SDG Family Ties Newsletter August 2009

Several cases involving donor intent have made national news in recent months. Three of the country's leading animal rescue organizations are pursuing legal action against the trustees of Leona Helmsley's estate. In what they are terming the most significant financial litigation in animal welfare history, the groups are seeking to force the Helmsley Trustees to follow Mrs. Helmsley's expressed intent to help dogs. In another noteworthy case, The Robertson Foundation will be dissolved as part of a settlement with Princeton University that ends a six-year landmark donor intent case.

Navigating the legal and personal agendas of donor intent is an ongoing dilemma for family foundations. The donor's wishes are the chief factor in creating the foundation's mission and vision, however, they can also lead to ambiguity, uncertainty, and disputes among future generations of trustees. If the donor establishes a foundation with strict instruction for the use of funds, new generations of trustees may see the money as being locked into use for redundant causes. If intent is non-specific or not known, the ethical option may be to observe the donor's life, hobbies and politics - but this can be subjective and cause divisions among trustees. If the trustees did not know the donor, each generation of trustees will need to balance its need to honor the founder's wishes against changing times and leadership. Many new founders are making their wishes more flexible, giving future generations the decision-making authority determine an appropriate use of the fund in changing times.

A number of issues impact the decision-making abilities of family foundation boards, including respecting donor intent. In Inside American Philanthropy, Waldemar Nielsen outlines "widespread and consistent" disputes related to the special circumstances involved with mixing family and philanthropy, including: clashes of values, philosophy and politics; power struggles between siblings; or the refusal of the older generation to hand over the reins. Conflict management and family dynamics are part of life in a family philanthropy. Yet of course, other family qualities - such as affection, loyalty and healthy competitiveness - can also be harnessed to strengthen the foundation's effectiveness.

When family foundations face these difficulties, often consultants or advisers are hired to lend a fresh point of view. While an 'outsider's view' can be of great benefit to the foundation, many also feel that advice from outside must be managed carefully so that it does not compromise the aims of the board or original donor intent. Paid staff members, on the other hand, can feel like intruders into family foundations, hindering their contribution of potentially beneficial insights and knowledge. At the same time, paid staff in some foundations have objected to being treated as 'servants' whose decisions and advice will ultimately be overridden by family preferences.

In the end, the responsibility of carrying out donor intent lies with the board, staff, and advisors at each family foundation. Continuing this conversation will ensure that family foundations remain relevant and effective in achieving their desired goals for generations to come.