Strategic Philanthropy in Family Business
Family philanthropy is harder than it looks, but it can be immensely rewarding for the family, the business, and for society at large. For many years we have been studying and working with complex family enterprises (Generations of Giving: Leadership and Continuity in Family Foundations, https://www.lgassoc.com/insights/books/#itemId=58bc21e7f951afde7cf60655). Our research and experience suggest that the philanthropic endeavors of prominent families take many forms. For many the bulk of their philanthropy is channeled through a family foundation. For most families, however, “philanthropy” takes many forms, including: corporate giving programs that stem directly from the family’s enterprise; value driven impact investing programs that flow out of a family office that are driven by hybrid of economic and philanthropic objectives; individual foundations; as well as personal giving by family members. Taken as a whole, the family enterprise can be viewed as a network composed of multiple philanthropic channels operating at different levels. Like the estuary of a powerful river composed of several branches and streams flowing into a vast ocean of human needs. While the composition of the estuary is certainly an expression of the sum total of a given family’s philanthropic values and interests, the directionality, organization and impact of the financial resources that flow through multiple channels are only seldom tracked, coordinated, or looked at strategically as a whole. That said, there are challenges to be faced. Many enterprising families start out giving to causes based on the founders’ or trustees’ personal interests with little to no strategic plan or vision for their charitable practice. As their businesses and families grow, more family members with diverse interests become involved, and families are faced with the conundrum of evolving their giving practice to include the interests of next generations while simultaneously preserving their family philanthropic legacy. In our years of advising family enterprises around the world, we have been fortunate to work with families who evolve their giving practices systematically in a way that preserves their family philanthropic legacy while still embracing the interests of succeeding generations. These are the families who define and commit to a comprehensive philanthropic vision and strategic plan; they create sound policies and good governance; they engage in difficult conversations about values and family identity. Above all, these are families willing to explore the fundamental questions associated with wealth: What is our overarching purpose as a family? How do we want to use the wealth we’ve accumulated? How do we translate our purpose and values into philanthropic practices that have real impact in the world?. These are the tasks that become the keystones behind the effectiveness and success of their continued collective giving.
How do we begin?
Our Guide to Strategic Philanthropy in Family Businesses addresses the questions of how families can begin to have strategic conversations across the family enterprise, and how they can establish a strong foundation for long lasting philanthropic impact. The Guide offers a framework of questions that families should ask themselves when contemplating a more strategic approach to family business philanthropy. When examining philanthropy comprehensively leads to such questions as: “Why we should give as a family?”, “What organizational guardrails and mechanisms do we need to orchestrate a complex portfolio of philanthropic activity?”, “What kind of impact do we expect from each effort and overall?”, and “What risks might we face with our philanthropic work?”. The Guide presents comprehensive lessons from other enterprising philanthropic families, lessons that build on the vantage point of family business owners. While it is indeed true that every family business is unique, there are six universal key steps to launching strategic philanthropy in family business that have emerged from our research and advising experience with enterprising families. Key steps include establishing a mandate for your family philanthropy task force and exploring different legal structures and paths through which to pursue your family’s philanthropic activities. These key steps will give your family a roadmap, one that demands that philanthropy keeps to the same high standards of rigor and professionalism that are placed on operating businesses and family offices.
In our collaborative work with IFB, we heard from IFB members who shared some of their experience and challenges. On November 6th, we are thrilled to be hosting a panel discussion at the Hoare Bank in London, that will allow IFB partners and members come together in a safe space to further share about their challenges and successes and to ask questions and learn from others. In the meantime, this Guide is a first step towards strategic family philanthropy. It is intended for families who are just beginning their philanthropic journey, and also for those who are already established and looking to take their giving to the next level. We are convinced that by highlighting how families can become more strategic in their social endeavors, it will inspire others to consider this transformation – a transformation that can ultimately create greater impact and serve as a more engaging and unifying activity for all of your family members. Read the guide here, and the biographies of its authors, Neus Feliu, Wendy Ulaszek, and Devin DeCiantis.