For families with family offices, “impact” has become an essential — but highly personal — concept. For some, it may mean philanthropy or sustainable investing. Others connect impact with family alignment and continuity.
“The goal is to keep the family as closely tied together as possible, or at least going in the same direction: It’s important for us to have the core of the family office growing in the direction of what we feel my parents wanted and what their goals were,” says Andy Unanue, head of AUA Capital Management.
An increasing number of family offices are working to both define and measure what they mean by impact.
“Families are more and more focused on being very clear about what impact they want to have, what they mean by impact, and how they’re going to deliver, measure and administer that impact,” says Peter Moustakerski, CEO of Family Office Exchange. “Family conversations around impact often turn on big questions: ‘What are we doing for the world? What are we doing for our communities? What are we doing that’s going to outlive us all?’ That’s usually the most important external objective.”
Expanding impact from philanthropy to the portfolio
Some family offices, recognizing that philanthropy alone cannot address large systemic issues, are broadening their definition of impact beyond charitable giving, often by incorporating sustainable investing or values-aligned investing into their portfolios.
“The scale of today’s global challenges means they cannot be solved through philanthropy alone. Families increasingly recognize that meaningful progress requires government, sustainable investors and philanthropists working together,” says Rebecca Gooch, global head of Insights for Deloitte Private. “This is one of the reasons we’ve seen a notable shift: Families continue to give philanthropically, but many are also deploying capital through sustainable investments.”
According to Deloitte’s Family Office Insights Series, 46% of family offices globally invest sustainably, with Europe driving much of the growth.
“While North America has seen some pullback in recent years, the global trend remains upward,” Gooch says. “Key focus areas include clean energy, healthcare, education and climate solutions.”
Measuring what matters
Once a family has defined what impact means for them, they need a way to measure it — to assess whether they are creating the impact they seek.
When the definition of impact is more closely tied to financial expenditures — either philanthropic or investment — measurements are likely to be numerically focused.
Joe Tracy, CEO of Dot Family Holdings, says the office uses financial ratio measures to assess their investments.
“In terms of philanthropy, our foundation has a follow-up process to ensure grant dollars produce the intended results,” Tracy says.
Some family offices track their own progress toward their impact goals, while others adopt standardized global frameworks, Gooch says.
“Many also develop customized metrics — starting with a broad goal and then translating it into specific, measurable targets,” Gooch says. “For example, a family might set a goal to improve reading proficiency among children in a particular region and then build the indicators and monitoring systems needed to track progress. This combination of global frameworks and tailored metrics helps families ensure their capital creates tangible, long-term impact.”
Bryn Monahan, senior consultant at Relative Solutions and board member of Foster Holdings, Inc., says her family’s family office executive committee and staff highlight annual priorities for the family and the family office.
“At the end of each year, we assess each of these categories with a three-point scale. Red means we did not achieve our goal, yellow means we’re working on it and it’s not complete, green means we completed it,” Monahan says. “The categories range from investment related to family engagement, family and next-gen education, specific family office goals, and more. Impact, for us, is measured by how well we move the needle on our priorities each year. The biggest impacts we can make are those that keep the family and the family office together.”
Not all impact lends itself to formal measurement — especially when the goal is family cohesion or continuity.
“We don’t have any formal measurements,” Unanue says. “It might be a good idea to survey the family every year or three years as to what that means to them. But we take an ad hoc approach since it’s a small group, with us at the family office, and me as their uncle, seeing how people interact, how we treat each other, how we communicate, how we spend holidays together. We try to make sure they’re staying close to each other.”