The future home of the Dancap Family Investment Office provides some indication of how much work goes into giving money away.
Now under construction just north of the Rosedale subway station in Toronto, the new headquarters for one of Canada’s largest single-family offices will combine a restored Georgian Revival heritage home with an ultra-modern rear addition designed by Dewson Architects. Along with a team of managers, analysts and administrators hired to produce financial gains, the four-storey structure will be home to staff supporting the Aubrey & Marla Dan Foundation (AMDF), which was established in 2002 after its founding family sold Novopharm to Israel’s Teva Pharmaceuticals for an estimated $430 million.
Helmed by Aubrey and Marla’s daughter, Alyse, the foundation’s staff of five co-ordinates charitable giving in the areas of community, healthcare and education. Past donations have included $5 million to the Baycrest Centre Foundation, $8 million to the Sunnybrook Foundation’s Centre for High Risk Mothers & Babies, and $5 million to the School of Drama and Music at Queen’s University.
How does such a foundation choose which charitable organizations to support?
Such is the volume and diversity of requests that in early 2020 it launched an online application system that allows AMDF to assess proposals using an integrated, standardized approach. The system automatically rejects registered charitable organizations that promote the advancement of religion or political platforms, for instance, as well as those that are unable to provide substantial financial records or budgets.
Amazed at number of applications
Applications that make the initial cut are then assessed by AMDF staff, who may then pass them on to Alyse, and ultimately Aubrey and Marla, for final approval.
The foundation was “blown away” by the number of online submissions, says Alyse. In 2020 alone, AMDF distributed 69 grants to 58 organizations supporting 67 programs, increasing its overall giving by 200 per cent from 2019.
The development of AMDF’s online system provides a unique digital example of the work that goes into helping the extremely wealthy plan and manage their giving.
Sometimes a conversation will end in tears because it involves something that’s very personal to a client.Tom McCullough, Northwood Family Office
Whether conducted by single-family offices like Dancap, or by multi-family shops that serve several affluent clans concurrently, philanthropic planning is integrated into a laundry list of services that includes business advisory services, tax compliance work, legal services, expense management, bookkeeping services, document management services, family safety and protection services, reputational risk management, financial education for family members, family support services, family governance and lifestyle management.
“Philanthropy is one of the key elements of legacy planning for just about all family office clients,” says Marvin Schmidt, founder of the Schmidt Investment Group multi-family office in Edmonton. Indeed, according to a 2016 report by UBS and Campden Wealth, half of the North American family offices surveyed said they were involved in philanthropy “with a clear strategy and focus.”
Long-term giving – doing it right
While most wealthy families practice philanthropy to some extent, how they incorporate it into their legacies varies dramatically, says Tom McCullough, chairman and CEO of Northwood Family Office in Toronto.
“Families are complicated organizations. For some, it’s completely natural that all of the money goes to future generations, and little or none goes to charities,” McCullough says. “Others have a very strong view that charitable giving is enormously important, and that inheriting a large amount of money can be devastating to a younger person because it throws off their priorities. Of course, most people are somewhere in between.”
The long-term success of philanthropic planning often depends on intergenerational agreement and involvement. Schmidt says, “Sustainability goes down dramatically when family members aren’t on the same page.”
Achieving this is often easier said than done.
“This process can’t be reduced to questionnaires,” McCullough says. “Sometimes a conversation will end in tears because it involves something that’s very personal to a client. There’s no problem with tears, because it shows a level of commitment, emotion and passion.
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“What’s needed is a skilled facilitator who can apply best practices to help a family express what’s important to them, build a philanthropic game plan, and then execute on that plan, without having the process devolve into broken relationships and acrimony.”
One best practice involves “being the bad guy,” he adds. “You don’t ever want to have family members pitted against each other, because it can be very hard to repair those relationships. As a consultant, it’s always better to be the focus of hard feelings.”
Another best practice involves hosting group seminars with a number of families.
“That way we can speak more generally about philanthropic best practices, which prevents family members from feeling like they’re being singled out,” Schmidt explains. “It really comes down to being honest and authentic about the impact a family wants to have.”
Develop a roadmap
In situations where an impasse is reached, or when a family office faces a conflict of interest stemming from growth-oriented financial operations, an outside consultant is often retained to “develop a philanthropy roadmap based on the motivations, intentions and expectations of donors,” explains Bri Trypuc, founder of Trypuc Philanthropic Office in Toronto. “These conversations can include everything from determining geographic scope and family participation to the causes clients care about most passionately.”
The latter is focused heavily on impact, Trypuc says, because without impact “you might as well just throw your money at a bonfire. Understanding the context of the problems that clients are trying to address allows them to be impactful through evidence-based grant making.”
Other best practices are more practical.
“It’s important to have a policy in place for when it’s hard to say no,” Schmidt says. “There are just so many causes out there, and a predetermined philanthropic scope, with some flexibility built in, provides the structure needed to turn charities down gracefully.”
Once the right policy is in place, it’s time to “put the money to work,” Trypuc says. “With the right structure and support, giving can be everything it should be: fun, rewarding, strategic and impactful.”