Philanthropy Advisory Group Merges With the Boston Foundation

When Peter Karoff founded the Philanthropic Initiative in 1989, he knew of only two small competitors in the emerging field of philanthropic advising. Eleven years later, in 2000, he told The Chronicle that his nonprofit organization was operating in “a cottage industry that’s trying to meet a huge demand that’s greater than anything we’ve seen before.”

Others paid attention—and began to move into the game. Today, several large consulting firms, including Arabella Philanthropic Investment Advisors, the Bridgespan Group, McKinsey & Company, and Rockefeller Philanthropy Advisors, are bigger and perhaps better known for philanthropic consulting than Mr. Karoff’s pioneering effort.

Last month, the Philanthropy Initiative announced that it was merging with the Boston Foundation. Paul Grogan, the Boston Foundation’s president, describes the Philanthropic Initiative as a “terrific brand,” and says the new unit will allow the community foundation to provide thorough philanthropic advice to its donors in a way that it never has before. “We hope that we can really grow this enterprise significantly in the years ahead,” Mr. Grogan says.

But two people close to the Philanthropic Initiative, who asked that their names not be used, said the merger was also made for financial reasons: The charity had been dipping into reserves after losing a major client and needed to find a partner to help pay for new projects, like its Center for Global Philanthropy, that had yet to bear fruit.

Ellen Remmer, the Philanthropic Initiative’s president, acknowledges that the organization’s revenue dropped about 25 percent after the recession hit hard in 2008. But she says most of the decline came when the Melville Charitable Trust, a client for nearly two decades, pulled its account. She says the organization rebounded sharply last year—before the Boston Foundation announcement—and that it was never in danger of closing.

“We have more work on our hands now than I’ve had in my entire tenure at the helm here,” she says.

Mr. Karoff says he is happy his creation has found a secure home.

“We never had the ambition to be large just to be large,” he says. “We always balanced our consulting with what we felt we could to do add value to the field.”

Mutual Benefits

Joel Fleishman, a professor at Duke University and an expert on philanthropy, says the merger will allow the Boston Foundation to offer better advice to some clients who maintain donor-advised funds at the community foundation. The merger may also give the Boston Foundation a chance to attract assets from wealthy local residents who have worked with the Philanthropic Initiative, which is also based in Boston.

The Philanthropic Initiative, he says, will benefit from the Boston Foundation’s financial security—its endowment has about $290-million in unrestricted funds—and its aggressive marketing team. “This is an absolute gangbusters strategic partnership,” Mr. Fleishman says.

Broader Services

The Philanthropic Initiative provides customized advice to individuals, community foundations, and private foundations. Services include strategic planning, transition planning after a death, and the creation of new philanthropic programs. Very few community foundations offer such in-depth advice to their donors, Mr. Fleishman says. One that offers some specialized consulting is the Community Foundation for Greater Atlanta, which has a Center for Family Philanthropy.

Mr. Grogan says the Boston Foundation will keep all 12 of the Philanthropic Initiative’s full-time staff members and 10 part-time consultants.