Bringing philanthropic endeavors closer to the business can also help other stakeholders. From suppliers to customers, people want to see that there is more to a business than profits. From shoe manufacturers to ice-cream brands, there are myriad examples of companies excelling financially in part because they prove to their customers that they have a strong social and or environmental responsibility.
Cautionary tales
Inevitably, there is a flipside to all of this. While philanthropy can give added meaning to a family and provide important roles for those not directly involved in the day-to-day running of the enterprise, it can also reinforce long-standing rivalries or differences.
In one case involving a European family, high hopes that philanthropic causes could create a bridge between generations quickly fizzled out. “I was convinced that philanthropy could be a great part of our transition [succession in business], and a great part of making us committed properly,” says a third-generation member of the family interviewed in the study. “Sadly, it is not the case; philanthropy ‘suffered’ from the differences and conflicts that occurred in the family business. Philanthropy did not help but was negatively affected by the rest.”
That experience is not unique. And it highlights that, in spite of philanthropy’s positive impact on the family enterprise system, common issues that enterprising families are challenged with can decrease the “joy of giving together”. It is therefore of critical importance to align, as a family, with the overall purpose of giving before getting started.
A third-generation male member of a European family reports: “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 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.”
Based on our research and experience, we find that there are no specific “right” or “wrong” approaches to philanthropy, and any journey in giving will have wins and losses that we can learn from and share. While there are just as many ways to approach philanthropy, if approached in a thoughtful and structured way, family giving can be an impactful and engaging calling. It can become a lifelong passion as families start to see that they can make a real difference in the world.
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