Navigating Your Family's Philanthropic Future Across Generations

Principal Findings and Outlook

Principal Findings and Outlook

Business Philanthropy can help with creating an element of one’s legacy, based on something unrelated to the profit-oriented side of the business. “I am an artist; I didn’t go to any business school. I’m a woman. I didn’t have any credibility [when I joined the board]. But when I asked for that philanthropic project [it changed]. Today, our customers are paying a premium to have our products, compared to the other companies. I’m the one who encouraged that, who is always fighting for that. It has given me a lot of respect from the board , even if I am an artist and a woman. We are pioneers ; we are the first ones in the industry to do that, and there are no other examples.” Female philanthropist, Europe, 5th gen

“The foundation was a trigger. It triggered a discussion about equal representation. It has triggered results within family governance, where we have more women on the boards, in the management team . Because in our family, for many years the custom was that even if I was the family member, as a woman, I didn’t have a seat on the board ; my husband represented me on the board. That is not a case anymore.” Female philanthropist, Europe, 5th gen

For minority family shareholders, philanthropy can become an opportunity to have their voices heard and stay involved. Typically, philanthropy is rather “democratic” in terms of decision making and power distribution: The number of owned shares does not play as much of a determining role as in the business. “We’re thinking about setting up a second foundation to give focus and more deliberation to social performance and philanthropic activities which would be separate from the business . Just putting things in place, like who gets to be on the board, how does one get paid, succession, outside partnerships. Because for some [family members], you can be a member of the board and top management and a shareholder as well – but not everyone; some might be just a shareholder who is t housands of miles away and has little involvement .” Male philanthropist, Southeast Asia, 2nd gen Setting up a trust or foundation ownership model can limit the influence of next gens on the business. If there are active heirs who are willing and able to lead the business, but the ownership rights are transferred to a philanthropic entity, it could then impact the health of the family enterprise system. “We had a long discussion with some family members about how to ensure that this tradition of charitable giving continues for the next generation, and the generation after that. We’ve been looking at a lot of legal systems and mechanisms to see if it is possible. The conclusion that most of us had is that it’s almost impossible to legally enforce it . Unless you put everything into a trust at which point you’ve lost control of your business. It’s very hard to do that.” Male philanthropist, Europe, 4th gen “Later, my grandfather changed his mind and said: ‘Maybe it’s not my decision whether I should leave the firm to the foundation alone. Maybe we should keep some ownership in the family, and then a later generation can decide whether the foundation should take over. For now, t he family seems capable, interested and willing , so we’ll leave the control of the firm in the hands of the family.’” Male philanthropist, Europe, 4th gen

Philanthropy can help to put things in perspective, creating awareness about one’s own privilege and position, and the responsibility that comes with it.

“Doing a family charter with my two sisters and a professional has helped us a lot. We asked ourselves: ‘What is important for you? What are your values? How do you see the future?’ The first value that we had was being sustainable. The second value we had was to do our best. Our best means being an example and trying to change the industry. Suddenly you have a lot of conscience about what are the problems, and where we are not doing enough. I wanted the board to go into that philanthropic project because all our business is related to [a sensitive industry]. I wanted to have a project that could say ‘Thanks’ to the ground, the earth, for what it is giving us, and something to go back, too.” Female philanthropist, Europe, 5th gen Running your philanthropy in collaboration with your employees can bring many benefits to the organization. “What we really did is we have some projects where employees of ours can work; they would get a day off so they could work in a social project. That was something we did; we thought it was a good idea , to get people together. We allowed our people to do social work in their working hours, to see different things.” Male philanthropist, Europe, 3rd gen “Every Christmas they collect money from the employees, which they donate to a school in Africa. We have had some projects where they have collected shoes from their kids, which we have sent from the factory in big boxes to the school. The biggest impact internally in the company is the sense of purpose and meaningfulness to all the employees that comes through the school. This is also why I try to tell them every now and then what’s going on, what’s happening in the school.” Female philanthropist, Europe, 2nd gen

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Navigating Your Family’s Philanthropic Future Across Generations

Navigating Your Family’s Philanthropic Future Across Generations