The question Virginia “Ginny” Esposito, Founder of the National Center for Family Philanthropy, gets asked the most, is “How can I engage my family in philanthropy?” In this episode, Ginny highlights what family business is and common trends in the work she has been in for over 30 years. She has lots of wisdom for parents and great resources, whether you are just getting started or if you’ve been giving for decades.
Family Learning
Resource Search
Succession planning for a family business inevitably requires planning for the transition of the management team. This transition presents several challenges, including dealing with non-family managers and with a family member who is not suited for a leadership role in the business. These difficulties are not insurmountable, and, with clear communication, careful planning and assistance from advisors, the family will end the planning process with a stronger and more successful management team and family business.
On the journey to obtain independence and achieve financial success, the priorities usually include having a good educational experience, a sound resume and a career with a nice salary. That journey will likely contain u-turns, bumps and dead ends. And if good financial habits are not developed, then there can be a financial disaster. The reality is that the road to financial freedom requires practice and discipline. Stay on course—follow the 10 steps to financial freedom in your twenties and thirties—and you will reach your destination.
Wealth brings with it some important considerations, including the obligation to have an approach to managing it. For families of significant wealth, it primarily revolves around the requirement to develop an investment strategy that ensures the wealth is maintained for future generations. It creates a shift in focus—one that takes an intergenerational approach and goes beyond the protection of capital in the short term.
The importance of connecting with your children, whether they are ten years old or sixty years old, never diminishes. The investment you make in them comes back ten-fold in the family office setting and in innumerable, intangible ways in your life with them. A filmmaker translates her right-brain know-how to a left-brain playing field—the tax attorneys, wealth consultants, and risk strategists—on how to connect with the rising gen.
In a perfect world, parents would have a well-thought-out plan for wealth transfer, explain their intentions, and help their heirs learn their roles and responsibilities. But life doesn’t always unfold in an orderly way to provide such a roadmap. Sometimes, inheritors may need to step in to play a more active role so they can empower themselves with the knowledge and tools necessary to make the best decisions for themselves and their family’s legacy.
How do you prepare younger family members to manage their wealth well and flourish in their own lives and in the family enterprise? Every family is challenged to find creative ways to engage family members in the process of learning—about the family and what it values and owns, as well as what it takes to care for these human and financial assets.
When wealth owners are asked what challenges them most, their first answer is frequently, “helping my children become productive adults.” Preparing children for both the opportunities and responsibilities that come with wealth is not easy, but those who have committed to family learning and educating the next generation will tell you that the return is well worth the investment.
Few problems are as vexing and seemingly impossible to resolve for families, advisors and trustees as the active alcoholic or addict, particularly those who continue to use after treatment. While low recovery rates for treatment and subsequent relapse may be understandable in the aggregate, on the individual level the experience is frustrating and unnerving for all concerned. Often the response is “treatment,” yet few family members and advisors are familiar with the success rates for treatment or what leads to sustained recovery.
Most of the time when families gather, the focus is purely social—reconnecting, reminiscing, and “rest and relaxation” as a group. Occasionally, family members may also gather for limited financial management tasks, such as settling a loved one’s estate, or planning for how to manage shared assets such as land or a family vacation home. These family get-togethers are important to families no matter what their financial circumstances. For families with wealth, though, the need to connect can go beyond the social aspects.