Dec 1, 201012:00 AMVan Lines
with Joe Vanden Plas
We Are Fa-mi-ly
When we last saw Ann Kinkade, she was directing the UW-Madison Family Business Center, advising family businesses on internal issues. Now, as president of Family Enterprise USA, she's trying to give family businesses something external — a collective identity.
That's not an easy task in a stubbornly persistent economic malaise, but Kinkade and her staff are striving for a membership of 20,000. "Starting anything in a recession has its own challenges," she noted, "and with a new organization like this, where we're trying to get people to part with money to become members, it's an extra challenge."
Family Enterprise USA is a nonprofit membership organization that is being organized to educate the public about family businesses. To my great surprise, other than industry-focused trade associations, there really are no other organizations that represent business-owning families in any meaningful way, in part because they don't fit a precise definition. The nation's estimated 5.5 million family run firms are rather amorphous — they range in size from the local mom-and- pops to the Ford Motor Co.
Ford is an example of a publicly traded company that is considered a candidate for membership because it still has a significant family influence and ownership percentage. So one public misconception, that all family businesses are small businesses, is among several that Kinkade would like to discard.
Kinkade, who splits time between Madison and the Twin Cities, where Family Enterprise USA is based, believes family enterprises have some things in common. For example, they have withstood the economic downturn better than most, in part because they tend to take the long view. She recalls a focus group last summer in which one man said his business was down 40%, but his payroll was down only 20%.
Kinkade, who has a masters of business administration from UW-Madison, said Family Enterprise USA's mission is largely an educational one. During a recent visit to Chicago, where the organization held a public policy session as part of the Family Business Network's World Summit, 375 people ventured out to the Palmer House Hilton for business tutorials.
Family Enterprise USA is a 501(c)(3) organization and exists for charitable and educational purposes; for tax reasons, it is limited as far as lobbying is concerned, and will be broadly oriented, not a single-issue group. So don't expect a singular focus on the estate tax, which is set to return to a $1 million exemption and 55% top rate if Congress fails to act before Jan. 1.
There are a myriad of tax measures that impact family businesses and their long-term continuity. Since many of these measures are crafted based on their impact to particular industries or businesses of a certain size, Kinkade said policy makers usually fail to consider the impact on the basis of business ownership. An example can be found in the new health care law, which prohibits a business owner from counting family members as employees when it comes to applying for a small business tax credit for health insurance premiums, essentially limiting the credit for family-owned businesses that employ family members.
"Family businesses are so diverse in size, geographic area, and industry, that if the family aspect is overlooked, it can have a significant impact," she said. "Right now, there is no recognition in society that family firms are their own industry, and Family Enterprise USA intends to change that."
Surveying work begins in December, which means the 7,000-plus businesses in Family Enterprise USA's database will hear from the organization with a chance to state exactly what's on their minds. Issue advocacy will percolate up, rather than trickle down. "We're tying to get a critical mass of members who can speak to us and tell us what their issues are," Kinkade explained. "It's a collective identity, a shared voice, so we're trying to create this industry. The industry already exists; they just don't know it."
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