Philanthropy is rarely the main goal of a family office. In Citi Private Bank’s “2024 Global Family Office Survey Insights,” for example, just 21% of family offices globally said that philanthropy is a primary focus. That figure increased to 35% when looking at family offices in North America.
Still, for many families, the family office does play a role in philanthropy. We asked several family members how their family office is involved in their charitable efforts, and we got family office experts to weigh in on how to think about the relationship between the family office and the family’s philanthropy.
Family members on the relationship between their family office and the family’s philanthropy:
The family office presents annual budgets and follows up quarterly to procure compliance with budget for all our philanthropic initiatives. Our main foundation is endowed to be quasi-independent from family funds, yet we still request a formal budget and compliance for its funds to be released. Our family office provides a treasury function to all our initiatives and the discipline and space to promote meetings where issues are debated and a meeting of the minds is recurrently obtained.
— Alexander Degwitz, family council chair and head of GEMIS, the family office of the Maldonado family
As an embedded family office, we created a Van Metre Companies Foundation with its own charter and members that are employees within the Van Metre Companies. They steward the funds and direct philanthropy in a meaningful way to impact the communities in which we build housing.
— Michael Dunleavy, chief financial officer and group president of finance, Van Metre Companies
For us, the family and the foundation board make grant decisions, but the family office administers the usual – check writing, tax returns, etc.
— Josh Kanter, president of Chicago Financial, Inc. and founder & CEO of leafplanner
Experts on how they recommend family offices structure the relationship between the office and the family’s philanthropy:
It comes down to governance, and I typically see philanthropy covered in the context of a “board” meeting. That board could be anything from the board of directors for the family office to the family advisory board—but it needs to be a shared forum across family members and advisors so that the philanthropic strategy is clearly communicated and that everyone is on the same page.
— Janet Arzt, founder and managing partner of Parere Advisory
There are a range of options for the relationship with the family office and the family’s philanthropic efforts. Some families have their philanthropy as a completely separate initiative, while others have these efforts highly integrated as part of the family office. Families need to assess what works best for their unique situation, and how they access the best in administrative help, governance, and effectiveness for their philanthropy. Clarity of purpose, vision, and defined roles are very important to establish, and a dedicated board of directors can be very helpful to ensure successful philanthropic efforts.
— Joshua Nacht, PhD., principal consultant, The Family Business Consulting Group
A family’s philanthropic giving not only mirrors their core values but also serves as a profound means of cementing a family’s legacy within the community. Consequently, the philanthropic strategy of a family office should be crafted with the same diligence as the firm’s investment policy. Family offices often opt between establishing a private foundation, which provides greater control and engagement but demands rigorous governance, or a donor-advised fund (DAF), which offers a more streamlined and adaptable approach with less administrative complexity. Regardless of the chosen method, philanthropy should be thoughtfully planned, adequately resourced, and considered a fundamental pillar of any family office.
— Hillary Sieber, director of family office advisory, Wingspan Legacy Partners
Most often, the family office is just the back office for philanthropic initiatives. They process grant requests and ensure that any pledges or other requests get funded appropriately. However, for many family offices, this area is rife with risk. Running afoul of various rules and regulations can subject the private foundation to penalties and public scrutiny. There are rules around self-dealing, expenditures, excess business holdings, etc. The higher volume of grants a foundation makes, the higher level of risk. This is because the foundation should ensure that anyone that they’re sending a distribution to is a public charity. Further, certain procedures should be followed for each grant. Family offices should look at outsourcing the compliance associated with a family’s private foundations. The family office can then manage the relationship with the outsourced service provider that offers up the compliance to the private foundation.— Mark R. Tepsich, Family Office Design and Governance Strategist, UBS
