Melanie Stern is section editor of Families in Business magazine.
The Asian tsunami drew one of the most extensive responses of any large-scale catastrophe. Family foundations do not realise, philanthropy experts tell Melanie Stern, that they are in a unique position to expedite disaster grant-making
Distasteful as it may be to discuss it frankly, the fearsome pictures beamed across the globe of events in Asia last Boxing Day, and in the weeks following it, had a potent effect on the world – illustrating how powerful media attention can be in driving charity dollars to a cause. According to the BBC, over $7bn has been pledged in total to victims of the disaster, and some reports said that many leading humanitarian charities received so much money they were considering refunding some of it, or re-directing it to other causes.
In contrast, US non-profit organisations raised some $1.2bn for victim/family support and relief services in the wake of the September 11, 2001 attacks on the World Trade Centre. Other estimates sit at $2.4bn raised in total; one could argue that the psychological effect of seeing the devastation caused on that day fuelled generosity for the estimated 1.6m displaced victims of the tsunami – and the families of the estimated 286,000 people who perished.
Disaster grant-making by foundations was one of the only areas of philanthropy to grow in 2003 (2004 figures won't be available for a while yet, and 2005 figures will be the most interesting ones). In the US, the Foundation Centre's annual report on giving trends found that year-on-year funding for disaster preparedness almost quadrupled to $24.2m. This in a year where many foundations were being courted for hand-outs in advance of last year's presidential elections; donations for public affair issues surrounding this event merely tripled, reaching $15.7m. At least foundations have their humanitarian priorities right.
The sheer devastation caused by the Asian tsunami highlighted the urgency of immediate need, and observers have since noted that family foundations in particular could have a unique edge in this regard. State-affiliated foundations and public charities are built to generate and distribute funds in an orderly fashion over the long-term, and commonly have several different people or groups to answer to in the way they operate. A foundation whose mandate is set, funded and managed by a founding family has essentially one set of approvals to seek before it can move. All it can take to make a donation to a critical cause is a quick discussion at the kitchen table. Family foundations have the flexibility not just to lead the way in disaster response, but also in philanthropic disaster management – putting that long-term view to the very best use and channelling funds to the most appropriate organisations.
"Unlike other types of foundations, family foundations are able to be flexible and very responsive to disasters," says Karen Green, managing director of family foundation services at Washington DC-based Council on Foundations (COF). "Non-family foundations may have a more rigid giving profile and grant cycle. They may only have grant-making meetings twice a year making it all the more difficult to respond to emergencies, especially if the board members are not normally local to one another. Family foundations are inherently more flexible and they can play a key part in the tsunami effort."
COF held a special session on disaster grant-making at its annual family foundation conference this February in which, Green says, many families reported they had no mandate to respond to disasters whatsoever, and top of the list of questions was how to give to this part of the world. Because they wanted to donate to the tsunami efforts with urgency, some had considered sending money out without completing the due process. "We tell our members not to feel under pressure to get a cheque out in the first 24-48 hours after a disaster occurs – but rather, to look at the medium and long-term needs. Multi-national aid agencies responded quickly to the immediate emergency, but there had been little consideration around the funds needed for rehabilitation and rebuilding," COF's Director of international programs, Rob Buchanan, tells Families In Business. "It is entirely appropriate for family foundations to hold back a little."
Perhaps the definition of 'disaster' has been re-defined by modern events, like September 11 and the tsunami, so that grant-makers' nerves – as the laymen – are sharpened to react to such mega-catastrophes. As family foundations have unmatched opportunities to be flexible, they can do this better than their non-family counterparts. But philanthropy experts warn family foundations to remember the other disasters that do not receive so much airtime because they are happening over the long-term; Darfur, Ethiopia, the AIDS epidemic, global warming – the list of those in a constant state of emergency will likely keep on growing, well beyond a time when tsunami-hit towns are back on their feet.