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The culture of philanthropy: a transitional advantage
Grand Rapids boasts an impressive list of buildings, events, venues and services that are/were driven by philanthropy and help make our community excellent.
Locally owned businesses have been the engine behind much of that philanthropy. Both owners and employees often share resources with area organizations in need of support.
As a Grand Rapids banker, I have enjoyed working with many of the locally owned companies. A surprising number of these companies are family-owned and into their second, third or even fourth generations of ownership. Transitioning from one generation to the next can be a challenging endeavor: maintaining the original principles of the founder(s), proper financial planning, management development, family dynamics and many more considerations require hard work, planning and good counsel from trusted advisors.
How does a family-owned business maintain its soul while transitioning from one generation of leaders to the next? How can leaders with different styles ensure the family-owned business sustains its culture? How can a family-owned business ensure its employees continue commitments into the next generation of ownership? I posit that one effective tool is developing and maintaining a culture of philanthropy.
Although a culture of philanthropy is helpful for most businesses, the benefits to family-owned businesses may be augmented because (1) it helps sustain the family-owned business through generational changes, (2) it sustains the community in which the owner/family resides, and (3) it clarifies purpose for the company's employees through the generational changes in ownership.
Corporate philanthropy sustains the family-owned business by creating a meaningful bond between the company and those in the community who patronize the business, seek employment with the company and agree to provide support for the operation. Increasingly, those seeking a career are demanding to work for companies with a "conscience" and are seeking a social benefit as a result of their employer's existence. An action-oriented, philanthropic spirit is an effective way to meet this demand.
Whether your company collects $5 for employees to wear jeans on Friday, gets a team of people to support a charity walk, or financially sponsors a fundraising event, the company is creating a sustainable trust with the community as a result of the efforts — and the participants will likely have fun at the same time.
Watching a business respond meaningfully to a community need or a local family in crisis absolutely impacts me when deciding what company I will use for a needed service or product. It is logical: I want to support companies that support our great community, especially when those companies are owned by our neighbors.
A family-owned business sustains its community by supporting it philanthropically. Since many family-owned businesses started with a fervent desire to help make their communities better places to live and work, philanthropy is an extension of the company's origin. Philanthropy comes in the form of time, treasure and talent. Whatever form is offered, a family-owned business can build on its roots by continuing a giving culture.
Like many other companies in the Grand Rapids area, our bank's leadership established practices to build a culture of philanthropy throughout the bank in its early stages of development. This early effort has created a spirit within the company that will last beyond the founder's involvement and create a common bond among employees with the community. Although our bank is not a family-owned business, the example can be a strong foundation on which a family-owned company can transition into the next generation.
I recently spent some time with the founder of a company that has grown into a nationally recognized success. Despite its significant growth and achievements, all stakeholders in the company meet monthly to discuss goals, challenges, strategies and what philanthropic organizations in their city they are going to support. Giving is an integral part of the company's identity as well as the individuals that contribute to its success. Philanthropy has helped maintain some of the principles that defined the company in its infancy, when it was comprised of only two people.
A culture of philanthropy clarifies purpose for employees of family-owned businesses. Family-owned businesses are generally in business to support its operating costs and provide a financial return to the owners. But, they are also in business for other beneficial reasons. Identifying why the company is in business can be as important, or more important, as what the company produces or does. A commitment to philanthropic endeavors can be an enduring legacy that maintains purpose within the individuals of a company. (It's worth suggesting Simon Sinek's 18-minute TED talk "Start With Why" — it's time well spent.)
This commitment to philanthropy creates a sense of purpose that will last past the first generation of a family-owned business and prepare the company for future success with a base of employees bonded in purpose. Yes, we are here to generate profits, but we do that to provide opportunities for our employees, to improve our neighborhood's condition, to assist others in need and to be an example for other organizations looking to plug into the community.
The dynamics and challenges inherent in family-owned businesses are many and well-documented. Philanthropy can be used to help through some generational adjustments, but the current and next generations of family-owned businesses should utilize the resources available to navigate these challenges, including their accountant, attorney, banker, other trusted advisors and organizations like the Family Business Alliance.
Additionally, they should spend time sharing best practices and concerns with other members of family-owned businesses to learn from their experiences.
Grand Rapids has a concentration of entrepreneurial spirit with many locally owned and/or family-owned businesses. Our city is also nationally recognized as a generous and charitable city filled with services and resources serving residents and visitors.
Thank you to the many businesses and individuals that have converted financial success into civic improvement. It is a legacy I hope continues for generations to come.
Michael Sytsma is the senior vice president and Grand Rapids market manager at The Bank of Holland. He can be reached at email@example.com.