How a social impact approach can supercharge family office philanthropy

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Do your philanthropic efforts provide a sense of unity, purpose and satisfaction? Do they align with your family’s values and philosophy? Are you solving for a real community or global problem and working with others to move the dial? Employing a social impact approach to philanthropy can help family offices rediscover the joy of giving.

Philanthropy covers a broad spectrum that may not be fully explored, notes Paula Murphy Ives, managing director, social capital and impact for the RBC enterprise strategic client group. Charitable giving may include writing cheques to a fundraiser, giving to familiar charitable organizations, or working through a family foundation or donor-advised fund. These strategies generally represent a transactional approach to philanthropy using just a few of the tools in the family office toolbox.

“The social impact approach to philanthropy looks at the entire enterprise,” she says. “That can include taking stock of family values, investments or how ESG is being integrated into their business. It’s an alignment of doing and giving that looks at community, Canadian or global issues, and the impact the family office can make in addressing those needs.”

While open discussion with members of the family office team is an important aspect of social impact philanthropy, Murphy Ives suggests a more structured, strategic approach. She often works with families or family office staff to first identify overarching values that run through the fabric of the organization. Identifying those values leads to the exploration of specific objectives and solutions that a family office wants its philanthropy, investments, businesses and networks to achieve.

The RBC North America Family Office Report 2022, developed by RBC and Campden Wealth, notes that North American family offices typically give to causes that include: education (87 per cent); economic and social impact, such as financial inclusion, entrepreneurship, economic and community development, research, arts, culture and sports (66 per cent); and healthcare (59 per cent).

“But when you talk to the principals of these families, they’re not always truly satisfied with their philanthropic efforts,” Murphy Ives says. “It’s not that these causes aren’t worthy, but the family may be giving because a certain fundraiser has been tapping them on the shoulder for decades, or because they feel a sense of loyalty to an alumni association.”

Through a family discussion on social impact philanthropy, new avenues for impact are explored. Every voice should be heard. Sometimes a junior family member identifies a particular issue, such as climate, conservation, mental health or equity and inclusion, around which the entire family can galvanize and provide surprising insight.

“One family I worked with found that both the principal and his two children identified the support of women in STEM as a very important issue,” Murphy Ives says. That realization sparked important questions. Do they set up a foundation focusing on that area? How can they mentor women through their existing businesses? How can they create a network and pathways for women, from the University of Waterloo, the University of Toronto and the Global South, to help reflect these values across the enterprise?

“On the business side, these family offices also have capital, often referred to as catalytic capital, which they can deploy to invest in areas such as clean tech, clean energy or companies run by women,” Murphy Ives says. “They can make social impact investments to move the needle on these issues.”

Some family offices even encourage family members to launch their own social enterprises. These can include both for-profit and not-for-profit companies primarily motivated by a social goal — a renewable energy company, a company focused on sustainable fashion or a business specializing in converting historic structures into low-cost housing.

Some family offices are also leveraging a solutions-focused strategy by partnering with other philanthropists, government organizations and non-government organizations to amplify their giving to focus on larger issues.

Events like the Skoll World Forum, organized annually by Canadian entrepreneur Jeff Skoll, provide a meeting place for social entrepreneurs to rally, unite and provide unique solutions to the world’s most pressing problems. Another potential partner is The Philanthropy Workshop, which includes a community of 400 global leaders committed to solving pressing global social issues.

“We work together with these organizations to find niches and gaps in existing approaches to various challenges,” says Murphy Ives. “I lead delegations of philanthropists to such global events to help build networks and come up with solutions that can result in real change.”

Done well, the process of developing an appropriate framework for social impact philanthropy can take between three and six months. She says that building in a social impact approach to investing provides greater satisfaction and can yield multiple returns.

“Their philanthropy is infused with the historic values of their family founders and reawakens the joy of giving,” Murphy Ives says. “And by employing the full set of philanthropic tools available to them, they’re building family unity and legacy while creating something truly exciting.”

This story was created by Content Works, Postmedia’s commercial content division, on behalf of RBC Investor Services, which is a member and content provider of this publication.