This article originally appeared on the Wisconsin Philanthropy Network blog, and is republished here with permission.
A family or a company foundation is not required to have a mission statement, purpose statement or grant guidelines. There is no legal requirement to have any of these types of documents (the governing document must limit the foundation’s purposes for charitable, educational, religious, or scientific, etc., but that’s very broad).
Whatever it is called, some sort of statement to guide the foundation’s giving can be useful:
- For a family foundation, if a primary donor passes away and the foundation will still have significant assets, it will be important for the directors/trustees who will make future funding decisions to have some guidance as to how to make grants with the donor’s funds (this is known as “donor’s intent”). A mission statement for the family foundation can also be a good way to transmit family values to younger generations.
- For a company foundation, it may be important to communicate to employees, vendors, clients, and other third parties about the company’s good works.
- For all foundations, a statement can be a good communication to potential applicants about whether the organization should apply for a grant (or whether its time should be spent elsewhere).
Oftentimes, mission statements or policies are full of soaring language. This can be good for some purposes. But, if there is a need to provide guidance to grant-making (either current or future decision-makers), some aspect of the statement or policy should set forth the organization’s views, principles, and intentions in a way that can usefully guide future grantmaking. Often, mission statements are written too broadly to actually provide practical guidance in decision-making. The key is to draft some sort of policy that provides concrete guidance about which grantees to fund or not to fund—that is, some organizations are “in” and some are “out.”
There are a number of “touchstones” to provide a more specific guide for grantmaking. Some examples include:
- Geography. The mission statement could state that the organization will focus its efforts primarily in some defined geographic area.
- Causes/Interest Areas. The mission statement could specify one or two areas of interest, such as arts, education, health care, or social services. A good mission statement is specific: “performing arts” is better than just “arts and culture.” “K-12 schools” is better than just “education.”
- Goal-Oriented. The organization may want to focus on the goals and outcomes that you hope to accomplish by grant-making. Instead of simply determining which organizations should receive a grant, the mission statement could describe the organization’s larger goals. Future decision-makers would have to evaluate the best way to meet these goals with available resources; this may result in more targeted or specific grants along these lines.
- Philosophy. A mission statement could contain a more specific view as to your philosophy toward making philanthropic gifts. Some foundations want to focus on more “entrepreneurial” or sustainable non-profits. Or, the organization may wish to focus on “capital” grants or starting new programs as opposed to continuing operating grants.
- Family Involvement. A mission statement could state that the foundation’s focus is on having family members involved in philanthropy (and the foundation should make grants based on family members’ interests and passions).