Maximising impact
Q5
Philanthropy has the potential to have a very positive effect on the larger family enterprise ecosystem. What strategies can be employed to maximise this?
In summary, grasping the "why" is essential, as it lays the foundation for effective execution of the "what" and the "how." This isn't merely a trivial aspect. I recently had a conversation with a family that is managing a family office, a family business, and a foundation and they encountered challenges regarding a clear purpose, leading to disparities within the larger family. This underscores the critical necessity to thoroughly revisit and structure all elements, steering clear of ad-hoc initiatives that may deviate from the intended purpose and undermine the potential for meaningful impact.
“...grasping the why is essential, as it lays the foundation for effective execution of the what and the how.
Prof. Dr. Peter Vogel
Q6
In your experience, how do families aim to utilize their heritage and "total family wealth" to make a meaningful impact?
This is where we witness the convergence of the various elements we just discussed—investment, philanthropy, and business. The critical question at hand is whether there exists an overarching strategy and purpose. Often, families find themselves with a legacy business, possibly establishing a family office for diversification, followed by the creation of a foundation, funded through contributions from the family or the company. With numerous entities and governing bodies such as the family council, the owners' council, business boards and leaders, family office leaders and the investment committee, or the foundation, a complex network is formed, and the challenge then lies in elevating the perspective to grasp the entire system and to align the different interests.
We have seen some families that have addressed this complexity by establishing a formal or informal council (sometimes it’s the family council, sometimes it’s an elders’ council), which is essentially an overarching governing body that serves as the central nervous system infusing life and storytelling into the wider ecosystem. The specific approach varies based on the family's culture and dynamics. The key to success lies in achieving alignment, a step many families overlook. They often fail to ask the crucial question: "How can we create collective impact that transcends individual activities, and how can we align our giving with our investing and our business?" The importance of this alignment cannot be overstated, and it is a facet that many families do not explore enough.