FAMILY GIVING NEWS:

GIVING THROUGH THE FAMILY BUSINESS

March 2003, Volume 3, Issue 3

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CONTENTS:

• UP FRONT: GIVING THROUGH THE FAMILY BUSINESS
   

• SPOTLIGHT ON: FAMILY BUSINESS TRENDS AND PERSPECTIVES
   

• SPOTLIGHT ON: CORPORATE PHILANTHROPY
   

• RESOURCE REMINDERS: GIVING THROUGH THE FAMILY BUSINESS AND CORPORATE PHILANTHROPY

UP FRONT...
GIVING THROUGH THE FAMILY BUSINESS

The National Center’s forthcoming study on the motivations, goals, and challenges for California donors includes a number of references to the connection between philanthropy and the family business. Several of the donors interviewed for the study first learned about philanthropy through the workplace. Some worked for corporations that had corporate foundations or matching gift programs. Others worked for corporations that invited representatives from the local community foundation to make presentations about donor-advised funds and other options. Still others discussed the advantages of giving through the family business, and the affect that this giving had on employees and customers.

The comments from those interviewed, who participated with the promise of anonymity, provide a first-hand perspective on the advantages and challenges of giving through the family business. Here are a few selected excerpts:

• “There are advantages to funding in the community where our business is. I can use my business connections to help nonprofits and, in turn, our philanthropic activities help our business. There was another side benefit we didn’t expect. We run our foundation out of our office, and our employees took an interest in our philanthropic work. I had no idea how proud they would be to see what the foundation was doing. That encouraged us to set up a matching program for board members, family members, and employees to give money to charities they want to support.”

"There are advantages to funding in the community where our business is. I can use my business connections to help nonprofits and, in turn, our philanthropic activities help our business."

• “We used to target our support to the African-American community (where the business is located). The neighborhood has changed now, but we still feel we should give the money here. With all the government cutbacks for social services, we’ve had a huge increase in requests for donations. So, now we wonder whether to do more crisis intervention or focus on more long-term needs? And should we spread out the grants in smaller amounts or make a few more significant grants? Every time we think we’ve decided on a policy another crisis occurs and we wonder whether we’re taking the right approach. It’s hard to maintain a focus because the needs are so broad.”

• “I felt that I was contributing to society by helping to build a socially conscious and great company. I never thought about matching my growing wealth with giving. I learned about the local community when my company invited a representative to speak to us about donor-advised funds. I was intrigued by the idea of funding locally, but more important, the representative got me thinking about philanthropy as a process rather than as charity.”

This issue of Family Giving News features a wide variety of tools and stories of donors and families that have chosen to give through the family business. We hope that you are able to use these strategies and suggestions in your own situations, and refer them to colleagues who may find this of interest.

GIVING THROUGH THE FAMILY BUSINESS:
"HOW-TO" RESOURCES

There are many options for how to structure philanthropy through the family business, and there are many goals that you as a family, and as a business, might have for that giving. The following selected resources provide an in-depth overview of what you can expect to encounter and accomplish while creating and sustaining your corporate giving program or foundation.

MARYLAND BUSINESS GIVING WORKBOOK

Source: Association of Baltimore Area Grantmakers

This comprehensive new workbook from our friends at the Association of Baltimore Area Grantmakers and the Baltimore Giving Project presents a roadmap and guide for establishing an effective and sustainable corporate giving program. The workbook provides checklists and worksheets for setting up a grants decisionmaking system, evaluating requests, and involving employees. Also included are suggestions for promoting employee volunteerism and thinking about options for in-kind contributions.

Examples, samples, tips, and resource lists are included throughout this complimentary and essential guide for businesses that are in the process of, or thinking about, establishing a giving program.

As just one example, the book includes the following suggestions for ensuring that employees participate in the business’ giving program:

• Give priority to organizations with which your employees are affiliated

• Offer matching contributions for individual employee gifts

• Invite employees to participate in a company-wide volunteer effort

• Offer “in-kind” contributions in the form of technical assistance to “show off” your employees’ skills and talents

• Invite your employees to share in the grants decision-making process.

“Give your charitable program the same amount of attention, strategically, as you would a business project,” says Penny Lewandowski from the Greater Baltimore Technology Council. “Make sure it is sustainable, filling an identifiable and proven need, and supporting an organization or project that is capable of carrying through with commitments and obligations.”

For additional examples of how Maryland businesses have created a culture of giving among their employees and executives, please see this from the December 10, 2002 edition of the Jeffersonian.

 

CREATING A GIVING PROGRAM:
A GUIDE FOR SMALL AND MID-SIZED COMPANIES
        Source: Washington Grantmakers

MINNESOTA TOOLKIT ON GIVING:
DEVELOPING A CORPORATE GIVING PROGRAM
        Source: Minnesota Council on Foundations

These online guides provide suggestions for how to structure, manage, and communicate a corporate giving program. The guides also identify a number of “bottom line” benefits for corporate giving, including:

• Establishing a competitive advantage in attracting and retaining employees
• Developing closer relationships with community leaders and officials, and an enhanced reputation and standing in the community
• Increasing customer loyalty, as well as positive name recognition and brand awareness
• Creating new business-to-business relationships with nonprofits
• Improving internal communications and employees’ sense of common purpose
• Exposing staff to new ideas, points of view, and important social movements
• Creating healthier, more livable and economically-stronger communities  

IT DOES THE BUSINESS GOOD
Source: Entrepreneur magazine

This article from Entrepreneur magazine examines the close connection that often exists between family businesses and their communities. “Family businesses’ emotional commitments to their communities stem from their longevity. Parents, grandparents and the present generation typically live in their community or in one nearby,” says the article. “That longevity creates a connection with the public that family businesses can’t afford to ignore. In an age when competition is fierce… family businesses need to seize the opportunity to create the deeper bonds with their customers that local involvement offers.” Because of this connection, and because family businesses are often highly respected members of their communities, the article says that their involvement in an issue is also likely to attract other people and support for that issue.

CREATING A PHILANTHROPIC STRATEGY FOR YOUR FAMILY BUSINESS:
A RETREAT MAY BE THE BEST WAY TO ADVANCE
        Source: Genus Resources

This short article from Genus Resources highlights the importance of purpose and planning when giving through the family business. The article addresses the important question of “who decides” about a family business’ giving decisions, and provides suggestions for structuring and administering that giving. “Nowhere is it written that the business guru of the company is necessarily equipped to deal with questions that often touch upon social, religious, ethnic, artistic, or communal issues,” notes the author, Steven M. Drysdale. “Therefore, one of the first steps is to determine who in the family business structure is best equipped to deal with questions relating to charity and to handle the many requests that [may] besiege the enterprise.” The article also discusses the role of the family retreat in defining “synergies and points of commonality among the goals of individual family members” for the family philanthropic strategy.

CREATING CLEAR DIVISIONS BETWEEN FAMILY
AND CORPORATE PHILANTHROPY
        Source: Inside Giving

This article from Inside Giving addresses the importance of clarifying corporate philanthropy and individual philanthropy within family-run businesses. The article features the example of the Hasbro Charitable Trust and Hasbro, Inc. CEO Alan Hassenfeld. “Why should the corporation help the CEO with their personal philanthropy?” the article quotes Hassenfeld. “It is not fair for me to take corporate money for things that are not personal. The University of Pennsylvania is my responsibility. The most important thing is to be even-handed.”

The author suggests several strategies to help create clear divisions between the family’s and the business’ philanthropy, including:

• Create written guidelines and a mission statement for the corporate community involvement program that parallel the overall corporate goals, rather than, necessarily, the individual charitable goals of family members;

• Institute a matching gifts program or “dollars for doers”  volunteer matching program to honor the personal interests of employees and family executives; and

• Consider establishing a personal charitable fund as part of certain top executives’ compensation plan.

SWEET CHARITY

Source: PeerSpectives.org

This short article from the Edward Lowe Foundation’s PeerSpectives.org website introduces the reasons that small family businesses may also want to invest in a corporate giving program, in particular the positive impact that philanthropy has on employees. “Corporate philanthropy is the most powerful way to capture your employees’ loyalty and trust,” the article quotes Lisa Buksbaum, founder of a New York advertising and PR firm. The article also includes several quick pointers for establishing an effective corporate giving program within a small family business.

CORPORATE PHILANTHROPY: WHY AND HOW
Source: PeerSpectives.org

This briefing paper from PeerSpectives.org describes why and how companies give back to their communities, and how your company can start a philanthropic program. Included is a list of 12 tangible activities to identify, research, and operationalize your corporate giving.

PROFILES OF FAMILY BUSINESS PHILANTHROPISTS

RUSSELL FAMILY PROFILE

This profile of the Washington state-based Russell family was developed by the Washington Chapter of the Association of Fundraising Professionals as part of their celebration of the family as “Outstanding Philanthropic Family” for 2002. The family behind The Frank Russell Company and the Russell 2000 financial index have given back to their community in a wide variety of ways, including through participation on the boards of numerous local nonprofits; through the Executive Council for Greater Tacoma; through funds in the Greater Tacoma Community Foundation; and through the creation in 1994 of the Russell Family Foundation.

“George Russell and his late wife Jane have meant as much to Tacoma as any family the past 40 years. George took over his grandfather’s small investment business in 1958 and built it into one of the world’s leading asset consulting and investment management firms… With the option of moving their business to one of the nation or world’s financial centers, the Russells chose to stay in Tacoma, and to support that community in many ways.”

“The legacy that the Russell family has built is truly unique. For them, the concept of family has included not only their employees, but also the entire Tacoma/Pierce County Community.”

HIS JOB: HELPING OTHERS
Source: Sacramento Bee

This profile of Fred Teichert, the executive director of the Sacramento-based Teichert Foundation, describes the role of this family business’ philanthropic giving program within the community. The family business was established in 1927 by Teichert’s great-grandfather, and created the foundation in 1990 “to provide a budget, strategy, and philosophy for giving.”

“Our company always has been about giving back,” the article quotes Teichert. "We have done very well in the community, and we want the community to do well because of our presence.”

COLLABORATIVE PHILANTHROPY — K.C. STYLE
Source: St. Louis Business Journal

This speech from Kansas City businessman and philanthropist Bill Hall touches upon one of the most rewarding opportunities for giving through the family business – supporting the community in which you are based.  Hall, a trustee with the Hall Family Foundation (founded by the family behind Hallmark greeting cards) focuses on another important lesson in family business giving – understanding one’s role and respecting and collaborating with the nonprofits you support, and with other foundations and institutions within your community.

Hall’s view of collaborative philanthropy is an important one, particularly for successful businesses who have “energy, intelligence, and the will to make a difference” and who often feel that they can translate their successful business formulas to health, human service, or some other community issue. Hall argues that these businesses often end up “overreaching” in their philanthropy because they do not seek out and “understand the network of knowledgeable people who have devoted their lives to subjects” they may be interested in supporting.

CHARLES BRONFMAN ON BUSINESS AND PHILANTHROPY

Source: Bottom Line newsletter

This article from the Columbia Business School’s Bottom Line newsletter profiles the career and accomplishments of legendary Jewish businessman and philanthropist Charles Bronfman. The article touches upon a variety of topics, including his role in the family business, Seagrams liquors, his overall business philosophy, and his beginnings as a philanthropist. Concerning how and where to commit money and time, Bronfman recalled: “I remember asking that to my father, who said, ‘Experience, my son, has no equal.’ “

VALUES, BUSINESS, AND PHILANTHROPY:
A GUEST PERSPECTIVE ON FAMILY DYNAMICS

by David Trickett

From my youth, when my grandfather introduced me to Win Rockefeller and I began fairly closely to observe how families of means make decisions that affect not only multiple generations of their own brood but also many others, I’ve been fascinated with the dynamic relationship between what makes a family tick and how those in business use their sense of identity and deeply-held values to shape both their enterprises in the private sector and their philanthropic investments in society, where the bottom line sought is different.

Though I spend time with families, their closely held businesses, and their philanthropic undertakings as part of my daily life, what continues to impress me is the clear demarcation between those who have a pretty clear sense of who they are and the principles for which they stand—and have found a way to effectively transmit that elusive distinctiveness across generations—and how they make a difference in both business and philanthropy, on the one hand, and those who don’t. 

It all has to do with a sense of direction, of basic focus, and of an awareness that who we are as a family actually has a deep and abiding connection with how we spend our times, both in wealth acquisition and protection as well as in its philanthropic seed-scattering among causes which are important to us.  Either someone in the family has realized (not always the “alpha” wealthy generation, by the way) that privilege and responsibility are inextricably linked to one another—and that therefore we need to do something about making sure this connection helps to hold us together amidst all the changes, marriages and split-ups that may occur, geographic dispersion, and business ups and downs—or no one has.   Where someone has both realized the connection and has begun a dialogue process inside the family—including both the business and philanthropic sides of the house—I see all the difference in the world.

It’s both a matter of tone and profile, of self-image and performance, of a sense of indebtedness to factors beyond one’s own control and the commensurate opportunities for giving back that good fortune have made possible, that enables a family to find a path for a sustainable future.  And that’s what is at stake—whether and how the family will manage to endure through many changes of different types that they will inevitably face.

David Trickett is founder and principal for The Jefferson Circle. He can be reached via email at KYNANCE@AOL.COM.

SPOTLIGHT ON...
FAMILY BUSINESS TRENDS AND STATISTICS

What role does family business play in the U.S. and the world? What are the largest U.S. family enterprises, and what are the key issues facing these institutions? This month's Spotlight section shares statistics, facts, and perspectives on the current and future state of family business.

FACTS AND PERSPECTIVES ON FAMILY BUSINESS IN THE US
Source: Family Firm Institute

This compilation of facts and figures from the Family Firm Institute illustrates the leading role of family business in American society, and the challenges that business families face in areas such as leadership and succession. Just a few of the interesting facts listed here include:

• The greatest part of America’s wealth lies with family-owned businesses. Family firms comprise 80 to 90% of all business enterprises in North America. (J.H. Astrachan and M.C. Shanker, Family Business Review, Summer 1996)

• Family-owned businesses account for more than two-thirds of all businesses in the world and are becoming more, not less, prevalent (Harvard Business School Executive Education Brochure, 2001)

• 25% of senior generation family business shareholders have not completed any estate planning other than writing a will; 81% want the business to stay in the family; and 20% are not confident of the next generation’s commitment to their business. (Arthur Andersen/MassMutual, 1997)

• Of primary importance among family firm wealth holders is transferring not only their financial wealth, but also their values surrounding their wealth, to subsequent generations. Primary values taught include encouraging children to earn their own money, philanthropy, charitable giving, and volunteering. (2000 Wealth with Responsibility Study, Bankers Trust Private Banking, Deutsche Bank Group)

FAMILIES IN TRANSITION
Source: Family Office Exchange

This outline of a 2000 presentation by Family Office Exchange founder and CEO Sara Hamilton provides an overview of the specific challenges facing family firms in the areas of business, family issues, and financial issues, and describes the potential role of family offices in helping families manage key transitions within these areas. The outline includes a comparison between “old” and “new” economy wealth generators, and provides an illustration of the key activities that occur within the “Evolution of a Financial Family” over time.

AMERICA’S LARGEST FAMILY FIRMS
Source: Family Business Magazine

THE WORLD’S LARGEST FAMILY FIRMS
Source: Family Business Magazine

These two lists from Family Business Magazine identify the largest family businesses in America and throughout the world. The editors selected the businesses listed based on three common characteristics:

• A single family controls the company's ownership.

• The controlling family's members are currently active in top management

• The family has been involved in the company for at least two generations – or seems likely to be.

The 150 firms listed in “America’s Largest Family Firms” all have annual revenues of more than $800 million. The 116 firms listed in “The World’s Largest Family Firms” have annual revenues of more than $1 billion. According to the editors, non-U.S. family firms often play an even more important role than their American counterparts. “Outside the U.S., family companies are often the most potent institutions in society – more effective even than their national governments.” 

RESULTS OF THE 2002 AMERICAN FAMILY BUSINESS SURVEY
Source: Raymond Institute

“In the early years of the new millennium, family enterprises face unprecedented transitional challenges, as nearly 40 percent will see a leadership change in the next five years.” This report, released in January 2003, is based on interviews with more than 1,100 family-led businesses with mean annual revenues of $36.5 million, and provides a look at the perspectives and key challenges of these firms. Key findings from the report include:

• Almost nine out of 10 family-owned business leaders believe the same family or families will control their businesses in five years;

• More than four out of five businesses are still controlled by the founders;

• 39% of family-owned businesses will change leadership within the next five years, significant given the fact that the average CEO tenure at a family-owned business is up to six times as long as a typical non-family public company;

• 34% of respondents say that the next CEO may be a woman (currently only 10% have female CEOs leading their firms); and

• Only 37% of respondents report have a written strategic plan to guide their futures, including their philanthropy.

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