MIT Sloan Sustainability Initiative
Creating a Positive Family Legacy
Family-owned businesses, foundations, and offices make a consequential economic, social, and environmental impact.
Written by: Tracey Palmer
Family-owned firms employ 62% of the US workforce
In the United States, more than half of publicly traded companies have significant family ownership, and family-owned firms employ 62% of the US workforce. In emerging economies, 60% of firms over $1 billion are family-owned. And out of $62.8 billion in philanthropic grant-making in the United States in 2015, 46% came from family foundations.
Reeling from the events of 2020, many owning families are motivated to make change for a better world. This is particularly true among next-generation family members, a majority of whom consider it important to use their family’s wealth to make a positive social or environmental impact. Senior family members, recognizing this opportunity to engage the next generation and build a positive family legacy, appear ready to take meaningful action.
Families face two key challenges, however, where MIT Sloan is ready to help. The first is around building alignment. How can families move from fragmented activities by individual family members toward a cohesive family social impact strategy, animated by shared values and drawing on the full capability of the family? The second is around efficacy. How can families deploy effort and resources in ways that truly advance social progress, with minimal unintended consequences?
Family-owned impact falls into four categories—impact investing, philanthropy, corporate social responsibility, and political engagement. Each of these play an essential role in the transition to a just and sustainable economy.
Jason Jay, director of the Sustainability Initiative, and John Davis, lead faculty member of Family Enterprise Executive Programs, are collaborating to develop a portfolio of offerings called the Owning Impact Project—to guide families as they strive to create positive social impact and lasting legacy.
"I grew up in a business family,” says Jason. “Every night was a lively, sometimes heated dinner conversation between my parents about the family enterprise, and how we could do the right thing for customers, employees, and society.” As he dove into the fields of sustainability-oriented innovation and finance over the past 15 years, he gradually noticed that owning families play pivotal roles in domains like clean energy, agriculture, and healthcare innovation.
“Family-owned impact falls into four categories—impact investing, philanthropy, corporate social responsibility, and political engagement.” Jason says. “Each of these play an essential role in the transition to a just and sustainable economy.” Jason also witnessed the difficult, complex conversations and conflict that can arise in families, and the applicability of his work on Breaking Through Gridlock.
While Jason has helped run a half-dozen workshops for families since 2012, the work gained significant momentum when John Davis joined the MIT Sloan faculty in 2018. John is a globally recognized pioneer and authority on issues related to the family enterprise, family wealth, and the family office. Since the 1970s, he’s been a leading researcher, professor, author, advisor, and speaker on family enterprise, and is the creator of some of the field’s most influential conceptual frameworks. “We’re building a suite of programs to provide assets for family enterprises—and sustainability in its many forms is one of them,” says John.
“In fact, family companies perform significantly better in terms of sustainability, profitability, and growth of all kinds when compared to non-family businesses." Applying MIT Sloan’s unique brand of system thinking to the challenge of family social impact, Jason and John are helping families examine their enterprise as a dynamic system. In the process, families will develop a shared sense of purpose and build momentum for change.
“Ultimately, we hope participants will strengthen their family unity, talent, culture, and reputation, all while making the world a better place ,” says John.
Family companies perform significantly better in terms of sustainability, profitability, and growth of all kinds when compared to non-family businesses.
In December, Jason and John presented a pilot workshop for twelve family enterprises, with two-to-six people from each family in attendance. Participants joined via Zoom from Brazil, Mexico, Argentina, Senegal, Switzerland, the United States, and the Philippines. The highly interactive, three-hour workshop featured a live case study of Keller Enterprises, a family-owned organization committed to areas including clean energy innovation, sustainable farming, community-based partnerships, and mission-driven investing. The case was presented by Temple Fennel, Sloan Fellow ’14, who is a member of the Keller family by marriage; and Sam Bonsey, who is a Keller board member and Temple’s cousin.
“It was great to share our story,” says Temple, who shared how his family reframed its identity as an oil family to that of an energy family. “Some say that each family story is unique, like a snowflake. That’s true, but I also think it’s possible to understand snow—the underlying system dynamics of family enterprise.” Temple’s family narrative opened up the pilot class conversation to investing significantly in clean energy. “It’s great fun to work with Jason and John to explore these dynamics and help other families along the journey,” he says. “I think MIT could do something unique and necessary in this space.”
“We are all trying to weave our efforts into the wider narrative of our families, and having some challenging conversations along the way,” says Sam, who is also executive director of The ImPact, a group of families committed to solving social and environmental problems by increasing the flow of capital to investments that generate measurable impact.
“Through The ImPact, we encounter wealth owners at all stages of the journey, from just articulating their vision and values, to grappling with diverse family priorities, to fine-tuning an impact investment strategy,” says Sam. “I have personally gained some important insights from telling our family’s story and applying the systems tools that Jason and John have developed. I hope that others in our network are able to gain some value from this MIT approach as well.”
Temple and Sam were part of the pilot program design team, along with current SDM student Preeti Varma. Thanks in part to their involvement, the pilot workshop feedback was overwhelmingly positive. Nearly all participants surveyed agreed or strongly agreed that they were “more inspired to engage my family in future impact opportunities.”
Jason and John have since conducted a follow-up workshop for the pilot families, and a customized workshop for families in Asia. In July 2021, they are launching an executive education program on Owning Impact. In parallel, Jason is developing ways for family members to participate in MIT’s innovation ecosystem—both to help refine their impact strategy and identify opportunities for investment.
The $715-billion impact investing field is significantly driven by family offices and foundations. But the bigger picture is this—$41 trillion in wealth will be inherited in the coming decades, the investment of which will shape our global economy and societies.
“MIT understands and creates the future,” says Jason. “I think with my sustainability lens, John’s family enterprise expertise, and the deep strengths of MIT, we can help families understand and create their future, and a positive future for societies and the planet.”