In this issue
Few would argue that vision and discipline are essential to make money in a family business. The same ingenuity is needed to donate money in a way that feels right to all family members.
As family businesses achieve significant wealth for their owners, philanthropy tends to become increasingly important to the family. Many factors spark the interest, including a desire to give back to the community that supported the business, passion for a particular cause and the hope of doing meaningful work together as a family.
Philanthropy may keep family members engaged in the family business (including those not otherwise working in it) and can promote family values. Even so, the unique circumstances of business families can raise some challenges for effective giving.
When J. Mark Baiada turned 70 in 2016, he had more to celebrate than just a big birthday. Bayada Home Health Care, the business he had founded in 1975, was generating more than $1 billion in annual revenues. The Moorestown, N.J., company had become the U.S.’s 10th-largest home health agency, with 310 offices in 22 states and 23,000 employees serving 150,000 patients.
In just one generation, Cascade Engineering has achieved considerable business success, while also striving to make a positive impact on society and the environment. Fred P. Keller, who founded the company with six employees in Grand Rapids, Mich., in 1973, says the business now generates about $350 million in annual revenues, up from $250 million in 2011. The enterprise, primarily engaged in designing, engineering and injection molding of large plastic parts, employs some 1,600 people and serves customers worldwide.
During the credit crisis of the last decade, John C.L. Darby, like many real estate developers, had his share of sit-downs with jittery lenders.
But while other developers recount stories of painful reckonings with bankers during the worst housing downturn since the Great Depression, Darby, 55, noticed lenders seemed to breathe a bit easier when he told them how his family business is governed. “You could see their facial expressions change,” Darby says.
It’s a dream for most families: build a successful business and eventually pass ownership of the company to the next generation and, hopefully, many generations after them.
But too many business owners fail to take important steps to ensure their business is handed down according to their wishes. Many have relied on good faith or on agreements based on a clause commonly referred to as “last man standing,” meaning whoever is next in line will inherit and continue the family business. Today, however, because of the changing American family, a proper buy-sell agreement is essential.
Founded 120 years ago, Anthony’s is the oldest business in West Palm Beach, Fla. The retailer, now specializing in women’s apparel, owes its origins to advances in transportation.
A.P. “Gus” Anthony rode James Flagler’s new railroad to its end in Titusville, Fla. There he started a small jewelry counter in 1894. The next year Flagler extended the rails to West Palm Beach. Gus was close behind.
The Business: Jakob Nunnemacher (1819-1876), a master butcher, emigrated from Switzerland to the United States in 1841 and arrived in Milwaukee in 1843. He opened a meat market and prospered by selling specialty cuts of meat to Swiss and German immigrants. In 1854, he used his profits to buy land and began raising his own cattle. Eventually, he got the idea to use the slops from his feeding operation to start a distillery and liquor distribution business.
Generation of family ownership: Third.
Company revenues: $115 million.
Number of employees: 130.
First job at this company: Making boxes, sweeping the warehouse and helping with the laundry, at age 12 or 13. (Our employees in the production room, who cut steaks and chops, wore gowns and cotton gloves and changed several times a day.) Afterward my cousin and I would look for places to hide.