We are in the midst of the largest generational transfer of wealth in history, with $84 Trillion expected to transfer over the next several decades in the United States alone. Whether the result of inheritance, business merger or sale, or other large liquidity event, many foundations will find themselves doubling, tripling, or quadrupling in size.
Anticipating a large infusion of assets can be an exciting opportunity to expand your reach and make a greater difference in the communities you serve. It can also feel overwhelming, sending you hiding under the covers. Don’t fear! With thoughtful planning and an abundance mindset, you can successfully manage this philanthropic boom and dramatically increase the clarity and impact of your giving.
Below are 10 key considerations for foundation executives, trustees, donors, and family offices in preparation for a significant increase in philanthropic assets. By addressing these considerations, you can ensure that your organization is well-positioned to effectively manage and deploy the additional resources for maximum impact.
1. Strategic Planning
Review and update your foundation’s strategy to align with the increased resources. Consider how the infusion of assets can enhance and expand the foundation’s existing program areas and causes. Determine if you want to add additional funding areas and explore new possibilities that were previously out of reach. This is an opportunity to think creatively and consider what is now possible with the increased resources at your disposal. Engage with key stakeholders, including staff, board members, and community partners, to gather input and ensure that your strategic planning process is inclusive and reflective of diverse perspectives.
2. Grant-Making Strategy
Your grant-making strategy will likely need to evolve to reflect the foundation’s increased resources and refreshed strategic plan. After all, tripling the assets will mean tripling your grant-making budget. Consider how the infusion of assets can support innovative approaches, partnerships, and collaborations to maximize impact. Explore opportunities for strategic partnerships and collaborations with other funders, organizations, and government agencies as part of your grant-making strategy. By leveraging collective resources and expertise, you can address complex social challenges more effectively.
Also, consider implementing or expanding best practices such as offering general operating support, grants to strengthen the capacity of nonprofits, multi-year grants, grants to support policy advocacy and systems change, and program-related investments to diversify your grant-making portfolio and increase the sustainability and impact of your funding.
3. Capacity Building
Assess the foundation’s current organizational capacity and identify areas where additional or improved infrastructure, systems, processes, and structures may be needed to effectively manage the increased assets and expanded programs. This could include grants management systems, technology upgrades, enhanced data analytics and evaluation capabilities, internal communications tools, and professional development programs. By investing in capacity building, you can ensure that your organization has the necessary tools, resources, and expertise to maximize the impact of your philanthropy. Engage with staff, board members, and external consultants to conduct a thorough assessment and develop a comprehensive plan for building and strengthening your organization’s capacity.
4. Talent
Assess your talent needs to effectively lead, manage, and implement your new strategy, increased assets, and grant-making budget. Evaluate the talent you currently have and consider if they are still a good fit for the organization’s expanded scope. Identify opportunities for promotion, training, or professional development to support your staff in their new roles. Additionally, consider if there is a need to hire new talent or engage consultants to bolster your capacity as you grow. A robust talent strategy is essential for attracting and retaining top talent, fostering a culture of innovation and excellence, and ensuring the long-term success of your organization.
5. Office Space
Evaluate your physical space needs in light of the anticipated growth of your organization. If you are working in person in an office, consider whether you need to expand your office space to accommodate the increased staff and resources. Alternatively, explore the possibility of shifting to remote or hybrid work options to optimize your resources and adapt to changing work environments. Consider the potential benefits of flexible work arrangements, such as increased productivity, cost savings, and access to a broader talent pool. Assess your current lease or real estate agreements and engage with experts to explore suitable options that align with your organization’s needs and culture.
6. Governance and Board Composition
Evaluate the foundation’s governance structure and board composition to ensure it remains effective and representative of the foundation’s mission and goals. Consider whether additional board members or advisors with relevant expertise should be added to strengthen decision-making processes and oversight. Assess whether your current board members have the talent, expertise, and experience needed to effectively lead the larger foundation. Gracefully exit any board members who may no longer align with the organization’s vision and actively seek diverse perspectives and backgrounds to enhance the board’s diversity and inclusivity. Conduct regular board assessments and engage in strategic board development to ensure the ongoing effectiveness and relevance of your governance structure.
7. Financial Management and Investment Strategy
Review the foundation’s financial management practices and investment strategy to ensure they are aligned with the increased assets. Engage with financial advisors to plan for the transfer, optimize investment returns, and manage risks. Consider implementing mission-related investing to align your investments with your philanthropic goals. Evaluate your current investment policies and explore opportunities for impact investing or ESG (environmental, social, and governance) investing to generate both financial return and social or environmental impact. Regularly monitor and evaluate the performance of your investment portfolio and engage in ongoing dialogues with your investment advisors to adjust strategies as needed.
8. Stakeholder Engagement and Communication
A comprehensive communications plan needs to be developed to transparently share information about the increased asset size, refreshed strategy, and organizational changes with key stakeholders. Foster open dialogue by creating dedicated channels for stakeholder feedback and input to ensure programs remain responsive to community needs. Leverage multiple platforms like social media, newsletters, and events to disseminate updates, report on progress transparently, and share success stories. Engage stakeholders directly in decision-making through advisory committees and collaborative forums. Incorporate stakeholder perspectives to ensure the foundation’s philanthropy remains community-centered and impactful.
9. Diversity, Equity, Inclusion, and Belonging
Prioritize diversity, equity, inclusion, and belonging in all aspects of the foundation’s work. Review and enhance policies and practices to ensure equitable access to funding opportunities and representation in decision-making processes. Incorporate diversity, equity, and inclusion principles into your grant-making processes by actively seeking out and supporting organizations led by underrepresented communities. Consider establishing funding initiatives that specifically address systemic inequities and promote social justice. Engage in ongoing learning and training to build your organization’s capacity to address diversity, equity, and inclusion effectively. By embedding these principles into your philanthropic work, you can contribute to a more equitable and just society.
10. Succession Planning
Evaluate the foundation’s leadership and develop a succession plan to ensure smooth transitions and continuity in the event of key personnel changes. Identify potential successors and invest in leadership development to cultivate a pipeline of talent within the organization. Succession planning is crucial to maintain stability and sustain the foundation’s impact over the long term. Engage in ongoing conversations with key staff members and board members to identify their long-term career aspirations and provide opportunities for growth and development. Consider external leadership training programs and mentorship opportunities to nurture emerging leaders. Regularly review and update your succession plan to adapt to changing circumstances and ensure a seamless transition of leadership when the time comes.
Anticipating a large infusion of assets presents an exciting opportunity for executive directors, boards, and donors to expand their philanthropic efforts and make a greater impact. While these are not the only considerations, this list will get you started. Remember, each foundation’s journey is unique, so adapt these steps to your specific circumstances and goals. With thoughtful planning and strategic decision-making, you can leverage the infusion of assets to create lasting change and advance your organization’s mission.
Want to secure your philanthropic future? Register for the Wealth for Good: Strategic Philanthropy Planning For Ultra-High-Net-Worth Families or The Simplified Succession Plan: Your Foundation’s Untapped Superpower virtual workshops.
