These Lottery Winners Put Millions to Philanthropy. Now Their Foundation Is Closing.

In 2001, Carmen and Alcario Castellano won a multimillion-dollar fortune in the California Lottery and quickly set about creating the Castellano Family Foundation. Since then, the San Jose, Calif., grant maker has given out $10 million to support Latinx arts and culture, education nonprofits in Silicon Valley, and efforts to promote Latinx leadership and diversity on nonprofit boards.

From the beginning, the Castellanos planned to spend down the assets of their grant maker. In 2011, they brought their three adult children — Carmela Castellano-Garcia, Armando Castellano, and Maria West — onto the foundation’s board to help them plan that process and to lead the foundation in its final years. In 2016, Carmen Castellano, the driving force behind the family’s philanthropy and a respected nonprofit leader (who died in 2020), retired as president of the foundation and handed that role to Castellano-Garcia, a lawyer who was then the CEO of a health care nonprofit.

The Castellano Family Foundation shut down operations in June. To ensure its founders’ legacy will continue far into the future, the family has given $500,000 to the Silicon Valley Community Foundation to launch the Alcario and Carmen Castellano Silicon Valley Community Foundation Fund to support Latinx charities and nonprofit leaders. The community foundation is kicking in an additional $500,000 to create the endowed fund and plans to raise money from other donors who want to back Latinx nonprofits.

“This fund needs to grow significantly in order to really give any meaningful grants because it’s going to be in perpetuity,” Castellano-Garcia says. “It’s a long-term strategy to create a vehicle that donors from Silicon Valley could give to in support of Latinx nonprofits in Santa Clara and San Mateo County.”

Castellano Family Foundation

The family will have no control over the new fund and will act as advisers only, Castellano-Garcia says. She says officials from the community foundation also intend to use the recommendations laid out in the “Blueprint for Change,” a report the Castellano Family Foundation produced in 2020 to highlight the gap between philanthropy and Latinx-led nonprofits in Silicon Valley, to inform some of the new fund’s grant making.

The new fund follows in the footsteps of the LatinXCEL Fund, an effort the family foundation created with the community foundation in 2021 to raise money to provide a $10 million pool for operating grants and technical support to Latinx nonprofits and advocacy groups over five years.

Castellano-Garcia and her siblings have also started a short-term donor-advised fund at the community foundation to ensure Castellano Family Foundation grantees with multiyear commitments will continue to receive money through 2024. The DAF will close once all grants are paid out.

The Castellano siblings have spent the past 12 years learning how to lead the foundation, streamline its grant-making practices, and plan for its spend down. Castellano-Garcia says it’s been a challenging but ultimately exhilarating experience. She spoke to the Chronicle in June about what she has learned running a family foundation.

What did you and your family learn about the philanthropy world from those years of running a family foundation, giving out grants, and being deeply involved using your fortune to try to help the Latinx community in Silicon Valley?

One of the very hard lessons we learned is that philanthropy is very slow to move. It has been very difficult over the 20-year period to watch the tremendous need and inequities in society and in philanthropy persist.

That has been a tough lesson because you come in as an advocate; you’re there to make change. We had a vision for change, and you know what? It just hasn’t changed that much.

On the other hand, it is the resilience and the strength of our community and our grantees that inspired us. Because despite these inequities, despite the lack of investment, we have watched them grow and excel over 20 years, or survive and evolve during Covid when some of them transitioned from arts organizations to food banking and other things that the community really needed. That resilience, that ability to change and grow and evolve under very challenging circumstances, my whole family has been super inspired by that. That is what motivated us and kept us going.

If you were approached today by a newly wealthy person who was planning to start a family foundation, what advice would you offer?

I’ve learned it’s important to get some help. Don’t do everything yourself. Find out what your strengths are and where you need assistance, and then bring the right staff person on to help so you don’t get overwhelmed.

One of the smartest things my parents did when they first started was they talked to as many experienced philanthropists as they could. A fundamental question people have to ask themselves when they’re embarking on this is: Are we going to create a foundation, or are we going to go with the donor-advised fund?

Consultants can play a very important role in advising people on that front. You have to very carefully explore the options and decide what level of effort and commitment you want to make because having your own foundation is a whole different thing than having a DAF. You have to clearly understand all of that.

Another thing I’ve learned is that it’s really important to think about how you utilize your power and your money. How do you use those in support of the cause, and how does it go beyond writing a check? That’s what my mom did that really made a difference. She didn’t just write checks. She used the power of her voice and her position to further advance a cause.

How can philanthropists navigate tricky family dynamics that rise to the surface when families are deeply involved in their foundation?

Going to a third party can be very helpful. My parents were brilliant for bringing in a facilitator. They might have had a dinner conversation or two with us, but from the first meeting with us kids, there was a facilitator, and that facilitator interviewed all of us extensively with a set of questions. Difficult family dynamics can come to play in the boardroom, and the facilitator helped us come up with a set of agreements before our first formal meeting.

There was also a code of conduct that came from my experience as a nonprofit leader. All of that helped because we agreed from the beginning that however we act in private, when it comes to this foundation, we’re going to act like we act with other nonprofit boards. We’re going to act like we do in a business environment. Whatever that family dynamic is, it has no place in the boardroom or anywhere around our staff. We had that agreement before we really got started. Thank God because it was very helpful.

As you look back on your family’s experiences working together as grant makers, what stands out to you the most?

I’m just so proud that when my parents won the lottery, the first thing they said when my mom called me at 6 that morning was, “We can help more families. We can help the community.” Those were the first things they said, and then they went and did it.

I’m so thankful that they gave our family the opportunity to learn from each other and these different strengths that we brought to the foundation. We all brought something different, and together it was powerful. It was very enriching for our lives, and it was a great experience. It had its challenges; I’m not going to say it was always perfect and easy. Sometimes it was hard, but it was a beautiful part of our family’s experience.

This interview has been edited for clarity and brevity.