Why Should I Allow an Outsider to Review my Family Office?

Over the years, I've really enjoyed working with the various people at Family Business Magazine, and am honored to have another article published in the current edition. I've had many questions over the last few years about how family businesses should make distributions to owners, and I finally wrote my thoughts on the topic. Being thoughtful on this topic, involving the various family owners in documenting philosophy and approach, can go a long way toward building family harmony. I hope you enjoy this article.  Please reach out about creating a vision and strategic plan to support your legacy.

One of our family business clients recently asked for a benchmark or assistance in setting an amount for charitable giving from the business. What a great question! The challenge is that family businesses have such different goals, values and approaches; it is difficult to compare them to each other. Most family businesses are at least doing nominal charitable giving, such as sponsoring youth sports and local schools or perhaps in-kind donations of whatever product or service they provide. Many family businesses do this without tracking them or even much thought. When it comes to larger donations, businesses have to think about why they are making them. Some businesses make donations as public relations, perhaps instead of advertising and marketing. These businesses may have larger donation budgets than others, as it combines marketing with charitable desires. Some businesses make very few donations, explaining that they distribute money to owners and encourage them to donate personally. A few family businesses we know have used the Biblical-tithe as a rule, giving a tenth of their net income, either donating in-year or perhaps setting up a foundation or donor-advised fund. Some businesses set a fixed amount annually, based perhaps on what they did in the past or a number that “feels” right. Other businesses choose to make donations in particularly good years, or perhaps when they sell a line of business or a particular property. One conversation we’ve held many times is about how important it is to ensure that donations from the business match the family’s shared values while ensuring they support (or at least do not detract from) the business’ goals. In other words, if a donation could lead to bad social media or alienate groups of customers, or if perhaps the recipient organization only matches the values of a subset of owners, then the business should not make the donation. Focus on where the family and its values are in alignment, and ignore the areas where they disagree. None of this musing answers our client’s question about how much they should budget for charity each year. We would love to hear from you on benchmarking charitable giving – how has your family business set amounts for such donations? Please reach out about creating a vision and strategic plan to support your legacy.

 In working with families, family businesses and family offices on their vision and strategic plans, we’ve long discussed how the vision and values should identify where to focus your efforts and attention. Many times, we’ve looked at business opportunities and evaluated whether they aligned with the family’s values, as well as their vision. We’ve targeted investments, new businesses, philanthropic initiatives, succession plans, training programs, and much more based on their desired future-legacy. This has been a clear benefit of knowing who you are, where you want to go, and what is important to you. You can choose to change your vision, but don’t operate outside of it. As I created the vision and values for Big Canyon Advisors, I was reminded of another benefit to having a clear vision and purpose: providing boundaries about what not to do. I am focused on inspiring families to achieve their legacy for the next 100 years; spending time on activities that don’t support that vision is a distraction, limiting my success. Recently, several people have approached us about referral opportunities with good, solid companies. However, while such arrangements could be profitable for the business, since they are not within the vision (and are potential conflicts of interest), we have declined these opportunities. Our vision statement has helped us understand not just where we are going, but also where we should not go in order to stay on track. Having a clear vision and strategy for the family and business keeps us moving toward our goals, while also providing boundaries to help us say “no” to things that could distract or waylay us on the path toward success. This is just as true of the families, businesses and family offices with which we are working. Please reach out about creating a vision and strategic plan to support your legacy.