Managing a foundation’s assets wins you the cachet of being seen as helping your clients fulfill their philanthropic goals, and it is extremely lucrative work that can create a practice-building bridge to the next generation.

“Foundation assets are sticky,” says Jeff Briskin, a principal at Briskin Consulting, a Boston-area strategic marketing and philanthropic advisory firm. “Generally, annual distributions amount to little more than the 5 percent required minimum, whereas high net-worth clients could withdraw huge amounts from other investment accounts advisors manage to purchase yachts or second homes.”

Accordingly, many advisors hope the family foundations they help establish become multi-generational philanthropic vehicles. But managing a foundation entails responsibilities very different from managing personal assets, and families often become frustrated with operational details.

Advisors often get high marks from clients for defining a foundation’s investment policy, investing the initial gift, and handling the ongoing management of the portfolio for a percentage of the assets they manage. A survey of family foundation managers conducted by Briskin Consulting, however, found that more than 45 percent said they wished their financial advisors had done a better job of educating them on the administrative responsibilities and time commitment associated with operating a foundation.

“Advisors tend to emphasize the excitement of awarding grants, receiving public recognition and supporting favorite causes while downplaying the enormous fiduciary and legal obligation that come with managing a complex charitable entity that must comply with both state and IRS regulations,” says Briskin.

Without the proper guidance regarding administrative duties, Rushworth Kidder says, many family foundations become overwhelmed and “find themselves functioning in an arrogant, superficial, inharmonious, and dysfunctional way.”  Kidder is president and founder of the Institute for Global Ethics in Rockland, Maine, a nonprofit organization dedicated to promoting ethical action in a global context.

Emphasizing the administrative side of foundation work will become even more important as foundations become an increasingly popular charitable vehicle. According to the 2008 Bank of America Study of High Net Worth Philanthropy, 15 percent of respondents (wealthy Americans with household income greater than $200,000 and/or net worths of at least $1,000,000 excluding primary residence) planned to form a foundation by the end of 2010. And, according to the Foundation Center, a leading authority on organized philanthropy that supports nonprofits and grant makers, private foundations grew in number from 44,146 in 1997 to 75,187 in 2007.