Webinar: Strengthening Governance and Family Dynamics
Transcript of the video:
JULIE BARTLETT: Welcome. We’re so thankful that you’ve joined us today for the fourth webinar in the Navigating Family Philanthropy Series, sponsored by Schwab Charitable and the National Center for Family Philanthropy.
My name is Julie Bartlett. My role at Schwab Charitable is a Director for Charitable Consulting. My team and I work directly with clients, families, and their financial advisors to facilitate the family’s philanthropic goals. Schwab Charitable’s mission is to increase charitable giving in the United States. We do that by sponsoring a donor-advised fund and through valued partnerships like the ones that we have with the National Center for Family Philanthropy. Together, we really focus on providing education and tools that promote effective, impactful, and informed family philanthropy.
Family foundations are really creating a very substantial part of the charitable giving community, and the National Center for Family Philanthropy is committed to that world and really creating these proven practices that build and develop the family philanthropy segment. We know that with the wealth transfer of 30 trillion to younger generations over the coming years, it’s expected that family philanthropy will continue to strengthen as families really look at the ability to prepare the next generation for greater responsibility and to share their family values.
Today, on the call, we have a number of extraordinary guests that we’re going to go through and really talk about the strengthening of governance and family dynamics. This series actually covers five topics where we are going to talk about the philanthropic vehicles for your giving goals, identifying social impact, governance and family dynamics, and succession and legacy.
When we go through strengthening and governance and family dynamics today, I really want to thank Tony Macklin and the team from NCFP. This is a thoughtfully executed series of resources on family philanthropy that really creates an extraordinary capability for family members to formulate a future of meaningful and effective philanthropy together.
With that, let’s go ahead and do some introductions. So on the call today, we do have Tony Macklin, who is the Senior Program Consultant for the National Center for Family Philanthropy. We also have Ashley Joyce. Ashley is the Chairman for the Duchossois Family Foundation, and she is also a third-generation member of the Duchossois family. Also, we are pleased to have Mary Ann Roeser, who is the President of the Duchossois Family Foundation.
Tony will be facilitating and leading the conversation with us today. And with that said, Tony, I’ll hand it over to you.
TONY MACKLIN: Thanks so much, Julie. Thanks for having co-host duty with me.
So before we bring in Ashley and Mary Ann, we’re going to do some context on the series, and the governance and family dynamics content that you’ll find in the guide. As Ashley said, there are five modules to this series, or five topics, everything from Purpose, to Social Impact Strategies, to Legacy and Succession. It’s all designed to integrate and work together as you think about how you plan ahead for your family’s philanthropy, both in its current generation, as you think about other generations of the family or community being involved. Each of those five topics has a guide that has sort of the content and context about what you should be thinking about and how you could be making decisions about the content. And it has some worksheets if you are filling out some ideas for an individual or as a couple. There’s also a family roadmap that you can download. So if your whole family is working together, they can fill that out together and say, ‘Oh, here’s our mutual values,’ or ‘Here’s our mutual idea of how we want to govern our organization or our family philanthropy.’ And then you have a short four-to-five-minute intro video that’s sort of a primer or a quick stop for introducing the family to what’s going on. And advisors could use that to sort of prime a family for a conversation around the topic along the way. And then we have these webinars that tell the stories through the lens of one or two families.
A couple definitions that you’ll see across all of the guides and roadmaps. One is we’re talking about philanthropy beyond charitable giving to tax-deductible giving to charitable organizations. So it’s all the ways you and your family want to make a difference. Maybe it’s social enterprises, impact investing, volunteering, advocacy, all the different tools. And so thinking holistically about how you want to make a difference in the world. And we also say that you can define family the way you want. So it could be biological, it could be adopted, it could be families of choice, it could be your friends and coworkers, whoever you want to bring together to help you make decisions around your philanthropy and social impact.
As we dive in then to today’s content, the primer, or the guide and the roadmap, and everything else really help you think about a governance framework, a set of tools to help you make decisions and bring intentionality and effectiveness to the dual mission of family philanthropy. All families are bringing together the ideas of how do we engage the family in some kind of generational or intergenerational work. And then how do we have a social impact as a family? And sometimes those circles work well together, and sometimes they don’t always work well together, and a governance framework helps you make that work together a bit more seamlessly.
In the guide, you’ll find some topics that you’ll talk about as a couple or as a person or as a family. The first is just what governance bodies do you want to have in place? Basically, that’s the groups of decision-makers. So often it starts fairly informally with just a couple folks around a kitchen table. And, eventually, as more people get involved, you start formalizing the governance bodies. And especially if you have a business-owning family or you have a larger multi-generational family, then they start having more formalized boards of directors and family councils or assemblies. So pick the organization size and governance body that works for you, and then you’ll probably add more later as you get more down the line in your philanthropy.
The second piece that you think about is who are the people that you want to involve and what goals will they play, or, more simply, who gets to make what decisions or just to advise them. The guide encourages you to think about… along with your family members who are making decisions with you, are there other trusted allies, like your financial advisor or legal advisor or a mentor in your life? Are there experts that maybe have some ideas around an issue you’re working on? Are there people in the communities that you’re serving that might have some ideas about what works well in those particular communities? Or are there people with lived experiences with the issues you’re working on? So, for instance, if you are trying to cure cancer, are you talking to cancer patients about what it’s like for them to go through certain treatments or certain rehabilitations scenarios? Or if you’re working in neighborhoods that aren’t doing well, are you talking to those neighborhood residents or the kids in the schools about what works well or doesn’t work well? So think about rounding out all of those voices as you’re making decisions.
You also think about then like what are the roles and responsibilities? So if you have a committee or a board, who is going to be on it? And what are the terms of tenure they’re going to be on? And what’s the eligibility process? And, again, you’ll probably start informally about that, but then as you bring more people in, you’ll start writing some things down so they know what they’re getting themselves into, it can feel comfortable that they’re playing the right role in your family philanthropy.
The third piece is, what kind of principles do you want to have in place to drive your decision-making? So do the people understand the why of how you’re working together and the sort of roadmap that you’re trying to create for the values underneath of it? Sometimes those principles are based on your personal values or your family’s values. Sometimes they come from cultural traditions. Sometimes they come from professional codes of conduct. Oftentimes you’ll see words like ‘integrity,’ ‘accountability,’ ‘transparency,’ ‘effectiveness,’ ‘stewardship.’ So like what is it you really want to underpin the decision-making process?
Then you’ll put some policies in place. So how do you create some rules and guidelines for putting your principles into action? And what policies give direction and oversight for those governing bodies you have in place? Sometimes the policies help you reduce compliance risks. Sometimes they help you increase the credibility of your decision-making. Sometimes they help give younger family members practice in following policies they might later see in their own workplaces or on non-profit boards. The guide has a checklist of policies that are recommended by the IRS, by the National Center for Family Philanthropy, or by other families who have done a lot of work in this area. You can go through and see if you have those in place. Oftentimes, your advisors, your Schwab advisor or your legal advisors might have example policies that you can work from, or you can talk to other families and see what they have in place. And like everything else in this, you might start with something simple and then add to it over time.
After policies come practices. So that’s sort of the operational piece. What do you do in terms of how do you manage your finances? If you have an office you’re all working out of, how do you manage the office? How do people think about if they’re traveling on behalf of your philanthropy or doing site visits? So just sort of the operating practices of it, how you live your values and principles out through your actions. Again, the guide has a checklist of common practices that people think about writing down. If you have a donor-advised fund, your donor-advised sponsor will mostly handle the practices for you, although they may have some templates for you to use within your family meetings or your family gatherings. So just think about the basics, like record-keeping and financial management. And if you have a foundation, maybe you have to get to an employee handbook at some point.
The last piece of the guide then talks about family dynamics. And if this is a new term to you, it’s really about helping you think about your family as a ever-changing interconnected system of people. And people’s ideas about what works and doesn’t work may change, their attachments to philanthropy and social impact may change, what they value may change over time, and thinking about family dynamics helps you tune into all of those changes and the changes in the relationships. And so you may watch different interactions of how people work together in your family either well or not so well. And you may think about all the different factors that shape those interactions and relationships that something happened in somebody’s life that sort of interrupts them making good decisions, or is there a marriage that brings new voices into the family or family role shift? And so paying attention to family dynamics helps you step out a little bit from the family, and watch it and say, ‘How can I help the family make better decisions?’
The guide gives you some tips on improving family decision-making and family interactions. It sort of goes more in depth into ideas like how do you create supports for both individuals to grow in the family and the group to make decisions together? So it’s both individual and group work at the same time. How can you nurture a culture of active stewardship, so people really feel that they are a nurturing resource for the family, that’s for the community also? And how do they steward that over time to make sure it does good things in the community?
How do you strive for resiliency? Oftentimes, families talk about how we best show up as a family is when we bounce back up from a distress, like we overcame this big problem, the business closed, we were able to survive, we went through a natural disaster. And so what’s the resiliency of your family to sort of go through trials and stresses?
Fourth is you’ll have to plan ahead for disagreements or maybe even healthy conflict. And, again, back to your policies and practices, if you have things written down about like here’s what happens, or here’s what we should do if we disagree about something or we have some conflict about it, or who manages that disagreement and conflict. And the more you write that down, the easier it is for newer family members or community voices or experts to come in and be helpful to you.
The last is for all these governance topics and for family dynamics issues and next generation preparation, everything else you’re doing as a family, don’t be afraid to ask for help. There are people out there who are advisors and coaches and family therapists and pastors and other experts in helping families navigate tricky decision-making, navigate family dynamics when families aren’t working well together or help you improve even when you are working really well together. And so ask your advisors, your Schwab advisor, your legal advisor, or other folks if they know some people who specialize in helping families make good decisions together and set up good decision-making models and governance frameworks.
Again, lots more in the guide and the roadmap for you to read through and think about how it all applies to you, how you want to right size the framework to your family based on where you are in your philanthropic journey.
We’re going to go ahead now and bring in Mary Ann and Ashley and bring back Julie and talk a little bit about their perspectives about… at least for the Duchossois Family Foundation, how they thought about governance and family dynamics and what Julie’s been seeing across some other clients. So Ashley and Mary Ann, if I can have you come back on camera and put your microphones on. Same with Julie. I’ll take these slides down.
So great. Thank you all for joining us today. Why don’t we just start off, Mary Ann, just give us a quick history overview of the Family Foundation to sort of settle us in. What’s been going on?
MARY ANN ROESER: Sure. Thank you, Tony. Thank you for having us today. And so the Family Foundation was founded in 1984 by Richard Duchossois and his four children. So for the first 30 years, I think, like you said, Tony, especially in the very beginning, it was very much kitchen table philanthropy, and it was run by the first and second generation for that first 30 years. Kim Duchossois was the president for all of those years and… before it was handed off years later. So the family had an operating company at the time and so it was operated like a pass-through foundation, and funded the foundation with the grants that they wanted to give. And it was mostly relationship driven. They did do some… a couple large transformational gifts, but they were very much driven by relationships that the family had with those organizations. And much was managed for the most part by an outside firm at that time. And so by the time 2015 came along, which I’m going to hand over to Ashley, we did bring the management of the foundation into the fold, and it is now run by us and with the help of the family office.
So, with that, I will hand it over to Ashley to give, you know, more of the story about when the third generation came onboard.
TONY: Great. Ashley, tell us more.
ASHLEY JOYCE: Wonderful. Well, Tony, thank you. Yeah, as I’m listening to you with your slides, I wish… I think the guidebook is incredible. And I think that there’s so many families out there that don’t know where to start. So I kind of wish that we had that, but, hopefully, we’ll be able to help out some families. I always love hearing personal stories, so please ask away whatever questions you have.
So a quick… just to go back one step is I know Tony, you mentioned, that I am a third-generation family member. Our family business is a little over 105-years-old. My grandfather, even though he was technically 2G, he kind of reset the clock and he kind of called himself a founder. So we have always called him first generation. And so it was my father… I mean, my grandfather, four children, and then there’s seven in my generation. We’re all married, so that’s 14 of us. And then we have 15 next gens, which are the fourth generation, and they range in ages from one to 17. So just to kind of give you an idea.
Now, going back to Mary Ann’s question, or comment, when I took over the foundation in 2015, it truly was… I have a social work background, and it was… you know, my grandfather, again, he passed away last year at age 100. He really looked at my generation… he looked at his children who were in their seventies as children. So his grandchildren were still in diapers even though we’re well into our forties and fifties and thirties. So, you know, I was kind of waiting in my aunt’s like shadow for about 10 years. And, finally, in 2015, he said, ‘I’m okay. You know what? Everyone, 3G could handle the foundation.’ And that’s when I stepped in. And I said, ‘If I’m going to do the foundation…’ I have control issues. And so I wanted structure. I wanted to… I wanted us to have bylaws. I wanted us to have really a strategy. And in the past, it was, but as Mary Ann mentioned, it really was more relationship driven and I really wanted to make it a little bit more strategic. So I’m happy to get into that a little bit later, Tony.
TONY: That’s great. And for families and advisors watching, that’s oftentimes when new forms of governance take place, another generation comes in and they realize how easy or not easy it was for them to navigate into the organization or into the family’s philanthropy, and so they usually want more things written down or having the things rearranged. So that’s very common story.
Pick up, Ashley, and just talk about the governance body. So back to like how is the organization… what kind of boards and committees and who is on those?
ASHLEY: Well, for the foundation, it’s really just… it was always just family members. And just this past year, Mary Ann was promoted to president of the foundation, as well as the first non-family member. Our family, we have a lot of. So we have our operating company for, again, 105 years, and we had an investment company, we have a foundation, a family office, private trust company, family council. And within all of those… it took us a long time to get there, lots of bumps and bruises on the way, but we have different committees. We are… you know, to me, the structure is really important. And I think that, you know, what I’ve said in the past is the more policies and guidelines, so the more things could be black and white. You have… kind of that gray area, I look at that emotional area. And when you’re dealing with family business, there is a lot of emotions.
MARY ANN: So in our family, we have tons of guidelines, tons of policies. You mentioned… you know, I think you mentioned conflict, if there is ever conflict. Well, we have a conflict resolution. We have just guidelines on how to act type of culture. Cell phone usage. I mean, we really try to go as specific as we can, so it’s not taken personally.
TONY: For the folks that are watching, so family council is probably the largest group, sort of the most comprehensive group, and then these other groups are sort of subsets of that council.
ASHLEY: Yes, correct.
TONY: And you talked about family members. So spouses can be involved in the foundation?
ASHLEY: Yes. This is pretty much the first time. Again, going back to when my grandfather, it was bloodline only.
ASHLEY: And the non-blood were not really invited into anything. And non-blood is a married and an in-law, or out-law, depending on which family you work with. And when I took over the foundation, I opened it up to in-laws. And, you know, an example of… I mean, I think that’s very important. And the majority of my generation felt like that was a very important, as well as the second generation. My mother, who is an in-law, she said once we formed our board, she said, ‘You know, I have been married, you know, to your father, but in this family for over 50 years. And this is the first time I’ve ever really felt part of the family business.’ And it was just a really… you know, I can’t stress enough the importance of those that are interested, blood, non-blood, adopted, what have you, bring them in and let them let them get engaged.
TONY: I suspect Julie has seen this with other clients, and we’ve talked about this, actually, in a couple of these other webinar recordings, that as you are thinking ahead about younger generations or… younger generations, 40 or 50 coming aboard, the more that both parents of both parents around us are able to be active, the better they can help mentor that younger generation into the family’s philanthropy. It’s so much harder to do it when only one person is a piece of the equation. And so you see so many more families involving spouses and partners earlier in the process because they want to raise generations into the family’s philanthropy. So kudos that you’re able to make that decision.
Let’s think ahead about the boards and committees, at least related to the family’s philanthropy. How do you think about recruiting people in afterwards? Is there eligibility requirements? Is it age requirements? Sort of how do you say, ‘Okay, I’m eligible and I’m prepped to go for this.’?
ASHLEY: Mary Ann, do you want to take it, or do you want me to take it?
MARY ANN: Sure. I mean, you know, we have not done a lot of recruiting because the family is pretty… I mean, it’s pretty small and the fourth generation are still… you know, they’re a little too young at this point. They’re high school on down. So we have, I think, more through… from what I understand, more through the family council, there’s been some educational opportunities for, you know, learning on not just investing and, you know, financial management and responsibility, but also what types of things go on in a foundation. And, you know, I really look forward to having maybe like a junior board at some point, but we kind of have to wait until, you know, there are family members of the age where they’re interested. I think maybe when they go away to college, that that might be an opportunity.
I know that we’ve… right now we’ve got a small board, but we’re pretty happy and secure. I heard at one of our first meetings that… when I was the president asking, ‘Do we want to bring on another outside board member at this point?’ And everyone, you know, at that point was not really ready to do that.
So I don’t know if you have anything else to add to that, Ashley, or…
ASHLEY: No, I mean, I think what we have, you know, going back to the documents and the guidelines, we do have specific criteria to join our board. And, again, Julie or Tony, we’re happy to, I always say why reinvent the wheel if… you know, if anyone wants our documents, feel free. But one of them is the criteria. We have a criteria for a board observer, criteria for a board member for the foundation, as well as for our operating company. And, you know, examples are you have to be married into the family for five years. You have to have a leadership role in something with… if it’s for the foundation, something with a non-profit… you know, with a non-profit organization. You have to… if it’s for the business, you have to have outside… you have to work outside the company for four years. You have to have two references that are outside that are business related. You know, proficient and basic finances. So we have a guideline, and, again, we put a lot of things in there. And that is so it’s… you know, when our next gen is involved, it’s not me saying to my sister, you know, ‘No, your son is not…’ you know, my nephew is not able to do it because he’s a pain in the neck. It is, ‘Well, maybe he could do it, but he still has, you know, three, four, and five qualifications to do, and then he could come back to us.’ So it just takes that emotion out.
TONY: You’re both making a great connection in this guide, right, that when you have these things documented, even if they’re simply documented, it helps tame those family expectations and helps reduce potential conflicts when somebody wants to be involved but they’re not ready, or there’s hurt around somebody being involved before someone else. And the more that they know ahead of time, ‘Here’s the rules of the road, what we expect,’ the more they know sort of what they can get themselves into, it just feels much fairer for the family over time.
Before we come back to some more specific policies and practices you all have, Julie, I’m curious. You get a chance to talk to lots of different families about their governance and their governance journeys. What are you seeing across some of the other clients you’ve been working with?
JULIE: Well, Ashley and Mary Ann touched on a number of things that I hear, and it reminds me of a client that actually came to us for a vehicle selection. And he already had a family foundation, and I had asked him more questions about the family foundation, and so many… there are so many common threads. And I think I hear those across my conversation, Tony, and I’m sure you do, too. He said his mother had created the foundation in the later part of her life, and it was her project, and she found great joy in it. And the family had a very good understanding of the purpose of the foundation and what it meant to her, and that was important to them. And there were three children. And upon her passing, he was going to be taking over as the successor, as the leader for the family foundation. And he went through all the paperwork, and he realized there’s nothing that documents what this foundation is about. ‘There’s nothing that tells me what I’m supposed to do next.’ And so he really… he sat down, he said the first meeting was him and his siblings. The three of them sat down together and kind of made some basic rules, which Ashley, I think has taken that to… they were like, ‘Okay, are our spouses involved?’ And then he even explained that later on even though they agreed that they would, one of them went through a divorce and then how they dealt with that, how they managed that aspect of still keeping this group together and keeping the next generation involved. They’ve developed so many fascinating things.
And, Ashley, I think sharing your… the work you’ve done is such an incredible offer, because I think back to what they went through, one of the things he talked about is they made a strategic plan. So they created values for the family, they documented them, they created vision and a purpose of who they were. And then they started creating action items to meet goals. And he said, ‘We’ve been able to do so much more.’ And he goes, ‘I wish my mom could see it.’
But one of the things he talked about, too, was… they interviewed family members and he remembered, he interviewed everyone. He said, ‘Eight and up. They all got an interview. And he asked them what they knew about the foundation and what they were doing. And he said one of the things that resonated with all of them was when the eight-year-old said, ‘I don’t know what this is. I don’t really understand.’ And so they ended up… one of the committees that was created was to document their history.
So there’s so many aspects of this, it’s just really incredible. And, Ashley and Maryam, thank you for sharing. I think creating that structure is important to meet those goals, and I think that’s it.
TONY: There’s a great point in that story, too, Julie, in that you create governance bodies and rules and processes to serve the organization, but oftentimes you can use them as ways to latch on to different strengths and talents of different family members. So here’s family members who are good at something, let’s get a committee together or a task force together because they can go off and do the history piece or an art piece or whatever else. So it’s a great way to figure out like how do you organize people into ways that they can feel like they contribute at whatever age they are.
JULIE: That’s where they brought the teenagers in, by the way. They digitized a lot of the older history and they’re responsible for documenting all the history to current. And they’re great at editing. So it’s been fascinating.
TONY: That’s fantastic. That’s a cross-sell for the Navigating Family Philanthropy Series. There’s a separate topic, a guide and everything on next generation preparation. And so you’ll see some of these ideas picked up in that guide, as well. How do you help those next generation members feel like they’re engaged in a way that makes sense for them, whether they’re eight or 18 or 28.
Okay, let’s get nerdy/practical, Mary Ann. So you mentioned a little bit about some things that are documented. What else is in your sort of policies and practices, like where did you start and what do you recommend other families start in terms of getting some stuff written down?
MARY ANN: Sure. It is really helpful. And, you know, as much work as it was, we put together a really nice board book. And actually looking at it in preparation for this call, I’m realizing that it’s probably time to really kind of, you know, strengthen it and take a look at all the policies and guidelines that we have in place. But the book is… it’s sectioned off in different categories. The first category is a board tab. And that has things in there like an organizational chart of the board, there’s biographies, Nomination Criteria and Board Etiquette, and Statement of Board Culture. And, of course, the Committee Charters are in there.
There’s also a section with TDFF history, so it’s got just a little bit of the story of the first 30 years. And we’ve also got a strategic framework. You had mentioned strategic framework. In there we have our mission and vision and values of the foundation. And at that time our three-year strategic plan, which we have put a much finer point on at this at this time.
We also have a section with Policies and Guidelines, and there’s a place for Code of Ethics, Conflict of Interest, and then Guidelines. We call them Guidelines because we want to be a little bit more flexible.
ASHLEY: We have a few different ways that we make grants. One is community-driven, you know, where we want to support just organizations that are important to the Chicagoland community. We have our strategic guidelines, which are still kind of in draft because we’re really at a new phase of our strategic focus right now. And we also have a Personal Giving Grant-Making Guideline for each of the family… each of the parts of the family are able to donate to their organizations that are important to them, and we match that up to a certain amount. And that really… I would say that that personal bucket really helped us, because it was very difficult to take a 30-year foundation that was really based in relationships and try to give back a lot of those organizations to the different family members and then have them still feel part of the foundation. So rather than just dropping those organizations, we really gave them back to the family members that were particularly interested in those. So that specific guideline has been very helpful. It’s also been a great way for family to feel a part of the foundation.
TONY: Different kinds of grant-making strategies are a great way to, again, navigating family dynamics, giving people different ways to have a voice and attach themselves to an interest of the foundation.
MARY ANN: It was a great way, also, to educate the board and the family members because we put in there event attendance guidelines. And that’s important, especially when… you know, you can’t have family members bringing all their friends to an event that the foundation is supporting. So we made those very specific, and they’re pretty black and white, and everyone understands them. We haven’t really had to go back to many of these, but they’re good. Especially if you bring someone new on, or if someone has, you know, kind of been out of the loop for a while, those kinds of things are really good to just kind of, you know, revisit every once in a while.
TONY: That’s great. Again, for the audience, if you have a donor-advised fund, then a lot of this stuff is taken care of by your donor-advised fund sponsor, but you… yeah, you even put little pieces of it in practice, like ‘How do we get together?’ ‘Who’s involved when?’ When you have a foundation or a trust or something, they need to have more things in place. So scale accordingly on your governance practices.
Let me give Mary Ann and Julie and Ashley just a quick break to breathe. I’ll put up some tips for families and advisors as they’re diving into the conversation. And then we’ll come back and finish up with some other ideas here.
So some tips for families as you’re navigating governance and family dynamics. One is, and I think you’ve heard this from Ashley and Mary Ann and Julie, stay rooted in the shared values of principles. So keep coming back to ‘Are we writing this down?’ ‘Is it going to help us live our values out, or is it somehow not tied well to what we value as a family or as a group?’
As you heard, again, from Ashley, be more inclusive than less as you’re developing these things. If the younger generations are going to have to live with in the future, they probably ought to have a voice and say, ‘That sounds right to me,’ or, ‘I don’t understand that,’ or ‘That doesn’t feel like that would work for my generation.’ So keep asking questions of people as you’re developing the guidelines and policies.
Be transparent with your advisors and those potential successors. So if you’re writing some things down or even if you’re thinking about them, it helps, as Julie mentioned, to have a conversation with your advisor and say, ‘Here’s what I’m thinking about. Here’s why I’m doing this.’ Because oftentimes the why behind your policy is as important as what you’ve written down or the why behind the governance frame framework.
Encourage lots of folks to come up with contingency plans or emergency plans. You may have a board and place that you want… committees in place, but what happens if somebody passes away suddenly or is sick or incapacitated? So go through those what-if scenarios and… or divorce, as was me as mentioned earlier… and make sure you know what you’re going to do ahead of time on that, and who might need to act on somebody else’s behalf or on your behalf as a founding donor if something happens.
And then, finally, we’ve got lots of other families through Schwab and through the National Center for Family Philanthropy. And if you live in the Chicagoland area, you can go find Mary Ann and Julie to really talk about like, ‘How are you doing things and why did you do them in certain ways?’
If you’re an advisor working with families, a couple different ways you can use the guide and the roadmap. Examples are you can do a 60-minute Zoom session or in-person session, and just help them kick off their own conversation and they can use the guide themselves. Some advisors will do like a regular quarterly or every other month meeting to help walk the family through the guide or roadmap and help them at least draft some answers. Sometimes you can use it as a client event. So if you want to get a bunch of families together to talk with each other about their governance practices and swap stories and ideas and sample practices, you can do that. And then, also, encourage advisors to develop a list of trusted specialists in family dynamics. So if you don’t feel confident in handling times where the family’s not getting along well or where there’s generational shifts, there’s lots of specialists out there who deal with family, work both in the family business side as well, as the family governance and family philanthropy side. And so reach out and make sure you know who those people are so you’re going to feel comfortable bringing them in for your clients. And, again, Schwab Charitable, National Center for Family Philanthropy, lots of larger advisory firms have these people on call.
Let’s bring Mary Ann and Julie and Ashley back on. We’ll finish up some of the ideas in the Governance and Family Dynamics Primer.
So Mary Ann maybe be thinking with you as we get Ashley back on, as a staff person, as a non-family member, what are you observing in terms of the family’s culture, the culture they’re trying to make for a decision-making? I’m interested to hear how Ashley thinks the family’s trying to put it together.
MARY ANN: Yes, it’s really important and I know that, you know, every family foundation is so different, they’re as different as every family is. So I’ve been very fortunate, though, to see how the family has worked together. Just to kind of go back a step, too, I mentioned that as we changed our strategy and really refined our strategy in the last seven years since the new board was organized, it’s very… I’ve been very proud of this family because they not only get the buy-in for our new strategy, which is in wellness and economic opportunity for the veteran community, but they not only got the support from the board, but it was important to Ashley and the family and the family board that they got the buy-in from the whole family. And they did this at the family council one year when we had decided to go in this direction. And it just felt so good to know that everybody was onboard, and it just felt good for everybody. So that’s been a great opportunity for us, especially as we hope to continue operating like that since we’re, you know, hoping to be in perpetuity as it grows.
And I’ve been fortunate, also, to do a couple big things. One is to be part of the board meeting since the beginning. That has given me the opportunity to, you know, listen and learn and present and be part of the conversation.
I guess two other big vantage points is I’m a neutral participant. I’m not a family member. And it doesn’t feel unusual for us to go into a board meeting, and we’ve got, you know, a specific agenda, and Ashley and I really work hard to stick to that agenda, and really run the board meetings very professionally. We also have our head of the family office and the senior director from the family office who join us at each meeting. And so that’s great because, you know, they’re the financial gurus and they bring a lot to the table as far as, you know, looking at our financials and our investments and all of that. But we keep things on track and with structure and professional, and I would say that that is kind of a vantage point of being, you know, a neutral outside non-family.
TONY: Ashley, you’ve been resetting a lot of things as chair of the foundation. What’s the culture you’ve been trying to create for the family, working together, making decisions together, and what is it you’re trying to pass down to that younger generation when they’re ready to join?
ASHLEY: Yes, you know, I’m glad that Mary Ann brought up, you know, kind of bringing in the entire family. And, Tony, when you talked about tips for families and you said, you know, the importance of being transparent and inclusive, that’s really what we want to do. So, to me, you could have a business, businesses. I think that our company we’ve bought and sold over 50 companies over 160 years, right? But to me, a foundation, hopefully, is going to be there for multi-generations.
So it’s very important and I hope that I have… that this is working, but it is to include everyone. So yes, we have a small subset of our family that is involved specifically with the foundation, but when we do any major strategic change, like, again, supporting veterans, once the kind of the foundation discussed that when we had a family meeting, I pitched it to the entire family, and we… it was open, and it said, this is what we’re thinking.
And, you know, it’s really important to get everyone’s buy-in, you know, and to bring people along. And I think that that is huge. And when we started the… when I took over and Mary Ann was with me, we brought in the whole family. We had a consultant, and we did a values exercise. We really wanted to… you know, to make sure that we have shared values.
And if I could just share a quick story about values. And, you know, one time as I’m sure many families have had this situation, when we had the fund 2016 presidential election. And we had a board meeting the next day, and there were family members that were really on different sides and really emotional. And then all of a sudden, family… I mean, again, our board was my grandfather, so we had three generations on the board. And all of a sudden, we became…it became very emotional. And so what we decided, and this was not just the foundation, but for the entire family, my thought was, ‘Okay, we need to bring in someone, a consultant… we’re all about consultants… someone objective to come in and talk to us about diversity of thought.’ So he came into our entire family, and he really spoke about our… you know, Julie mentioned the mission statement, the value statement. He went through that with us, and he said, ‘Okay, family, you guys have core values. That is an asset. But another asset is that you have diverse… you have diverse ideas. So embrace your core values, but also you have to… what makes a family is that there is a lot of diverse ideas, and that is important as well.’ So it really was helpful to kind of put us back on track.
So I guess being transparent, being inclusive, but, also, you know, allowing for differences and embracing that, I think, is very important to kind of keeping everyone in invested.
TONY: Every family handles those kinds of tough ideas, politics and religion and everything else differently. One of the families I worked with talked about at the root, ‘This is supposed to be a family endeavor. And so if you are bringing a grant that you know is going to blow things up, then you need to take that grant off the table and do it on your own, right? This is about stuff that we all can feel at least neutral about, if not good about in some ways.’ And so they had a sort of self-disciplined way of saying, ‘You know where the family gets tense about stuff. Don’t add to that tension.’ And it worked 90% of the time, but, you know, at least you’ve got it written down exactly. Families are families, sometimes things happen.
What else, Ashley, do you do as a board chair and a peer to these family members in terms of creating productive family dynamics and productive decision-making culture? What other tips do you have, or tools are you using?
ASHLEY: I think it is… so I’m also on the board of our… our company board. And that was… so my grandfather at age 90, he decided to kind of come back into the business. And my father had run the business for… you know, he had run it for over 40 years, and then all of a sudden, my grandfather came back out of retirement at age 90. And so I think that… a couple things. It was you have… so there’s three generations that were on both boards, and how to manage those relationships, how to remain… you know, as a chair, I have to remain very objective and not take things personally, but when you’re dealing with family, it’s very hard. And so you really have to work at trying to be as objective as you can.
And so that’s something I constantly work on. You know, we definitely have had some situations. You know, to me, what I would suggest for some families, if you do have outside members… and this is not necessarily our foundation board because Mary Ann has heard my family bicker left and right, but our regular board, our company board, we have outside directors, and we have decided as a family, the family directors, if there’s something that is very personal and emotional, we do not involve the directors. So we will take that, we will table it, and then we could go outside the board and then we discuss it.
Another thing that’s been very helpful is my father and I, after every meeting… I’m very close with my father, and I’m also vice chair of the board of our company, my father is the chair. So what we do is after every meeting, my dad and I go into his office, and we critique each other. And that’s a similar thing.
ASHLEY: Oh, yeah. And it’s… I’ve got thick skin growing up with him the whole time. And he usually is like, ‘Ashley, you said ‘um’ too many times’ or ‘Ashley, you spoke too much.’ And I said… you know, I’ll say, ‘Well, dad, you monopolize too much, and you interrupted someone.’ So… but, again, that’s all about personal growth. And then when we take our stuff, we allow… you know, try to keep it as professional as we can inside the boardroom. And, again, Mary Ann and I do the same thing. I think it’s important after any meeting, any board meeting, to make sure you allow time, hopefully, right after a board meeting to recap, rehash, and give each other positive… not positive, but, you know, honest feedback on how it went so you could constantly improve on your board meeting.
TONY: This culture of candor, then, that sort of you’re passing along amongst each other.
TONY: That’s great. Julie, what else are you seeing in some of the families you’ve been working with? How are they navigating tricky governance issues and family dynamics issues?
JULIE: This is so hard. So I think, Ashley, you’ve talked about a few things that were… I’ve heard. I think that in my… there was a situation I had with a client who came to us because he wanted to start his own philanthropy. Those were his words. He wants to start his own philanthropy. And, usually, when we start those conversations, we like to go back and understand what they’ve done in the past so we can kind of build from there. Well, his family has a foundation, and he had been at a meeting, and they had proposed a vote, and he voted in the minority. And there were comments made by other family members at the meeting to him about his vote. And I asked him, you know, ‘Did it change your mind? Did you vote differently, or did you maintain your position?’ And he’s like, ‘Well, I maintain my position, but I know that my voice isn’t important.’
And that really struck me because I feel… and you talked about this, actually, when you talked about how you deal with each other. You have structure about what our behavior is, how we manage things. You want to create a confidence in this next generation. so that they, too, have the ability to say no if they don’t believe in something and every family member has a voice. And I feel like if you’re not doing that, if you’re not creating that culture of that within your foundation, you’re creating some quiet… a quiet group of dissension possibly, and really not acting in unison.
So that culture, being able to give the feedback that you talked about, Ashley, I think is so key. And having open conversations even when they’re tough. And that’s not easy. And I’ve had so many families that will bring in a psychologist. Tony talked about bringing in your pastor. There are actual consultants that will come in and do this, like Ashley talked. There’s so many resources available, so that if you do find yourself in a situation like that, that you can work through it as a group. And that, Tony, I think that when we get to those points, we do have a list of where we will defer and reach out to clients or send them along those ways so that they’re getting the support that they need. Super important.
TONY: Julie, have you seen other families use like sets of ground rules for the decision-making or how they work together or like do you see sort of good ideas in those ground rules?
JULIE: I think one of the… is what Ashley actually mentioned, is if something gets too tense in that conversation, is stopping the conversation there, and tabling the topic and figuring out a way to work through it together. Because right then it’s probably not the best time to keep driving that point, especially if the conversation is getting heated.
And we… actually, it reminds me of a donor-advised fund situation that we had with a family, where they’re sitting around and there’s a lot of dissension about what the actual grants will be and the differences of opinion. And being able to say, ‘Okay, we all have an opinion. Let’s take a break. Those are important.’ And I think implementing and writing this down about how… when you do go through something, documenting it, right?
We have all different sizes of foundations, so there’s all different levels of what the structure looks like of development and where you are in the process. So if you do have something like this and you do encounter it, that you’re documenting how you handle it, and there’s an expectation going forward when this happens again, because it will, that you have a policy you’re following, which I think kind of goes into the thread of really having a plan and being structured.
TONY: One other story I’ll share, and then I’ll give, Mary Ann and Ashley, any other last tips you want to share with other families about sort of managing governance and family dynamics. So I was working with the family a couple weeks ago and occurs to me sort of going along with what you’re saying, Julie. Mom and Dad are in their seventies and the kids are in their forties, and like the kids to sort of take over the foundation while the parents are still living, which is great, right? They’re sort of seeding that power. But Mom kept coming back to, ‘I want us to be unified on why we’re here together, but I don’t want us to hold dear how we do it. So I want to pass on to you, generation, you and your spouse, like if you want to change how we do grants or if you want to change paperwork, that’s great. And same thing, we want to make sure that your kids have that same power.’ So don’t accidentally take over things that… and hold them dear that we shouldn’t, and focus on the whys and the values and the faith and everything else that they put together on that. So I thought it was a great way to keep coming back because they were wrestling through some of their grant strategies and how they were going to operate some things.
Mary Ann and Ashley, other tips you want to leave to other families who are watching this video before we close out?
ASHLEY: You know, I’ll just say, you know, Mary Ann touched on it before, but it was the matching bucket. So when we… I think that is… you know, so we have a strategic bucket, which is veteran organizations, that’s 70% of our giving. Then we have our community buckets, 20%. And 10% is our personal matching. And I think that… you know, Julie, thinking about that one client of yours that felt not heard, this is a way, I really think, for people… you know, again, we match up to a certain level per generation. You’re going to have with generations very different views on what you want. So if you are able to… you know, it doesn’t matter what the amount is, but if you are able to… you know, when we do our matching, it’s very important that every family gives to their community, and for them to be able to… you know, say, they wanted to give 5,000 to an organization, the foundation, as long as it’s a 501(c)3 in good standing, we will give that… we’ll match one-to-one and that family member gets credit for $10,000. So their money doubles. The foundation is not really attached to it, besides they get the check, but it’s not public. And I think that’s really a good way to… so, you know, for people that have different views they’re still being able to benefit from the foundation, and then they will almost, you know, hopefully, back the big vision a little bit more, that strategic vision.
So that matching bucket, when I joined, I was really the only one… because of my social work background, I was really the only one that was interested and kind of took a… not advantage, but utilized the foundation for my generation. And since we started the matching program, we had 100% family members…
ASHLEY: …of households doing it. And so all of a sudden people are interested when they’re able to double some of their giving, and now they’re interested in hearing a little bit more about the foundation. So that is something that I would probably… it’s been very helpful for our family.
TONY: Great. Thank you. Mary Ann, any other words of wisdom for other folks that are helping steward families through this process?
MARY ANN: Well, I mean, I think we touched upon it in our call, but I would like to just really say strengthen the benefit of, you know, leaning on others to… there’s no point in reinventing the wheel. I mean, we didn’t rewrite any of these policies. We took them and we made them work for us. And they were shared… honestly, they were shared to us by NCFP. So there’s a wonderful library with NCFP and you can get… there’s just a tremendous amount of support that is available.
Also, you know, I really believe in leaning on other colleagues who are in the same, you know, position and non-family members. There’s not many of us, but they are out there. And, you know, it’s always good to have a mentor, somebody who is in this field and understands family dynamics. So I really believe on leaning on others and networking quite a bit.
TONY: That’s great. So great pitch. The National Center for Family Philanthropy, one of the co-sponsors of the webinar, has a whole website that they call the Knowledge Center. And 90% of that is free to the public, including multiple pages of sample policies and practices. So if you need some inspiration, you can go to the National Center for Family Philanthropy and get some ideas of how other people have done a conflict of interest, or an ethics, or a next gen participation, or whatever else. And I suspect everybody then shares back to that. And if you don’t know those folks, there’s… oftentimes, philanthropy associations in different states or regions, and they’ll often keep those kinds of policies and practices around. And folks like Julie and her team do the same thing.
Mary Ann and Ashley, thank you so much for sharing the foundation’s wisdom and experience on this. Every family goes through this at a different pace and size, but I think your story is really applicable because oftentimes families are business owning families and things switch and then things switch again when a new generation takes over. So lots of good instructions and stories from you all.
Julie and I got to wrap things up here in a minute and say what else is in this series, and remind folks, again, how to get connected to everything.
ASHLEY: Thank for having us.
TONY: Thank you.
So what’s next for your family? Again, if you are interested in this governance and family dynamics tips, you can go to Schwab Charitable’s website, Schwabcharitable.org/family-philanthropy, and find all of the guides, all the roadmaps, webinars like this one. And, in fact, you probably hear a little bit about the matching grant program in the strategies webinar, little videos to help you educate yourself on what’s going on. And so feel free to use those tools and expand your knowledge and your practice of effective family philanthropy. Julie, what else?
JULIE: Well, definitely, we are a resource for you, as well. So we have existing… if you have a donor-advised fund or you work with Schwab today, you can contact us directly. We have a Donor Relations number. You’ll see that here on the screen. If you’re new and you’ve never had a donor-advised fund with Schwab Charitable, there’s a phone number to call, as well. It just those differences really are how we take you where you are and kind of take you to the next level. So we are very similar in how we work together.
Our consulting group is a tenured and experienced team that’s really focused on finding the right tool for you. So our conversations are very open. So, yes, we have the donor-advised fund. It’s something we sponsor, but we’re really looking holistically at your situation and making sure that you’re choosing the right vehicle. And so a lot of times… Tony talked about these references, these tools, we’re also sharing those with you as well and making sure you’re aware of what’s available to you.
Just please don’t hesitate to reach out. We encourage you to make contact if you have any questions, if we can do anything to help you. If you go to Schwab Charitable’s website, you can see the Strengthening Governance and Family Dynamic Guide that Tony discussed at the beginning, as well, with the roadmap. All those resources are available, as well as the video. And some amazing resources there for you. And we just really value this partnership.
And I, again, want to thank Ashley and Mary Ann and Tony for coming today and really being part of this extraordinary opportunity to share a very authentic, and I think true vision and view of what a family foundation is. And it’s an extraordinary opportunity to speak with you today, and we just appreciate it, and hope that as you move forward with your philanthropy you know some of the resources that you can get started with and just some amazing places to start.