Philanthropy is the act of giving back to society and making a positive impact on the community. In the context of family businesses, philanthropy by family-owned businesses is more than just donating money to charitable causes; it's a way of leveraging the resources and influence of the business to make a meaningful contribution to society.
"The best way to find yourself is to lose yourself in the service of others." - Mahatma Gandhi
Family Businesses are particularly well-suited for strategic philanthropy due to their inherent traits. These family businesses possess decisive, future-focused, and values-based qualities, which make them patient with their capital, proud of their entrepreneurial legacy, and committed to practicing stewardship.
Such traits make family businesses receptive to both the economic and social opportunities that strategic philanthropy offers while being acutely aware of the risks associated with inaction.
Philanthropy fosters family unity by promoting shared values and purpose across generations and provides a way for non-business family members to contribute to the family's legacy and transfer social capital across generations.
Philanthropy is crucial in the success of family-owned businesses as it provides a path for non-business family members to participate in the family enterprise, gain knowledge about the family's history and wealth, and improve their professional abilities. Furthermore, it enables families to share their social connections with future generations. Philanthropy displays the family's commitment to achieving long-term objectives. Additionally, it can help businesses develop their social and reputational capital while boosting employee engagement and loyalty.
“Philanthropy is not an activity; it’s an important pillar of the family business. It’s a moral responsibility of the family business.”
“Philanthropy is the foundation for family engagement on a continual basis”
Philanthropy:
Philanthropy plays a vital role in enhancing family businesses' social and reputational capital, strengthening the family's legacy, and positively impacting society.
“The philanthropic actions make the community and the family feel connected with each other and that’s what makes a difference to the family businesses. The generations of the community get emotionally attached to the family business, which helps the family business transform into a legacy. The family businesses last longer when they give back to the community, from what they have earned.”
Philanthropy in a family business is a powerful way to create a sense of shared purpose and contribute to the community.
Hold a family meeting: Hold a family meeting to define the purpose of philanthropy and decide on causes to support. Ensure every family member is aligned. This meeting can help to set goals, establish expectations, and assign roles and responsibilities.
Identify common values and goals: Identify the common values and goals of the family. This could involve a series of discussions or brainstorming sessions to determine what causes the family is passionate about and how they can best contribute.
Prepare a strategy: Once the common values and goals are identified, it's essential to prepare a philanthropic strategy that aligns with the family's mission and vision. This could involve identifying target organizations, developing criteria for evaluating potential partners, and outlining a process for selecting and funding causes.
Participate and engage all family members: To ensure that everyone is invested in the philanthropic process, it's important to encourage all family members to participate and engage in the decision-making. Family members may choose to do this individually; but doing collectively as a family, helps in strengthening family togetherness.
Set up a family trust or donor-advised fund: TManage donations and ensure that they are being utilized as envisioned. This can help to streamline the process of giving, while also providing a degree of flexibility and control.
Establish a task force: Manage philanthropic activities and ensure accountability, through a task force, which manages the day-to-day activities of the philanthropy, while also ensuring that the family's resources are being used effectively.
Consider the risks: While philanthropy can be rewarding, it's important to consider the risks. Some common pitfalls to avoid include overcommitting resources, failing to manage expectations, and neglecting the impact of philanthropy on the family's overall finances. It's important to be aware of these risks and plan accordingly.
Take expert advice: Finally, to ensure philanthropic efforts are effective and sustainable, it's important to seek expert advice. Consulting with a family business advisor or philanthropic consultant can help to develop a customized plan that aligns with the family's values and goals, while also helping to avoid common pitfalls and maximize impact.
In conclusion, starting philanthropy in a family business can be an excellent way to give back to society, promote shared values, and strengthen family relationships. By following these well-crafted steps, family businesses can establish a sustainable philanthropic strategy that aligns with their values and goals while maximizing their impact.
