Investing in opportunities you want to encourage in coming generations is invaluable. Funds are a means to do just this. It is a blessing to have the ability to say, “I’m going to get my education and cover my health insurance,” and to know you will have the money to do those things because you or your family business has established funds for just those purposes. It’s amazing and provides freedom to your family members. It’s something I encourage every family business to consider establishing: separate accounts that are untouched until needed.
Funds allow you to cultivate the next generation so that they can handle a broad range of interruptions in entrepreneurship and have the peace of mind and skills to enhance their business resources for others to benefit from. Funds are there to help out but, as each preceding generation reminds the next, they are not to be relied upon. It is up to the members of each succeeding generation to ultimately create their own futures and to plow, plant, nurture, and harvest the fruits of their labors. In being available for these important parts of life, these funds also build the spirit, allowing for more time and resources to benefit the community and help others.
As a family, we’ve established six different funds to help ensure a successful future for generations to come. Consider how some, or all, of these are investments could be beneficial in your family business:
- Education Fund – An education fund can have two merits. First, it can be created to ensure that every member of the family has the money available to them to go and get an education, be it higher education or other. The goal is to provide means such that “not having the money” is not the reason for pursuing education. The second part of the fund can be more philanthropic. A certain amount of the fund can be set aside to help others in your community who aspire to get an education and show the ability and desire to do so but who faced hardships and challenges.
- Research and Development Fund – Creating a fund to sponsor the intellectual development of promising employees can be invaluable. Proactive education for training team members or helping to improve their knowledge in specific fields not only benefits them but also positions them as an even more valuable asset in your company.
- Marriage Fund – Marriage funds can be any size, from a small set amount to a variable calculated for inflation, if the fund is in place over multiple generations. Either way, having this fund available can help ease the minds of senior generations as their children’s potential weddings— and the inevitable high costs associated with them—approach.
- Medical Fund – When it comes to medical costs, even with the best medical insurance you can get, no one can tell if their system or alternative ones are the best fit, but an emergency fund can go a long way to alleviate those worries, especially when there are still going to be deductibles to cover and other unexpected out-of-pocket expenses. From births to deaths in the family, having a medical fund can help assist during some of the most significant moments in life.
- Investment Fund – This fund is the one we use to encourage entrepreneurship and diversification of business. It was a great idea that my parents introduced, and it has unified my siblings and me, because it requires that we work together. That is, based on a formula and when feasible, there is a portion of money that we can use to invest in potentially good prospects. No one person can make this decision on his or her own. We as a family entity have to collectively agree that this prospect works for us as a whole.
- Philanthropy Fund – When you’ve been blessed with any kind of success, in business or otherwise, one of the greatest things you can do is pay it forward. According to Strategic Philanthropy president Betsy Brill, “Businesses that are owned or controlled by families are using philanthropy as part of a business strategy and aligning the family’s core values with the company’s. It makes sense and can also be extremely beneficial to business objectives such as attracting and retaining great employees and improving the company’s reputation as a good corporate citizen with its customers, community, vendors, and suppliers.”
Whatever your family’s priorities, goals or vision may be, establishing funds to help pursue and support those initiatives is a crucial aspect of your future success as a family. Learn more about how to pave the way for future financial freedom for your family business by reading my book, https://amzn.to/2EwtPWB