What does the future look like for family foundations?

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By John Stone, philanthropist and entrepreneur 14 July 2022

For 20 years NPC has been helping philanthropists and charities to maximise social impact in the lives of the people they serve. To mark our 20th birthday, we’ve been talking to leading figures and people doing things differently to ask: Where next for social impact?

The following is an edited interview with NPC’s long-term client, John Stone, who set up the Stone Family Foundation with his late wife Vanessa in 2005, on the future opportunities and challenges for family foundations. Parts of this interview were originally recorded for Bright Talk. Opinions are the interviewee’s own.

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Can you tell us about why you set up the Stone Family Foundation?

I sold my financial services business in 2004, which gave me more wealth than I ever imagined or knew what to do with. We had no plans to spend the money on a lavish lifestyle and we did not think that we would do our children a great favour by leaving them a fortune. So decided we would use this money to try and help other people. We set up a charitable trust and endowed it with funds.

As we did not have a passion for any particular cause, we didn’t know where to start! Fortunately, we were introduced to NPC, who asked us lots of questions to try and tease out what would be of interest to us. With NPC’s help, we put together a “pilot (or learning) portfolio” comprising ten projects in ten countries in three sectors: Microfinance, water and sanitation (WASH), and education for girls.

Having visited all of these 10 projects, the sector which really appealed most was water and sanitation. The need is enormous and the impact of not having safe water and hygienic sanitation is devastating, with girls having to spend hours going off to fetch water early in the morning rather than being in school.

Most importantly, I saw we could make a difference. Traditional solutions were not working, so I could see a great opportunity for us to support innovative new solutions which can be truly sustainable. We call them “market-based solutions”. They are sustainable because people pay for their safe water (or sanitation), and this generates the funds to pay for the maintenance of the systems that provide the services.

There is a clear role for new innovative solutions. The social enterprises developing these solutions need risk capital to scale up their pilot schemes. That is our niche. We have built a team of experts to provide extensive support to help these enterprises become more effective. We are very hands on and personally involved; in rather the same way that private equity investors provide not only capital but valuable business advice.


You combine grants and impact investments in your approach. Can you tell us more about why you do this? Does it change how you measure impact?

One of our successes is developing innovative finance solutions. Having decided in principal that we would like to support an organisation, we then try to work out the best form of finance for them. Our preference where possible is debt of one form or another; the obvious advantage is that it gets repaid so the money can be used time and time again, whereas if it’s a grant then it’s gone.

Our approach is to intelligently tailor the right funding for each project. This could be a grant, debt or even equity.

As any professional investor would do when considering a potential new opportunity, our No. 1 criterion is the quality of the management. We then evaluate the business plan to measure the social and transformational impact that it could achieve, in order to ensure the maximum social return for every pound we invest or donate.


Looking ahead, where do you see opportunities for family foundations?

Most entrepreneurs have been successful because they have identified and exploited a niche market opportunity; they’ve done something different. The approach of our foundation has been exactly the same – to identify “game-changers” that can achieve transformational impact.

One of the great advantages that family foundations have is that as it is family money, we can take risks if we want to, whereas if you are spending other peoples’ money, you have to be much more cautious and risk adverse. That is why we take the position on our WASH portfolio of providing risk capital. Of course, not all risk investments are successful. We accept this as the price to pay to support exciting new innovative developments.

We are also great believers in co-investment. Partly because it avoids the organisation being over-dependent on a single funder, but also because we learn from each other and share ideas. Co-investing makes life more interesting and accelerates your knowledge base.


What are some of the barriers?

To achieve fulfilment (and fun!) from a family foundation you have to prepared to commit time. I spend about 30% of my time on our foundation. Unless you have a passion for a particular cause, it requires patience to find your niche opportunity. It’s unlikely you are going to achieve miraculous short-term results – life generally is not like that! That can be a barrier – you’ve got to have the patience and perseverance.

It has taken me 15 years to identify the specific niche opportunity on which we now plan to focus on in the future – supporting financially sustainable enterprises which provide safe water to the homes of low income households in Africa and SE Asia by way of piped water networks and household connections – in stark contrast with the traditional approach which requires families (usually girls) to fetch water from “water points” in jerry cans.


What do you think the next generation of philanthropists might do differently?

A family foundation creates a wonderful opportunity to involve family members in a common cause.  For example, our son, Charlie, is not only a trustee; he also now manages a portfolio of projects which help disadvantaged youths in the UK – this was his initiative, developed by him with our encouragement.

Looking at the bigger picture, more wealth has been generated in the last two decades than in any time in history, mostly by successful entrepreneurs.  It is a constant puzzle to me why more of these successful, wealthy entrepreneurs do not apply their capital and business expertise to philanthropy. In my experience, it is hugely fulfilling, satisfying and great fun!


What role could NPC play in supporting family foundations over the next 20 years?

We benefitted hugely from the advice that we received from NPC. I can recommend them to any wealthy family considering the development of a charitable foundation.


We hope you find these essays and interviews engaging and thought provoking. We’d love to hear what you think the future holds, and what you believe NPC should be focusing on. You can join the conversation using the hashtag #20yearsofNPC or through our events. As a charity ourselves we rely on the generosity of those who value our work to help us to continue to produce research and guidance to support the sector in maximising social impact. Visit the 20 years of NPC page to find out more. 

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