Aligning Purpose and Process: The Role of Governance in Family Philanthropy

GOOD PHILANTHROPY IS GOOD GOVERNANCE

Governance in a family enterprise goes beyond corporate bylaws and shareholder agreements. At its core, governance provides families with a framework for decision-making, communication, and continuity. It can be defined as the tools and processes that align stakeholders to support achieving their collective goals. Professionals engaged in advising families on philanthropic initiatives would do well to apply governance principles to support a family’s dreams and ambitions.

Philanthropy intersects with governance in several key ways:

1. Shared Purpose
   Establishing a family giving strategy creates a unifying vision that transcends wealth. It is often easier for families to agree on a cause to support than on investment strategies or dividend policies.
2. Education and Engagement
   Charitable vehicles create a practical arena where next-generation members can learn about financial stewardship, board participation, and impact assessment.
3. Conflict Management
   When designed well, philanthropy provides a constructive outlet for differences in values and interests. It can channel individual passions into projects under a shared family umbrella.

For advisors, philanthropy offers a bridge between the technical and relational aspects of family wealth. An accountant can connect tax-efficient giving with legacy planning, while an insurance planning professional can show how policies can fund multi-generational philanthropy. Both can help their clients see philanthropy not just as a tax line item, but as part of the family’s governance architecture.

WHEN PHILANTHROPY DOES NOT CONSIDER GOVERNANCE

While philanthropy can strengthen family governance, it can just as easily expose or deepen divisions if not managed carefully. Below are some challenges that arise when philanthropic efforts are not well-articulated or grounded in the family’s governance and values:

1. Unclear Purpose
   Families sometimes create charitable vehicles for tax reasons without explicitly stating why they are giving. This lack of clarity can lead to scattershot grants and disengaged family members.
2. Overlapping Authority
   Without clear governance, family members may clash over who decides which causes to support or how funds are allocated.
3. Generational Disconnect
   Younger family members may feel excluded from philanthropic decisions or view them as irrelevant. Conversely, older generations may fear “losing control” of the giving strategy.
4. Token Engagement
   Sometimes philanthropy is used as a symbolic gesture to “involve” the next generation without giving them real authority. This can backfire, leaving younger members frustrated or disillusioned.
5. Compliance Oversights
   Philanthropy brings regulatory obligations. Private foundations, in particular, face strict reporting and spending requirements. Missteps can attract scrutiny or reputational damage.
6. Reputation Risks
   Philanthropy brings regulatory obligations. Private foundations, in particular, face strict reporting and spending requirements. Missteps can attract scrutiny or reputational damage.

BEST PRACTICES FOR ADVISORS

Helping families use philanthropy as a governance tool requires balancing the technical with the relational. Advisors are often most comfortable with compliance, tax, and structuring. However, the families you serve also need support in discussions about values, legacy, and generational collaboration.

Here are some best practices, along with practical illustrations:

1. Integrate Philanthropy with Broader Governance Structures

Philanthropy should not sit in isolation. It works best when aligned with family constitutions, shareholder agreements, and succession planning documents.

• Why it matters: A charitable foundation that operates separately from other governance forums risks becoming fragmented or irrelevant.
• Advisor’s role: Encourage families to place philanthropy on the agenda of family council meetings or governance retreats. Link philanthropic decision-making to the same processes that guide ownership and business strategy.

Case Insight: The Weston Family Foundation aligns its giving strategy with the family’s broader legacy commitments, which extend to stewardship of the Loblaws business and the preservation of Canadian ecosystems (Weston Foundation).

2. Start Small and Build Over Time

• Why it matters: Starting too big, too fast can overwhelm families with compliance and decision-making complexities.
• Advisor’s role: Propose phased approaches. For example, launch a DAF first, add a family giving committee in year two, then transition to a formal foundation if the family demonstrates sustained interest.

Some Canadian families begin with a community foundation-managed DAF, which provides a ready-made governance framework, before deciding whether to take on the responsibilities of a private foundation.

3. Facilitate Values-Based Conversations

Families often struggle to articulate why they give. Advisors who create space for these conversations can help clarify purpose and avoid fragmented giving.

• Why it matters: Without a shared sense of purpose, philanthropy risks becoming transactional, limited to tax planning.
• Advisor’s role: Use tools like family surveys, storytelling workshops, or facilitated retreats to draw out shared values. Encourage families to capture these in a written “philanthropy charter.”

Case Insight: The Bombardier Foundation clearly articulates its values of education, culture, and community development—values drawn directly from Joseph-Armand Bombardier’s legacy of innovation and community commitment (Fondation Bombardier).

4. Educate on Both Technical and Human Dimensions

Families need advisors who can deliver both tax planning expertise and relational insights.

• Why it matters: A technically perfect structure can still fail if family members feel excluded or underprepared.
• Advisor’s role: Offer dual education:
• Technical workshops on tax benefits of charitable donations, capital gains exemptions, and insurance-funded giving.
• Governance workshops on conflict resolution, consensus decision-making, and impact measurement.

A tip for families: Pair financial literacy training with site visits to charities so next-gen members see both the numbers and the human outcomes.

5. Empower the Next Generation with Real Responsibility

Token roles lead to disillusionment. True governance impact comes when younger members have real authority and accountability.

• Why it matters: Engagement in philanthropy is one of the most effective ways to prepare the next generation for leadership roles in the family enterprise.
• Advisor’s role: Encourage families to set aside discretionary funds for next-gen members, assign them to committees, or allow them to lead annual grant-making projects.

Case Insight: The Bombardier Foundation includes younger family members as observers and committee participants, allowing them to learn governance while contributing meaningfully.

6. Measure and Celebrate Impact

Tracking outcomes ensures philanthropy remains purposeful and avoids becoming a “check-writing exercise.”

• Why it matters: Families who see evidence of change are more likely to sustain engagement and avoid conflict over priorities.
• Advisor’s role: Help families implement reporting frameworks, such as annual “impact reports” or dashboards. Encourage them to share stories of beneficiaries with the entire family.

Case Insight: The Rogers family’s $60 million COVID-19 relief donation was publicly communicated with clarity about intended impact—food security, shelters, and community resilience—helping strengthen both external reputation and internal family pride (Rogers Communications).

7. Balance Transparency and Privacy

Families differ in how visible they want their philanthropy to be. Some prefer discretion, while others embrace public engagement. Advisors can help strike the right balance.

• Why it matters: Overexposure risks criticism, while excessive privacy can reduce philanthropic influence and impact.
• Advisor’s role: Advise families to establish clear communication policies. For example, decide in advance whether to publish annual reports, make donations anonymous, or brand initiatives under the family or business name.

WHY ADVISORS ARE KEY TO PURPOSEFUL FAMILY PHILANTHROPY

Philanthropy provides a practical, values-driven platform for governance that professional advisors are uniquely positioned to support. By expanding their advisory role beyond compliance and tax optimization, professionals can help families build charitable structures that unify generations, reduce conflict, and sustain impact.

About the Authors

Hadielia Yassiri

Hadielia is a partner with PwC’s Family Enterprise Services. She is a family business engagement expert with more than 15 years of experience working with multi-generational enterprising families and family offices. Hadielia holds an LLM from Osgoode Law School (tax program) and a JD from the University of Calgary. She also holds designations as a Family Enterprise Advisor and Trust and Estate Practitioner.

With a breadth of skills in tax law, wealth management, family office services, and family business continuity planning, Hadielia listens thoughtfully to her clients to best support their needs.

Elise Hochberg

Elise is a senior manager in PwC’s Family Enterprise Services practice. Her skills in family advisory enable families to develop a greater communication capacity, increasing dialogue across multiple generations. In addition, Elise leads family office diagnostic engagements for single family offices. Elise takes a holistic view of the family enterprise to ensure that the family’s interests are best supported.

Elise is a third-generation family business member. Prior to joining PwC, Elise was a project manager in her family’s company. This experience gave her a practical, first-hand perspective of issues and opportunities facing families, their companies, and the next generation of family members.