From Private Foundation to Donor Advised Funds: A Family’s Journey
Private family foundations with storied names — think Rockefeller, Walton or Gates — grab headlines for their major grants and global initiatives. Yet the United States is home to more than 40,000 family foundations that support all kinds of causes.
For decades, Dan Gibbs, a retired neurologist, and his two sisters ran a private family foundation established by Dan’s mother in 1981. The Sarah A. Stewart Foundation — named after Dan’s great-grandmother — was established with the intention of creating a lasting legacy of philanthropy for Dan and his sisters.
Family foundation administration such as accounting, federal filings and audit preparation often fall with family members — people balancing administrative tasks for their foundations with careers, parenting, health challenges, and other life demands. As time passed, Dan and his sisters realized that the administrative demands of their family foundation detracted from their true passion for charitable giving.
Dan also had another concern: succession. The family foundation didn’t provide a process for setting up the next generation of advisors and was lacking other details that would have required legal updates.
As the landscape of philanthropy evolves, many families with private family foundations are choosing to convert to donor advised funds (DAFs) — often managed by community foundations like OCF — as powerful, flexible tools for effective charitable giving that free families from administrative duties.
“As the three of us got older it became more and more of a burden to keep managing the foundation, and finally in an attempt to look at our options, we got together with (attorney) Penny Serrurier at Stoel Rives,” explains Dan, who managed the process of converting his portion of the family foundation to a DAF with his wife, Lois Seed.
“When Dan and Lois first approached me about making a change they were thinking they might just dissolve it and walk away. As we talked through some of the options, they realized there were better choices for them, and that their legacy could continue using an advised fund,” says Penny Serrurier. “OCF rose to the top of the list right away. When they had a conversation with the fund advisors at OCF, they called me back and said this is the path they wanted to take.”
Dan and one sister each established their own DAFs at OCF, while the other sister converted her portion to a DAF at a San Diego-area community foundation. The move allowed each to concentrate on maximizing the impact of their gifts.
Because the family foundation was based in California and administered in Michigan, the process to dissolve the Sarah A. Stewart Foundation took a year. But both Dan and Penny describe the process of establishing the OCF fund as seamless.
“I should say that that my sisters were both quite happy with the outcome. Everyone realized something had to be done. I think there was an initial kind of feeling of family loyalty or nostalgia — or something about losing the Sarah A. Stewart Foundation, but it worked out,” Dan says.
Lois adds, “It was a relief to be able to turn all the management over to OCF and just let them take care of everything.”
With their DAF, Dan and Lois plan to support the same types of causes they funded with the family foundation: education, medical research, arts, libraries and support for people experiencing homelessness.
They name their children and grandchildren as successor advisors and are beginning to involve their children in grant selection this year.
Added benefits of working with OCF, Dan says, include the ability to choose OCF’s social impact pool for investing the DAF balance, and using a web interface to make grant selections. “I find the website, the donor portal, very easy to use. And that’s saying a lot because I have no patience for technology that’s hard to use.” Dan says.