Navigating your Family's Philanthropic Future Across Generations

Principal Findings and Outlook

Principal Findings and Outlook

Big family businesses tend to lack clarity about the richness of philanthropic activities across their business units and family. This can lead to duplicated efforts, wasted resources, decreased employee engagement and, ultimately, negative consequences for the health of the business.

Dealing with the unintended consequences of philanthropy has proved to be a big concern of many enterprising families. Beyond the positive impact, family philanthropists want to ensure that they do not do any harm.

“We have to structure more, in the company at least, how we give, how we can be more efficient and organized , because even this year, we don’t exactly know what all the [philanthropic] actions are that have been done.” Female philanthropist, Europe, 5th gen

“I’ve had really bad experiences with the mega ones [beneficiaries]. After the tsunami in Indonesia, a large international NGO requested a lot of products: ‘All these people have lost their homes; give us shavers.’ We gave them like 20 containers of shavers. Three weeks later, I was buying them back from the wholesale markets of Indonesia, Thailand and Malaysia because all products had just been sold off for cash . We don’t work with large organizations anymore. There’s a ‘right size’ for us, especially if we’re giving products.” Male philanthropist, Europe, 3rd gen

Often, families do not accept business values as their own family values. Any misalignment between both plays a role in decreasing the health of the business, especially if the family lives a lavish lifestyle but claims to have different values for the sake of PR and marketing.

It’s worth bearing in mind that philanthropic plans don’t always go to plan. Many of the families we interviewed admitted experiencing failed grants, failed philanthropic projects or processes, or situations where their money could not be traced, and any impact was impossible to measure. Often, the unintended consequences of poorly managed intervention can be very harmful. This kind of collateral damage leads to substantial negative effects on society and the environment as well as on the personal reputation of the philanthropist.

“For my dad’s generation, the corporate values had been usurped as the family values, and they weren’t lived that way. Later, one of my cousins and I who run all this ‘three-ring circus’ said to the family: ‘We can’t force you to believe that the five corporate values are yours. We have to have our own mission . It’s okay to have a set of values for the family and a different set for the company. You’re not betraying anything.’ That’s very hard for the older generation to understand.” Male philanthropist, Europe, 3rd gen

“Grants might fail. Things will fail. At the end of the day, you’re working with people , and we’re only human, and it can happen . As long as you fail forward and you accept it and you learn from it. In the long run, with failure, you’ll be a better philanthropist.” Female philanthropist, Europe, 3rd gen

Society and environment For many enterprising families, it is both a responsibility and a privilege to be able to give back in non-reciprocal and altruistic ways. Family philanthropists’ desire to serve the community and steward the planet reflects their deep commitment to improving the state of the world.

“We expect each foundation board to think a lot about how to get the most ‘bang for the philanthropic buck’ : how do you get the best return on philanthropic investment? That’s quite important for us.” Male philanthropist, Europe, 3rd gen

Key takeaway We find that family philanthropy can have a substantial influence on the various levels of the family enterprise system – both positive and negative. Despite its positive impact, there are common issues that enterprising families are challenged with as they embark on their philanthropic journey. As such, these can decrease the “joy of giving together.” Many of these common challenges recur in different contexts and can possibly derail a family’s passion for giving and the impact one wants to achieve for the beneficiaries. It is therefore of critical importance to align, as a family, on the overall purpose of giving before getting started.

“We know that the consequence of what we do is very positive in terms of education , because most women who need to find water go great distances. They don’t have time to do anything else. Since we build wells and they have water ‘next door,’ they can focus on their business and send their children to schools . We are involved in education by building wells and providing water in the developing countries.” Female philanthropist, Europe, 4th gen

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Navigating your Family’s Philanthropic Future Across Generations

Navigating your Family’s Philanthropic Future Across Generations