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FAMILY MEETINGS
The ABCs of Family Councils
BY MIKE COHN
AUGUST 2004
If you are thinking of starting a Family Council, here are some basic rules to follow so that you create a council that involves and engages family members.
What is a Family Council?
A Family Council brings family members together on a regular basis to learn—and make informed decisions—on issues of mutual interest. Members are typically from two or more generations.
Typical Family Council Initiatives Create a family vision and goals statement. This is typically the council’s first activity. Develop a challenging vision of the family’s future that all members can embrace—what pioneering psychologist Daniel Levinson called a “Shared Dream.” Articulate roles and responsibilities for family members regarding operating businesses. For example, will council members serve on family business boards, nominate board members and serve on board committees? Plan educational programs and events for family members. Create policies regulating events such as relatives’ entry into or exit from the family’s business, confidentiality and pre-nuptial agreements. Further the development of young family members—for example, by setting up scholarship or incubator-type investment funds. Coordinate functions for the next generation’s investments, which will include investment policy statements, oversee the hiring and the performance of investment advisors. Establish and oversee the family’s philanthropic initiatives. Set policies to regulate potential conflicts of interests among different family members’ business activities. |
What work do Family Councils do?
A Council acts as a forum where family members can ask and answer questions, understand choices and implications.
A Council is typically a “recommendation only” body, but sometimes the Council is empowered for decision-making.
A Council typically starts by creating a family vision and goals statement as a guide; over time the Council does other work, such as nominating members to Boards of family entities, creating family governance policies (see the example of typical initiatives at right).
What are the advantages of having a Family Council?
It’s a multigenerational learning experience that creates opportunities to involve adult children in planning and learning about complex financial (and other) issues. It also prepares the next generation to work together collaboratively.
Finally, a council provides oversight so family values are always aligned with activities of various types—business, philanthropic, investment and leadership development.
What are the disadvantages?
You must make a time commitment. Because Councils need a certain amount of momentum to get started, monthly meetings usually are a good idea at the start.
You also must disclose information and be willing to involve others (usually, the adult, next generation children).
Who runs the meetings?
A facilitator who can work with family members and who can also organize the existing advisors to participate as appropriate: The facilitator often helps with the implementation of decisions to keep the process running.
How long does the process take?
Initially it may take 6-12 months for family members to become educated and to feel legitimately included in the discussions and decisions (as compared to being a bystander in the process).
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