Over 80% of businesses around the world are family-owned businesses. Specifically, Canada’s family businesses employ 4.7 million full-time employees, and the total annual sales of Canadian family businesses is $1.3 trillion.
It is thus very clear that Canadian family-owned businesses are a force to be reckoned with. So how does a family business become such a successful empire? One of the keys to many of these business’ success stories is a good governance system. Good governance will help any organization find its direction and identity. An excellent governance tool for a family business, large or small, is having a family philanthropic foundation.
A family philanthropic foundation is an effective way to bring all family members together to work towards a shared objective. They all have the same goal and must work as a team to create results for the common good, not just for financial gain (where we all know that the green-eyed monster can rear its ugly head). The family can give back to a community that has supported their success over the years through time or money or community programs that the family business can institute. Not only is a family philanthropic foundation a good way to give back to the community that the family business gained its success in, but it is also an incredible way for the next generation in line for the family business to learn to work together at a very young age. It will allow the current and younger generation to work together to better understand the business and the bottom line.
Effective governance is essentially wealth preservation. This type of governance will encourage collaborative decision-making among the family members, possibly across several generations of family members where financial skills and practices can be very different. A philanthropic goal for a family business will effectively unify their values and vision and provide the glue that will keep the family members focused and excited for the future. It will also encourage the family to address succession planning, business structuring and the family inheritance plan.
This is provided as information ONLY; it should NOT be construed as legal advice. For more information on estate planning/incapacity planning and to discuss your specific circumstances, please contact Vanessa DeDominicis at [email protected]or on 250-869-1140. Vanessa practices in the area of Real Estate and Wills & Estates at Pushor Mitchell LLP in Kelowna and would be more than happy to assist you.
