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Bringing the family business community together

Natural Philanthropists: Family Business Philanthropy and Social Responsibility

1st January 2009 Paul Andrews

Data and information on the scale, scope and impact of family business philanthropy and social responsibility. The report has examples of good practice  and makes recommendations to encourage and enable family business owners to start their own ph

Family business owners are “natural philanthropists”

Family businesses are more likely to support charitable activities than non-family businesses, and their commitment to being philanthropic, socially responsible and good members of the community is genuinely felt, deeply held and more robust. Clearly, family businesses have no monopoly on being philanthropic or socially responsible, but their characteristic commitment to long-term stewardship, stability and continuity means that a philanthropic and responsible outlook is frequently embedded in their business. However, being “naturally philanthropic” involves both advantages and disadvantages: these activities are more likely to be resilient if they are innate, but a lack of conscious cultivation can sometimes mean they are not undertaken in a very structured or strategic way.

Family businesses are largely local heroes

Family businesses tend to have strong roots in the local areas in which they are based, which often go back for generations. Family business owners are aware of the debt they owe to the community that helped to generate their wealth and are keen to give something back. They want to be – and be seen to be – good neighbours and members of the local community. Therefore, whilst individual donors are often attracted to supporting particular causes, family business philanthropy is most often geographically defined, resulting in the provision of vital support for a range of activities in their locality.

Informality is the rule but some degree of formality is the ideal

Approaches taken by family businesses to their philanthropic and socially responsible activities run the gamut from entirely opportunistic and ad hoc acts, to highly structured and formalised approaches.

However, they tend towards the informal, particularly in smaller organisations. Yet some type of formal structure appears to result in more effective and impactful contributions. “Flexibility within a framework” is suggested as the best approach for putting these activities on a more strategic and systematic footing, without letting bureaucracy squeeze out the underlying passion and family values. 

There are three key drivers for family business philanthropy and corporate social responsibility (CSR) – values, marketing and peer-pressure

Family values, especially an ethos around “giving something back”, are a key driver of much philanthropic and socially responsible behaviour in family businesses. However, these activities can also be marketing-driven and peer-driven, as family businesses seek to align their values with their business goals, and adapt to the norms that exist amongst their professional contemporaries. These three drivers, values, marketing and peer-pressure, create a range of potential interventions for those wishing to encourage greater philanthropy and social responsibility in the family business sector.

For example, firms that are values-driven may respond to connecting this agenda to the salience of their family name and the opportunity to create a lasting impact; those that are marketing-driven may respond to learning about reputational benefits and competitive advantages in terms of recruiting and retaining talent; and those that are peer-driven may respond to case studies and networking events that disseminate information about what contemporaries are doing.

Download the full report below.

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