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When the Parents’ Dream Becomes their Kids’ Nightmare

Just the Way “WE” Always Wanted It

In many ways this post has been a long time coming. I’ve run into versions of what I’ll be sharing this week for years now, but never felt compelled to devote a whole post to it.

Some confluence of cases in my head, from the past and from current discussions with clients and prospects, has resulted in my finally deciding to tackle this tough subject.

In other ways, though, it’s so simple to describe, that even those who know little about family business can easily relate to such stories when I share the basic fact patterns.

Every parent says they want what’s best for all of their children, and every single one of them believes it when they say it.

But they sometimes overestimate how much they know, as well as what they can control to make that happen.

Building the Dream Family Business

The closest I’ve come to writing about a version of this was way back in 2016, with When your Greatest Desire is also your Greatest Fear.

But that post was about the fact that parents hope to get to a level of wealth that makes the lives of all their family members easier, and then end up “overshooting” that level, and suddenly realize they’ve got a whole different challenge on their hands, often labelled as entitlement.

This week we’re looking at parental desires again, but from different perspective, and with a whole other kind of downside.

Unlikely Business Partners

The simplest way to describe the phenomenon is to consider a family business with just one person or couple in charge, who have more than one child together.

They will often want to bring all of their offspring into the business with them, and run things together as the prototypical “one big happy family”.

And this can work for a time, especially while the senior generation remains in place, to mitigate any sibling issues “in the bud”.

The problem comes later, after the exit of the parents, when the siblings end up in a situation where they’re now unwitting partners together.

They’ve worked together for while, but at a lower level, with less at stake and possibly less ego involvement.

Eventually they realize they’re stuck in a partnership with people with whom they never would have entered into business together of their own free will.

“Plans that Don’t Include Us”

Too often the parents make plans with professionals regarding their estate plans that include an operating business, and because they’ve long dreamt that what they’ve been building will continue on with the whole family at the helm, those plans end up creating sibling partnerships that really don’t have a high likelihood of surviving long term.

See Why Succession Planning Fails

When the cart (the legal structures) is put before the horse (the relationships of the offspring expected to work well together), things are set up for failure more than for success.

And it happens all the time.

Hopefully it can be caught in time, plans can be modified, and a new plan, this time including input from those most affected, can be put into place.

If not, those who end up “stuck as partners” risk having their family relationships damaged because they can’t live up to Mom and Dad’s dreams.

We’re Better Than Our Parents!

I’ve even seen versions of this where a parent hopes to have all of their offspring continue together despite the fact that they previously worked with their own siblings, and quickly realized that was not a good fit.

They couldn’t work with their own sibling, yet they expect their heirs to successfully work together; presumably they believe their own parenting skills are far superior than those of their parents!

Parenting skills are just one variable in this equation, and the human desire for some independence is typically stronger than whether your parents taught you to play nicely together.

Playing nicely as children is one thing, working together as adults is quite another.

Time for a Reality Check

When a family calls in someone like me, it’s often an opportunity for a reality check on those dreams we were talking about.

Assessing the likelihood of success is a large part of what I do, and in many cases (most?) some modifications to “Plan A” are required, to increase the likelihood of their success.

Success looks different for everyone, but continued family harmony is at the top of my list.

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Formula 1 Racing and Working with 1% Families

Useful Analogies for Working with Complex UHNW Families

During recent discussions with colleagues, many of whom who also work with complex families, I came up with an analogy that resonated with some of them.

So of course I now want to share it here as well, if only because writing about it forces me to think through the best ways to talk about the subject.

I’ve always been a huge fan of metaphors and analogies of all kinds, even though they’re never perfect.

I’ve written about sports analogies here a number of times, including The Rules of Baseball and Family Business, Where’s the Puck – Family Wealth Hockey Analogies, and Communication in Curling and in the Family.

Formula 1 Racing Is Up Next

This week we’re venturing a bit up-market, into the lofty world of Formula 1 auto racing, because that’s the analogy I recently concocted.

It so happens that the wealthy are often referred to as “The 1 %”, but that’s a total fluke here, and I didn’t even realize the coincidence of the number 1 until I set about coming up with a headline for this post.

For those who don’t follow auto racing, Formula 1 likes to view itself as the crème de la crème of the sport, with a worldwide audience and races on several continents.

Many of the automakers own parts of the teams and use them as kind of an R & D Laboratory to test the limits of technology.

The technical automotive improvements they develop at this top level of racing cars eventually make their way downstream to the cars sold to consumers.

Over the years Mercedes, Ferrari, BMW, Nissan, Renault, Ford, Honda and Porsche have been doing this. Likewise, in the US, Toyota, Ford and Chevrolet have done similar things on the NASCAR circuit.

Family Governance Models to Follow

I recently attended the annual NYC conference of the Institute for Family Governance where some of this really hit home.

Attendees heard from members of several families about how their governance systems were put into place and how they have evolved over the generations.

We heard from families that are into their 5th, 6th, and even 7th generations, including a few that now have several hundred family owners.

None of them got to where they are today easily, and they were all supported by outside professionals over the decades.

These are rare families at the very top of the complexity pyramid, and often also from the highest echelons of wealth.

This is the “Formula 1” equivalent I’m trying to point out.

What About the Other 99%?

As someone who is involved in several professional communities who serve families, I’ve heard many people lament the fact that we typically speak about the work that gets done and discussed always seems to involve the wealthiest families. See Meta Views on Sharing with Peers and Families.

They recognize that the need for this work on family dynamics and developing the rising generation exists at all levels of wealth and even in the smallest of family businesses. I can’t argue against that.

What I always try to stress is that this ecosystem is still in its infancy, and for now, most of the ideas we are learning to integrate into these complex wealthy families are still emerging, and that the good news is what we learn here can, should, and will eventually trickle down to simpler and smaller families.

The Pit Crew Metaphor

Happily, there’s a related metaphor that I can share that will help drive my point home, and that’s the idea of the interdisciplinary pit crew that every race team has to prepare the car for each race, and also handle the periodic pit stops during the main event.

The aforementioned professionals who serve families come from a variety of fields that each have their own view of what family clients need, and when they work together, all seeing the same big picture, they can be even more effective all while being more efficient.

If you’ve ever watched any auto racing on TV, you’ve surely been impressed by what you see when a car comes in for a pit stop and a bunch of guys all jump in and change all the tires, top up the gas tank, make whatever other adjustments, and then get the car back on the racetrack in a few seconds.

Imagine professionals who work well together to serve families operating with such seamless interaction, and you can begin to see what’s possible in our ecosystem.

That’s the model we should be following.

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Starting Family Discussions Late – 5 Considerations

It’s Never Too Late to Begin

While visiting relatives stateside recently, the matriarch of a local family enterprise passed away.

My cousin’s kids were childhood friends of several grandchildren of the recently departed, whose many businesses around town are part of the family’s widespread holdings and operations.

I hear similar stories frequently, including the unfortunate familiar refrain around how unprepared the family seemed to be.

Fortunately, it’s never too late to begin working on the family communication aspects of the larger family wealth continuity puzzle.

Starting Family Discussions Late – 5 Considerations

A Typical Well-Known Family Example

I’ll share some considerations I’d have if I were called into such a family at this stage, say, after Grandma’s funeral.

She was in her 80’s, one of two maternal figures in this family, the wife of one of two brothers who lead these businesses for decades. 

The business had been started by their father, i.e. “Generation 1” (G1).

The two G2 brothers produced 7 G3’s, many working in various businesses alongside some of their G4 offspring. 

The many G4’s are already giving birth to G5.

All over town, everyone knows this family and considers its members to be part of the “lucky sperm club”.

But most of them have no clue about what they own, what they can expect, or what comes next.

Many are probably hoping Grandma’s passing will be the catalyst to finally getting some answers.

  • Who Owns What?

One key question that will determine much of what ensues is “who owns what?”, from a legal standpoint.

My work is concentrated in the “family circle”, but it cannot be done in a vacuum, and the actual legal ownership of the assets is something I’d want to know before going too much further.

There’s a good chance that whatever documents and agreements are in place were done long ago and so this question, while simple on the surface, may not have a clear and ready answer.

  • Who Knows What?

I’ve already noted how this family has expanded over the decades, from what used to be one household, and then three, to where there are now a couple of dozen family units who are key stakeholders.

There’s a high likelihood that many family members heading those households are very much in the dark, and also craving some clarity of what lies ahead for them.

Often in these situations, some G3’s have more information than others, depending on their role and seniority.

This “information asymmetry” typically creates potential for mistrust and jealousy between family branches as things unfold.

The sooner everyone in G3 can be brought up to speed, the better chance of smooth sailing ahead.

  • Can They Work Together?

With many intertwined entities operating in this family enterprise’s sphere, questions about the potential for all family members to continue to operate together, rise to the top.

Keep in mind, these are siblings, cousins, and second-cousins, most of whom didn’t grow up in the same home, from several different family branches.

This is far from a “no-brainer”, and time needs to be taken to assess the compatibility question. 

A fact about this situation playing in their favour is that there are a number of business entities here, as opposed to one, monolithic company, so separating things could be simplified.

  • What’s Carved in Stone?

Back to the ownership question, is every detail carved in stone via structured entities (think trusts, etc.) or is there some flexibility around what can happen next?

Unfortunately, family members are often forced to be business partners with others with whom they’d never enter into such an arrangement, if they had a choice in the matter.

Flexibility around what can be changed is way better than rigidity in this case, but this needs to be looked at soon.

  • How Can I Best Help This Family?

There are surely already several professionals surrounding this family who are well placed to help clarify what’s next from a legal ownership perspective, based on the agreements mentioned above.

When there’s a complex web of families involved, it may be helpful to bring in someone who’s trained and comfortable dealing with the “family dynamics” angle too.

One outside expert alone won’t be able to untangle this alone, because of all the moving parts.

If the current professionals are overwhelmed, as they likely will be, they should bring in qualified outside resources to handle these human aspects of what lies ahead for this family.

We do exist!

 

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Family Wealth – Is Stewardship Still the Gold Standard?

More Options to Consider Nowadays

When it comes to preserving family wealth over generations, one of the biggest bogeymen out there is entitlement, and for decades now that’s what’s been keeping families up at night, and keeping many of their advisors busy trying to prevent.

Most of what I write about here concerns the challenges families face when trying to transition their hard-earned wealth from one generation to the next, and I almost always tie in parts about how the industry that serves these families is continuing to evolve.

This week we’re going to look at the concept of stewardship, which has often been hailed as the antidote to entitlement.

As this ecosystem matures, we’re coming to terms with the fact that while having rising generation family members adopt a posture as stewards is preferable to them being entitled, it may not be the “be all and end all” that some have held it out to be.

 

Better Than the Opposite, But Too Passive

I covered this briefly in The Many ‘Ships of Working with Family, where I added stewardship to leadership and partnership, among others.

Here’s some important background I’m recycling for context:

Definitions of stewardship include words like “supervising” and “taking care of” something, and often include adjectives like “responsible” and “careful”.

Clearly someone who wants to “take care” of wealth in a responsible fashion is preferable to someone who feels entitled to squander it.

It may not, however, be an enduring solution, depending on how much wealth there is, how quickly it can be expected to grow, and how large a crowd of family members it’s expected to serve long term.

 

Entrepreneurs in Each Generation

Some prominent members of the field of family enterprise have long held that it’s important for each generation of a family to renew itself with a new crop of entrepreneurs to keep things going and growing, as the family continues to expand.

In many ways, setting up the expectation that those who follow the wealth creator are simply supposed to maintain the wealth doesn’t always dovetail nicely with the idea of taking the initiative necessary to recreate something new.

I’m reminded of Jay Hughes’ view that those who follow the wealth creator risk getting sucked into that person’s “black hole”, which can exert a strong pull, from which it can be difficult to break away.

 

The Wealth 3.0 Version – Pushback?

During a recent Purposeful Planning Institute webinar on the subject of Wealth 3.0, we spent some time discussing how stewardship fits into that topic.

A participant asked the panelists about how the concept of stewardship might look a bit different from a Wealth 3.0 lens, which provoked a certain amount of unexpected (yet welcome) discussion.

Interesting points were raised about whether stewardship becomes a good outcome for a family, versus the idea of someone becoming a steward as more of a “job description”.

There was also talk about how while stewardship had been put on a pedestal until recently, there’s been more pushback lately, as families are looking at their wealth transitions more holistically and less as a “top down” venture, i.e. “thou shalt steward my wealth”.

I’m realizing that the concluding sentence of one of my blogs from less than a year ago, Finding the Liquidity Sweet Spot for Your Family may already be out of date.

That post ended with “I recommend they also become involved in co-creating their future as stewards of the family wealth.”  which in the context of that piece remains valid, but I might phrase it differently today.

The “Three Orientations” Viewpoint

The views on this question continue to evolve, of course, and a recent whitepaper from Merrill Private Wealth Management underscores an advanced way of looking at this question. See Inheritance Style Whitepaper

That piece notes that there are three different orientations that wealth inheritors can and do adopt, based on Merrill’s research.

In addition to traditional Inheritors (who may be entitled) and Stewards, they introduce the concept of Sojourners to the mix as well.

It may take some time for these ideas to crystalize in the family wealth transition ecosystem, but it’s clear to me that change and evolution to this question is afoot.

While stewardship can be an important part of the wealth continuity plans of many families, for a certain period of time (which might be measured in decades or even generations), it will rarely be a question of “set it and forget it” either.

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On Letting Professionals Run your Family Business

A Different View on a Common Question

I’ve been operating in the family business sphere for about half a century now, if you count from my first memory of being told that I was expected to eventually take over the company my Dad founded before I was born.

Back then, in the 1970’s, family businesses were still considered “less good” than corporations, and were typically spoken about with at least some derision.

Happily, times have changed, at least to some degree, and family enterprises are seen as models in some areas, especially insofar as their cultures are often strong and people want to work for them.

There is still, however, an aura of them being “less professional” than their more corporate counterparts.

When Do You Bring In Professionals?

There are ways to see what people search for on Google and other search engines, and I occasionally ask someone skilled at this to share what kinds of questions people typically ask about family business.

Here’s a recent question he sent me:

                  “At what point should a family business      

                              let professionals run it?”

While this feels a bit like an outdated question, because from where I sit I thought we’d moved past that, the fact that people are asking it means it is worth spending some time on.

My gut says that for anyone asking this question, the word “professional” could likely be swapped out for “non-family member”.

There ARE Professional Family Members Too

The question itself assumes a black and white view of the world where a family member is not professional.

The corollary of that view might then be that a non-family member therefore is a professional.

I hope that I don’t have to explain the absurdity of this view.

But I absolutely do understand where this comes from, and that’s where we’re going to go now.

There certainly are enough examples that we’ve all seen where we’ve witnessed family members working (or at least employed, even if they’re barely working) in jobs for which they are not adequately equipped.

And that’s putting it gently, in some cases.

Family-Owned and/or Family-Operated

Over the years, various people have tried to define “family business” in different ways, and those definitions typically involve some components of family ownership (either currently or eventually) and family operation.

I’m not a stickler for detail in such definitions myself, my motto is, if you think of yourself as a family business, then you are a family business.

But there are of course differences between businesses that are simply “family-owned”, yet not (or no longer) “family-operated”.

I daresay that most examples of those that we think of are probably also viewed as being more professionally run.

But they sure didn’t start that way, did they?

Like So Many Things, “It’s a Process”

Getting back to the initial question, about “when is it time” to “bring in professionals”, this is likely the idea people are getting at.

You certainly can continue to own a business with family members, even if no family members still work for the company.

You can serve on the Board of Directors of a family business as a family member as well, even if you aren’t an owner or employee.

There are certainly a number of advantages to situations like that, because it sure is easier to fire someone that isn’t related to you!

Of course few businesses get to that stage until they’ve been around for a long time, typically until at least the end of the career of the founding generation, and more often after a couple of generations of being family-operated.

A Really Long-Term View

This of course requires a really long-term view, and at some point it may become quite obvious that the business and the family have reached that stage already.

When you get right down to it, what are the chances that the best person in the whole world to run say, Ford Motor Company, is actually a descendant of Henry Ford?

My guess though is that anyone asking this question about a much smaller or younger company is likely doing so because they’re witnessing some family members who just aren’t up to the quality level required to do the job “professionally”.

If that’s the case, you may want to speed up the process of bringing in competent management, because if you don’t, you may not have a profitable company for much longer!

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How Bricolage Applies to Family Governance

Words from Another Language Can Illuminate Ideas

Over the years since I’ve been sharing my thoughts in this space, there’ve been occasions when I’ve used translations from other languages (mostly French) to make a point.

We’re going back there again this week, because a certain word that I learned in my childhood, while attending primary school in French, just keeps coming up in different ways, and one of those ways actually relates to the work that I do with families.

The word is “bricolage”, which was something we typically did on Friday afternoons as part of the “arts plastiques” component of our curriculum.

For the first five decades of my life, that was what that word meant to me, but then suddenly, sometime in the past few years, I heard it used in English.  Hunh?

A Whole New Meaning for “Arts and Crafts”

If someone had asked me to explain bricolage, my quick answer would’ve been “arts and crafts”, because that still makes the most sense to me, as a translation of that childhood activity.

But now it means a whole bunch of other things too. My good friend Mr. Google helped me uncover a few:

  • Bricolage is a term used in several disciplines, among them the visual arts, to refer to the construction or creation of a work from a diverse range of things 
  • Bricolage is the skill of using whatever is at hand and recombining them to create something new.
  • Bricolage is defined as “making do by applying combinations of the resources at hand to new problems and opportunities.”

(Bold as per originals; italics added)

Switching Over to Doing Improv

Last year in Doing Improv While Developing Family Governance I noted that the idea of “improvising” your family governance when translated from French could be confusing, as some of it runs counter to the way I typically suggest families handle it.

My idea is to kind of “make it up as you go” and as you need to, but that you should definitely NOT try to do it on your own.

And so it is with a bricolage approach to creating family governance. The family members need to do the work, but not by themselves.

Family Members Must Get Their Hands Dirty

Any agreements, guidelines, or documents that a family creates to define the way they’re going to govern the members of the family, must be co-created by the family members themselves. 

Assuming, of course, that you want them to abide by them.

This work cannot be delegated and still be expected to be worth the paper it’s printed on.

It can, though, be cobbled together as needed, incrementally, over time.

Kind of like an arts and crafts, or do-it-yourself project, like doing bricolage. Only the do-it-yourself part doesn’t have to be (and shouldn’t be) done by yourself.

You should engage someone independent, from the outside, to guide the process.

A Bricolage Guide or Assistant’s Roles

If you think about what this person would do, their roles would include the following:

Organize:

This hired guide is tasked with organizing the work that needs to be done, which includes staying in contact with family members on a regular basis, both one-on-one and in groups.

Keeping the momentum going is a big part of the role, and adjusting the cadence to the speed of the family members is not as easy as it might seem.

Co-Lead:

While there’s a leadership component to the role, it is not always “solo leadership”, but often requires teaming up with at least one family member, who co-leads and plays a key role as well, rallying the family members in ways the outsider cannot.

See Sustaining Family Ownership Through Generations

Motivate / Coach:

Another key part of the job is to motivate and coach each of the family members to be as involved as necessary and to find their rightful place in the process. 

Treating each person as an individual is an art in itself, and gaining everyone’s trust takes time and effort.

Draft / Circulate Drafts:

When a family takes on this work of defining how they are going to be together, it usually makes sense to write things down, and creating some form of “Family Charter”. 

Getting agreement on wording is not always easy or linear. 

Some of my colleagues do the drafting of the documents, while others prefer to play a role in circulating the drafts and making sure everyone provides input.

There’s no wrong way to do it; keeping things moving forward is the key.

Clean Up the Mess:

Every bricolage project gets messy at times, and part of the role includes cleaning up messes along the way.

Ideally most of the big ones will be prevented by having someone from outside the family play this role too.

And don’t forget, the process is even more important than the finished product. Because it’s never truly finished.

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Sustaining Family Ownership Through Generations

The Essential Element Required

It can sometimes be difficult to explain the work I do to those who don’t happen to belong to a family that runs a business or owns assets together.

There are at least three interdependent sub-systems at work, between the family, the enterprise (businesses/wealth/assets), and the ownership group.

Just about every enterprise is in constant contact with outside experts for a variety of services from the outset.

But the family and the ownership typically take on more of a “behind-the-scenes” role and get much less attention.

The family circle happens to be where I do most of my work, and I’ve been developing a bigger appreciation for its overlap with the ownership group lately.

Focusing on “family ownership” and how important it is for the future of the enterprise is the focus of this week’s post.

For those in the know, you won’t be surprised that we’ll be talking about the essential role of a family champion.

Their Nebulous and Misunderstood Role

I first wrote about the concept of family champions back in 2019, in The Unsung Role of Family Champions.

Recently, I had the wonderful occasion of spending a day with a number of people who play such a role in their families, even if they weren’t all sure that they “qualified” for such status.

I led the opening discussion, where I shared the origin of the term and just how essential having at least one such family member has been for all of the families featured in Dennis Jaffe’s study of 100 family enterprises that had endured for at least 100 years. 

See Jaffe’s book Borrowed from Our Grandchildren

But just because Jaffe and Joshua Nacht, one of his researchers, came up with the term, that doesn’t mean it’s well understood, even by those who play this role in their enterprising family.

Will Every Family Eventually Reach Its Limit?

While certain family members often play a starring role as the CEO and perhaps others are some kind of rainmaker, the family champion is typically much more low-key, and out of the limelight.

Few families are able to maintain family ownership over generations, often because they lack someone motivated and interested in doing the work of keeping the family focused and organized ahead of important transitions.

Eventually the family often grows bigger than the enterprises that are meant to support the people, and choices need to be made.

While these choices occur infrequently, the idea of discussing whether or not continued ownership by the whole family still makes sense is usually a scary notion that is not easily put on the table.

But when it is raised, you can bet that the family champion played an important role in setting the stage for it.

Forever Asking the Key Question

A family that owns an enterprise together will likely assume that it can and will and should remain that way, and for a certain period of time, which may be measured in decades and even generations, it’s often true.

At some point, though, most families need to ask themselves if that is still going to be the case after the next generational transition.

Hopefully, once they get to the point where hard choices need to be made, they’ll be able to figure out how to make the necessary changes in a way that leaves the family intact.

The result could be to prune the family tree or maybe sell the enterprise and have a liquidity event. See Pruning the FamBiz Ownership Tree and Huge Liquidity Events – Great News, Right?

For someone like me, who considers himself a family specialist, my thoughts are always “family first”, and many families I know also adopt this attitude. 

There are exceptions, those who put the success of their business first, which sometimes has me shaking my head. I typically do not work with such families.

Who Is Looking Out for the Family?

So much focus is put on the business that the family owns, so it’s not that surprising that the family and the ownership areas sometimes get lost in the shuffle.

The business stuff happens at a much faster pace (see Varying Time Factors in Each of the Three Circles) and those who work in that area are put on the spot on a daily basis.

Meanwhile, though, there needs to be someone who is thinking about and talking about the family’s role in all of this, and who makes sure that the family and its ownership of the enterprise also get the attention they deserve.

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From Multidisciplinary Field to Interdisciplinary Ecosystem

The Continuing Evolution of Our Professional Space

There’s nothing like a conference with peers, who come at our work with enterprising families from a variety of different professions, to stimulate reflection about the journey we’re all on.

When that conference (FFI Boston ’22) is the first big get-together in 3 years, it’s even more impactful.

And, when that conference has as its theme the future, it makes members of that community even more reflective and inspired.

Please join me as I continue to process all of what I took in, along with all the debriefing I’ve done with colleagues since then.

See Now What? After the Great Meeting

From Multi-Disciplinary to Interdisciplinary

Let’s begin with the insightful framing of an FFI Award that was shared by this year’s recipient. Jack Wofford received the annual FFI Interdisciplinary Award for 2022 at the FFI Fellows breakfast on Friday morning.

Wofford is an attorney who has a long history of acting as a mediator in all sorts of multi-party disputes, including many involving enterprising families.

During his acceptance speech, he made a point of stating that the name of the award is “interdisciplinary” which he contrasted with another, oft-used similar expression, “multi-disciplinary”.

Hmmm, I thought to myself, I’d never thought about this distinction before.

A Multi-Disciplinary Field, Requiring Interdisciplinary Effort

There is no denying that the people who serve family firms come from a multitude of different disciplines, this has been known and acknowledged for decades.

What is more recent is the understanding that in order to do this work well, and not just in our original silos, requires some effort to be able to work with people from disciplines different from one’s own.

Many professionals do not even really recognize this, and even among those who acknowledge it, my guess is that there are only a small minority who really do a good job of learning how to do it well.

Perhaps that’s one of the reasons that it merits its own award.

From Field to Ecosystem

The title of this post hit on two parts of the evolution of the professional space in which I and many readers endeavour, the part about the disciplines, as well as the issue of how we label the area in which we all work.

Let’s switch gears and take on the second question.

The A-Ha Moment for this came during an off-site dinner that I attended with what we called “Team Canada”, which was a wonderful opportunity for many of us Canucks to spend some time getting to know one another a bit better.

Without naming names, I was seated next to a friend and colleague who I happen to know was born about two and a half decades after I was.  Across from him was a woman I know, who I also understood to be much younger than my late-50’s.

As it turns out, they had already compared notes and were born in the same year.  I was suddenly quite jealous, but maybe not for the simple reasons you might guess.

Entering and Ecosystem, Not Just a Field

I had my calling to do this work relatively late, and so I’ve been trying to make up for lost time for a decade now.

I’m jealous of these two professionals not just because they are so much younger, but also because they both seem to have found work that really suits them and that they enjoy.

And, the field has continued to evolve, to the point where it is now so much more than a plain old field, it has become an ecosystem in its own right.

The opportunities for those entering this space are so much better defined and available now than they were even a decade ago.

The Family Enterprise Parallel Version

I always like to draw some sort of parallel to the situations involving business families in these posts, so let’s do that before we run out of room.

Any FamBiz going from the founder’s generation (G1) to the next, offers some complexity and opportunity, and things to work on.

But when you see a family where there are active members in G3, G4, and G5 (and so on) that’s when things really get interesting.

Just as the young professionals I spoke about have plenty of opportunities, I’m also jealous of the rising generation members of such families, because they have a much broader path of opportunities ahead of them too.

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Philanthropy as a Doorway to Family Governance

Finding a Reason for Organized Family Discussions

Every week here I tackle a subject relating to families who either work together or own assets together. 

The main thrust typically involves the challenges these families face in organizing themselves in ways that increase the likelihood that they’ll be able to keep a great thing going right through the next generational transition of the family.

That often means I talk about the importance of having regular family meetings and beginning to institute some forms of family governance, which is often a tough swallow for some families.

For certain families, there’s kind of a nice “back door” to this that presents itself, and that’s family philanthropy.

A Subject That’s Long Overdue Here

I’m almost embarrassed that I’ve written so little about philanthropic activities in this space, because family enterprises are often quite generous, especially in their local communities.

When I got into this field, the ideas I had around philanthropy were quite simplistic, eg. Companies makes money, so they give some of it back, that seems logical.

It was only later, when I noted that some families had found it necessary to organize their activities on a more formal basis to actually implement everything required to properly execute their giving, that I realized the wonderful side effect this can have.

The Family Governance Angle

Regular readers recognize that we are now venturing into familiar territory, i.e. family governance.

I typically lament the fact that most families seem almost allergic to the idea of implementing any form of governance, and I fully understand their reluctance.

In my first book, SHIFT your Family Business, there’s even a chapter called “Governance, Ugh!”

So one day it finally clicked, philanthropy offers some families a wonderful onramp to this world, because family giving, done right, actually necessitates many of the steps required for other types of family enterprise governance.

Philanthropy Experts Abound

The professional circles in which I travel and connect also contain philanthropy experts on a regular basis, and it is amazing how much we have in common.

On the podcast that I often host for Family Enterprise Canada, Let’s Talk Family Enterprise, I once did an episode with a colleague, Dr. Sharilyn Hale, called How Philanthropy Can Support Both Family Governance and Legacy.

Yet it still never clicked that I needed to share this idea with my blog readers. Like I said, this is long overdue.

In the organisations I belong to, including the Family Firm Institute (FFI) and the Purposeful Planning Institute (PPI), I regularly interact with professionals who work with families to support their philanthropic activities.

I guess I’m starting to realize how much we have in common.

When There’s No Operating Business (Anymore?)

One way this situation suddenly appears is right after a liquidity event, when the family realizes that now that they no longer own and operate a business together, many things are different. 

See Huge Liquidity Events – Great News, Right?

Yes, they now have much more liquid wealth to handle and organize, but they’ve lost that common asset that they used to rally around and identify with, likely much more than they ever realized at the time.

How do you get a family excited about rallying around a pile of money?

Well, one answer, one that seems to be gaining in popularity, is very much centered around philanthropy.

It takes work and intention to do this well, especially if the family leaders have realized that doing this in a way that will last beyond their own lifetime, they will need to do this as a family, and not just by one or two people.

Building a Strong Foundation

Whether the specific vehicle(s) the family chooses to use include a family foundation or not, it will be important for every family to build a strong (figurative) foundation upon which they want to structure the family’s giving.

That important work includes defining the family’s values, which needs to be done pretty early on. Likewise, co-creating a vision and mission can also be important pillars that can help strengthen a coherent effort that all family members can get behind, and possibly also be involved in executing.

This will involve figuring out how they are going to communicate and make decisions together, as well as solve problems as they arise.

And as regular readers will recognize, I just laid out the key elements of family governance, right there in that last sentence.

Indeed, philanthropy offers many benefits for the family, not just for society!

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