Establishing a family philanthropy

Norbert Schwarz

Norbert Schwarz

Several of my clients have wanted to begin or continue a philanthropic culture with their families but have been hampered by the costs of establishing their own foundation. The advice generally given to them by the experts is that it takes an initial investment of $250,000 to $500,000 to make the foundation cost effective. However, there are vehicles that can accomplish the objective for far less.

Our family was recently made aware of Vanguard Charitable. It is a public charity that was founded in 1997 by the Vanguard Group and provides investment management and administrative services for charitable purposes. A majority of Vanguard Charitable’s trustees are independent of the Vanguard Group.  The minimum contribution to establish a fund with them is $25,000 and you can make grants to acceptable charities of $500 or more. We were able to fund our initial tax-deductable contribution utilizing appreciated mutual funds.

The process to establish a charitable account was very easy and the company was extremely helpful in working us through the enrollment process. Making grants to your favorite charities is also simple. Vanguard Charitable does the due diligence, and you can choose the charities for your grants. Grants must support recognized public charities. You can also designate how you want your remaining fund balance to be invested at Vanguard Charitable. The annual fee based on our initial funding was .6%

If you are looking for a vehicle to establish family philanthropy at a conservative funding level, this type of vehicle might be well worth investigating.

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Five principles of personal wealth management

Norbert Schwarz

Norbert Schwarz

Recently a business-owning family facing the sale of their business asked me how they might prepare the family to face the issues of sudden wealth. Their primary concern was for their children and how this major change might affect them.

Over the years of serving as a banker, investment advisor and family business consultant, five principles of personal wealth management came to mind. These principles apply to adults as well as children and have been confirmed by the test of time for families of wealth and those just managing to get by.

The first, and most important, is to learn to live below your means.

Number two is to maintain a budget. Whether it relates to an allowance or a paycheck, the old adage “you can’t manage what you can’t measure” is just as true in managing your finances as it is in managing your company.

The third principle involves establishing a regular saving discipline. Save regularly, and when possible, save on a tax-effective basis.

Number four is to exercise financial patience in investing. Don’t try to time the market.

Finally, from a life as well as an investment perspective, understand the benefits of balance. In investments, it means asset allocation and periodically balancing assets according to the targeted allocation. Seeking balance in everything you do in life can make life’s transitions more rewarding.

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Communication in family enterprises: The role of assumptions

Mike Fassler

Mike Fassler

Family enterprises are complex systems due in part to the overlapping roles of family, ownership and management. Effective communication in the midst of these overlapping roles is crucial to being able to work together effectively. Part of human nature is to use assumptions in an effort to simplify and make sense of complex systems. So it is natural for stakeholders in family enterprises to make assumptions as they seek to communicate with one another. It is these very assumptions that often get in the way of communication and in turn working together effectively.

An assumption is “something that is accepted as true or as certain to happen, without proof.” Assumptions have a powerful impact on communication because they can become fact in the mind’s eye, facts turn into beliefs and beliefs drive our behaviors. There is a tendency to make assumptions that are negative, cumulative and unspoken. This often results in a negative outcome of interactions with other family business stakeholders because the behavior, stemming from the assumptions, is not appropriate for the situation. At the extreme, the search for reinforcing evidence of being “right” can become the priority which can contribute to a downward spiral in trust.

For example, if a sibling partner assumes that sharing their viewpoint about their niece’s behavior and performance will be met with defensiveness by their sibling father, it is more likely that an important discussion will be delayed indefinitely. The negative outcome in this situation is that the niece is not provided with timely feedback that is important to her development as a manager and future owner.

What if the sibling partner’s assumption was changed and shared? For example, open the discussion with: “I am assuming all of us are interested in Tonia’s development as a manager and future owner, have her best interest at heart, and believe that timely feedback is important for her development and the future of our family business.” Stated agreement on the underlying assumptions helps all parties align on the purpose of what will still be a difficult conversation, yet an important one that will actually take place.

As you prepare for that next interaction with another family business stakeholder consider…

Asking yourself:

  • “What assumptions am I making that if fully disclosed, would more clearly communicate my intentions?”
  • “What assumptions am I making that if modified, might open up other possible outcomes?”

Asking the other person:

  •  “Can you help me understand what led you to that solution?”
  • “Is it possible to try another approach? If so, what might be an alternate outcome?”

Working effectively with other family business stakeholders is always going to involve the making of assumptions. Being transparent with what your assumptions are and being curious about others’ will contribute to more effective communication in your family enterprise.

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Accountability: How to respond when behaviors or results don’t measure up

Mike Fassler

Mike Fassler

Accountability in a family business requires personal commitment to agreed upon behaviors and results. When you commit, you automatically make yourself vulnerable because your behaviors and/or results might not measure up. That’s why it takes courage to make commitments – you have to take some risk. How you respond when there is a gap between your commitment and what actually happens determines how others are likely to respond to the shortfall and whether or not you will have a positive influence on accountability in your family business.

So, let’s say you’ve made a commitment and you’ve fallen short. How should you respond?  By voluntarily acknowledging the shortfall, you create a safe environment within which to have what are usually difficult conversations. You are not leaving another family member or non-family executive to wonder whether you are aware of the shortfall, and how to best start a conversation with you. They don’t have to — your initiative has started the conversation and your display of vulnerability created the safe environment.

Voluntary acknowledgement takes pressure off relationships. Your recognition puts others at ease and better enables them to provide input as to changes or actions to help mitigate the impact of the shortfall. Provided your family business stakeholders have shared intentions, and are pulling together in a shared direction, voluntary acknowledgement will more likely lead to support, rather than challenge.

During this conversation that you have brought to light, ask for input and ideas. Was the commitment too large? Is there additional training or skill building you need to improve upon next time? Is there someone that might shadow you on your next attempt to provide more input along the way? Asking for feedback frees others to bring resources to bear, and this will support you in future commitments.

Voluntary acknowledgement is a powerful influence on keeping accountability alive and well in your family business and a way of mounting support during difficult periods.

Consider what’s standing in the way of you trying this out.

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Top 10 New Year’s resolutions for family businesses

Wendy Sage-Hayward

Wendy Sage-Hayward

It is that time of year where everyone is making New Year’s resolutions. I am not necessarily a big fan of resolutions primarily because too often we don’t remember them shortly after we make them! However, if we treat New Year’s resolutions with a bit more formality by writing them down and reviewing them regularly then we will have a greater likelihood of success.

My second issue with New Year’s resolutions as they relate to family business, is that they typically focus on individual outcomes like weight loss, exercising more and the like (which are all good goals of course!). However, this year rather than focusing all of your resolutions on yourself, try developing one for your family firm.

Here are a few resolution ideas to get your thoughts moving in this direction:

  1. Practice daily gratitude towards your family members – especially the ones you find more challenging.
  2. Identify three items in your family code of conduct that you will improve this year.
  3. Engage the next generation in a new conversation about their role in the family business.
  4. Go to a family business conference or course with another family member (not a spouse) this year.
  5. Schedule a conversation with your family about what money and wealth mean in your family.
  6. Complete your shareholder’s agreement in 2015, or at least get started on it!
  7. Develop family employment policies for your family firm.
  8. Schedule a conversation to talk about the pros and cons of pre-nuptial agreements or co-habitation agreements.
  9. Start a family business book club in your family. Top reads include: Innovation in the Family Business by Joe Schmieder or Strangers in Paradise by Jim Grubman.
  10. Develop a plan for exiting your family business in five years.

Remember when it comes to goals, less is more so don’t try to do all 10.  Start with accomplishing one or two, then move along and try more.

What would be a great New Year’s resolution for your family firm?

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After holiday reflections: The value of family

Wendy Sage-Hayward

Wendy Sage-Hayward

I, like many of you, have just returned from the holidays where I spent time with my family as well as with a few other business families. During this time, I was reminded of the wonder of family along with some of the challenges of being with family, especially for certain personality types.

It can be difficult to manage the many different perspectives, needs and sensitivities of a large group of related people. Everyone has ideas about how things should be done or where you should go or even what the best way to cook the turkey is. Not an easy path to navigate and yet one of the most significant ongoing tasks of our lives is to build and maintain a sense of family.

How do we make people feel included, loved and respected when we are all together for the holidays? How do we honor each other’s status needs? How do we constructively manage the inevitable conflicts? How do we balance our own needs with that of our family’s? And most importantly, how do we continue to enjoy being part of an ever-evolving family?

Being with family takes just as much, if not more, planning and intention than anything else we do in life. If we do not set out standards and a plan for how we want to be together, how will we ever achieve a greater sense of connectedness? For many families, the variable personalities and dynamics are just too complicated to let it evolve all by itself. We need to be thoughtful and intentional about how we come together and celebrate, especially during special holidays which have a natural stress already associated with them.

Here are some reflections on how to manage the holidays and special events of any kind with family.

Why?  First, be clear on why are you going to celebrate the holidays with family in the first place. What do you value about family? For me, family is about a commitment to join together for the purpose of fostering ideals like love, belonging, tolerance and justice –  things that really matter. Family is one of the key mechanisms in life that allows these ideas to become real when they are shaped by traditions which are handed down from generation to generation. Remind yourself of the value family brings to your life.

How much? Second, plan for the stress – it is an inevitable part of relationships and families! Build skill and capacity for managing it better. Families are our practice ground for the stress we face in life. Attempt to be boldly tolerant and patient with others. Families aren’t just about the good feelings we get from them. They are a place for us to expand and develop as human beings. Be clear about how you are going to participate and how much you are going to participate.  Doing some planning before the holidays start.  It’s a great time for a family meeting to chat about how and where everyone wants to participate.

How do I balance it all? For many the stress of the holidays is not the one event (like Christmas day).  It is the ongoing events: the busyness of being out night after night with family, business associates and friends.  So once we get together with family, we are already tired and sometimes on a short fuse. Make sure you exercise your “no’s” when appropriate. This will help you ensure your tank isn’t already empty by the time “family time” rolls around.

How can I help?  Finally, on a more practical note, do your part. Consider your role and how you can help make the load lighter for others.  It is a ton of work to bring family together. The cooking, cleaning, organizing, shopping and event planning are enormous. In many families, it falls on the same people year after year.  Before the holidays, have a family meeting and decide how everyone will contribute.  This year, we had a family meeting at Thanksgiving and made our plans for all of the holiday events: who would host, how each person would contribute, etc.  So pitch in, share the load and have a laugh while you are doing it!

Ultimately, we all want to feel a greater sense of connectedness during the holidays.  Being clear about why we are coming together, how much we want to be together, and balanced about everyone’s contribution can help facilitate that connectedness.

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Avoiding the “to-do list” mentality

Kristi Daeda

Kristi Daeda

One of the great benefits of the ever-increasing dialogue around family business challenges is that many families have a much clearer picture of the things that are required to sustain the business into future generations. Readers of our books and articles will see that our experience with business-owning families has shown certain things to be very helpful in balancing the needs of family and business, including independent boards, family councils, family policies, family meetings, and family education.

And so, it can be tempting to dive in and start putting those things in place. Take the example of instituting a family council. It can seem fairly simple – selecting people to serve on the council, organizing meetings, creating agendas, etc. A successful family council, though, requires the family itself to change, giving up old ways of communicating and making decisions in favor of this new structure. This kind of change takes time and may feel like two steps forward, one step back for a while until the family adapts.

This is why the process of how these important structures are created is as important as the structure itself. A board of directors will be most effective when the board has the trust and respect of the family. A family council will work best when the family understands its purpose and respects the council members who represent them. The process of creating these structures includes what they are and how they’re formed, plus education, agreement, and engagement.

As we enter a New Year we may look to set goals that will move our families towards better continuity planning. Keeping the focus on both where you need to go and how you’re going to get there is important to smoothing out the bumps in the road on the way to change.

Posted in Communication & Conflict, Family Business Consulting, Leadership, Succession & Continuity | 1 Comment

Getting more out of 2015

Kristi Daeda

Kristi Daeda

Earlier this year, Kelly LeCouvie wrote here about the book Essentialism (a book I have not got around to reading yet – perhaps that should be my New Year’s resolution?), and the importance of the “disciplined pursuit of less.” Amy Schuman and Stephanie Brun de Pontet wrote about mindfulness and its benefits for family enterprises for The Family Business Advisor.  Just today I had multiple conversations with people who used words like “anxiety,” “pressure,” and “time-sensitive.” In our conversations with family, friends and colleagues, we see these themes repeated – there’s seems never to be enough time, energy or attention to do all of the things that we want and need to do.

It follows that our lives – often over-scheduled, over-committed, and awash in information – won’t accommodate the things that are most important to us unless we make them a priority and put them first.

So, in honor of the closing of 2014 and with a hopeful look at the coming year, here are some questions that I’m asking myself to help me plan for my priorities first. I hope that they spark a thought or idea for you as well.

  1. What happened in 2014 that should continue in 2015? Perhaps you had an incredible family vacation, or started regular coffee dates with a valued friend. Maybe you found great business insights from an unexpected source. The stand-out moments in our lives can seem like a one-off, but we can welcome more of them by creating more opportunities for them to happen. How might you make more of these opportunities in the coming year?
  2. What’s important to you that, if you don’t plan for it, could fall by the wayside? This year, with busy schedules and being scattered across the U.S., we weren’t able to get my extended family together for the holidays. To avoid that in the future, we’ve already started the conversation about Thanksgiving 2015. The same can happen to things like family meetings, personal health, strategic planning, or time for training and mentoring younger family members. Making a commitment before other things get in the way – especially a commitment to others – creates an anchor that the rest of our obligations can revolve around.
  3. Where did you spend time this year that most engaged or energized you? It could be time serving your community, planning for the future of your business, reconnecting with loved ones, meditating or exercising. Which places, activities and people naturally recharge you? How can they play a bigger role in your life in 2015?

With some thought and a little planning, we can all have more of what’s important, and not just what’s urgent or expected, this year.

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Experimental tolerance

Joe Schmieder

Joe Schmieder

Family businesses are willing to experiment. A desire to try new things, particularly in the entrepreneurial stage, is a trait found in many family business leaders. That doesn’t mean they take large risks or jump blindly into innovation, but rather that they may be willing to go against CONVENTIONAL THINKING, in pursuit of new products and processes. Within public companies, this experimentation is called “intrapreneurship,” as embodied by employees who see and implement new ways of doing things.

New York-based Welch Allyn, a family business that manufactures medical devices, embodies an experimental approach to innovation by soliciting ideas from its customers, employees, and the public at large, as stated on the company website:

“At Welch Allyn, we make new devices and products come to life through innovative ideas. Our engineers are continuously developing next generation solutions, but we know that people just like you are thinking up inventive and resourceful ideas all the time too.… In order to continue the creative cycle, we encourage you to submit your ideas to help us create products that are inspired by you to be used by you – our customers and partners.”

This openness to experimentation and innovation was established by company founder William G. Allyn, and it has helped the company achieve five decades of technical advances, sales growth, and industry recognition.

How could you tap into your customer base for more innovative ideas?


innovationJoe Schmieder’s new book Innovation in the Family Business utilizes the IP from the Family Business Consulting Group team and includes case studies from successful family business ventures such as SC Johnson, Beretta, Mogi (producers of Kikoman), and others. This is the first book to focus on innovation in a family business setting.

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Creating a culture of innovation

Joe Schmieder

Joe Schmieder

Innovation can be described as creative change that produces meaningful results. Family businesses that demonstrate a proactive ability to drive meaningful, value-adding change are those with the strongest cultures of innovation.

In some family firms, the notion of innovation, creativity or change is clearly stated in their values, which may be posted on the walls of the company.  S.C. Johnson, the global household cleaning company that uses the tag line “A family business,” makes its values as clear as glass freshly cleaned by its products:

  • Entrepreneurship
  • Innovation
  • Risk-taking
  • Knowledge and technology
  • Employee welfare
  • Eustomer relationship marketing
  • Vision
  • Proactivity
  • Global thinking

According to this list, the Johnson family explicitly values innovation. Supporting innovation are the complementary values of entrepreneurship and risk-taking. It takes an entrepreneurial drive and some investment risk to make innovation real and meaningful. The four generations of Johnsons have been inspired to exemplify these values by the story of founder Samuel Curtis Johnson: at age 53, he launched a flooring company and soon diversified into floor maintenance when he observed his customers needed a product to preserve their new floors.

Most family businesses have not been as intentional or broad scope about innovation as the Johnsons. In other family firms, innovation may be exhibited mostly in one area of the business, or only for specific periods of time. A family firm in the adhesive coating industrial sector discovered that one of their key ingredients was going to be discontinued by its sole supplier. Understanding that this would devastate their business, a team of engineers, managers, and salespeople banded together to generate A CREATIVE solution. It turned out that one of the salespeople’s customers knew a different vendor with a similar ingredient. After some joint development with that vendor, which was also a family business, the formula was developed to suit their needs, resulting in an even better adhesive. This was just one time the family firm exhibited such joint problem-solving innovation.

Creating a culture of innovation shouldn’t be about product/service DEVELOPMENTS alone (although the next chapter discusses that topic in detail). On the one hand, there may be no greater practical way to create a “sense” of innovation than to produce a steady stream of new market-focused products. New-product introductions are exciting and highly visible to the organization and its stakeholders. On the other hand, to maximize performance, companies need to aim for innovation on multiple levels. That means long-lasting family firms also work on creative ways to:

  • Take measured risks to develop new wealth while preserving foundational or legacy wealth.
  • Blend diverse family members working in the business with capable nonfamily executives.
  • Transition ownership from one generation to the next while balancing incentive to work hard with financial security.
  • Develop the next generation into leaders who are able to reinvent the business for greater growth, building upon the founder’s legacy without trying to replicate the founder’s hero image.
  • Live family values that set the tone for business continuity while remaining focused on managing a healthy business in the short term.
  • Steward family resources in a manner that benefits customers, employees, communities, and family members.
  • Develop effective governance practices that balance the sometimes conflicting needs of the family, management, and ownership.

Together, these elements support a highly innovative family business culture.


innovationJoe Schmieder’s new book Innovation in the Family Business utilizes the IP from the Family Business Consulting Group team and includes case studies from successful family business ventures such as SC Johnson, Beretta, Mogi (producers of Kikoman), and others. This is the first book to focus on innovation in a family business setting.

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