Founding and building a family business is one thing, maintaining the interest, or indeed involvement, of later generations of the family, is quite another.
This is particularly the case if the business is very successful, perhaps with a global footprint, and thus generates a substantial revenue stream. In these circumstances tensions may develop between individual family members, prompted perhaps by an absence of motivation among some of the founders’ children or grandchildren, given the amount of wealth already at their disposal, or maybe by a lack of business interest or acumen.
To combat this issue, families may choose to develop protocols, sometimes called family Constitutions or Charters, which are intended to establish a set of common values which underpin family life and practical policies which they agree to be led by when running family affairs.
JTC Group works closely with families to develop Family Protocols, which are effective in bringing families together around a common set of guiding principles. In addition, JTC Group is very active in the implementation of different family governance solutions, which can involve setting up a charitable structure, usually a foundation or trust. Such arrangements reflect the accelerating importance many in the younger generation attach to social values as they offer the opportunity to give something back to the community. These solutions are an example of what might be described as the ‘Evolution of Morality’.
In most cases, these trusts or foundations are established by the original founder of the family business, and as well as providing a substantial income for family members, also offer the opportunity to direct the charitable works via a seat on the Charity’s Council; in other words to become directly involved. This can help to strengthen family cohesion via shared goals.
Interestingly, most wealthy families choosing to donate shares to a charity tend to prefer to create or support community projects or similar targeted schemes rather than addressing broad long-term aims such as curing disease. Despite the fact that, inevitably, many prefer to keep their charitable works private, there is often a specific family element involved.
By way of example, one of our European-based clients has highly successful business interests. The family members have become increasingly keen to give back to their community, and with our support, the founder’s children wished to establish a trust for charitable purposes, which will purchase paintings and display them in an art gallery, in line with the philanthropic/cultural interests of their family.
In another example, a family wished to give back to their community by financially supporting chosen charities and organisations in the UK that have solutions to helping those most in need. We have implemented a trust structure to enable this with the family business.
There are many ways in which our clients are supporting community projects and charities. This has increased in popularity in recent years with the transfer of wealth to the next generation, and it almost always encourages family members to work together positively. It is a privilege to be able to help families to achieve these aims, ensuring their long-term philanthropic success.