Approximately half of the 10,000 foundations in Canada are family foundations. They differ from public foundations in two important ways. Firstly, unlike public foundations, family foundations are not established to raise money from the public at large. Instead, the capital used to establish the foundation comes from one person or one family. Secondly, the majority of board members can be, and often are, related through blood or marriage. Conversely, trustees in public foundations must absolutely be at “arm’s-length” from one another meaning they can’t be related.
There is a wide range of family foundations. Some are small organizations with no staff, almost no endowment and who make donations based on yearly transfers of wealth by a family member. Others have significant endowments, numerous staff and run their own programs in addition to their granting activities.
Donations from family foundations can either come from the investment income generated by a large endowment or from annual or periodic transfers of money from the family to the foundation. Many of the today’s largest private foundations were established by a large initial endowment. The foundation’s philanthropic interests will typically reflect the values and personal interests of the founder(s) who endowed it. Although the foundation’s focus can change over the years, it seldom happens.
For various reasons, most family foundations tend to keep a low profile. Many won’t have a website, so knowing what they fund and obtaining granting information can be challenging. Furthermore, some tend to take a more proactive approach to granting, meaning they will not accept unsolicited applications. Instead, they prefer to conduct their own research on charities and will invite those which interest them to submit a grant proposal. Obviously, this poses a challenge for charities that want to obtain funding from these foundations. They will have to invest a significant amount of time and effort in order to get on the radar screen of family foundations active in their sector. Exactly how you identify which family foundations to approach and how you go about approaching them will be the topic of future blog posts.
Ligia Peña, M.Sc., CFRE, President of Diversa Consultants, has more than 10 years of experience in fundraising and communications and has collaborated with a variety of charitable and non-profit organizations ranging from the community to international development groups. Ligia’s company, Diversa, specializes in helping small and mid-sized charities with their fundraising and communications.