It Does The Business Good

Philanthropy could help your family as much as it benefits others.
Magazine Contributor
5 min read

This story appears in the April 2001 issue of Entrepreneurs Start-Ups magazine. Subscribe »

The first bullet point on Fleeger's Pro Hardware's mission statement, "We strive to have relationships that are open, truthful, understanding, courteous and loyal with each other, our customers and our community," telegraphs a great deal about the company's commitment to its community-and offers a tangible goal that all family businesses would be wise to reach for.

Fleeger's Pro Hardware, a 55-year-old family-owned hardware store in Toledo, Ohio, has articulated what family firms know almost instinctively: Family businesses are different; as such, relationships with their communities are critically important. "Community relations is not just part of their job-it's fundamental to their existence," says Craig Aronoff, director of the Cox Family Enterprise Center at Kennesaw State University in Marietta, Georgia.

Family businesses' emotional commitments to their communities stem from their longevity. Parents, grandparents and the present generation typically live in the community or in one nearby. If everything goes according to plan, future generations will stay in the area as well. That longevity creates a connection with the public that family businesses can't afford to ignore. In an age when competition is fierce-and more far-reaching than ever, thanks to the Internet-family businesses need to seize the opportunity to create the deeper bonds with their customers that local involvement offers.

Family businesses often contribute money to their communities via family foundations, where members work together on projects that will have an impact on the area. Their contributions to such worthwhile causes and organizations are made for a variety of reasons-to gain personal satisfaction, to support philosophical and religious beliefs, to memorialize the lives of loved ones, or to affirm their values and act as role models for subsequent generations.

Some foundations are also set up so individual members have funds to distribute among causes in which they have individual interests. The impact of such giving is enormous.

"Because of their high profiles in the community, family members also have a tremendous amount of power and influence," says Ellen Remmer, director of the family practice of The Philanthropic Initiative, a consulting firm in Boston. "They draw attention to the issues they're supporting, and they're able to build bridges between unlikely parties," she says. For example, if a family law firm decides it wants to do something about domestic violence, it can exert its influence in numerous ways. "In addition to donating money to nonprofits that help victims and offer legal serv-ices on a pro bono basis, the company could provide office space for advocates and play a role in convening conferences on the subject," explains Remmer. "And their involvement will attract other people and money to the issue."

David K. Welles Jr., chair and CEO of Therma-Tru Corp., a residential entry door manufacturer and family business in Maumee, Ohio, adds: "Of course you want to live in a nice community and be one of the positive forces of change in it. All the family members who are shareholders in our business, and that's roughly 30, know how important community involvement is, and they're proud the company is part of it. I haven't ever heard anyone complain that our philanthropy was eating into their dividends." Aronoff and Remmer point to several positive effects of community involvement:

It's a powerful way to pass family values from one generation to another.

It develops family cohesiveness, especially when relatives are working together on meaningful projects that accommodate each generation's interests.

It promotes fairness. When working together on a project, authority isn't hierarchical. Generations relate to each other in a way that allows power sharing among them.

It prepares the upcoming generation for its stewardship role-in the family business as well as in the community.

Meeting The Challenges

Family businesses are often beleaguered by requests for money, time, goods, donations and the like from causes across the spectrum. So they frequently wind up giving a mile wide and an inch deep-and wondering whether they're making a difference.

To gain control of the process, Remmer suggests dividing your community commitment into two separate efforts. The first is to set aside a certain amount of time and money to causes and issues; because you're a family business, you'll be expected to contribute as one. The second part is to develop a strategic project that has a much greater impact on community and society than scattered gifts. That means getting completely involved. In Therma-Tru's case, family members have immersed themselves, physically and mentally, in Habitat for Humanity. They serve on the board, help to fund the office of the executive director, donate doors and volunteer for building projects.

Another challenge that faces family businesses is to make certain one person doesn't run away with all the glory. Says Aronoff, "If credit isn't appropriately distributed among owners or the management team, or if one person is trying to take advantage of the company's largess to enhance his or her social standing in the community, there's bound to be jealousy."

Also, take advantage of your employees' desire to be involved in philanthropic endeavors. "People were always coming to us and asking for guidance in how they could get more involved in their communities," says Welles, "so setting up charitable contributions committees at company headquarters and at manufacturing plants seemed like a good idea. But our associates knew their communities best and established their own criteria for giving. Neither my father nor I are on these committees." Finally, Welles says, "I know the associates feel very good about what they're doing and are tremendously rewarded by having a say in the company's philanthropic efforts."

Patricia Schiff Estess writes family business histories and is the author of two books: Managing Alternative Work Arrangements(Crisp Publishing) and Money Advice for Your Successful Remarriage(Betterway Press).

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