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Why a family foundation is vital for cohesion and the key to long-lasting success
The Carvajal family’s Ana Maria Guerrero Carvajal and Isabel Carvajal Sardi on why the family’s foundation is the largest shareholder of their 121-year-old family business and how it’s the key to sustaining...
The Carvajal family’s Ana Maria Guerrero Carvajal and Isabel Carvajal Sardi on why the family’s foundation is the largest shareholder of their 121-year-old family business and how it’s the key to sustaining social, human, and reputational capital.
“It is impossible for a business to succeed among a sick social environment”.
“It is impossible for a business to succeed within a sick social environment.” These were the words of second-generation family business leader Manuel Carvajal S. that changed the course of the Carvajal family enterprise – and paved the way for a revolutionary foundation that would go on to shape millions of lives.
Today, his vision lives on through his grandchildren, Ana Maria Guerrero Carvajal and Isabel Carvajal Sardi, who joined our philanthropy webinar series to discuss the importance of communication, consistency, and personalization in a family’s journey of giving. Their story is both revolutionary and inspiring and offers extraordinary lessons on governance, philanthropy, and entrepreneurship for family enterprises of every size.
In 1904, Manuel Carvajal Valencia founded the Carvajal business by selling his wife’s land to import a printing press from Europe. At the time, Cali was a small, underdeveloped village, making the venture seem ambitious, but the family used their newspaper El Día to advocate for the creation of the Valle del Cauca department and the Cali diocese – both achieved by 1910. That same year, El Día closed its doors, but Carvajal had already become a growing industrial company.
Now, 121 years later, the Carvajal business offers a story of strength, giving, and extreme resilience – having survived two world wars, local drug wars, guerrillas, several recessions, the internet revolution that nearly destroyed the enterprise, a pandemic, and a social uprising in the city. Now on its sixth generation and with 347 family members – the youngest just days old – the family has diversified from a printing press to a technology, education, and packaging empire.
The family has also served more than 1.1M individuals through its host of community centre programmes.
The Carvajal Foundation
But in the family’s eyes, the bigger the privilege, the greater the responsibility to give back to society, and in 1961, they established a foundation that was groundbreaking for its time. Manuel Carvajal S. spoke of the ill society surrounding their family business, with a growing number of slums and increased migration from the Pacific Coast and the south. He convinced his family members of the importance of social justice, and together, they donated 23% of shares to the foundation, making it the largest shareholder of the family business.
More than six decades on, the foundation continues to achieve the unthinkable, now boasting one of the most sophisticated philanthropic structures in the world of family business. With its own governance structure, staff, and an annual budget of $8–$10m, the foundation partners with aid organizations, local governments, and other foundations to make an impact across Colombia.
The Carvajal Foundation last year supported over 3,450 beneficiaries in Cali, Buenaventura, Ginebra, Guachené, and Candelaria, almost half of whom live on less than $3 per day. It is this extreme poverty that the family hopes to eradicate through income generation and education, reaching 6,300 students through an e-learning platform, 26,000 primary school students, and 100,000 individuals through library services. The family has also served more than 1.1M individuals through its host of community center programs.
“The family is now reinventing this structure to make it simpler, more agile, and future-proof.”
Continual evolution
Evolution and innovation are at the core of the Carvajal family enterprise system, regularly reviewing and remodeling its strategy to ensure it remains competitive and sustainable – able to survive geopolitical tensions and help the most vulnerable thrive.
One of these reinventions is the way the foundation is governed, currently led by a Founder’s Council formed of eight family members and the archbishop, signaling the family’s strong Catholic roots, as well as a board of directors formed of six family members
and three external professionals. The family is now reinventing this structure to make it simpler, more agile, and future-proof.
The ambition is to have a single board of directors to run and supervise the foundation, still comprising six family members and three external professionals; however, they will now be elected by merit, through a process led by an external head-hunter, and will be decided by a whole family vote. There will also be term limits and external evaluations on its performance, one of eight best practices and initiatives the Carvajal family offers to family businesses aspiring to make a difference. These include:
- Next-gen programs that allow new generations to join boards (without a vote)
- Volunteers’ programs aimed at involving family members with the Foundation’s social programs
- Educational programs to help family members reach high educational standards
- Impact evaluation to measure the results of every program
- Family assemblies and site visits
- Constant communication
- Institutionalize giving through clear by-laws
- External evaluation of board members
This non-extensive list simplifies some fundamental practices and bylaws that the family lives by. One such principle is to educate family members to ensure the family continues to create well-educated members who will continue to give back to the foundation and the community it serves. It also states that the family will never financially benefit from the foundation, with shares never being taken over by the family. If the foundation ever became non-operational, its shares would be transferred to a similar foundation.
In the words of Ana Maria Guerrero Carvajal, president of the board at the Carvajal Foundation, “We see our business as an instrument to promote economic and social development. And by doing things right, the foundation is the vehicle that makes it happen.”
Our foundation has also played a part in building a positive reputation for the business
Turning a vision into a reality
The foundation has also allowed the family to benefit from its creation in unexpected ways.
Ana Maria continued, “We find a lot of benefits from a family perspective. The foundation turns our DNA, which is a commitment to social prosperity in the region, into reality. Our foundation has also played a part in building a positive reputation for the business. Carvajal has always ranked highly in reputation indexes in Colombia, and our foundation and social work have played a crucial part in that.”
Isabel Carvajal Sardi, president of the Carvajal family council, added, “From a family council perspective, the foundation is vital for family cohesion, which is one of the things you need to work on if you want to be a long-lasting family enterprise. This is one of the factors that build on emotional cohesion; it is a source of pride for the family and continues to move and inspire all of us.”
Lessons for family businesses
The critical lesson the Carvajals offer is that with privilege comes responsibility – and successful, multigenerational family enterprises can make a tremendously positive impact on society. In return, they can also unite their families and build on their social, reputational, and human capital in an elegant and inspiring way.
Ana Maria and Isabel also offer some tangible lessons for family businesses looking to embark on a philanthropic journey. In their words, communication, personalization, and consistency are key.
Isabel said, “Communication is key, but crucially, this messaging needs to form part of a long-term strategy that fosters engagement. It needs to be continuous and consistent. You also need to tailor your communications and your internal programs by age and cohort. We have a next-gen program for graduates, an educational program for those finishing high school, and site visits for adults. This takes a lot of time and coordination but ensures you have a truly engaged community of family members wanting to make an impact. Never underestimate the power of site visits – and the impact of letting family members hear firsthand how their family has transformed lives. It is more impactful than any work that can be done online or in a classroom. It is a priceless exercise and repeats an important message: to be physically present wherever possible.”
We are extremely grateful to Ana Maria and Isabel for sharing the story of their foundation with our audience of family enterprises. The Carvajal family is one of Latin America’s most respected family enterprises and the winner of the 2022 IMD Global Family Business Award. You can read more of our work with the Carvajal family here, and to learn more about the importance of philanthropy as an integral part of your family enterprise ecosystem, download our Family Philanthropy Navigator’s toolkit for free.
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