On the Precipice: Managing Growth

By: Darcy Addison, Partner and Advisor

Recently, several families and foundations have asked us to help them create a plan for “managing growth.” Meaning, as their assets double (and in some cases triple), how will their philanthropic endeavors increase as well. Growth is an exciting “problem” to have, but can also mean an identity shift as well.

Questions immediately emerge, such as:

  • Do we support more organizations? Or double the size of our grants? 
  • Do we make more multi-year commitments? 
  • Do we expand our grantmaking priorities to include more issue areas? 
  • Do we expand our geographic footprint?
  • If we have limited capacity, how do we handle a larger portfolio? 
  • How do we adjust our measurements for impact/success?
  • Do we need to hire an advisor, or potentially staff?

The most interesting part of the discussion is that they are all preparing for a “someday scenario.” These families (and some foundation staff) are being thoughtful and intentional about how to create a concrete plan today for a future that will most certainly happen….someday.

That’s why at GPA, we created Stratlas, an impact reporting tool – and holistic way to visualize the data. Stratlas tells you where you’ve been and where you’re headed – and can be used as a tool for predictive modeling of your philanthropy. (For example, if your assets are growing, what would your portfolio look like if you considered funding a new issue area? Or change the percentages of what you fund? What would it take to truly move the needle in one area?) An article in Candid, “Growing Pains & Possibilities: Planning for Growth in Your Foundation poses an innovative idea: “what if you could “set aside a portion of funds…to serve as a laboratory, enabling the foundation to experiment with promising programs before making a more significant or enduring commitment?” 

We see families standing on the precipice – of who they are now – and who they can (or want to) become. Putting a plan in place today is a sure bet, like taking out an insurance policy on your car for your 16-year old. You would never let them drive without insurance! So, why would you not plan ahead for a wealth event that you know is on the horizon? Often, it’s the sudden sale of a business, receiving an inheritance, or an IPO that creates new capacity for major charitable giving. As we’re seeing with the “Great Wealth Transfer,” these events catalyze donors to restructure assets, maximize tax benefits, and potentially accelerate large philanthropic donations.

We’re also seeing clients grapple with:

  • When assets grow significantly, the strategy often needs to move from responsive giving to proactive leadership.
    • Ask: Will our current mission statement still fit this foundation when it’s twice the size? Or is it time to narrow our focus to deepen our impact?
  • Growth in assets often overtaxes human capacity. If you don’t want to hire staff, you might need to rethink your model of giving.
    • Ask: How much of our time do we want to spend on this, versus hiring trusted advisors?
  • It’s easy to get caught up in the “busy-ness” of giving out more grants. Growth is the perfect time to define what success actually looks like.
    • Ask: As our giving grows, how will we measure where our dollars are having our intended impact?
  • Increased wealth and visible giving often bring a flood of unsolicited requests.
    • Ask: How will we maintain our privacy and our ‘philanthropic joy’ when the volume of requests multiplies?

There’s no one-size-fits-all for families to tackle these issues. However, working with experts in the field can help you navigate these tricky situations. In our role as philanthropic advisors, we often act as the connector between your philanthropic vision and the rest of your professional team. We prefer to sit at the table with your CPA to ensure your giving is as tax-efficient as it is impactful. We are happy to coordinate with your Trust & Estate Attorneys to ensure your donor intent and legacy intentions are ironclad yet flexible enough for future generations. And we work alongside your Wealth Advisors to balance your liquidity needs with your charitable commitments.

Addressing growing pains in a family foundation with significantly increased assets requires shifting from an informal, ad-hoc operation to a more structured, professional entity. Key strategies include: 

Not having a plan is like getting caught in the rain without an umbrella. Just a little foresight (and checking the weather) can alleviate a host of issues, before they arise. Don’t wait for the “someday scenario” to arrive before you’ve built the infrastructure to handle it. Our friends at NCFP report that “Planning for growth today ensures that when the influx of assets occurs,” you aren’t scrambling to manage the “business” of giving – instead you are experiencing the joy in your philanthropy.

About Grant Philanthropic Advisors:
We’re an independent firm helping clients to focus and maximize their philanthropy—in turn, strengthening the fabric of our communities. Founded in 2019, we help donors move from responsive patterns of giving by assisting clients to identify values and become more strategic in their philanthropy. Our goal is to help donors to become more effective as change-makers. We work with foundations (large and small staff teams), donor advised fund holders, multi generational families, individuals, philanthropy supporting organizations and corporations to design philanthropic strategies.

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