There has been a lot of buzz in the press of late around the ‘Giving Pledge’ launched by Warren Buffett and Bill and Melinda Gates, as an effort to encourage billionaires around the world to donate the majority of their wealth to charity. According to a recent article in Daily Finance (See full article at:http://www.dailyfinance.com/story/forty-billionaires-pledge-wealth-charity/19581080/?sms_ss=email&icid=sphere_copyright) over 40 well-known figures have signed up for this pledge, such as CNN founder Ted Turner, Ronald Perlman, designer Diane von Furstenberg, to name but a few. Members are expected to make a public statement about their gift, explaining their decision. Buffett describes the effort as follows:
“At its core, the Giving Pledge is about asking wealthy families to have important conversations about their wealth and how it will be used. We’re delighted that so many people are doing just that — and that so many have decided to not only take this pledge but also to commit to sums far greater than the 50% minimum level.”
While obviously the huge philanthropic commitment being pursued through this Giving Pledge is to be lauded, we know families that own businesses might not have the ability to make the commitment that is being encouraged on this platform, but remain among the most philanthropic and high-contributing members of society nonetheless. The reality for a family that aspires to see its business vision carried into the next generation is that transitioning a capital-intensive business to the next generation while funding ‘Uncle Sam’s’ cut will tie up the resources of even the most generously-minded soul!
In an informal poll among our family business advisors I heard a number of comments around trends and approach to giving among our family business clients. Chris Eckrich offered the following series of examples:
“The biggest trend I see with clients is getting actively involved in their giving. Visiting Africa’s micro businesses, walking in fundraising walks to which they contribute, touring hospital wings that have been donated by the family, serving on boards for causes they feel strongly about, helping build buildings, and many site visits to recipients of grants are examples.
Those who seem to enjoy active involvement with today’s dollars…as opposed to future dollars at death, show great vibrancy in their foundations.”
Others mention the frequent family time devoted to service projects such as a building a ‘habitat for humanity’ home as a project undertaken by the ownership group. These efforts of going beyond writing a check, and getting involved in person demonstrates a genuine connectedness that provides a strong example to the broad community, employees as well as to future generations of owners.
John Ward also underscores the importance of choosing to keep a family business private (rather than selling and creating cash that can then be given away). Many closely-held businesses are run very ethically and provide value to their customers, and an excellent work opportunity for hundreds or even thousands of employees – staying the course in this case represents another important way of contributing to society. These business-owning families are often deeply connected to their communities and also contribute tirelessly to local charities and community development (which is always enhanced by the presence of stable, well-paying jobs).
Finally, Jennifer Pendergast underscores the importance of a family having an intentional conversation about the purpose of their wealth. Most families with whom we work have philanthropy and giving of funds as one of their shared purposes as a family – but many also choose to reinvest funds into new ventures, contributing to society through business innovations and employment.
It would be great to share how different families have found meaningful ways to contribute – as community-minded families are eager to hear of new approaches to stimulate their own family’s thinking. To quote John Ward: “different approaches for different people is the American way.” Feel free to share your ideas or comments as we are always eager to learn about the many ways that families fulfill their ‘obligation’ to be generous and engaged members of the community.