Unexpected rewards when you involve family members and employees in your charitable giving
Entrepreneurs who are known for their personal and corporate philanthropy often cite the motive of ‘giving back’ to the communities that have fostered their success. Involving your family and employees in the philanthropic process can make this experience even more rewarding.
Instilling values and money management skills through philanthropy
A challenge faced by many affluent families is how to instill values of working hard and being appreciative of the privileges offspring enjoy as a result of the older generation’s efforts and self-sacrifice. Playing a meaningful role in the family’s philanthropic projects allows children to see your words about giving back translated into action.
A thoughtful approach to philanthropy is multi-faceted, offering opportunities to discuss values and the relative merits of competing needs; as well as learning practical skills such as budgeting and money management techniques, and aspects of investing and preserving capital. Many families also use philanthropy to model a responsible and compassionate response to social problems and the plight of those less fortunate, whether locally or on a global plane.
Deciding how your family can best contribute to the well-being of the community (however you define that community) involves discussions about what is most important to you. It also gives you the opportunity to learn more about each other and what is important to individual family members. Defining family values broadly enough to include a range of interests may help to keep the younger generation engaged. For example, if your particular interest is quite narrowly defined, say, learning disabilities or promoting literacy, defining the family philanthropic focus as ‘education’ allows for the expression of other family members’ passions for, say, encouraging girls to take math and science, or giving inner city kids wilderness experiences to educate them about the importance of preserving nature. Understanding and accommodating different viewpoints – particularly about issues one is passionate about – teaches many valuable skills that will be useful as your children navigate social and business networks in our increasingly complex and interdependent world.
The formal structures you put in place to implement the family’s philanthropic activities offer the same kinds of learning experiences as a business, but in a low risk environment where children can learn by making mistakes. As your family surveys the nearly infinite worthy causes that could benefit from your charitable dollars, even the youngest child starts to comprehend how finite are your means by comparison. It becomes evident that hard choices must be made and that your philanthropic capital must be carefully stewarded to have an impact and provide ongoing funds for the family’s charitable projects. This involves careful research and a collaborative decision-making process, allocation of resources (human and financial), detailed budgeting (often on a multi-year basis), cash flow projections (often based on estimated returns on investments), and the establishment of metrics to measure results. If you have a family foundation, learning experiences also extend to various administrative and legal issues, as well as governance structures.
Corporate philanthropy enhances competitiveness
On a corporate level, there is evidence to suggest that employees who participate in corporate philanthropy are measurably more productive. In a recent study1, 300 university students were offered compensation of a fixed wage plus a bonus based on their performance. A subset of these students participated in corporate philanthropy: one group donated a fixed amount to a charity, another donated an amount related to their performance on the job, while a third had the option of splitting their performance bonus with a charity. Regardless of how the charitable contribution was made, job performance increased an average of 13 percent for all three groups involved in the corporate philanthropy initiative. The improvement was particularly strong for those workers whose performance was initially low. It was found that performance improved even more when workers had some say in how charitable payments would be made. In cases where participation was optional, over half of the workers chose to donate some of their compensation, with women being more likely to do so than men.
Research also indicates that engaging in corporate philanthropy makes your company more attractive to the latest generation to enter the workforce, as they expect their employers to be socially responsible and to make charitable contributions where they do business.
At home and in business, it seems we improve our own prospects as we look after the needs of our expanding communities.
1. Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment; Mirco Tonin, Michael Viassopoulos
Daryn Form is a Senior Financial Advisor with Assante Capital Management Ltd. providing wealth management services to principals of family-owned and privately held companies. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and is registered with the Investment Industry Regulatory Organization of Canada. The information mentioned in this article is for general information only. Please contact him to discuss your particular circumstances prior to acting on the information above. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Rates are not guaranteed and are subject to change at any time without notice.