Family philanthropy - beyond giving

It can become the life-force that invigorates the family identity and the keystone for the survival of the family dynasty
By JUNE LEE
IT HAS always been a tradition in Asia and across the globe that the very rich give substantial sums as alms to the very poor. The motivation varies, but normally revolves around the theme of social responsibility: 'giving back'; remembering roots and 'appeasing the gods' (as one philanthropist put it); or repaying a debt of gratitude for good fortune or assistance received - 'paying it forward'.
Among the most active companies in this arena are family-controlled businesses. It is a way for the families to thank the communities that have allowed their businesses to thrive, and to build closer ties with employees as owners who are engaged and in touch with their responsibilities to the community.
Family philanthropy takes on an added significance for families who have sold the family business. For such families, the sale of the operating business results in the loss of the most visible component of their identity. Family philanthropy has the opportunity to fill the void. Sitting together to deliberate the family philanthropy philosophy and strategy can be a way of reconnecting with the values and vision of the patriarch or matriarch.
Increasingly, philanthropy has been mooted as the 'glue' that keeps members of wealthy families connected to one another.
Family philanthropy is often associated with legacy as gifts are made in the name of the family foundation, which, more often than not, bears the name of the patriarch or matriarch. Well-known examples of some structures funded by family philanthropy are the Lee Kong Chian School of Business at Singapore Management University, the Khoo Teck Puat Hospital, and the Shaw Foundation Symphony Stage at the Singapore Botanic Gardens.
Perhaps family members feel some degree of pride and belonging when they encounter media publicity about such gifts from the family foundation. Perhaps the deliberations on grant-making provides a platform for them to reconnect with the vision and values of their predecessors. Perhaps the value is in the fact that, were it not for such occasions, they would rarely even meet each other.
The truth is that family philanthropy can be all those things and more.
It is clear that the effectiveness of family philanthropy in reinforcing the family legacy depends entirely on how well the family's philanthropy is planned and executed.
A cleverly designed family philanthropy programme can be the action learning theatre for nurturing values and developing a culture of collaboration among the younger generation of future shareholders and leaders of the clan and family business. It can be crafted as a new focal point, not just as an occasion to bring family members together, but also as a means of keeping the founder's legacy alive. In effect, the family's philanthropic activities can become the life-force that invigorates the family identity, and ultimately the keystone for the survival of the family dynasty.
At the most rudimentary level of engagement, family members should participate in the nomination and selection of beneficiaries to receive support from the family foundation. Subject to applying common sense in ensuring the level of participation and decision making is age-appropriate, involving young family members in such an exercise has much merit.
The Myer family, founders of the Myer Stores in Australia, have an interesting approach to involving family members in their family philanthropy. They have created a Family Grants Program in which family members' personal donations to approved charities will be matched by the Myer Foundation. In addition, they have created a separate platform for philanthropic giving involving their fourth generation. The G4 Program, as it is called, has a family development mission in addition to its philanthropic mission. The G4 program seeks to create opportunities for fourth-generation members of the Myer Family to gain hands-on experience in philanthropy, and in this way develop the G4 Committee as future leaders of Myer philanthropy in the 21st century. Causes supported are youth-related. With mentoring and guidance, young family members gain exposure to governance concepts and project evaluation, and develop an understanding of issues facing other young people.
Another edifying practice concerns the giving of grants for causes supported by young family members. For young family members who have no independent income, grants are given in proportion to the amount of volunteer time the young family member has personally contributed to the cause. This reinforces superbly the link between effort and reward.
Involving a family's young generation in site-visits and hands-on projects puts them in touch with reality and could be an eye-opener that helps reinforce good values and develop character in young family members. In addition, leaving them to discuss possibilities and come up with proposals allows them practice in working together as a team. Business families can look upon this as a safe ground for developing teamwork as decisions will have no impact on - and therefore pose no risk to - the operating business.
In the best-case scenario, as younger-generation family members continue their interactions, a natural leader could emerge from the cohort, who could be nurtured and further developed into the next CEO for the family business.
The Lien Foundation provides an excellent case study in the evolution of a family's philanthropy and the role it can play in igniting the family passion to yield tangible results.
The Lien Foundation was founded in 1980 by the late Lien Ying Chow, also founder of Overseas Union Bank. Dr Lien focused his energies on the bank, while the foundation restricted its activities to responding to requests for grants in the area of education and health.
In 2004, the foundation was restructured. Margaret Lien, widow of the late Dr Lien, felt that the foundation should not only honour the memory of his name, but also his spirit and values. The board of governors was expanded to include three family members (one each from the first, the second and the third generation of Liens) and two independent governors; a professional manager with substantial experience in the philanthropy arena was hired, and additional funding priorities were added.
Instead of merely reviewing and approving requests for grants, the Lien Foundation began to engage in a slew of activities ranging from awareness raising to capacity building, to conceiving of projects, their funding and realisation. Their basic tenet was that the activities must be impactful and create change. The transformation of the foundation completed, Mrs Lien stepped down from the chair to make way for the younger generation to take over at the helm. In June 2009, a new board of governors was appointed. The two senior-generation Lien family members retired. In their place, two more members from the third generation of Liens were appointed.
Today, the Lien Foundation is recognised as a leader in the social space, and family members take renewed pride in their origins and heritage.
Families taking their first steps on their family philanthropy journey can learn from these two exemplary families to ignite family passions through impactful family philanthropy, and to use the opportunities it provides for developing the next-generation team of potential family leaders.
The writer is head of family governance at UBS Wealth Management in Singapore