There is an increasing emphasis on the inter-relatedness between the process of making money (whether through active business activities or through investments) and also having a positive impact on one’s community (either at the local, national or global level). The focus, along with developing opportunities, applies to individuals and families, small businesses, corporations, and family foundations.

Let me share with you some recent developments from a variety of social arenas, and also resources available, if you are interested in finding out more.

At the corporate and business level. This past week Indra Nooyi, the CEO of PepsiCo, shared her thoughts about the need for corporations to redefine what true profit is. She suggested that a company’s “real profit” is revenue, less costs of goods sold, less the costs to society. Ms. Nooyi stated, “companies can do well, long term, only if the socieities in which they operate also do well.”

Additionally, others like Dov Seidman [author of How: Why How We Do Anything Means Everything…in Business (and in Life)], propose that companies who behave ethically will also eventually outperform their competitors financially. For an introduction to his thoughts, see the February 8, 2010 article in Forbes entitled “Why Doing Good is Good for Business.”

At the individual and family level. Given the disappointment with the banking industry, their struggles with ethical behavior and seeming lack of interest in anything except pure financial return, individual investors are looking for alternatives. Recently, I was exposed to the concept of community development banks — whose mission is to not only provide a financial return for their investors but also to invest in their communities. They do this at multiple levels — providing small business loans to help businesses grow, being involved in microfinance lending for start-up entrepreneurs, investing in community projects such as Boys & Girls clubs, providing education and training for small business owners, giving loans for education, investing in the local educational systems; the list goes on. An excellent example and leader in this area is Southern Bancorp, who is having a dramatic impact in the Mississippi delta areas in Arkansas and Mississippi. [Note: you don’t have to live in the area to bank there. For example, we are moving our personal money market account from a national financial institution to Southern Bancorp — where we will earn market-rate (or better) interest while Southern will use the money in community development projects.]

From the family foundation and philanthropic perspective. For decades, family foundations and private foundations have emphasized aligning their financial investments with their values. This led to the development of “socially responsible investing” — not investing in companies whose business was not consistent with the family’s or institution’s values (for example, who made products related to military weapons, whose processes seriously damaged the environment, or were related to alcohol, tobacco or gambling).

Further developments have included mission-related and program-related investments — where the foundations proactively invest in companies who are aligned with the foundation’s mission (e.g. companies who are creating technologies applicable for developing countries, or companies developing charter schools). For an excellent introduction, see the publication “Mission Related Investing” published by Rockefeller Philanthropy Advisors.

A third wave has been the focus on social entrepreneurs — helping individuals who are both entrepreneurial (in the business sense) but who are also impacting their communities at the social level — through job creation, education and training, creating products using local renewable resources. I have had the prvilege of working with Charly and Lisa Kleissner and their family over the past nine years, as their family coach. Charly and Lisa have become leaders in the area of social entrepreneurship — and I have gotten to see, hear and learn from them in their work in this area. Go to www.socialimpact.com for great resources and to gain an understanding of social entrepreneurs. [I can’t give a sufficient introduction here — it is too big of a topic.]

Finally, a new area of “doing good” while making money is the arena of “Impact Investing”. Historically, foundations viewed socially-responsible investments in their investment portfolio, as an area where they would be willing to earn less (say 2% versus 5%) on their investments. However, there is a new movement among philanthropic investors who are demonstrating that socially-responsible investments (e.g. in long-term sustainable timber production) that not only have a positive social return but also can meet or exceed the financial returns compared to their investment allocation benchmarks.

Again, Rockefeller Philanthropy Advisors, along with Lisa and Charly Kleissner, Raul Pomares and others, have produced a thorough introduction to the topic, entitled, “Solutions for Impact Investors“. Also, the Kleissner’s foundation website provides a great introduction to the topic. Go to www.klfelicitasfoundation.org and hit the button regarding their investment strategy.

I know I have thrown a lot of information and topics out there in this entry — but they are all inter-related and I wanted to give people starting points for investigating, exploring and learning about the new resources that are becoming available. (It feels sort of like doing the abridged version of all Shakespeare’s works in 30 minutes.)

Hopefully, I will be able to “circle back” and give a more in depth discussion of some of the areas. In the meantime, enjoy exploring!

In my role as a family coach for wealthy families, one of the common issues that arises is the parents’ desire to be “fair” with their children and grandchildren. (I put “fair” in quotation marks because it really is an unusual term that is defined differently by many people and is almost totally based on perception.)

For whatever reason, and I really don’t know exactly where it comes from, fairness is an extremely important issue in our culture that drives many decisions within families. Take, for instance, this past week’s events over Christmas — parents (regardless of their financial status) are quite concerned about giving the equivalent financial value (or perceived value) in gifts to their family members.

There are many challenges related to parents or grandparents trying to be fair with their family members. Let me cite a few:

The “givers” have their own perception of what is (or should be) fair. Most people have a hard time accurately or concisely describing what “fair” is, but they sure have a strong sense of it intuitively. Often it is described in terms of being “equal”, but when pressed about specifics or circumstantial differences, the concept of equal usually fades into the background.

The “receivers” usually have a different view of fairness from the givers (and from other receivers).Most of the family members with whom I work are genuinely grateful for any gift they are (or will be) receiving. The adult children and their spouses do not appear to be greedy, unthankful or have a sense of entitlement. They understand that the “givers” have the right to do whatever they want with their possessions. Nonetheless, when probing deeper, they often express a different viewpoint of what would be “fair” in how the gifts are distributed across the family — often not to their own benefit but out of concern for one of their siblings or in-law’s.

What is “fair” changes over time (pretty easily and often). Let’s take the recent volatility in the financial markets and real estate values. Suppose, in May 2008, some parents gave one of their children $100,000 in a blue chip stock; they gave their second child a house in Atlanta worth $100,000; and they gave their third child $100,000 in cash to use as they wished. Let’s assume each child wanted and agreed to the form of the gift they received (this isn’t always true, you know). So not only were the gifts “fair”, they were exactly equal in monetary value in May 2008 (which is an unusual occurance). But fast forward to May of 2009. The blue chip stock lost 40% of its value, so it is now only worth $60,000. The home in Atlanta lost 50% of its value and can’t really be sold for virtually any price. And the $100,000 in cash is worth $102,000 after they earned 2% on it in a money market account. Are the gifts fair now? Should the parents do some additional giving to make the monetary values equal?

When do you want fairness to exist? When do the givers want things to be fair. Now? Next year? When the business sells? When everyone has completed college? When dad dies and his life insurance proceeds create cash to equalize the gifts given? When both parents die and everything will be “equaled up”? “When” is an important question to answer — for a number of reasons. First, you have the most control over events closest to the present. So “now” seems to be a pretty good option. However, you may not have the liquid assets to make everything fair now, so “now” doesn’t work for many families. Secondly, the further out the “when” is, leaves more variables to chance and the likelihood of fairness not being achieved. Is it “fair” to your second child to wait until the business sells (say in 5 years) to make things fair, and they get divorced and become a single parent needing cash flow two years from now? Or is it “fair” to the eldest child who is running the business (and buying it from you) to wait to realize their inheritance when they sell the business (potentially) in twenty years? I can run a lot of scenarios that create problems.

So what do you do? Give up on the ideal of “fairness”. Maybe, but probably not. I try to help families (usually the senior couple or single parent) clarify what being “fair” means to them, to the best of their ability currently. Secondly, answering the question “when” is critical — and it differs significantly across families. Finally, I encourage family members to think more in terms of values, rather than fairness. Since fairness is a moving target across time and is perceived differently by almost everyone involved — I find making decisions based on what is important to you as a better guideline.

Is education for the next generation important to you? Then figure out a way to fund that. Is affordable housing important? Then figure out a way to help younger family members achieve this goal. Travel? Stay-at-home moms for your grandchildren? A financial safety net? Guaranteed health insurance? Whatever is important to you — pursue that as a gift.

You will eventually have to make some decisions about what you view as being “fair” — assuming you have more than one child. Do you try to equalize your gifts to your children? Or do you try to equalize them at the grandchild level (one of your children has two kids; his sister has three kids; and the youngest has one of his own and three stepchildren)? It’s not easy. But, hey, that is what I am here for — to help you think and talk through the issues, so you can come to a decision you can live with.

Remember, you don’t have to have a lot of money or “stuff” for this to be an issue. Dividing up the household furniture and belongings raises the same issues. Whatever you do, don’t let one of your kids or grandkids (who does have a greed or entitlement issue) “guilt” you into making decisions you don’t want to.

Until then, have a great and safe New Year’s celebration.

This past weekend I had the privilege of helping facilitate a board meeting for a family foundation. One of the goals of the meeting was to begin to more fully integrate the next generation (currently twentysomethings) into the foundation’s activities and financial giving over the coming years.

Part of the process included looking at philanthropy through the lens of daily life, rather than conceptualizing it as just large financial gifts given to non-profit organizations. Here are a few thoughts from that process.

A reminder that philanthropy comes from the Greek words phileo (practical love) and anthropos (meaning man or mankind). So essentially philanthropy is the act of demonstrating practical love to others.

So, at a very basic foundational level, if we think about philanthropy in daily life, it is really embodied in kindness and treating others as you would like to be treated.

We then can take practical love toward others to the level of our lifestyle decisions and how our daily decisions impact our local and global communities. Here is a list of practical areas of daily life with some brief notes of issues to consider in each area.

*Groceries (packaging, buying in bulk, local producers)
*Transportation (utilizing public, automobile choices, flying)
*Clothing, Personal Items (used, consignment, self-made)
*Gifts (consider not giving objects, self-made, Third world, charitable donations)
*Electronics (recycling computers, cell phones, TV’s / screens, energy efficiency)
*Housing (green, energy efficiency, remodeling)
*Banking (utilizing community-based, socially-involved
*Services (using global professionals from accounting, web design)
*Physical health (healthy lifestyle, exercise, equipment)
*Medical treatment (natural, preventative, high tech, insurance)
*Recycling (paper, plastic, glass, metal, in general)
*Recreation / Entertainment (low cost, low impact, big business)
*Financial investments (socially responsible, mission and program related investments)

We then also discussed ways to incorporate charitable giving in one’s daily life context (versus just thinking about annual financial gifts). These included:

*Looking for needs in your local, daily community.
*Observing organizations that intersect with your life.
*Volunteering your time, service and expertise.
*Giving financially from your monthly income.
*Attending charitable events and fundraisers of organizations you want to support.

No major earthshaking revelations here, but possibly some helpful reminders in how we can think about others through our daily life decisions.

Over the past several weeks I have been involved with a number of families, helping them with their philanthropic giving process.  What has been interesting is the fact that almost all of the families are at some different stage in their developmental stage of philanthropy.  Some are really just beginning, others have been “doing” philanthropy for a while but are at a new life stage in their families and having to reshape their giving process, and some are not only experienced but are providing leadership to other families and foundations.

Let me share some lessons I am gleaning from my facilitator role.

“Successful” philanthropy reflects the true, authentic character of the family.  There is a lot of discusssion within the marketplace about what “successful” philanthropy is, but from an observer’s position, it seems successful philanthropy entails actively engaged family members who enjoy the process of giving along with positively impacting people’s lives as a result of the money given — both pieces seem to be necessary.  Given this description, I see “successful philanthropy” take on many shapes and forms.  No one approach or format yields these results for families.  Rather, if a family is laissez faire and goes through life more experientially (versus planned out), their philanthropy and generosity works well in this form.  But for families who are more goal-driven, structured and need to help “move things along”, a laissez faire approach to their philanthropy would drive them mad and not be fulfilling.

Ongoing, regular two-way communication is key.  Regardless of the level of development of the family’s philanthropic process, whether it is just a couple sitting down to talk together informally; parents sharing about their giving with their adult children; or a group of adult siblings with their spouses having a formal Board meeting — if there isn’t ongoing regular communication, problems erupt.  Misunderstanding, hurt feelings and mistrust can grow over a few thousand dollars to be given or over hundreds of thousands of dollars — the amount of money is not critical.   The challenge is — regular communication takes effort and time, and a commitment to overcome the obstacles of life (busyness, interruptions, illness, unexpected demands from other commitments). Families that can meet the challenge win — the process of giving together stays healthy.

There needs to be a healthy acceptance of different levels of interest, passion, and involvement across generations.  I am asked to speak on or address (to families) the topic “How to Engage the Next Generations in Philanthropy” fairly frequently.  And the pattern which I am seeing that is yielding the most positive results is this:  a) there is a generation of the family which is interested, passionate, and involved in giving;  b) there is a desire within this generation to pass on their passion to other family members;  c) however, they understand that there are seasons of life and interest in philanthropy needs to be grown and developed over time;  d) the involved generation attempts to model and share about their giving at a level which matches the level of interest by the next generation;  and e) the involved generation continues to be involved and excited about what they are doing philanthropically regardless of the response of the next generation (that is, they don’t get discouraged, start to manipulate or place “guilt trips” on the next generation).

These are just some initial observations from recent interactions.  Being forthright, working with families and their philanthropic plans is once of the most enjoyable and rewarding aspects of my work right now.

Have a great week!