How engaged is your family with your foundation? Are they passionate about giving or do they see it as something distant or inherited, like antique furniture? Let’s take it a step further. How aligned is the concept of philanthropy within your family? Is it peripheral or an integral part of the family enterprise system?
Those who are running foundations know only too well the challenges that can arise if a family is not engaged and aligned with its philanthropy – it can lead to drift, a lack of cohesion and purpose, and a loss of interest or support over generations. So, are you doing enough? Foundations must be ready to continuously and actively engage family members and re-define its relevance for each generation so that the contract of giving can be renewed as necessary.
Philanthropy as both a challenge and an opportunity
Where can the cracks begin to show in family engagement? There are many ways. An upcoming generation may not identify with the causes that inspired the creation of the foundation, or there may be a lack of understanding about how effective philanthropy can benefit other aspects of the family enterprise systems. It can also be that the senior generation does not actively think about engaging the younger family members and to inspire them about the family’s philanthropic efforts. Newer generations may also come with different sets of skills and expectations on why and how to engage. Addressing these challenges early on in a systematic way is important, but not always easy.
As Thierry Mauvernay, Chairman of his own family business Debiopharm as well as the initiator and donor of the Debiopharm Chair for Family Philanthropy at IMD, states: ‘The donation can also benefit the donor. Very often, in a family, money does not bring people together – it divides them. The passing of time does not unite them either, it separates generations. What unites people are values. Family philanthropy should make it possible to unite both family members and company staff around common values’
Our experience in academia and practice shows that philanthropy has a serious and valuable role to play in sustaining a healthy family enterprise system and that engaged and aligned philanthropic families create even more impact as they can do more to leverage their resources. At IMD, the Debiopharm Chair for Family Philanthropy has built on decades of work with family businesses and family offices to understand the significance of giving for families, to help families improve how they give and to enable them to get more out of their giving, both for their families and their businesses.
A growing demand …
It is, however, an area that more and more families are asking for support with as they seek to build a healthy and holistic family enterprise system, not just a healthy business. Given that about 70 per cent of businesses around the world owned by families, this topic is an important avenue for IMD, striving to inspire positive change and responsible leadership, especially considering the huge challenges our society faces from pandemics, migration or climate change.
For the family, when well structured, philanthropy can increase engagement and understanding between relatives, and provides meaningful roles for family members who may not be active in the business. It onboards next generation family members into the family’s values and purpose, and it provides a safe, first step into areas or responsibility that can act as a pathway to the business or beyond. It can also influence how a business perceives its responsibility and contribution to society.
…but with a simpler framework
Explaining these points to families is not enough. They need tools and encouragement to feel motivated to engage – to think through the reasons why they give, who could help them and how their giving might become more effective. Managed the right way, there is an opportunity here to take stock and renew the contract for giving – a contract that will deliver better results, strengthen the family and forge healthier bonds between family and foundation.
We devised the Family Philanthropy Navigator as a systematic, playful and easy-to-use tool, in part, to make it easier for families to engage and align with their giving and to help those working with families to stimulate these important discussions. Through eight key questions, supported by activities and advice, we have found it is possible to explore the purpose, relationships and organization of family philanthropy and to refresh or reset that philanthropic contract in a way that feels relevant to today’s generations.
As Aristoteles once stated, ‘Doing good for others is enlightened self-interest.’ Failing to act when families disengage or drift from their giving is a dereliction of duty and a missed opportunity, both for the family and society. Start the conversation now and begin a new chapter of successful giving that also gives something back to the family.
Family Philanthropy Navigator by Etienne Eichenberger, Malgorzata Kurak, and Peter Vogel was released in December 2020. For more information on the book, click here.
Etienne Eichenberger is Managing Partner at WISE philanthropy advisors, and member of the advisory board for the IMD Debiopharm Chair for Family Philanthropy. Peter Vogel is the IMD Professor of Family Business and Entrepreneurship, and holder of the IMD Debiopharm Chair for Family Philanthropy.