WISE Insight - Entrepreneurs and families in philanthropy

WISEInsightSPRING 2013 NUMBER 1

A WISE publication on your philanthropy

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CONTENT

5. EDITORIALBy Etienne Eichenberger and Maurice Machenbaum

6. LET’S FOCUSFamily businesses: What can philanthropy bring you?

10. THEIR STORYFamily philanthropy: Learning by doing

12. A DIALOGUESocial Entrepreneurship Today: What is at stake?

16. BLOGGive more or give better?

18. ABOUT USBringing complimentary expertise

WISE Insight – SPRING 2013 – NUMBER 1 3

A WISE publication on your philanthropy

EDITORIAL: Jessie JohnssonCONCEPTION&COORDINATION: 360CrossmediaARTISTIC DIRECTOR: Frank WidlingCOVER PHOTO: ©Nicole BeuchatPHOTOS: ©arcenciel, Julien Frentzel, IMD, Patrick Mallet and WISEPRINT RUN: 500 copies

WISEInsight

4 WISE Insight – SPRING 2013 – NUMBER 1

“Philanthropy

is all about choices:

the choice to give, the

choice of how

to give and who

to give to, even

the choice of when

to declare success

or admit failure”

AEDITORIAL


As experienced advisors for entrepreneurs and families engaged in philanthropy, we have been privileged to observe their increased interest in such matters in recent years. Their commitment reflects sincere selflessness, as they strive to have a visible and long-lasting impact in the world; they aspire to share values and nurture family ties around a new common goal. Our work with them as donors in recent years gave us the opportunity to reflect on their journey. Their perspectives may vary, depending on their motivations and cultural backgrounds, but each family seeks to develop both a precise and flexible framework that balances the demands of reason and the calls from the heart. Our experience shows that the impulse to engage in philanthropy often comes from a combination of personal commitment and expectations of results. We hope that the personal stories and insights in this publication will be a source of inspiration for some and a source of renewal for others. The purpose of this publication, the first in a series, is to share experiences from this field that is becoming increasingly dense as well as to build a dialogue between different expertise that can emerge through philanthropy.

Etienne Eichenberger & Maurice Machenbaum

Dear Readers, dear Friends,


LET’S FOCUS

Family businesses: What can philanthropy bring you?


An interview of Joachim Schwass, professor of Family Business & Entrepreneurship at IMD, and Etienne Eichenberger, co-founder of WISE.

WHAT ARE THE REASONS AND MOTIVATIONS FOR ENTREPRE-NEURS TO ENGAGE IN PHILANTHROPY?Joachim Schwass: Family businesses and philanthropy share a natural affinity: wanting the world to be a better place to live in. Whilst philanthropy makes this its central and explicit mission, for family businesses it is often a more implicit foundation of its business model. Philanthropy can also be seen as a platform for families moving from one generation to the next. Enabling them to use philanthropy as a tool to engage the next generation and share a better understanding of what the family is

about, their culture, their values and also allow families to be together, and not always around the subject of family business. Etienne Eichenberger: Motivations can greatly vary as every-one has different cultural backgrounds and personal expe-riences. Our observation is that we can usually make a difference between entrepreneurs who manage their own businesses and entrepreneurs who mostly have liquid investable assets.For the first profile of entrepreneurs we see that the motiva-tion often stems from the desire to make a difference around a specific issue. They want to get involved in their lifetime and go beyond signing a cheque; the notion of hav-ing an impact is important. For the latter profile, the desire to use philanthropy as a platform to engage the family over generations becomes very important. The initiative usually stems from an authority figure in the family who decides to devote some time to it or to perpetuate certain values, to give meaning to the family business. It becomes a family project at a later stage.


LET’S FOCUS

WHAT ARE THE BENEFITS FOR A FAMILY BUSINESS?EE: To name only two, I would like to stress the opportunity to raise new topics of conversation, especially around val-ues, and the opportunity to give responsibilities to family members. Not everybody is interested or has a place in the family business. Philanthropy can become a part of family governance. Of course, there is also enjoyment—of shar-ing, travelling, doing things for others. Entrepreneurial families also bring in their own “added value” in the way they get involved. More often than not, they engage in philanthropic projects with the same demands they have with regard to their business. It is sim-plistic to equate wealth with money. Wealth includes finan-cial resources, of course, but also personal experiences, and networks that can be put to use in the philanthropic endeavour. JS: Growing up in a home of wealthy entrepreneurs and business-owning families often exposes a next generation to matters of great financial value, which may appear dis-

“We have found that the families who survive over many generations, in addition to the business focus, have a very strong focus on the development of the family. Philanthropy can be a great platform for this.”

Joachim Schwass,Professor at IMD

JOACHIM’S RECOMMENDATIONS TO FAMILY BUSINESSES:

• Make philanthropy part of your family’s values

• Enable your next generation members to discover their own passion and interests

• Develop a structured approach by learning from others


connected from the harsh reality faced by millions of less privileged people in the world. A growing number of family businesses perceive philanthropy not only as a natural expression of their own family values - by giving back to society, the “external” benefit - but as a very powerful vehi-cle that allows a younger generation to experience and understand the necessity and importance to reach out to the less fortunate. Many heirs have discovered a new per-sonal meaning of life after experiencing the difference which, for example, micro-credits can make. Philanthropy can thus become an entrepreneurial venture in its own right: from learning to implementing. This is the additional “internal” benefit families are increasingly discovering.

WHAT IS THE CHALLENGE FOR FAMILIES TODAY AND THE TRENDS AROUND THEM?JS: One of the biggest challenges for families is the change of generation. The typical planning focus is very business-centric which usually makes good sense. But we have found

through our research that the families that survive over many generations, in addition to the business focus, have a very strong focus on the development of the family. The understanding there is that each entrepreneur in the family has developed its own culture and set of values, and the essence is how to capture the essence of these values in a way that the next generation can positively understand and build on these values and culture. Increasingly today, phi-lanthropy is seen as vehicle that can be used pro-actively in the planning stage in an applied way to engage the next generation positively within the family scope and values. EE: One of the challenges also lies in deciding the relation-ship between the family/personal philanthropic endeavour and the business. Do you put a “Chinese wall”, a “glass wall” or “no wall” between them? To determine the level of interaction– or mutual ignorance you have – is key to make sense of one’s desire of impact and level of engagement.

Jessie Johnsson

ETIENNE’S RECOMMENDATIONS TO ENGAGE IN PHILANTHROPY:

• Start with your passions and interests

• Choosing a focus will help you have a greater impact

• Combine ambition and humility

• Seek support from peers or advisers

• Enjoy, it is part of the journey and you will meet great people


THEIR STORY

HOW IT STARTED“My parents and grandparents always taught me to share” says Ivan, the father. “We want to go further with our chil-dren. We want to teach them to give spontaneously, to make them aware of their privileged background, and that the bubble in which they live does not reflect the reality of the world. By involving them actively in our project, we hope that they will “live” their philanthropy and discover new situations. We are also encouraging them to spend more time together, in spite of the geographic distance imposed by their studies. It is essential for them to remain united.”

MAKING IT HAPPENAfter understanding their parents’ perspectives, Anna and her siblings accepted the challenge with a mixture of sur-prise and pride. The only constraint given was to get per-sonally involved in the projects that they were supporting, by establishing regular contact with the beneficiaries and

visiting them in the field. The first meeting took place a few weeks later with philanthropic advisors who would be in charge of all methodological and administrative aspects.

In the first months, Anna and her siblings defined their first project—providing assistance to troubled youth. With the help of the advisors, they identified organizations that could bring grassroots assistance to the youth, so that their gift would be most efficiently used. They started with projects close to them, in France. After learning a lot from culturally familiar cases, they decided to expand their hori-zons and extend their action to other areas.

A SUCCESSFUL BEGINNINGFour years into the project, the parents are thrilled to see their children enthusiastic, and how they appropriated the idea and even enjoy the task. “They have become more proactive and they make group decisions. In the end, they do not feel that they are giving, but rather sharing with others, which is very enriching and motivating.” Ivan and his wife are satisfied with their children’s pilot projects. Now that they have gained experience and “learned by doing”, they are together looking ahead, and thinking of establishing a foundation.” Ivan knows it is not easy to have an impact on the ground; but he is convinced that anybody can give, as long as there is a will and good advice. “For us, it is part of our lives”.

An extract from “Philanthropists speak out”, written by WISE, published by Banque du Luxembourg, 2010.To receive the full case study, please email us at [email protected]

Anna was 23 when her parents asked her and her siblings to engage the family in philanthropic work. They were given a four-year budget and carte blanche to invest in the projects of their choice.

FAMILY PHILANTHROPY

Learning by doing


“We have learned beautiful lessons from the people we’ve worked with, who remain positive despite all the challenges they face.”


A DIALOGUE


SOCIALENTREPRENEURSHIPTODAY

What is at Stake?


A DIALOGUE

SOCIAL ENTREPRENEURSHIPMM: Social entrepreneurship is a response to current social problems, such as poverty, unemployment, and violence. It is not the only response, since it has to coexist with tra-ditional charities and other solutions. Some NGOs have trouble meeting their budget or expanding. One option is to develop entrepre-

neurial activities that generate income and/or to become a company that has a true social impact.PI: When arcenciel was founded in the 1980s, the term “social entrepreneur” didn’t exist. There were large international conferences sponsored by the UN, its agencies or the EU that set trends in international aid – one year it was sustain-able development, or social entrepreneurship, or women’s issues. Most NGOs in the south understood that they had to be opportunistic to get funding, and create programs that matched those trends. arcenciel will not adapt its programs to meet funding opportunities. In order to survive as an NGO, we had to meet certain economic goals – although we were called a business rather than an NGO. But a business that is only guided by economic concerns will not endure. We were an NGO that had clear economic goals and was thus doing “social entrepreneurship” without knowing it.

STRATEGIC VISIONMM: Entrepreneurs who have built their wealth with their own business understand the need for a long-term strategic vision, planning, and impact measurement so that their per-formance remains high. They also understand that the mar-ket and the economy are part of the response to social issues. It is the same entrepreneurial spirit that drives CEOs and social entrepreneurs. They know how to choose their staff, establish a strong leadership, and use the market so that their product or service will generate profit and, for social entrepreneurs, have a social or environmental impact.

PI: Our activities have a social-cultural, an economic, and an environmental goal. Our strategy is well defined: we look at a neighbor-hood or a village. We listen to the community and use its tools to develop services that will be useful to its members. We then develop public programs through legislation and legal

tools that will guarantee their stability. These are our strengths: a strategic vision for each program, a cutting-edge management, and a strong institutional culture. We ration-alize to optimize, then to become profitable, then to create norms, and eventually to replicate the model.

GRASSROOTS PROJECTSMM: Access to employment for disadvantage youth is the most efficient way to fight poverty, a problem faced by the whole world, not only developing countries. Access to work opportunities is naturally tied to the market and can be addressed through social entrepreneurship. Social entrepre-neurs are well equipped to work with marginalized segments of the population and connect them with quality and sus-tainable jobs.PI: arcenciel was founded at a time when religious communi-ties performed social work, and they were all segregated. We have no political or religious affiliation; we serve everyone, regardless of religion, gender, age or nationality. arcenciel means “rainbow” in French; it is found in Genesis, the book of the Bible recognized by all three monotheistic religions. The rainbow symbolizes the universal alliance with all human beings.arcenciel is run like a corporation; the poorest segments of society have the right to earn the benefits of an efficient, professional, viable, and lucrative activity. We started to work with and for handicapped people: handicapped people serving other handicapped people in repairing wheelchairs, making prostheses, etc. We listen to the community and

Maurice Machenbaum, co-founder of WISE, and Pierre Issa, social entrepreneur and director of arcenciel (Lebanon) discuss social entrepreneurship, strategic planning, grassroots projects, and impact measurement.


their real problems; we develop autonomous and lucrative services that bring and integrate marginalized people into the workplace and who contribute to the productivity of the whole country.

IMPACT MEASUREMENTMM: Impact measurement varies with each project. It is cru-cial to anticipate the evaluation process by knowing what type of data should be collected during the project and analyzed later. This makes it essential to have a strong forward-looking strategic plan as well as a solid experi-ence, as impact measurement combines quantitative and qualitative data analysis. PI: There is a rational and an irrational component in meas-

uring impact. It is easy to measure the direct impact of a project by evaluating the number of people that work, the net income, the quality of the product or service, etc. It is more difficult to measure the indirect impact beyond a community, even if we know that we make a difference. One indicator of success can be observed when a municipality, a hospital or a larger institution, such as a ministry or an international organization contacts us and asks to replicate our model elsewhere because they recognize the social impact of our work. This is an obvious qualitative indicator that we have an impact, even though it is hard to quantify.

Brigitte Sion

More information: www.arcenciel.org


BLOG

In early February 2013, the Beacon Awards, organized by the Community Foundation Network, rewarded the most innovative or inspiring philanthropists in the UK. At the same time, Michael Bloomberg announced a donation of USD 350 million to Johns Hopkins University, reaching a record donation of more than $ 1 billion to a university. These two events are symbolic of the challenge facing philanthropy today: to give more or to give better?

Give more or give better?

MOTIVATIONS OF THOSE WHO GIVEWhy do we give? The question may seem simple, yet it has been a topic for millennia. Part of the reason might belong to the intimate sphere of the donor. The question itself is fascinating; however there is, in this respect, no rule or change, because the debate is at a personal level.How much do you give and to whom? Philanthropy repre-sents only a small part of the necessary support to face the challenges of our societies. Donations are always short of the needs. The question of how much is important but insufficient to explain the act of giving. As to whom to give, tax incentives, in this period of scarcity in States’ budgets, encourages us to support causes of public interest. However, this incentive goes hand in hand with a freedom


donations; I wanted to be sure that my money would be used efficiently and have the greatest impact.”If giving is about choosing, this choice requires philanthro-pists to be rigorous. New resources are today available to be successful in one’s philanthropy and to fully live one’s engagement. For JK Rowling “We have a moral responsibil-ity when we receive far more than we need, (...) that to give intelligently.” The approach and the way to give better are hence becoming critical and at least equally important as giving more.

This article can be found on www.bilan.ch/etienne-eichenberger/finance-durable

“It took me five years before deciding to make large donations; I wanted to be sure that my money would be used efficiently and have the greatest impact.”

John Stone,laureate of

the Beacon Awards

of choice in the causes philanthropists choose to support.

NEW APPROACHES TO GIVING AT THE HEART OF PHILANTHROPIC INNOVATIONWhat has changed in philanthropy is neither why to give, nor how to give nor to whom to give, but it is the means available to give: supporting charities or social enterprises, making a donation or a loan, defining impact criteria rather than supporting a cause without explicit expectations, engaging in one’s lifetime rather than giving late in life or through a will.This question of how to give is at the heart of a new approach to philanthropy. John Stone, Laureate of the Beacon Awards: “It took me five years before deciding to make large


ABOUT US

WinnerPhilanthropy Team of the Year

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WISE, PHILANTHROPY ADVISORS

We strongly believe in the importance of combining expertise and know-how to best respond to the needs of donors and the sector. It is in this spirit of bringing complementary experiences and tools that WISE, philanthropy advisors, and Swiss Philanthropy Foundation collaborate.

Swiss Philanthropy Foundation (SPF) was established in 2006 as an umbrella foundation to both promote the development of philanthropy and facilitate cross border giving for individual donors. The Foundation is also the Swiss member of the European network of transnational donations, “Transnational Giving Europe” (TGE).www.swissphilanthropy.ch

Since 2004, WISE, philanthropy advisors, assists individuals and their families from the development of their giving strategy to the implementation of their engagement. It allows them to fully live their engagement while ensuring social impact and control over their commitment.www.wise.net

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WISE is the expert in high impact philanthropy. We enable you to transform your unique ambitions into lasting results, where it really matters. From setting up foundations and advising on causes, to delivering projects in the field, everything we do is structured to ensure the best possible impact from your philanthropy.

Because with WISE- philanthropy advisors, what really matters is the difference you make.

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WISE Insight - Entrepreneurs and families in philanthropy

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