Often, philanthropy is being used as a vehicle to reinforce family values when considering business succession. Succession planning is not an overnight achievement and using good philanthropy strategies can lay the framework for making collective decisions, whilst also instilling the family values in generations to come. It also represents a unique opportunity to involve the next generation in decision-making and to introduce an enduring governance framework.
In some cases the framework will be driven by the legal structure, for example the articles of a family foundation, or the legal requirements of a registered charity. Some families have adopted a family charter incorporating principles of governance for family philanthropy, and in most cases the following principles will apply:
Setting the family philanthropy strategy is an opportunity for the family members to buy into an over-riding strategy which reflects their cultural or religious values, interests and expertise, to provide an enduring framework for charitable giving.
The strategy will typically cover:
- defining charitable objectives, causes and sectors – traditionally health, education or relief of poverty, increasingly international development, human rights, sustainability, the environment, entrepreneurship or diversity;
- partnering with public or private organisations;
- single donations or multi-year engagement;
- impact investing;
- level of ongoing engagement;
- communication and publicity;
- restrictions and prohibitions;
- termination.
As stewards of foundation assets, trustees should look to ensure that:
- they exercise oversight over the foundation management;
- they act reasonably and diligently;
- they avoid conflicts of interest;
- they comply with relevant laws and regulation;
- they reflect the values of the foundation.
Financial parameters may be built into the constitution of the philanthropic vehicle (such as a simple trust requiring the annual distribution of income) or act as guidance. They will probably apply to the endowment and the operations in addition to the philanthropic activities.
We will further examine the priorities for family offices in their philanthropic ventures through an upcoming survey and in-depth report. If you would like to participate in the survey or discuss the topic further, please contact:
Kevin Mullen
Director - Business Advisory
P +61 3 9608 0100
E
kmullen@moorestephens.com.au
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