that has chosen not to have a junior board, but instead they choose to use the donor-advised fund tool for that nuts and bolts training of researching charities, finding charities that support a certain cause. Sometimes that cause supports the mission of the foundation. Sometimes they let them get off the reservation a little bit and find something that they’re passionate about. But either way, I think it’s a great way to utilize a foundation and a donor-advised fund. This particular family chose to do that, to give them their legs and their grounding and learning and coaching and mentoring, so that they could eventually step into a board role at some point, and they’ve had that fundamental training… or at least a portion of it, right? The donor-advised fund is a much more simple tool than the private foundation. But from a perspective of researching charities and giving to those charities and being given an allowance per se to use from the foundation dollars. So that’s something that, that I’m seeing from one of the families that I’m working with now.
TONY: It’s a theme across these webinars, a lot of foundations that are doing both/and, private foundation and donor-advised fund, or donor-advised fund and family office. People are using different tools to match what they need to accomplish.
Jessica ad Dinaz, let’s roll with this next generation or rising generation preparation. So getting really practical, like when do the rising generations of family members get involved in grant-making and how do they get involved in grant-making, and what are they learning along the way through that process?
JESSICA: A couple things I’d like to say about the next generation… or the rising… as I’ve been recently learning, it’s a much preferable way to talk about them, the rising generation… that we are all very geographically diverse. And I think that the reason that we do have a contact, like I said, is because we have been coming together as a foundation and our door has always been open. And whoever is in the room, even though maybe they haven’t officially become a trustee, everybody speaks up and their opinion is important. And even sometimes if, you know, we’re taking a straw vote, you know, Dinaz probably has to be careful, like ‘Who is actually a trustee? Who am I counting like for making our decisions?’ But everybody is included and we’ve always welcomed that participation. Does that answer your question, or what specifically?
TONY: No, I think that’s a good start. Dinaz, like are there… do the younger generations, Brian mentioned a couple examples, like do they have access to different grant pools? Are they all sort of part of the larger grant-making process?
DINAZ: Yeah, this family really has been pretty intentional around not having a junior board, and, you know, different folks with different ways. And I think to Jessica’s point, it’s been more of ‘Just come to the meetings and come participate in what we’re doing, and that’s how you’re going to learn.’ And a lot of the learning is like sort of trial by fire. You just kind of come in and… you know, we have these board meeting weekends, typically, again, before Zoom… or before COVID, where they would be, you know, two or three days, and we would spend a whole day doing site visits. And everybody came to those site visits, whether or not you were a trustee or not. So you had very young kids, and we would tailor these site visits and activities around sort of a multi-generational group. But that’s how they brought the younger kids along, to understand. And then you have kids asking questions, ‘Well, I don’t understand this’ or, ‘Tell me more about this’ or What does this mean?’ And that over time has been more organic, I think. And, again, we allow that to happen. We have sometimes, you know, 3-, 4-, 5-year-olds going on these visits, and that’s great.
And then as the sort of rising gen that has gotten involved, has gotten older, so in their teens and twenties, we’ve asked them to sort of sign up for this more trustee in training formal process, where, you know what, we’ve done a cohort model. Every quarter or so we hold a Zoom and there’s a particular topic that we might talk about, it might be just basics, right? Like what is a foundation? What are the legal and fiduciary responsibilities that you have as a trustee? Let’s talk about our governance structure. Let’s talk about our grant-making. What is our strategy? Just sort of breaking it up into modules. And then when they get on the board, sort of taking that to the next step, right? So then there’s more intense, or sort of more specific education that may happen. And when you have folks that are geographically dispersed and also of different ages within that generation, we also very much as staff want to sort of meet people where they are. So you might have some people that are much more interested in learning about a particular topic or really interested in the finance piece because they went to business school. So then we can sort of tailor that education and that training around what their interests might be. Because while everybody needs everything, we also want this to be very meaningful to individuals and want them to engage in a way that makes sense for them.
So there is a program as a baseline, but it’s very individualized, it’s very tailored, and it’s also just very ‘Just come to the meetings and you’ll learn.’
JESSICA: Even specifically, I want to add, it’s just so apt right now, because a handful of the fifth gen came together this past weekend, and they thought, you know, ‘We’re going to get together and just have some bonding time, and it’s going to be fun, and we’re going to talk about what we’re going to do.’ Like this cohort of, I don’t know, there were maybe seven of them, and five of them are recent trustees. And they’re like, ‘Oh, this is just going to be great.’
And then we started to look at it and say, ‘You know, that’s a great idea, but, you know, in order to do this, we need an agenda. You’ve got to have this. You got to have this. And if it’s a foundation, official foundation kind of meeting, then we need to have all these things in place.’ So we kind of, you know, stepped in there and said, ‘Look, you’ve got to do this. You’ve got to have A, B, C, and D and E, and all this organized, but go ahead and do that.’ So, and I think they sort of thought like, ‘Oh, you know, we thought we were just going to like talk for a little bit and have fun all weekend.’
But I think they got a lot out of the weekend together. I mean, they came from all over the place and they were together, some of them, for 36 hours. And most of it was with… we had a moderator coming in and talking about a bunch of foundation things, and I think it was hugely beneficial to them. So we’re in the process.
TONY: No, I think that’s great. I mean, again, the guides and families will meet other families. There’s all different kinds of ways you can get kids involved. And it depends on their learning styles, right? Dinaz, as you said, you know, some people want to be more active, some less, some people are into the finance, some people are the impact piece of it. In the family business world, they talk a lot about like, ‘Who is the chief learning officer for your family?’ It might be a aunt or an uncle, it might be a staff person, or it might be an advisor, trusted advisor, but who is really thinking about that learning options and tracking where is somebody in their learning journey when they want to jump in, what do they queue into? I ran a family foundation and, you know, some people responded to written things really well, other people responded to video learning, other people responded just sort of that tactic hands-on kind of thing. And so you’re having to really think through more time spent on that learning piece than probably most families do on their own.
DINAZ: Yeah, absolutely. And I think even that just goes from my board. I mean, I now have 19 trustees. To Jessica’s point, we had five come on in the last two months or so. And they live all over the country and they range age from mid-twenties to early eighties. They all learn very differently. They are aligned on our strategy, they’re aligned on what we’re doing, but they absorb information and engage in very different ways. And so, so much of my role and staff’s role is to just figure out sort of who needs what, how, and when. And so how do you move individuals, but then how do you get those individuals then to move as a group? That’s the secret sauce. I’m still trying to… still trying to figure out.
TONY: It’s always evolving, right? I’m going to give Brian and Jessica and Dinaz just a quick break, and give some tips for families and advisors who are thinking through these topics. Give me one second here.
So if you’re a family member, whether you’ve got little kids, or you’ve got grownup kids, or rising generations of multiple ages there’s some tips from other families that you want to take into account. One is, as much as possible be transparent about what’s coming next. Especially with your advisor, people like Brian, or your estate planning attorney, or other folks, make sure they know what your plans are for 10 years in the future, after lifetime, all the rest of it. And many families are thinking much more about… rather than locking it all in and then leaving it behind, all the documentation, starting early and then just sort of iterating through it. You hear this from Dinaz and Jessica. ‘We’re trying some stuff out,’ trying some new things out a few years later, sort of retesting along the way. So don’t feel like you have to have all the answers at one time. Get some things down, see how it road tests, and then build on it from there.
A lot of other families talk about how do you think about concepts of stewardship and empowerment more than control? I think there were the classic ideas of, ‘Oh, I’m going to have the dead hand from the grave and donor intent’s going to guide everything no matter what.’ And there’s still… that works for some families for sure, but many more families… I suspect Brian sees this in in his clients… they think about like, ‘How do I build a culture of stewardship across the family and a culture of generosity? That’s really what this vehicle is for. And how do I empower them to be generous, thoughtful leaders in their own generations or in their own communities?’ So it’s really that longer and purpose and legacy that you’re trying to leave.
And then thinking about like what happens when you want something to thrive longer, third generation and fourth generation? For most families it’s about sharing… it’s about prioritizing the shared purpose over individual wants. You heard this, again, from the Mayer and Morris Kaplan Foundation, really like ‘How do we keep the family together and keep bonded around shared purpose, rather than having like individual budgets or individual grant budgets?’ Again, every family works differently, but the families that break through that third and fourth generation really prioritize a shared purpose and the kinds of things that they can do together as a family.
For advisors… financial, tax, wealth, legal, otherwise… you could take the information you see in the guide and the roadmap and use it with clients individually, certainly. Some advisors will do this through a 60-minute Zoom or in-person meeting just to help a family kick off a discussion about one of the topics that you heard today. Some folks will set up like a quarterly family conversation to move them through and create a roadmap so they can create their own continuity plan over a while, or at least get one started. Some advisors will use these materials for a client event and grab a few families together because families love learning from each other about, ‘Well, how did you deal with this cousin?’ or ‘How did you deal with kids that didn’t want to get involved?’ They love learning together. So it’s a great client event kind of strategy. And especially when you get into the ideas of legacy and succession, some of these things may or may not be in your wheelhouse or comfort zone as an advisor, and so you can look for other philanthropic advisors or people who are legacy coaches or people who are trained to help rising generations or next generations or young kids think about philanthropy and generosity. There’s lots of consultants and advisors out there. The National Center for Family Philanthropy can point you to some people. Certainly, Schwab Charitable knows some folks who are experts in that. So don’t feel like you have to know all of these things. You can find some other folks you can tap in to help families work through the kinds of issues that Dinaz and Jessica have been talking about.
Take those slides down. We’ll come back in then to some of the other continuity topics.
So harder piece of the continuity plan we talked about in the slides, but maybe start with you, Jessica. I mean, has the family talked about what happens if nobody wants to be involved in the family’s foundation, or are there contingency plans in place, or is it mostly just sort of in thought process?
JESSICA: Dinaz touched on that a little bit before. I think we are very fluid and we had this big reckoning almost 12 years ago, when we were confronted with that idea. And I think that’s… we do talk about the possibilities of what happens if this and that. And we know we have to be ready for that, and it’s great to have resources when it comes to that point. But at least for now, we have a lot of, you know, the rising gen and a lot of work at hand, and I think we really tackle that as it comes.
We’ve talked about… one of the things that’s important to us, I think, is giving… you know, on the higher side of giving, we like to give a larger percentage. And so there’s always this conversation about, you know, ‘How long is the foundation going to be able to continue if we give at this level?’ And the younger generation might say, you know, ‘Oh, well, you know, we can’t give that much. There’s not going to be anything for us to give.’ And for us, it’s like it’s a continued level of participation. And as long as we have that, that’s what we’re… that’s what we’re trying to manage and that’s what we’re trying to govern, and do a good job with our philanthropy at the same time,
TONY: There’s that balance of payout and perpetuity, right, that families tackle when they want a long-term vehicle. When the National Center for Family Philanthropy was working with families through 2020 and 2021, all the struggles with COVID and the downturn, they found families who found some balance in that. They said like, ‘We want to be around long term, but it’s the impact that’s more important than the size of the endowment. So as long as there’s a way for the family to get together, if we need to dip into the endowment to make an impact now because of COVID or whatever else, we’re comfortable doing that,’ I think it was good that somebody voiced that ‘It’s okay. We’ll sort of look back and forth a bit, but it’s not always about asset preservation.’ It doesn’t have to be the entire guiding force. It could be impact or family engagement or other strategies.
JESSICA: And for us, ultimately, it’s about giving. So there’s that.
TONY: Yep. Dinaz, you’re on mute.
DINAZ: So sorry. It also helps for the Kaplans that they are a large family, right? So our fifth generation is huge. Not only does it span 30 years, I think there’s like 25 fifth generation members. So, you know, there’s a little bit of math there that you only have to have some percentage of them that are really interested in this, which I think there will be a large percentage. And I do think that just given the fact that they’ve always had an open door and they’ve always come, it’s almost like the fifth generation’s like, ‘No, this is just what our family does. This is how I grew up. This is what I know.’ And there’s this sense of wanting to continue that. And I think there’s a sense of wanting to continue that to be part of something bigger than them, to be part of the legacy. And, again, not a prescriptive legacy about what we do, but about how we act as a family.
TONY: What values do you see showing up in the family, Dinaz? You get to watch them for over 10 years now, I guess, or so. Like sort of where do you see their values showing up in their generosity in the way they work together?
DINAZ: So I always say to people, and I think you touched upon it earlier, which is this idea that especially when you have multiple generations or you have people across the country, you have a large number of board members, you have to give up sort of your personal interest and ‘I want to fund this thing’ or ‘I want to fund this organization.’ Right? And for this family, it’s really been around coming together around the process.
So if we could, as a family, have the conversations… first of all, learn together. I think that’s the basis of all of it, is like none of us have the answers, none of us know what is right, and there’s lots of social problems we can tackle. So let’s learn first and then let’s come together and figure out, ‘All right, with the limited funds that we have, what are the few things we might want to try to address?’ There’s so many ways to do that.
The way that we address, for example, education, maybe Jessica, that’s not her first priority or first interest area, right? But she’s sort of bought into this collective that ‘This is what my family does and this is the strategy we’ve chosen, and that is more important than what I might personally be most interested in or what I want to fund.’
There’s always that balance because you want people to feel engaged, and to feel engaged sometimes you have to have a personal interest. But we’ve really tried to focus on the collective of what is the family and the foundation doing together? And that’s not always an easy thing to do, but we’ve sort of set that baseline. And at the end of the day, I always say what’s remarkable about this family is that they might have disagreements about, again, how to fund something, what to fund, what strategy, what organization, but the most important thing to them is having their cousin, brother, aunt, sister, uncle around the table. And they’re not willing to sacrifice that for anything else, right? So the other stuff gets worked out, because at the end of the day, they want their family to be around this table doing this together. As messy as it sometimes can be, that trumps everything
TONY: In the set of guides that Schwab Charitable has, in NCFP, you have the first guide, which is about purpose. And so you draw in, it’s like we have these shared values, and the purpose of the vehicle we have is about the family togetherness and this legacy of generosity. And then you come back to it again, this shared purpose and values and principles across the guides. And then back to even in the legacy piece, revisiting, make sure like, ‘Is this really what we are acting and living out as we pass it down to generations?’ And it sounds like you have a real unity across all of the family and across sort of the generations of feels like it’s perpetuating in the right way. All the good parts of a legacy and the spirit of generosity.
Jessica, you and Dinaz have been talking about sort of the legacy within the family. Do you, as a family, or maybe even personally have hopes, like how do the communities and non-profits you serve experience this legacy? What do you hope they see in the family?
JESSICA: I think I can speak to that because Dinaz is so involved in our community and especially the philanthropic community in Chicago. Because we’re so geographically diverse, it’s really important for us to have that engagement. And we really rely a lot on our staff’s expertise in the area because none of us are experts in…well, maybe, maybe some of us. I’m not an expert in education and I’m not an expert in the environment. And I think we all just… it’s important for us to be engaged and learning about where we’re giving and having that respect, I think, from the communities and from the areas that we’re giving in, is that we’re not just writing a check, that we’re doing research into what we’re giving, and that is our level of engagement. And just having a respect for our grantees and respect for the organizations and the people that we’re involved with. And, hopefully, our respect for them gives us… you know, gains us a little respect from them, as well. But, ultimately, I think it’s important for us to be doing the right thing and trusting our grantees, and we lean a lot on staff for that. And Dinaz, by the way, has been with us well over 10 years, so she knows us pretty well by now.
TONY: Fair enough. Jessica, couple practical questions I suspect the audience will have, and so you can weigh in. One, so the family spread out across the nation or maybe past that, but all or most of the grant-making from the foundation is in the Chicago area?
JESSICA: Mostly in Chicago, yes.
DINAZ: So we’re based in Chicago, and this is where the founders sort of started the foundation. And so the majority of our funding is here, and I think it will always be that way. But we have sort of experimented with, you know, as folks have moved to different regions or areas, how do we maybe potentially fund in places where a large group of people live, again, to have some engagement or some more depth of engagement. And then we do a little bit of sort of national funding in the environment. But we’re based in Chicago and that’s where staff is, and so to Jessica’s point, we’re very deeply involved in community here because we are here and we can sort of dig into the ecosystem in Chicago.
TONY: Is that rootedness in place in founding documents or that’s just more the culture of how the family has evolved the foundation?
DINAZ: It’s not in the founding documents. Again, our founders were not really interested in being particularly prescriptive about where we gave or the program areas we gave in. This is more of a sort of… I think it’s a history and connection for the… again, the people who are sitting around the table today, even though they might not live in Chicago, still very much feel like this is where the foundation sort of was born, this is where the foundation, you know, should continue to focus. That may or may not always be the case, right? Like as you get fifth generation, who they certainly, most of them have never lived here. Their parents sometimes have never lived here in Chicago, right? So I don’t know that that’ll be the case forever, but for now, that’s sort of where that has come from.
TONY: And for both of you… go ahead, Jessica.
JESSICA: I would say one thing about… a couple things about that. I think that’s absolutely right. I mean, our founders did not direct that or intend to direct that from the grave, but for my generation and subsequent, I think it’s just a little bit of respect. It’s a combination of respect and honoring our roots. And it’s also… I think it’s also important because for a practical matter, it helps us stay focused. And there’s such need there. There’s such need there. So it’s a combination of factors.
TONY: I’m going to bring Brian back here in a minute. Another sort of practical question, Jessica and Dinaz. But some families will think about legacy also, like ‘We’re giving to the same organizations that grandma and grandpa gave to’ or ‘mom and dad gave to,’ or ‘We’re not giving to the same organizations.’ What’s the balance of sort of like are you committed to the same organizations over time or does that evolve, as well?
DINAZ: That has also definitely evolved. We have a couple of, you know, sort of if you want to call them legacy grants, but, frankly, those are up for discussion all the time, right? I don’t think that this family feels like the way that we have to… and, again, different families operate differently and that totally makes sense. For this particular family, I don’t think that there’s a sense that the way that we have to honor legacy, necessarily, means in giving to an organization that was important to X, Y and Z person in the past. That happens, we have a couple of very small grants that do that, but it really is just… I think the carrying out of legacy and the manifesting of legacy really is around these values and less about the specifics of the giving.
TONY: I think that’s a… you know, for many families they might have different buckets or budgets of how they make their grants from a donor-advised fund or family foundation. You’ve got things that are more unified at your foundation. For some families, they have like a legacy grants budget, like, ‘Oh, here’s 10 organizations that we will always give to because mom and dad helped found them’ or something. It’s just sort of an ongoing commitment or it’s an endowed kind of organization. For other families, they have a place-based budget that’s in the hometown, and then somebody that goes to other places along the way. So I think any family could be as creative as they want to be in terms of how they budget for the different pieces. They don’t feel like it has to be an either/or. You can sort of play that out. And, again, the percentages or the budgets may evolve over time, depending on how your family likes to work.
Brian, I’m curious, you’re hearing the Mayer and Morris Kalan Family’s Foundation. What else are you seeing in terms of this kind of succession issues in the clients you’re working with, and how they balance the different generations involved?
BRIAN: Yeah. Well, you both said it just right. It’s what I experienced, I guess, and what I would reinforce is that… you had a tip that before we came into this piece that was to empower and not control. And I have found… I would say, I don’t know, percentage is probably about… it’s a mixed bag, probably 50-50, families that I’ve worked with that have their private foundation and they’re very hard-lined about staying right to the letter the way it was initially drawn out maybe two generations ago. And so for that reason, I think they would, in those cases, either just be hard-lined, and ‘That’s just what we’re going to do.’ Or if there’s that appetite and you want to grow that next generation, you find ways to have these different budgets. And, again, for me, and this is going, something consistent with me in this program is going to be the donor-advised fund piece. So easy, and we find that on a regular basis that they will take a piece of their giving for that year and go to a donor-advised fund. I think what it does is it helps to quench that thirst to where they can give, this younger generation, to maybe different organizations and potentially even a different cause.
So I see that… it’s pretty consistent that I see it both ways. And it wouldn’t surprise any of us with as many foundations that are out there. A piece that we kind of came into this with is engaging younger family members. And I guess what I would say to that is how young is too young, right? I mean, we probably all as givers were like this, but as I think about families I’ve spoken to, but even in my own situation, you grow your kids up giving back, right? Whether they’re participating in walks, runs, you know, different athons, it facilitates a conversation with the child about what you’re doing and how you’re giving back. And it allows you to speak to the cause and the particular charity and the work that they’re doing.
So another family that I work with does something else, and, again, in the spirit of really trying to bring up this younger generation, is that they have… and I’ve heard variations of this, and it might not be a surprise to you, Tony, either when you hear this, but we have families that… this is a grandmother that at Thanksgiving will bring her family together as she would, and after going around the table and talking about what they’re thankful for, they go back around the table, and this young-young generation, you know, maybe 7, 8, 9, 10, up to, you know, 12, 13, have been given a homework assignment to go out and find, you know, a charity that they’re happy about, a charity that they love to give to, or they would want to give to, and explain why and why they’re passionate about that particular charity, just to get them in the process of finding non-profit organizations that do good work and ‘Why would I be passionate about that organization?’ The kids tend to lean towards animal organizations, I find, so a lot of dogs and cats and whatnot. But as they go through that process, they get to talk about why it’s so important to them. And then even, you know, tactically, they can go and give money from the donor-advised fund and have the kids watch that process.
So growing them up like that and incorporating them in different ways of giving back, I think, is fostering that generation to naturally come into these roles in that fourth, fifth, sixth generation with the foundation.
TONY: I think that kind of holiday discussion is one of the 30-some tips that are in the guide, right? And it’s super easy to do, whether you have… you don’t even have to have a vehicle to do that, right? You can just do that as a parent or a grandparent.
Danaz and Jessica, I want to plan a question in your head before I come back to Brian here, and come back to you to wrap it up. What tips do you have as a family that’s doing well and a staff that’s serving that family into multiple generations? What tips do you have for the audience on navigating issues of legacy and succession, something you learned yourselves, maybe, or something you learned from other families? Just last tips,
Brian, and back to you, while they’re thinking about that. Legacy and succession issues can be technical, right, for advisors. You get it down on paper, you get into an estate plan or a legacy plan, you’re filling out something on a donor-advised form. But where else do you hope families really engage their advisors in that conversation and when do you hope they engage the advisors in the conversation?
BRIAN: You know, it’s actually my charge to get out and talk to advisors, and, you know, wealth advisors, wealth consultants, financial consultants about incorporating this into the conversation, maybe even day one, right? In our industry and finance industry and investments, when you start building a relationship with families, you go through a discovery process. And I really try to coach and mentor that this should come up in discovery every time, because someone, a lot of these families have passions about something. And if you are not uncovering that early on in that relationship, that relationship is at risk, for one. Two, you’re probably not the advisor for them if you don’t have the concern to get involved in where their true passions are. So, you know, we really try to talk about incorporating that early on in the process. Of course, in about every conversation from investments to estate planning and otherwise, you can incorporate charitable giving certainly from a finance standpoint, from a tax perspective, which of course can start there, but then open up into more of a dialogue about what it is that they’re passionate about and why.
So it’s never too soon to start having those conversations and we hope that it happens right out of the gate so you can foster a fantastic relationship and be the best advisor possible for your client base.
TONY: And that’s right, the charitable giving, the tax planning is the key into the larger legacy and purpose conversation. Whether they use these guides for those conversations or other tools they might have, is how do you open up those things to say where do they connect their heart and their legacy into where they’re using their resources and time, right?
Okay, so, Dinaz, maybe you start with you and then we’ll give Jessica the last word. Any other tips you want to give to other families on navigating legacy and succession issues?
DINAZ: Yeah, I think I’ll try to sum it up in three things. I think one is sort of bringing the younger generations into the story. I think that the younger generations or the next generations have to see themselves in the history of the foundation. Whether that’s generation two or whether it’s generation seven, they sort of have to understand sort of where they came from to be able to be part of it. And so using history as a guide for sort of who we are and how we do it, not what we do, necessarily, but who we are and how we do it, and really bringing them into that.
I think the second piece, and this goes along with that, is, you know, we’ve been lucky enough where our founder had done a couple of videos, and so the generations now are able to go back and watch those videos and read letters that he wrote. And so really, again, placing themselves in that historical context and being able to see and hear firsthand from their great-grandfather, in some cases, great-great-grandfather why he started this foundation and what he hoped the family would get out of it. And I think that can even go with staff. To Jessica’s point, I’ve been with the family 18 years this year. And it doesn’t have to be a foundation staff person, but a lot of times there’s a family office person that’s been with the family for a long period of time and has some… you know, yes, the family has that history, but even sometimes having an outside perspective, sort of supplement that history is helpful for the younger generations.
And then I think the third thing is engaging often, early and often in a process of reflection and planning. And so going through that process, it’s not just the outcome. When Jessica’s family had to go through this about 10, 11 years ago, it wasn’t about getting to the other side, it was the process of having to think and operate as a group and really ask hard and answer hard questions. Because to me, we’re doing that again now and there’s muscle memory from when they did that 12 years ago, right? So it’s not just about the outcome, it’s really about going through these steps and the process so that you know how to do it, because you’re going to have to do it not once, not twice, probably multiple times. And so really sort of valuing that process because it’s a journey, it’s not something you’re arriving at.
TONY: I could rewrite the guide. I’d put the term ‘muscle memory’ into that. I think that’s exactly right.
Jessica, tips you want to share with other families who are working through these issues?
JESSICA: I think this process has been so interesting for me because it makes me… while you’re in the middle of it, you don’t really think about what you’re doing and then I step back and say, ‘Yes, you know, we have… besides having our family unity and enjoying coming together and working together and thinking together and discussing issues, I think at the base we have had some commonality.’ I mean, it’s really been around a couple things, like I said, apart from family, but education, our value in that; personally, being lifelong learners, and also having more equitable education available for people and what can we do to improve what’s going on within education around us and in our communities; and being able to help others. I think that that comes also from like a bigger value system, but it’s something that’s always guided us and I think is ultimately so important for us. And I think all of us know that that’s part of the reason we’re there. So having some strong guiding principles like that and then dealing with what’s at hand has really been the core of what we’ve been doing and allows us to go forward.
TONY: Thank you so much, Jessica and Dinaz, for sharing the family story of the Mayer and Morris Kaplan Family Foundation in Chicago. Anybody can look them up on the web and get a chance to read more about what the foundation is doing. And their one set of terrific ideas around how a family can navigate succession and legacy issues and make it fit the family’s values and culture.
I’ve got a couple slides to wrap up that I’ll turn things over, Brian to land the plane here. So if you haven’t already looked at the Schwab Charitable website, you can go to schwabcharitable.org/family-philanthropy and you will find all five guides, all five roadmaps, short videos for each of the guides. And then as we are working on these webcast recordings, you’ll find the webcast replays, so you can dive in and hear stories from other families who have dealt with things like governance and choosing philanthropic vehicles.
I’ll turn things back over to Brian.
BRIAN: All right. Well, thank you Tony. And, hey, first I want to thank Dinaz and Jessica for your participation today. What you’ve achieved as a family is inspirational, and I’m really in awe of how the foundation has been so successful in preparing each generation to take the reins of a foundation with such great results. Thank you, both, so much for your time and for the great conversation today, as well.
As I mentioned at the beginning of this webinar, I’m one of a team of charitable consultants at Schwab Charitable who are here to provide you with any information that would be helpful to you as you think about the process for embracing family philanthropy as a priority. We’re here to help families and the advisors who support those families. So please reach out with any questions or thoughts. Thank you so much.