Many families struggle with the ‘why’ of their wealth. Defining a philanthropic strategy is a great way for a family to articulate a purpose for their wealth. However, only 20% of families have a formal process for doing so.

At the start of COVID, there was concern that financial pressure on families would lead to a reduction in philanthropy. But in a recent survey, 43% of respondents said that the pandemic had not altered the way their family thinks about or acts when it comes to contributing to the community and wider society. The pandemic has also been effective in turning many families’ attention to the inequalities closer to home, which has led to an uptick in local giving initiatives.

The rising generation of family business leaders have been the driving force behind families increasingly integrating philanthropy into their business practices. Families are also using philanthropy to engage and educate their rising generation in the family business, and starting to think in a more holistic and cohesive way.

Philanthropy is a great entry point for young children about wealth – according to some it can start as soon as the child says ‘mine’ for the first time. Some experts encourage families to structure a three-part allowance for children: spending, saving, and giving. 

But philanthropy is not a panacea that will lead to fighting family branches uniting around a common theme and singing kumbaya. Conflicts between family members or branches can actually be aggravated through highly emotional discussions around giving. Tread carefully, and first build a foundation around shared values.

Consider This: Is family giving a source of conflict in your family? or something that brings family members together? Do you give with a strategy or is it more scattergun? Are you inculcating the giving culture in your family into younger family members? 

Further reading: https://mg.co.za/opinion/2021-03-09-few-wealthy-families-employ-a-philanthropic-strategy/, 
https://www.campdenfb.com/article/next-generation-takes-philanthropy-heart-family-business, 
https://www.wealthbriefingasia.com/article.php?id=189213#.X7NUQ3AzaUk, 
https://mibiz.com/sections/small-business/experts-see-short-long-term-shifts-with-family-business-philanthropy, 
https://ssir.org/podcasts/entry/giving_across_generations_maximizing_impact_through_family_philanthropy#

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post Defining Philanthropy: COVID & beyond appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/defining-philanthropy-covid/

If you couldn’t bear to watch Megan Markle bare her soul to Oprah (or if you couldn’t look away from it, and from the endless commentary that followed), here are two practical things you can actually take from the latest episode of this saga:

1. There are serious challenges to growing up in a wealthy family with a public profile. The weight of expectations is heavy, and finding identity and meaning can be difficult. Marrying into such a family has similar but slightly different challenges.

One of the hardest issues is: who can one talk to about this? Who can genuinely understand the experience, show empathy, and be a helpful sounding board? I don’t think this can come from a televised interview and the opinions of the social media masses. As my good friend says: “the poor want to be rich, and the rich want to be happy”. People without wealth or fame see them as a panacea that will solve all their problems. People with them understand that they come with their own problems.

However … 2. There is an intergenerational narrative here that has struck a chord with some younger people. A stodgy old institution deeply rooted in colonialism and vestiges of racist culture being exposed publicly (by a whistleblower) and forced by external pressure to change and adapt to the times. That is a similar script to the #MeToo movement and other such exposures of established cultures.

This is not the forum to discuss how a royal family stays relevant in a changing world. However, this same narrative plays out in many families, where the rising generation challenges established cultures. Those families need to build their own intergenerational bridges, and work out how to adapt and remain relevant to their own emerging stakeholders, both born and married in..

Consider This: Do the members of your family have a support network that provides empathy and a safe space to vent? Are they comfortable with their “privilege” and able to see both the positives and negatives? Is your family able to openly discuss and challenge family cultural norms?

Original articles & further reading: https://www.telegraph.co.uk/women/life/meghan-millennial-hero/, https://www.psychologytoday.com/us/blog/your-brain-work/201203/has-coddling-entire-generation-children-set-them-fo, https://www.npr.org/2016/09/13/493615864/when-it-comes-to-our-politics-family-matters, https://www.nestegg.com.au/retirement/11590-intergenerational-imbalance-the-central-problem-of-our-time, https://www.thenational.ae/opinion/comment/everyone-suffers-when-younger-and-older-people-don-t-mix-1.811571

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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The post Rising Generation Views on Established Culture appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/rising-gen-established-culture/

Consider this from two perspectives: the family and the individual. Do families demand that younger generations prove themselves in some way, perhaps before being allowed to join the family business or take some other role with respect to the family assets?

The other side is the view of the younger family member. Being born into wealth can be a lodestone, especially the way ‘privilege’ is a dirty word in some circles. The world loves a rags-to-riches story, but subsequent generations that don’t start with ‘rags’ are automatically ineligible.

That makes the story of Tamir Triguboff – great-nephew of the second richest man in Australia – an interesting one. Without a cent of family money, he developed an app, which he sold for AUD 85K. He’s using half of the proceeds from the sale to fund his next venture – “a social platform that enables young people to voice their opinions on social issues”.

Consider This: How do you (or would you) handle a request from a family member for funding their business idea? To what extent should family members need to prove themselves? Would you want to see their story on the front page of the local newspaper? Is this even newsworthy – while they may not have relied on family money for the venture, have they overly relied on surname for publicity?

Original article: http://www.smh.com.au/technology/smartphone-apps/my-parents-haven-t-given-me-a-single-cent-grandson-of-australia-s-second-richest-person-out-to-prove-himself-20171217-p4yxsl.html

Actionable Generational Wealth Succession

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The post Proof or Privilege in the Family Business appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/privilege-family-business/

And does being ‘happy’ mean something different to those who have wealth and those who don’t? These are the questions considered in a recent research study.

Most anyone who has wealth would find it obvious that the answer to the first question is a resounding ‘no’, but it takes the rigour of an academic to first define happiness (life satisfaction and a set of distinct positive emotions), and then examine the correlation between them and wealth or social class.

So the answer to the second question is ‘yes’. But how are they different? For those of higher social class, happiness is reflected in self-oriented feelings like pride and contentment, which may reflect their desire for independence and self-sufficiency.

On the other hand, lower classes exhibit other-oriented feelings of compassion and love as their expression of happiness, which could help them cope with their more threatening environments.

Consider This: What makes you happy? How much of your happiness derives from wealth or consumption?

Original articles: from the LA Times http://www.latimes.com/science/sciencenow/la-sci-sn-happiness-rich-poor-20171219-story.html which is based on a research publication from the magazine Emotion http://www.apa.org/pubs/journals/releases/emo-emo0000387.pdf (a very dry read for those academically inclined).

[reposted with permission]

Actionable Generational Wealth Succession

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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The post Does Money Buy Happiness? appeared first on David Werdiger.

source https://davidwerdiger.com/2022/03/happiness-money-coexist/

Q: We have three non-family board members in their 70s on our family board. How should we handle moving them on?

A: The composition of the family board is a careful balance between family members & independent voices, and maintaining regular turnover is very important. Often, families will establish a board with some family members, the family lawyer & accountant, and perhaps some other trusted advisors. But without due attention to the board composition, the group can remain static for a period of time, until they suddenly realise it’s time to bring in some fresh people and energy. What is required is a board succession strategy.

This involves analysing the mix of skills, ages, tenures and backgrounds that the board needs now and in the next few years (bearing in mind any anticipated major events the family expects to be dealing with during that period). That should be compared with the current composition, which can help identify any gaps. Open discussions with each board member individually as well as collectively are essential so everyone understands their role on the board, and how long they would like to continue there. People generally find it easy to join boards and committees, but hard to leave them.

While in the corporate and non-profit worlds, a common limit to board tenure is 6-10 years, families are different and terms can and should be longer. Family and ‘corporate’ memory are more important on family boards, and provide essential value and context, especially in times of crisis. That said, a board stacked with a bloc that has been there for 20+ years can be a barrier to necessary strategic renewal.

Usually, board composition falls to the chair. But in family boards, the chair may not have those skills, and it can therefore be helpful to bring in a specialist to assist with a regular review process.

Consider This: Do you track board tenure and skills for your family boards? Have you ever openly discussed board member’s plans to leave the board?

Further reading: https://www.forbes.com/sites/forbescoachescouncil/2019/05/29/the-second-commandment-of-family-business-succession-create-a-board/#594c014529ea, https://insight.kellogg.northwestern.edu/article/family-businesses-adapt-next-generation, https://www.bizjournals.com/bizjournals/news/2019/07/18/being-fair-but-not-equal-divvying-family-business.html, https://www.forbes.com/sites/matthewerskine/2020/06/29/succession-planning-and-the-professional-management-of-family-owned-companies/#1e19236e4272

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post Board Succession Strategy appeared first on David Werdiger.

source https://davidwerdiger.com/2022/03/board-succession-strategy/

Q: We’re just approaching a liquidity event. How do I get my twentysomething children involved in our plans for philanthropy?

A: Stop right there. You might be 10-20 years late.

Many families do things in the following order: create wealth, extract liquidity, then give charity in a big way. Now, that makes plenty of sense. You can’t give charity in a big way until you have the liquidity. And creating a foundation as a vehicle to perpetuate giving is usually most tax effective when done in conjunction with a liquidity event. But this process leaves out the most important step: the “why”.

If you want children to be involved in family philanthropy, it needs to be aligned with the family’s collective values and purpose. And the philanthropic behaviour should be modelled by parents as early as possible in the lives of their children. That can happen even if the family wealth or circumstances are not yet at the level for the giving you’d ultimately like to do.

Our children are smart and super perceptive. They look at what we do as an indicator of what is important to us. They are quick to spot inconsistencies (which to them might mean making money from oil and then donating to save the planet). By the time they reach their early teens, these attitudes are largely well entrenched.

Note that I’ve evaded the original question. It’s never too late. It’s just a lot harder to start doing philanthropy and engage your children when they are already young adults.

Consider This: Does your family have a consensus regarding its philanthropic activities? How was that consensus reached? Do you discuss your philanthropy with your young children? How passive (writing cheques) or active (time and talent) are you in philanthropy?

Original articles: https://www.tapinto.net/towns/east-hanover-slash-florham-park/sections/business-and-finance/articles/raising-charitable-children, https://www.worth.com/how-to-find-your-voice-as-a-next-gen-philanthropist/, https://www.forbes.com/sites/francoisbotha/2019/07/28/three-ways-to-embrace-the-next-generation-of-family-office-leaders/#79c0cd6f6d90, https://www.forbes.com/sites/oliverwilliams1/2019/04/24/what-happens-when-billionaires-children-inherit/#107bf42f4e92

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post Q&A: Charitable Children appeared first on David Werdiger.

source https://davidwerdiger.com/2022/03/charitable-children/

When seeking to deal with conflict in family business, it is essential to understand the impact of the family dynamic on a business. Conflict in family business happens differently, therefore must be resolved differently.

Disputes within a family don’t escalate suddenly. They are often built on years of relationship sentiment that is latent or suppressed. The triggers for those conflicts can be the smallest thing, because they are just the straw that breaks the camel’s back. The worst thing to do with family conflict is to suppress it, because it will only get worse with the passage of time.

These conflicts have a factual or financial component, as well as an emotional component, so both those aspects must be considered when seeking to resolve. Often, the emotional component is what is at the heart of the conflict.

A family is not a meritocracy. Family decisions have a very different basis than business decisions. When those two decision processes lead to different outcomes, conflict is inevitable.

Having independent voices – around the board table, or generally advising the family – can be very helpful to unpack complex, multi-layered issues. They can also assist with the establishment of more formal (but not necessarily too formal) governance and dispute resolution processes.

Consider This: Can you see latent conflict in your family that is a ticking time bomb? How does your family usually deal with such things?

Original articles: https://www.homecaremag.com/july-2019/conflict-family-owned-business, https://smallbiztrends.com/2019/08/firing-a-family-member.html, https://business.inquirer.net/277074/fixing-problematic-family-businesses, http://www.sbnonline.com/article/resolve-conflict-among-business-owners/, https://www.hindustantimes.com/columns/the-art-of-dealing-with-conflict-in-family-businesses/story-Kcte71AupdLgBIOMZiHtCO.html

Actionable Generational Wealth Succession

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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The post Resolving Conflict in Family, Money and Business appeared first on David Werdiger.

source https://davidwerdiger.com/2022/03/family-money-business-conflict/

As a family enterprise matures, and often in the context of succession planning (or ageing incumbents), the decision to appoint a non-family CEO comes to the fore. Having made the decision to consider one, families ask the usual question: what do we want in a (non-family) CEO?

Perhaps they should turn it around and ask themselves: what non-family member would want to be our CEO and why? Putting themselves in the shoes of a prospective CEO makes it easier to reduce the risk in the hire and avoid setting the candidate up for failure.

For the prospective CEO, well-defined authority and autonomy is essential, as is the comfort that the role is not interim while the family works out the ‘real’ next CEO. The boundaries of the role are also essential. A family cannot expect an external CEO to also be burdened with family issues. That could be a huge distraction from their main role.

That means (a) the family governance must be in order, and (b) the family may also need the assistance of externals who have a focus on the non-business aspects of family.

Consider This: Is your family considering a non-family CEO? Do you have a clear delegation of authority as part of the position description? Have you considered how long the CEO might stay on the job and why?

Further reading: 

https://www.forbes.com/sites/forbesbusinesscouncil/2022/02/16/family-businesses-10-tips-for-hiring-your-first-nonfamily-ceo/?sh=7355d7737c38, http://www.campdenfb.com/article/rising-above-how-succeed-non-family-chief-executive, https://www.forbes.com/sites/dennisjaffe/2019/01/09/leading-a-family-business-when-its-not-your-family-opportunity-or-potential-disaster/#2aab184a1b37, https://insight.kellogg.northwestern.edu/article/family-business-decision-making

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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The post The non-family CEO appeared first on David Werdiger.

source https://davidwerdiger.com/2022/03/non-family-ceo/

The Greek philosopher Plutarch asked: “People, where are you going? Doing everything to gain wealth, but not caring about your children, who will inherit it?”

If the rising generation is supposed to take the responsibility of managing the family wealth, there should be enough time for them to learn and prepare. To avoid raising a bunch of “trust-fund kids”, the family needs to define clearly what they expect and invest time and resources to help ensure that outcome.

This is a double-edged sword: if communicated too early this may set too much expectation. Common thinking is that age 25 to 30 years is about the right age bracket for rising gens to learn about family wealth, and receive education and training about how to effectively manage and grow it.

Rising gen family members should be able to:

* Develop a clear vision of themselves and their personal goals, as well as the skills to successfully communicate them

* Spend the time to understand the family and business’s legacy and values

* Form a healthy and individuated identity alongside the family identity and long-term family relationships

Non-traditional educational resources are as necessary as they are helpful and worth the commitment they require.

There are excellent programs around that help young inheritors find purpose, meaning and joy as they navigate the complexities and opportunities of wealth. The goal is for them to gain a positive and empowered view of their role in relation to the family wealth. Rather than seeing themselves as heirs and consumers, they can become stewards and active partners.

Consider This: Does your family have/use any programs (formal or informal) for educating the rising generation? Can you answer the question “are we rich”? Have you had family discussions (formal or informal) about the what wealth means to different family members?

Original articles: https://www.dailyadvent.com/news/f9f84f5b7a4e8bef93a144d6864e89ff-Our-Childrens-Heritage-Power-Health-or-Family-Education, https://entrepreneurship.babson.edu/5-things-joining-family-business/, https://www.businessdailyafrica.com/lifestyle/pfinance/Three-pillars-that-hold-family-wealth/4258410-5623128-12kv2o5/index.html, http://www.campdenfb.com/article/when-should-next-gens-learn-about-family-wealth-and-responsibility, https://www.forbes.com/sites/dennisjaffe/2020/04/15/how-wealthy-families-develop-new-family-leaders-a-program-that-empowers-next-generation-stewards/#2baf14726095, https://www.thenational.ae/business/money/how-wealthy-parents-can-teach-their-children-about-money-1.972725

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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The post The Education of the Rising Generation appeared first on David Werdiger.

source https://davidwerdiger.com/2022/03/education-rising-generation/

Successful entrepreneurs are often control freaks. But they can’t control whether their children can take over the business or the assets and keep them growing.

Entrepreneurs may be visionaries, but sometimes it takes an external advisor to identify choices that they might otherwise overlook. Transferring full control of an operating asset to children isn’t the only option. Neither is continuing the way things have always been done just for the sake of it.

The drive towards impact and ESG investment is running in parallel with the generational wealth transition. The stereotype that it is just young people who are interested in ESG investing is quickly becoming out of date. Often, parents say that they support this investment choice but when they were setting up the business in the beginning, their focus was on profitability. A common interest in environmental, social and governance investing can help parents and advisors connect with the rising generation.

That said, a change in investment approach driven by the rising generation can be a source of conflict, and needs to be handled judiciously.

For effective wealth transition, it’s important for families to learn how they can create value together through increased understanding of each other and a shared vision of their family’s future.

Consider This: What has your family done to raise the next generation of entrepreneurs? Are you able to deal with “Dad: I have a great idea – can I have a million dollars to invest in it?” Has your family experienced intergenerational conflict over investment decisions?

Original articles: https://entrepreneurship.babson.edu/power-of-entrepreneurial-family/, https://www.marketwatch.com/story/how-to-know-if-your-children-are-ready-to-take-over-your-business-2020-10-20, https://www.ft.com/content/dea5e5d1-8650-4819-aecc-699b612419aa, https://www.ftadviser.com/investments/2020/12/10/who-is-making-the-esg-investment-choices/, https://www.ftadviser.com/investments/2020/11/25/how-esg-can-help-succession-planning/

[Reposted with permission]

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post ESG Investing for NextGen appeared first on David Werdiger.

source https://davidwerdiger.com/2022/03/esg-nextgen-2/