A perspective on family philanthropy

July 2010

A cross perspective on philanthropy and family

Etienne Eichenberger and Maurice Machenbaum, co-founders of WISE


Crafting a philanthropic project within a family can perpetuate traditions and family values. As families of entrepreneurs are used to working together and overcoming challenges, they are particularly good at making successes of philanthropic projects. The co-founders of wise tell about their experience as philanthropic advisors.


– What are the reasons for families to engage in philanthropy?

EE: A longing for unity, a joint project, and the desire to learn. Each family has its own story and the challenges of running a family business can be heightened if the entrepreneur feels isolated from family members—either through choice, so that things can progress quickly, but perhaps also through a desire to separate business from family life. At the same time, the business exists so that the family can live, thrive, create meaning and transmit skills and a way of doing things to the next generation. From this point of view, philanthropy can become a common ground, or a sort of neutral ground that can include partners and children (perhaps even from various marriages) in a project that is not the family business. Philanthropy can also become a place for encounters, dialogues, or exchanges of shared altruistic interests. It is a wonderful opportunity to bring together, and even to unite family members. As such, it also offers space for personal growth.


MM: The idea usually stems from an authority figure in the family who decides to devote some time to it or to perpetuate certain values, to give meaning to the family business. It becomes a family project at a later stage.


– How do you address these issues?

M.M. At the first stage, we listen and make ourselves available. The world of philanthropy is about asking for things—on the street, by post, through friends…, there are many examples. People rarely listen to donors, although their motivations are rather personal. It is important to understand their motivations without trying to impose one’s own ideas – you need to listen objectively. Too often, a donor is not asked: “Which field do you support? Why? What are your positive and negative experiences? What impact would you like to have?” And yet it is precisely the discussions in the early stages that help to identify the level of involvement of a family.


– What are the benefits for a family?

M.M. There are many benefits: the opportunity to raise new conversation topics, especially around intangible values; the opportunity to give responsibility to family members, to give them important roles. Not everybody is interested or has a place in the family business. Philanthropy can serve as an alternative and become an important part of family governance. Of course, there is also enjoyment—of sharing, travelling, doing things for others. It is usually very pleasant and not confrontational.


E.E. Entrepreneurial families bring in their own “added value” in the way they get involved. More often than not, they engage in philanthropic projects with the same demands they have with regard to their business. It is misleading and simplistic to equate wealth with money. Wealth includes financial resources, of course, but also values, experiences, a business and networks that can be put to use in the philanthropic project.


– What is the impact on the business?

M.M. Families like to implement projects that reflect personal aspirations. This adventure can change them and have an impact on their role within the company. One can build bridges between the two worlds; but we have noticed that many families tend to make a conscious decision to keep them separate. Corporate philanthropy is very often public and reflects a different logic.


E.E. Family philanthropy remains private in most cases, at least in continental Europe. Laure’s family is an excellent example of this. Family philanthropy is very personal and often it involves the family in a much broader way than the business can. In fact, the family will find added value as much in the project that it supports as in the learning experience. The question of whether to create ties between family and corporate philanthropy remains open and should be discussed on a case by case basis. There are no set rules.


– How is the relationship between various generations of philanthropists?

E.E. We can see that the families we work with want philanthropy to be a conduit between generations, teaching values such as respect for others, or qualities such as an entrepreneurial spirit. Philanthropy is attractive for these generations, because they are involved in issues that are close to their hearts, such as climate change or difficulties facing young people. Philanthropy enables them to grapple with these issues. New ties and interests emerge from these experiences, which lead to new vocations and shape new leaders. In the case of Antoine, one can feel the pride of his grandfather and an undeniable hope in his father’s words, even if the story doesn’t mention that there is still a lot to do.


M.M. Philanthropy is a wonderful learning tool. Parents accustom their children to share their resources and to give them the opportunity to do so; to guide them in finding their modus operandi that will help shape their personalities; to make them understand the value of money and teach them to work together. In the case of Ivan’s children, we had lengthy discussions about the decision making process—whether it required a majority or unanimity. These are the baby steps of governance.


– How do you cast the roles?

– E.E. Philanthropy has multiple facets; it is difficult to define one type of “best practice.” Roles reflect the history, the desires, and motivations of a family. It is not the same for an entrepreneur (of the first or second generation) or people accustomed to managing assets that are passed from generation to generation. Yann started when he was not even 30 years old and commits about a third of his time to it, next to his business. His supporters are to be found less within the company than among his friends and other professional circles. The experiences are as diverse as people themselves.


M.M. We should also distinguish the concept of “role” from “status” in the family dynamics. One can have a role in a foundation that is different from the role held in a family business. Various roles can be balanced or crystallized depending on the wishes or needs.


E.E. There are many more things in common between generations than one might believe—motivations, ways of addressing issues; education, schools, private and professional circles that bring together family members; there can be conflicting views over the purpose of the donation. The particulars of family commitment and specific roles for family members emerge from this — sometimes lively— discussion.


– What are the motivations that unite a family around a philanthropic project?

M.M. We hear a lot of people say that they are privileged. But it’s not just a sense of guilt that motivates philanthropy, but rather the opportunity to act and the concept of getting some enjoyment out of the experience. Helping others derive enjoyment and satisfaction are great motivations. People want to get involved, to make a difference in their lifetime and to go deeper, beyond signing a cheque. People want to give in their lifetime and make sure they have an impact; this is a new trend.


E.E. Philanthropy is neither a remedy nor is it therapy; it is just a springboard. It opens up opportunities to unite and reunite children, like in Ivan’s case: To allow them to spend time together although they are very busy with their studies. Or to start a new chapter in life, like Paul, who decided to take that step at the age of 50.


– How do projects develop?

E.E. We have noticed that at the definition stage, it is important to build a dialogue based on reason and method. We do not create beneficiary organizations from scratch; we approach existing structures and we help accelerate their development. The tools and methodology we use to identify these organizations are based on years of experience. A philanthropist should be able to identify his or her own added value and the level of involvement in the project through practical experiences. One must learn from trial and error – an approach that comes naturally to family businesses. Having an expert give an outsider’s point of view can help the discussion and bridge the donor’s aspirations with the organization’s needs.


M.M. It is essential that family members be able to follow their philanthropic project on the ground. They will understand the goals and management of the beneficiary organization, its context and specific circumstances. We then know that everyone is singing from the same song sheet. Often this process happens naturally and the challenges faced by business managers and philathropy project initiators are much closer than one would think; from this situation emerges a dynamic force that drives collaborative projects.


– What added value do you bring to families?

M.M. Independence! A beneficiary organization proposes its own projects, while an advisor is not promoting anything. Our role varies depending on the interest and the availability of the family members. However, it is true that given the number of organizations out there, it is difficult to identify those that meet expectations the best. In philanthropy, it is difficult to learn without interacting with experienced people. With the help of an advisor, the donor understands that there is flexibility and that decisions can be made regardless of politics or the media exposure of certain causes. It is very stimulating.


E.E.  We know how to listen and we help them save time. Earlier, we discussed the importance of listening in a world where so much is asked of us. Having someone who listens objectively is a key criteria for building trust and helping them define what matters to them. Philanthropy can be frustrating; it is not easy to do good well. We have to get out of this paralyzing polarity between altruism and egotism. The challenges are elsewhere. We help donors develop a solid approach for doing things, without being too strict. We help them meet tangible performance goals clearly shaped by their contribution. Philanthropy must be driven by from individual experiences and discussions with other active donors. We see opportunities in the ties created between family members, in the understanding of differences, in the trust that is established with the beneficiaries, and in successful collaborations.


Source: Philanthropists Speak Out, Six family entrepreneurs speak about their commitment, published by the Banque de Luxembourg (2010)


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Etienne Eichenberger and Maurice Machenbaum describe two approaches to impact investing, which are proving increasingly attractive to Family Offices whose clients want to do well by doing good.


A perspective on strategic philanthropy

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To give means to make decisions: these decisions incur specific demands when expectations increase. The donor becomes a philanthropist when he wants a more structured and proactive process.


A perspective on family philanthropy

July 2010

Crafting a philanthropic project within a family can perpetuate traditions and family values. The co-founders of WISE tell about their experience as philanthropic advisors.



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