Summer 2022 GPC Newsletter

Manager's Minute

Changing the World

By David Bonner

I thoroughly enjoy reading books by acclaimed author David McCullough. A common theme he addresses in his biographies is that actions taken by historical figures were taken in faith, not knowing with certainty how their actions would impact others and the future.

One of the hardest, and I think the most important, realities of history to convey to students or readers of books or viewers of television documentaries is that nothing ever had to happen the way it happened. Any great past event could have gone off in any number of different directions for any number of different reasons. We should understand that history was never on a track.

Character counts over and over. Personality is often the determining factor in why things turn out the way they do. (The Glorious Cause of America - DAVID MCCULLOUGH, BYU Forum Address, September 27, 2005)

Your actions change people and change the world.

The choices we make in our personal and professional lives have consequences. As professionals rendering service to clients, you help them make important decisions which greatly impact their families and the individuals blessed by their gifts of time and financial resources. These decisions can have long lasting, even eternal, implications. In the words of David McCullough, character counts over and over.

We may not know with certainty how our actions will impact the future, but we can have faith that our efforts to bless and help others will create a better world for those who follow us. They will be grateful for your strength of character. They will appreciate all you have done. Our actions today will bless future generations just as we have been blessed by the actions of those who preceded us.

I am personally grateful for the time and effort you have invested in learning and mastering your profession. I am grateful for the service you render your clients and Philanthropies. I am grateful to you for the good you do.

Kindest regards,

David Bonner,
Senior Manager, Gift Planning Services, Philanthropies

The 5 C's of Generational Continuity

By Dave Specht

There is no magic recipe that will guarantee the preservation of your family relationships and the perpetuation of your business. There are, however, five key items that if not planned for will almost assuredly lead to heartache, negative family dynamics and a poor chance at business succession. As you consider all the technical elements that families need to address, please seek to humanize every step of the process.

1. Cash flow

Cash flow clarity is key. It is crucial that every business owner has a clear understanding of the business cash flow. Furthermore, it is important to “stress test” the operation to see what types of shocks specific to input costs or prices it can withstand. Besides the cash flow of the business, the operation needs to consider the cash flow needs and sources of the retiring generation. If retiring owners do not have assets accumulated outside the business, then their retirement would logically be funded through the successful operation of the enterprise, which will undoubtedly lead to second-guessing and continued attachment by the founders.

Questions to consider:

• From a cash flow perspective, how ready is the business to invite another family member back?
• From a cash flow perspective, how prepared is the retiring generation to create sufficient cash flow for retirement without supplementation from the business?

2. Contingency plans for management and ownership

Every business operation needs to have a documented, communicated, and frequently revisited contingency plan for both management and ownership.

•  A management contingency plan looks at the people in the operation and identifies the duties and decisions made solely by one person. When single individuals make purchasing, marketing, and other decisions by themselves, risk is created and continuity is jeopardized if they become incapacitated, die, or leave the business. Therefore, each business operation should identify these risks and train back-up personnel on how to minimize them.  Plans should also be considered as owners age and want to slow down.
•  An ownership contingency plan provides and establishes clarity regarding the flow of assets should any owner pass away, become disabled, or retire. Although it sounds like a simple and logical expectation, few have a clearly documented and communicated plan in place. The flow of ownership should not be a surprise and should include conversations about debt assumption and the rights, roles and responsibilities of owners.

Questions to consider:

• If one of the key managers passed away or didn’t come to work on Monday, how big is the knowing/doing gap between them and the person that would be called to do their job?
• If one of the owners were to pass away tomorrow, how would ownership flow and how would the business be impacted?

3. Compensation

Often overlooked but always present is the question of how people are compensated. As a family business invites a member of the rising generation back, it is crucial that there is clarity around their compensation. Compensating individuals for the job they do is always a best practice. When compensation is blended with gifting or is not tied to the job being performed, there will be confusion and unintended consequences. Paying siblings or cousins the same amount when they do vastly different jobs almost always leads to problematic situations of either entitlement or feelings of unfair treatment.

Questions to consider:

• How aligned is the family member’s compensation in the business with the job they perform?
• If a non-family employee was asked to step in and do the same job as a family member, would their compensation go up, down or stay the same?   

(Read more)

GPC Conference 2021 Review

For those who weren't able to join us in Salt Lake City for the 14th Gift Planning Council Conference, follow this link to review the many subjects covered. It was an inspiring experience for all that attended. Feel free to review a few to see what we mean by the "Intersection between Faith and Philanthropy."

BYU-Pathway Worldwide

Through donations to the BYU-Pathway Worldwide Fund, thousands of students around the world are blessed with the opportunity to obtain an education in a spiritually based environment and gain better employment. In 2021, BYU-Pathway Worldwide served more than 57,000 students in 188 countries.

The BYU-Pathway Worldwide Fund blesses students who have recently completed their missions but need financial assistance to begin or continue their education. By donating to this fund, you are fostering the growth of the Church and its members throughout the world. Your donation will help educate disciples of Jesus Christ who are leaders in their homes, the Church, and their communities.

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