If philanthropy is an investment driven purely by the Love(philos) for Humankind(anthropos), it is not surprising that many commercially driven businesses consider it to be no more than a noble pursuit for the super-rich. However, for family businesses in particular, it may be prudent to employ a more holistic and open-minded perspective on the potential benefits of philanthropy, not only as an investment into society as a whole, but as a long term investment into a healthy, sustainable business purpose that both family and employees feel a meaningful connection to.
The Importance of Shared Purpose And Shared Values
Much has been discussed around the importance of ‘soft factors’ in family business, with emphasis on building a purpose-driven mindset. Daniel Pink, the author of Drive, states that “most deeply motivated people, not to mention those who are most productive and satisfied, hitch their desires to a cause larger than themselves.” When that cause or purpose becomes embedded into the culture and strategy of a company, it tends to unify a leadership team and resonate throughout the organization and beyond. Philanthropy is an excellent avenue through which to explore and build a business purpose. Global Philanthropic sums it up neatly: “Philanthropy is the ultimate purchase. It connects you to your values and allows you to positively influence the world for this generation and future generations.” In this context, ‘future generations’ refers to the long term impact that philanthropy can have on society, as it focuses on the elimination of social problems and supports projects and endeavors from which we all can benefit.
Supporting Multi-Generational Involvement
In the context of family business, philanthropy can also be a very effective tool in keeping future generations of family leaders engaged and involved in the family business, supporting multi-generational transfer of wealth. According to Patrizia Misciattelli delle Ripe, AIFO (Italian Family Office Association) President: “The need for giving back has shifted from charitable donation to effective and focused multi-generational philanthropy that mobilises all family members behind a common cause. It is an ideal way to strengthen family ties and foster continuity among generations.”
And Keeping The Millenials Interested…
This is especially true when securing the involvement of the millennial generation in a family enterprise. This group actively seeks employers who match their personal values with its business purpose, with almost two thirds not only concerned about the state of the world but also feeling an obligation to change something. The Millennial Impact Project report which was released in 2017 provides a good overview of causes that this generation are particularly interested in:
Civil rights/racial discrimination
Family Offices Must Support
Juliet Valdinger, an expert in the area of philanthropy in the UK, shares some of her valuable research with us, which not only encourages multi-generational philanthropy within family business but also highlights the importance of family offices providing the necessary support and guidance in this area.
62% of investors believe that philanthropy is important to educate the next generation on family values and legacy, why the wealth exists, how to respect it and use it wisely
67% of millennial investors are more likely to see socially responsible investing as a natural expression of their own values and beliefs.
Clients with advisors who guide them on philanthropic planning are 40% more likely to be satisfied with their advisors
Advisors who help guide their clients’ efforts to have an impact are empowering them in a deeply personal and meaningful way – 44% of investors want more guidance on philanthropic planning from their advisors.
Rockefeller Philanthropy Advisors share the following eloquent assessment to close the topic: “For parents and grandparents in particular, family philanthropy can present an attractive combination of present and future. A meaningful experience with loved ones can be shared in the here-and-now while a legacy of giving is built for future generations.”
Philanthropy alone can’t right all the wrongs in this world, but along with the new-found lustre around family office impact investments, this business purpose could be the gift that keeps on giving.