Philanthropic Mission Statements

A philanthropic mission statement provides structure and direction for family charitable giving. Without a clear framework, giving decisions become reactive, inconsistent, and potentially contentious among family members. A well-crafted mission statement transforms charitable intent into lasting impact across generations.

Why Families Need Philanthropic Mission Statements

Families with significant charitable assets face several challenges. Different generations may have conflicting priorities. Without guidelines, giving becomes fragmented across too many causes. Family members may feel excluded from decisions, creating resentment.

A mission statement addresses these issues by:

• Establishing shared values that guide all giving decisions
• Creating a framework for evaluating grant requests
• Providing a mechanism for involving multiple generations
• Ensuring charitable intent continues beyond the original donors
• Reducing conflict by setting clear expectations

Core Components of a Philanthropic Mission Statement

Values Foundation

Begin by identifying the core values that motivate your family's giving. These values should be specific enough to guide decisions but broad enough to remain relevant across generations.

Common philanthropic values include:

• Education and opportunity
• Environmental stewardship
• Health and medical research
• Arts and cultural preservation
• Community development
• Religious and faith-based initiatives

Document why these values matter to your family. Understanding the reasoning helps future generations apply the values to new situations.

Focus Areas

Translate your values into specific focus areas. A family valuing education might focus on:

• Early childhood literacy programs
• STEM education for underserved students
• Vocational training and workforce development
• Higher education scholarships

Limit focus areas to two or four categories. Spreading giving too thin reduces impact and complicates decision-making.

Geographic Scope

Define where your giving will concentrate. Options include:

• Local community where the family resides or built wealth
• Regional focus covering a state or metropolitan area
• National scope for issues requiring broad intervention
• International giving for global challenges

Many families maintain a primary local focus while allowing limited giving in other areas. A typical allocation might be 70% local, 20% national, and 10% international.

Giving Level and Timeline

Establish parameters for annual giving amounts and whether the family intends to give in perpetuity or spend down assets over a defined period.

Perpetual giving: The family maintains the principal and distributes investment returns annually.

Spend-down approach: The family distributes all assets over a set period, often 20 to 30 years, to maximize impact during the founders' lifetimes.

Vehicle Selection: Donor-Advised Funds vs. Private Foundations

Donor-Advised Funds

Donor-advised funds (DAFs) offer a simpler structure for families beginning their philanthropic journey or those preferring administrative simplicity.

Key characteristics:

• Minimum contributions typically range from $5,000 to $25,000 depending on the sponsoring organization
• Donors receive an immediate income tax deduction in the year of contribution
• The sponsoring organization handles investment management, grant processing, and record-keeping
• Annual administrative fees typically range from 0.60% to 1.00% of assets
• No mandatory annual distribution requirement
• Limited ability to customize investment options

DAFs work well for families with charitable assets under $1 million who want to involve family members in grant recommendations without the complexity of operating a private entity.

Private Foundations

Private foundations provide maximum control and flexibility but require greater resources and administrative commitment.

Key characteristics:

• No legal minimum to establish, but practical minimums typically start at $250,000 to justify administrative costs
• Required to distribute at least 5% of assets annually for charitable purposes
• Annual excise tax of 1.39% on net investment income
• Must file Form 990-PF annually (public document)
• Can hire family members as employees or directors with reasonable compensation
• Can make grants to individuals, not just organizations
• Greater scrutiny of transactions with disqualified persons

Private foundations suit families with assets exceeding $1 million who want to create a lasting institutional presence and involve family members in governance.

Governance Structure

Decision-Making Process

Define how the family will make grant decisions:

• Who has voting rights on grant recommendations
• What approval threshold is required (majority, supermajority, or consensus)
• How often the family meets to review grant requests
• Whether individual family members have discretionary grant authority

Succession Planning

Address how leadership and participation will transfer:

• At what age do younger family members join the decision-making process
• How are spouses of family members included or excluded
• What happens if a family branch becomes disengaged
• Who serves as tie-breaker if voting is deadlocked

Review and Amendment

Include provisions for updating the mission statement:

• Schedule regular reviews, typically every three to five years
• Define the process for proposing and approving amendments
• Specify which elements are foundational and which are procedural

Worked Example: The Morrison Family DAF

The Morrison family recently sold their manufacturing business and wants to establish a donor-advised fund with $500,000 to formalize their charitable giving.

Step 1: Values Identification

The family holds a facilitated discussion and identifies three core values:

1. Education, reflecting how the founders worked through college
2. Workforce development, honoring the skilled tradespeople who built the business
3. Local community support, recognizing the town that supported the business for 40 years

Step 2: Focus Areas and Geographic Scope

Based on their values, they establish focus areas:

• Scholarships for first-generation college students (40% of annual giving)
• Vocational training programs and apprenticeships (35% of annual giving)
• Local nonprofit capacity building (25% of annual giving)

Geographic scope: 80% within their home county, 20% within their state.

Step 3: Giving Level

With $500,000 in the DAF and an expected 6% annual return, the family establishes the following framework:

• Target annual giving: $30,000 (6% of initial contribution)
• Minimum annual giving: $25,000
• Maximum annual giving: $40,000 (allowing for market appreciation)

Projected timeline: Perpetual, with the goal of maintaining purchasing power over time.

Step 4: Governance

The Morrisons establish these governance rules:

• Voting members: Parents and three adult children (five total)
• Quorum: Three voting members
• Approval threshold: Majority vote for grants under $5,000; four of five votes for larger grants
• Meeting schedule: Quarterly, with annual review meeting in November
• Discretionary grants: Each voting member may recommend one grant up to $1,000 annually without full family approval

Step 5: Documentation

The family drafts a two-page mission statement covering:

• Family history and philanthropic motivation
• Core values and rationale
• Focus areas with allocation targets
• Geographic priorities
• Annual giving parameters
• Governance procedures
• Amendment process requiring four of five votes

Step 6: Implementation

With their mission statement complete, the Morrisons:

• Open a DAF at Fidelity Charitable (minimum $5,000, no account fees)
• Contribute $500,000 in appreciated stock, receiving an immediate deduction
• Invest in a balanced growth portfolio within the DAF
• Schedule their first quarterly meeting to review grant opportunities

Year one projected impact:

Family Mission Statement Checklist

Values and Focus

• Identified two to four core philanthropic values
• Documented the family history and reasoning behind each value
• Translated values into specific, actionable focus areas
• Established allocation percentages for each focus area
• Defined geographic scope and priorities

Structure and Giving Level

• Selected appropriate vehicle (DAF or private foundation)
• Established annual giving targets (minimum and maximum)
• Decided between perpetual giving and spend-down approach
• Understood tax implications and reporting requirements

Governance

• Defined voting membership and eligibility criteria
• Established quorum and approval thresholds
• Set meeting frequency and format
• Created discretionary grant provisions if appropriate
• Addressed succession and next-generation involvement

Documentation and Review

• Drafted formal mission statement document
• Distributed to all family members
• Scheduled regular review periods (every three to five years)
• Established amendment procedures
• Stored document securely with other estate planning materials