1. At Your Discretion An introduction to the use of discretionary grantsin family philanthropy. Copyright 2010, National Center for Family Philanthropy. www.ncfp.org All rights reserved.

7. Defining Discretionary Grants Grants made at the discretion of individual trustees or other authorized individuals, without the standard approval process and/or review by the full board. Discretionary authority may be given to staff, for example, to respond to emergencies that arise in the community that cannot wait for the next board meeting.

8. Discretionary Grants: Board Review Process Board Review Process for a Typical Grant Board Review Process for a Discretionary Grant

9. Who uses discretionary grants?

10. Yes… Absolutely!

11. YES: To encourage the ongoing participation of geographically dispersed boards. “Discretionary funds help all of our trustees to connect with their local communities, and with issues they are passionate about.”

12. YES: To help boards with basic ideological differences among board members. “Discretionary grants – as a portion of the grantmaking budget – provide a flexible mechanism for trustees to support organizations or programs that have more meaning to them personally than to the rest of the board, and therefore would be unlikely to receive funding from the general grants budget.”

13. Caution! Using discretionary grants to deal with ideological differences can backfire… “If half of the trustees have a keen dislike for an organization and one trustee wishes to support that organization, it may be better for that trustee to make a personal gift rather than one in the name of the foundation.”

14. YES: To encourage and deepen trustees’ interest in philanthropy and specific issue areas. “Sometimes our trustees become so intensely involved in the details of their philanthropy that they lose sight of how enjoyable it can be to give money away, and discretionary grants are a good way to help trustees have some fun while fulfilling their responsibilities.”

15. TIP: Consider the use of matching grants in lieu of discretionary grants. Match board member gifts to defined level Helps trustees to leverage personal philanthropy Encourages additional personal philanthropy Matching grants in family businesses may help non-family staff feel more connected to the family and it’s philanthropy.

16. YES: To recognize outside board and volunteer service. “It is important to establish a process that recognizes each trustee fairly. What do you do when one trustee serves on four outside boards, while others only serve on one? Give them four times as many discretionary grants?”

17. YES: To allow for quick turnaround and response to natural disasters and local emergencies. “Discretionary grants are incredibly. Valuable if they are used for good grantmaking, and are clearly used to support the mission and purpose of the foundation.”

18. YES: To train new or future trustees in the work of the foundation and the grantmaking process. “Discretionary funds can be used as a way to “train” new and future trustees in how to make grants – although this can only be accomplished if there is some structure to the discretionary funding process.”

19. Then again, maybe not…

20. COMMON CONCERNS: Ensure that legal requirements for grant oversight are met. Like all grants from a private foundation, the Board of Directors as a whole is legally responsible for approving any and all discretionary grants made by individual trustees or staff.

21. COMMON CONCERNS: Ensure that individuals do not receive any benefit from discretionary grants. “When we developed our matching grants program, it was important to make it clear to both the participants and to the beneficiaries that there should be no benefits received by the individual who makes the qualifying gift.”

22. COMMON CONCERNS: Ensure that the foundation’s mission and guidelines are clear. “Discretionary grants should have guidelines wrapped around them; otherwise the foundation may send out mixed messages to the community and the grantees.”

23. COMMON CONCERNS: Ensure that the trustees’ primary focus is on shared goals of the foundation. “While I would love to have money from my family’s foundation to direct or match my gifts to some of my favorite charities, I think it is more important to maintain the foundation’s integrity and purity of focus.”

24. [THE BIGGEST?] CONCERN: Be prepared to deal with an expanding number of requests for discretionary funds. “I do not favor allocating the total grant budget by branches of the family and calling that discretionary. That is simply creating ‘mini foundations’ under a common name and check writing system.”

25. Establishing a DiscretionaryGrants Program Establish the process Clarify expectations of the board and family: written policy on eligibility, limits, Clarify expectations of grantees and community: grants letter and public descriptions Evaluate and refine as needed

26. Conclusion: Remember to watch for… Requests to increase discretionary grant pool as percentage of overall grants budget Any form of benefit received by trustees as a result of discretionary grants Requests from non-board family members Grants that are contrary to mission of organization Grants that result in criticism or acrimony from other board (or family) members

27. Read more… The following resources are available from the National Center for Family Philanthropy at www.ncfp.org Discretionary Grants: Encouraging Participation or Dividing Families? Grantmaking with a Compass: The Challenges of Geography The Trustee Notebook: An Orientation for Family Foundation Board Members

29. Understand and meet their governance and management needs; and

30. Have a significant, positive impact on the lives and work of those they support. The National Center is a nonprofit, 501(c)(3) organization.