For wealthy families, “philanthropy” means — or, at least, should mean — more than just donating money to charitable causes. It’s a shared vision, based on deeply held values, of how the family can make a positive impact in the world. It requires a serious, structured approach.
Family Business spoke with Maryann Bell, who leads Wingspan Legacy Partners’ advisory practice, about creating a philanthropic plan that brings your family together, provides them with a shared purpose and creates bonds that span, but don’t shackle, generations.
This conversation has been edited for length and clarity.
Family Business: How can philanthropy help galvanize families of wealth around a common purpose even in situations where, for instance, there are family members who aren’t engaged with an operating business?
Maryann Bell: We work with different sized families across multiple generations, so we see different patterns and varying levels of experience. But one thing that is very true is that having a family think through what’s important to them and what their values are — and then how to apply those values to a philanthropic platform or program — really connects individuals. It’s multigenerational.
We had a family where the first generation had three children, and each of them had between two and four children of their own. The grandfather who started the business had this mentality that average students — we’ll call them “C students” — never got a lot of attention. In some cases, a C student was somebody who was working two jobs or didn’t have the resources to help them get their academic performance elevated. So, he orchestrated a scholarship program in which the only students who were eligible were C students. It gave them a pretty good start on their college tuition, and then they had to maintain a B [average].
His kids and grandkids didn’t really know about this — they weren’t engaged. But he passed away unexpectedly and a beautiful thing happened at his funeral: Recipients of the scholarship stood up and said, ‘Your grandfather changed my life.’ The grandkids were 15 to 20 years old at the time. They didn’t know. They had no idea. Everyone was weeping.
For a short period after that, the [operating] business was kind of overseeing the scholarship, and, while it was a great thing, it wasn’t really activating a connection within the family. And so, what we’ve done is put in place a regular philanthropic council — of the nine G3s, five are on it. We also brought in some professionals who do grant allocation to help these young people select scholarship recipients.
This has activated a connection among the next generation that they’re super proud of. They’re learning different skills, they’re working with people and learning best practices, they have a cadence of meetings and they understand the language. And this is going to activate in them a commitment to something that makes them very proud of their family and very connected to their family members.
FB: I wanted to talk a little bit about getting buy-in and consensus when it comes to philanthropy. At our recent ALIGN conference, there was some debate over whether it’s better to encourage family members to pool their investments or to give them the flexibility to make individual investments. What’s your philosophy on that when it comes to “investing” in philanthropic causes?
MB: I think, again, it goes back to defining what the goal is and what the family’s values are. I think it’s valuable to come together on major commitments, major financial distributions. If you get too spread out, you’re not going to have as much of an impact.
Having said that, you always need to have room for flexibility, no matter what. But you can also be a little bit generous [in defining the area of focus]. For example, one of our families really wants to support education. That’s a pretty large arena and, within that, you can have different areas of focus. And so, I think identifying large enough objectives that allow for some individuality, but really getting discipline around some core values, is the most effective approach.
FB: Wingspan has identified five best practices for family philanthropic governance: 1) prioritize your family values and mission statement; 2) keep it professional; 3) foster generational engagement; 4) measure your impact and 5) revisit and rewrite. Can you walk me through what each of these entails?
MB: The first one really comes down to answering the questions: Who are you? And what’s important to you? So, for example, the answer can be “childhood education.” The answer can also be more specific: “We support our church” or “We support our synagogue.” We work with families that have taken both approaches.
“Keep it professional” is the second one. You should have a process for decision-making and a meeting cadence that allows for information to be shared and for thoughtful discussion to occur so that the family can achieve alignment around its goals. Leadership is important in this arena. When we created the philanthropic council I mentioned, we designated one member as the leader, and that person’s job was to create alignment.
The third one, multigenerational engagement, is always valuable in philanthropy, and it can be really fun for younger people to work with the adults in their family, not necessarily in a business, but on a common philanthropic goal.
“Measure your impact” is the fourth component. Sadly, the reality is there’s been some philanthropic malpractice in the world. You have to establish benchmarks and monitor the quality and impact of the [recipient] organizations. You should also know the people at these organizations and be in regular contact with them.
And the last thing we say is “revisit and rewrite.” Be mindful that the world evolves and changes. Be nimble enough to adjust your philanthropic plan to meet needs as they arise.
We know a family in Turkey that was extraordinarily generous after the earthquake last year. While their core philanthropic identity is focused on education — they actually have a university that they created and funded — when that earthquake happened, they brought water, they built houses and, going back to that core identity, they created schools.
FB: So, families should apply a similar level of structure and seriousness, as well as flexibility, to managing their philanthropic arms as they do to running their businesses or managing their investment portfolios.
MB: Just as businesses have to evolve because of regulatory changes or new competition, and just as portfolios might need to be rebalanced because of shifting market factors, philanthropic plans can evolve, too.
You want to create a system for responsibly stewarding your family’s assets that is transferrable but that can also be modified by subsequent generations. The world changes and younger people tend to think about things differently, so you want to make sure that gets reflected in the decision-making process.
Good, nimble, appropriate governance leaves the door open for new leadership, new ideas and new input and, therefore, better long-term stewardship of your family’s assets.