Family Enterprise Advisors share insights on charitable giving strategies

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Many family enterprises regard philanthropy as a key part of building a legacy. Yet business families also face unique challenges that can impact their business and philanthropy.

“Some of the most common issues business families grapple with concern values and ethics pertaining to wealth transfer,” says Gena Rotstein, Family Enterprise Advisor (FEA) and co-founder of Karma & Cents Inc. “When members of the rising generation take over the business or family foundation, they can bring different perspectives to what they see as family legacy. Chances of having a successful transition diminish when the next generation isn’t at the table during the planning stages.”

This can disrupt philanthropic activities, says Ms. Rotstein.

On the other hand, philanthropy can be a powerful tool for engaging the next generation. “I’ve seen an example where the grandchildren, as young as seven or eight, were asked to prepare a PowerPoint presentation about a cause they would like to support,” she says. “Beyond honing research and communication skills, this serves to create alignment and strengthen intergenerational family connections.”

Open discussions about shared values and defining a common mission can boost multigenerational engagement in both the family business and philanthropy, says Jo-Anne Ryan, FEA and vice-president, Philanthropy, TD Wealth Advisory Services.

“It’s a great opportunity to explore options for collaborating on something family members are passionate about. After all, there are lots of different causes – and about 86,000 charities – in Canada,” she says.

“Professional advice can make a big difference in maximizing philanthropic impact by helping to determine whether a charity is a good fit and creating a structure that ensures charitable giving is done in a tax-efficient way.

Jo-Anne Ryan
Family Enterprise Advisor and vice-president, Philanthropy, TD Wealth Advisory Services

Among the options business families can consider are setting up their own foundation or using a donor-advised fund, both of which create tax advantages and allow family members to guide the distribution of funds for charitable purposes.

Ms. Rotstein also advises business families to look for a strong alignment in values when choosing a charity. “Whether you’re a long-term philanthropist or just dipping your toes in the charitable sector, the most important thing is to ask questions, get to know the organizations and try them on for size,” she says.

Business families have to develop a plan, discuss this plan and share it outside their network for feedback, Ms. Rotstein stresses.

“Be strategic with your giving, and be aware of the interplay between philanthropy and the business.

Gena Rotstein
Family Enterprise Advisor and co-founder of Karma & Cents Inc.

For example, philanthropic efforts can enhance customer and employee appreciation and brand recognition of the family enterprise as well as engage family members who may not be involved in business operations.

Building consensus on philanthropic issues allows family enterprises to tap into their multigenerational advantage and recognize the value of diverse views. For example, women tend to approach philanthropy differently from their male peers, says Ms. Ryan. “Research shows that women like to build relationships with the organizations they support. They may volunteer or join the board before they’re ready to make a gift.”

The next generation also tends to have different priorities, adds Ms. Rotstein. “They often look at philanthropy from a business lens. Beyond writing a cheque or getting their name on a plaque, they want to ensure a substantial impact, because they know that without a robust non-profit sector, our healthy, vibrant, democratic society – with all our arts, culture, sports and recreation – would be at risk.”

Produced by Randall Anthony Communications. The Globe’s editorial department was not involved in its creation.