Publication Date: April 9, 2010
Authors: Shelly Banjo
Caroline Cummings Rafferty, 29 years old, is being groomed to help run the $235 million Max M. and Marjorie S. Fisher Foundation. But for now, she is running a tiny $1 million foundation and making gifts of a few thousand dollars to charitable organizations.
Ms. Cummings Rafferty reflects the struggles facing family philanthropists – one old problem and one new: How do parents foster proper stewardship of family foundations among their children? And with an economic downturn racking charitable giving, how do heirs manage to do more with less?
U.S. foundations lost nearly $150 billion in assets in 2008, or almost as much as they had given away during the four years prior, according to the Foundation Center, which tracks information.
Facing a brutal environment, parents have to be especially diligent in imparting skills their children need to carry on the philanthropic tradition. Some, like Ms. Cummings Rafferty’s family, set up mini-foundations with smaller amounts of money for their heirs to manage. Some parents direct 70% of foundation grants while the remaining 30% go to charities the kids choose. Other families are forming junior boards of directors or foundation committees, where children are put in charge of individual tasks such as developing a foundation Web site.