As family business owners, we’re strong advocates of family-run enterprises. Family businesses think, invest and innovate for the long term and are not swayed by short-term profits.
But family businesses are incredibly valuable for another reason too: they stay close to their communities. When companies remain in private hands over the generations, the business, the family and the local community forge strong and lasting links with each other, even when the firm expands.
So, it is no surprise to see that family businesses are the UK’s largest regional employers. For example, family firms employ more than 1.2 million people in the North West of England, almost 40 per cent of total employment, which is more than any other company type. This is something the family business sector should be very proud of indeed.
While many family owners think locally when it comes to business, there has been a tendency over recent years for philanthropy to move in the opposite direction
But while many family owners think locally when it comes to business, there has been a tendency over recent years for philanthropy to move in the opposite direction, with donors making gifts to national and international charities rather than supporting local causes.
Supporting national and global charities is important, of course. But it is critical that this does not crowd out local donations or that giving to smaller regional causes is unfairly maligned as useless, unproductive or small-minded in the process.
There has been a hint of that in some of the commentary from the ‘effective altruism’ movement; in the past, the movement has urged donors to give to international charities because they can improve the lives of more people for the same amount of money.
But we firmly believe that this should be balanced against arguments in favour of local and regional giving. Most family business owners will recognise that their companies are built on the support and assistance of their local community; that family businesses are often deeply ingrained within their home cities, regions and local communities.
Often, the very success of our businesses goes hand in hand with the support, encouragement and hard work of our local communities, which is why throughout the history of our own company we have always tried to prioritise hiring and training local people.
This should factor into all family business owners’ calculations; we should seek to give back to the local community who have supported and nurtured our businesses over the generations. This is what informed our mission when we formalised our giving a number of years ago.
But we have since discovered many other good reasons to support local causes. First, many small local charities are in desperate need of support, and most do not have a reliable source of funding. Securing a sustainable revenue stream in the face of competition from their large competitors with huge marketing budgets is very difficult.
Research from the Small Charities Commission found that more than a third of people could not name a local charity in their area, and 50 per cent of those who said they did not donate to any local charities gave the reason as not knowing enough about them.
Secondly, funding for local government has been cut by more than 40 per cent over the last eight years, leaving significant gaps in local community support services. This piles more pressure on local charities who are increasingly being expected to step up and fill these gaps.
Thirdly, small charities cannot easily enlist armies of volunteers and world-famous celebrities, access large government grant funding, or lobby the government directly. And when giving is in decline, especially large corporate donations, many local charities are struggling to get by.
We should seek to give back to the local community who have supported and nurtured our businesses over the generations
Finally, local charities really do matter. We often think that the charity sector is composed of the big boys, and a few others. But in fact, there are around 163,000 charities in the UK, and 97 per cent of them are defined, by income, as small – they receive less than £1 million per year in donations, and just under 50 per cent of all charities earn less than £10,000 per year.
Family businesses have been called “natural” philanthropists by the Institute of Family Business. That’s because family owners often see themselves as ‘stewards’ of their companies, focused on building a legacy that goes beyond the necessity of short-term profits. In the same vein, family owners see philanthropy as a way to transfer positive, meaningful values between the generations.
In fact, 81 per cent of the world’s largest family businesses practice philanthropy, according to Ernst & Young. But our philanthropic clout comes with responsibility, and we believe that it’s vitally important that the family business community have a discussion about giving.
It is, of course, up to individual families how to guide their giving, and every cause needs its own dedicated community of supporters. But thousands of small, energetic charities are stepping up to tackle significant local challenges every single day; they’re building the kind of society and communities we want to live and build businesses in, and they need our support too.