Do you have a clear set of goals and values for your family office? Perhaps you want your professional team to generate the highest possible returns each year regardless of risk or maybe you prefer them to make wealth preservation a priority for the next generation. Have you thought about the values and priorities you want your team to focus on?
Like many things in life, there is no one-size-fits all approach to establishing a family office. That’s why it is so important to start the process by preparing a mission statement that clearly spells out the values, goals, and purposes of your family office. It provides unambiguous direction for your professionals to enable them to make day-to-day decisions, whilst creating a baseline for evaluating their ongoing performance.
A mission statement also provides clarity to your spouse, children, and future generations, helping them understand the values of the family and the goals of the family office, as they consider their current finances and future plans. By creating a unifying foundation for the family office, a well-crafted mission statement can minimize potential conflicts amongst family members.
Constructing a statement
A typical mission statement includes the purpose, values and goals of the family and the expectations of a family office and family foundation. It should be concise without becoming convoluted or open to misinterpretation. It should have a long-term focus since it aims to serve current and future generations.
Building a mission statement is not overly complicated but is a time intensive process that begins with an open discussion involving the family members. An independent, non-conflicted professional makes an ideal facilitator for obtaining valuable inputs from everyone, without stirring up the emotional issues, ensuring that everyone’s point of view is incorporated. In my experience, it is critical to get family members from different generations engaged in the process of preparing a mission statement, to ensure better outcomes and a more robust statement, where everyone feels they have had a part in shaping the goals for the family.
After the discussion, family member’s comments should be analysed to see where there is consensus on the mission of the family and where they diverge, so further conversations can follow to get some clarification. For example, there might be a difference of opinion on the right balance between financial risks and returns.
Once the mission statement has been finalised in writing and discussed with the family, it should be presented to your family office professionals to ensure they understand the purpose, values, and goals of the family and how it will impact their work.
The same holds true when making the decision to create a Family Foundation. These structures are not only a great tool for philanthropy but a good way to keep the family engaged and ensure that values are transmitted from one generation to another. This statement could include the purpose and values of the foundation, as well as its funding priorities. One should use a broad brush and include all sectors that the family is interested in, however the hard work comes later in completing the due diligence on the almost unlimited number of worthy non-profits seeking philanthropic dollars.
Rather than giving small amounts to multiple charities, we would recommend a more focused approach by implementing fewer grants on issues that are important to your family, such as medical research, education, healthcare, or environmental sustainability.
Preparing a mission statement for your family foundation should also be done in a structured manner to obtain objective feedback and build a consensus around your philanthropic vision and values.
A good mission statement for a foundation should go into detail, outlining the expectations for each family member, as well as rules for making funding decisions and allocations. For example, each family member might be given the option of choosing a charity and allocating a grant each year, subject to review by the foundation’s board.
Be prepared for change
Finally, be aware that a mission statement for a family office or family foundation may need to be revisited from time to time. A revision may be needed because of a significant change in the family structure or outlook, which may be due to divorce, remarriage or the birth of a child.
It is important to keep in mind that a mission statement is a living document that provides invaluable guidance for making decisions that should support the evolving needs of your family.