Family Foundation Response to Community Crisis

For this year’s Philanthropy Northwest Spring Conference I was invited to join a panel discussion on how family foundations have responded to community crisis, and how they can be prepared for crisis in the future. In the wake of the September 11, 2001 attacks on the United States, philanthropy everywhere has been affected to some degree, and family foundations, including the KLeo Foundation, are no exception.

The Foundation

The KLeo Foundation is a small, even ‘tiny’, family foundation. There are two principals, “K” (Kathy, my wife) and myself, “Leo” Notenboom. There is no additional staff. The foundation has less than $1,000,000 in assets, and distributes roughly $75,000 in grants annually. Originally I was somewhat intimidated by the small size of the foundation in comparison to the more visible “big guns” of family philanthropy. It turns out, however, that one third of Philanthropy Northwest foundations are of similar size, with less than $2,000,000 in assets. We are definitely not alone, and as I’ll discuss, I believe represent an important and powerful force in community philanthropy.

One of the fun things about a small family foundation is that you get to do things for fairly arbitrary reasons. Many family foundations, for example, will time their annual grant decisions and check writing to occur over the Christmas holidays – often as a family event, or taking an opportunity when the foundation principals would all be together anyway. We decided that it might have a little more impact to distribute grants outside of the Christmas season, when recipient organizations are traditionally lower on cash, so the KLeo Foundation cuts its annual grant checks on my birthday.

Unfortunately in 2001, we ended up spending my birthday elsewhere, so elected to cut the checks the following day instead.

My birthday is September 10th.

All KLeo Foundation annual grant checks for the year were dated September 11, 2001.

September 11, 2001

On the morning of September 11th, I found myself watching TV, mining the internet, attempting to follow the horrific events of the day – with the foundation checkbook in front of me. The magnitude of the event was obvious, but the question that by now every philanthropist was thinking was – how to respond to this disaster?

Our first reaction was immediate; quite literally on the day of the attack. We elected to slightly rebalance the grants that were to be made that day. The Red Cross has been an annual recipient since the foundation’s inception, and their grant, made on September 11th, was increased by 1/3rd. Unfortunately, as other donors were also going to do over the coming months, the funds were shifted from another area, and another recipient’s grant was decreased. The net effect was that there was no total dollar increase in our annual grants, which represented a painful challenge.

The magnitude of the nationwide response to the events of September 11th was unanticipated. The amount of money that was raised and donated to support the victims and support organizations affected by the disaster was quite amazing. As time went on, however, it was clear that this was money that had been shifted away from other charitable endeavors, much as we had done. The local non-profit community was beginning to feel the effects as their own charitable income dropped precipitously.

As it turns out, the Seattle Red Cross did a very smart thing. As is the foundation’s way, we rarely designate an explicit intent for our grants, allowing the recipient organization the flexibility to apply the funds where most needed. Because of the overwhelming response to 9/11, the local Red Cross acknowledged our donation with a question: would we like our funds to be applied to the local community, or be directed to the relief efforts in New York?

Thus our second reaction: it was apparent that local organizations were suffering as funds were being sent to New York, so we directed the funds to be used locally.

The fact that local organizations were in need was well publicized in local media. In addition, the economy, already in a downturn before September 11th, continued to falter and government funding was beginning to dry up. This put local social service and other organizations in the position of having to deal with what can only be described as “crisis on top of crisis”.

Our third reaction was to respond to this need with an out-of-cycle grant to Hopelink, an eastside provider of human services. I was later to find out that in fact they were close to selecting which programs to cut, and had already been cutting some staff related expenses. Fortunately we were evidently not alone in our reaction, and as a result, no programs were cut.

Strengths and Weaknesses at Times of Crisis

Family foundations, especially smaller foundations, are often referred to as “nimble”, and The KLeo Foundation is a great example.

With only two principals, communication was simply a non-issue. (At least within scope of the foundation 🙂 ). The foundation’s initial reaction was immediate – even before all the principals were out of bed. This speed, this nimbleness, this ability to respond quickly, represents one of the most important strengths of the small family foundation.

However, being nimble can be both a blessing and a curse. With only two principals, there are fewer checks and balances – it’s easier to make a fast emotional response, rather than perhaps a more appropriate thought-out one.

The advice I give is simply this: stay true to your foundation’s vision or mandate.

This can be difficult. We turned down a friend who is principal of a vocal ensemble. His organization was suffering from the downturn in local funding after September 11th. However supporting the arts is not part of The KLeo Foundation Mandate.

But, perhaps more importantly, it can also be an invaluable guide. Crisis response was actually never a consideration at the time the foundation was created. However, both at the initial event, and subsequently, the reactions we chose clearly fit within our mandate. That not only helped us to support those reactions, but in fact helped us to determine that we should react, and how. Continuing to support your mandate through community crisis, and perhaps tailoring the support to the crisis at hand, can perhaps be considered the most important direction a small foundation can take.

The family foundation can play a key role in local community reaction to crisis – by holding to its mandate, by reacting quickly, and by using that unique ability to be nimble to provide community support when it’s most needed.

This article was derived from speaking notes prepared for the March 18, 2002 Philanthropy Northwest Spring Conference session: Family Foundations: Responding to Community Crisis.