If a Family Only Brings Money, It Brings the Most Replaceable Thing

"Wealthy people should do more good."

This is the sentence I hear most often, in all kinds of settings, and the one I most want to correct. Not because it is wrong, but because it turns a structural issue into a moral one.

If impact investing only lacked money, the problem would have been solved long ago. The forces driving impact are already diverse (foundations, corporates, banks and insurers, public funds), each with its own role. The question really worth asking is a different one: among all these forces, what can families bring that others would find hard to replace?

First, what impact investing actually is

Impact investing is not another name for ESG. ESG asks "could this company hurt my investment?", which is risk management. Impact investing asks "did this money actually make some good thing happen that otherwise would not have?"

To be called impact investing, an investment has to do at least three things: write down, before the decision, the problem it intends to solve; be able to say "without this money, this would not happen"; and keep measuring and disclosing results. Without the last one, it is just an ordinary investment under a new name.

This is no longer a niche market. Global impact investing assets are about US$1.57 trillion, managed by nearly 4,000 organizations, with a compound annual growth rate of about 21% over the past five years.

One sentence, two languages

In mid-September, the family-office research think tank formed through an industry-academic partnership between CTBC and National Chengchi University published its second report, "A Framework for Thinking and Deciding on Family Business Succession," written by Professor Joseph Fan (范博宏) of the Chinese University of Hong Kong and Associate Professor Tan (譚子敏) of Singapore Management University. Its core proposition is this:

What a family business truly needs to pass on is not the business itself, but the special assets that underpin its competitive advantage.

The report defines special assets as assets that are highly specific, hard to obtain through the market, and whose value drops sharply once separated from their original organization or context. It sorts them into five kinds: the founder's personal capital; knowledge and technical capability; the family brand and corporate reputation; social capital and partner networks; and governance culture. Of these five, only technical capability can arguably be bought. None of the rest has a price in the market.

I paused for a long time when I first read this passage. Because in the professional vocabulary of impact investing, one of the most central concepts is additionality, defined as: without this contribution, the thing would not happen, or would happen many years later.

These are two languages for the same thing.

If a family brings only money, it brings the most replaceable resource on the market: if you do not invest today, someone else will tomorrow, and the additionality approaches zero. But if the family brings special assets (a purchase order, trust built within a supply chain, manufacturing know-how, or even just a founder willing to lend their name), those are things the market cannot sell, and their additionality is naturally the highest.

The real cards in Taiwanese families' hands

The same report offers a weighty number: more than 70% of Taiwan's listed companies are family businesses, and more than 90% of unlisted companies are.

This means that most of Taiwan's high-net-worth families are not "holders of financial assets" but operators of industry. They understand manufacturing, supply chains and customers, and they hold real purchasing power and technical capability. That is very different from the family-office clientele many international financial centers attract, who tend to be strong at asset allocation but do not touch industry.

Consider a scenario already under way. TSMC has asked suppliers with key emission sources to sign emission-reduction agreements and to complete third-party verification of product carbon footprints by the end of 2026, stating that it will reduce business with those who fall short. This means that Taiwan's family businesses have to spend this money on decarbonization anyway.

The only difference is: do you spend it as a customer, or as a shareholder?

A family business that wants to adopt energy-saving technology can buy it from a supplier, or it can invest in an early-stage energy-saving technology company and become its first customer at the same time. The latter provides not just capital but orders, a production line to validate the technology, and a supply-chain endorsement. The additionality of that one check is something a purely financial investor would find very hard to match.

The CTBC–NCCU report also cites the example of Delta Electronics, whose foundation's philanthropic direction is closely aligned with the company's core capabilities, forming a governance model in which business operations, social responsibility and family values reinforce one another. My own extension is this: if philanthropy can be aligned with core capabilities, why not investment?

What the family gets

At this point someone usually asks, "After all that, what does the family get?" That question has to be answered first. Get the order wrong and no one listens to the rest.

First, returns are not necessarily lower. According to the Global Impact Investing Network (GIIN), 89% of global impact investing assets target risk-adjusted market-rate returns, and only 11% deliberately accept lower returns; among 305 investments it tracked, 94% performed in line with or above financial expectations. But I will not say "impact investing never sacrifices returns"; that is marketing talk. The honest version is that returns are distributed just like ordinary investments, some good and some bad, and choosing the right manager matters just as much. Accepting lower returns is an option, not the price of admission.

Second, it is one of the most effective family-governance tools available today. A survey this year by AlTi Tiedemann and Campden Wealth shows that the share of family offices with a formal "purpose of wealth" framework rose from 33% to 48% in one year. The three main motivations are guiding the next generation (65%), giving meaning beyond preservation (61%), and reducing family conflict (54%). The CTBC–NCCU report puts it another way: lowering the cost of family cooperation. That is the language of economics, and far more persuasive to business owners. Talking about dividing assets hurts relationships; talking about "what our family's money is meant to make happen" does not.

Third, the next generation really does come in because of it. UBS surveyed 307 family offices worldwide this year: only 27% have a structured process for developing heirs, and 29% see inadequate financial and governance education as a barrier to next-generation involvement. I often give families a very practical suggestion: set aside 1% to 3% of total assets for the next generation to manage as a small impact-investment portfolio, with a mentor and a real measurement process. It trains financial judgment, value trade-offs and external communication all at once, and it is closer to the real experience of succession than sending them off for another degree.

The cheapest thing is time

Finally, I want to clarify a term that makes many families hesitate: catalytic capital.

When many people hear "catalytic," they think of "first loss," meaning the family sits in the most junior position and absorbs losses first so others feel safe coming in. If that were the only definition, most families would close the door immediately, and they would be right to.

But that is not the full definition. Under the framework of the MacArthur Foundation's Catalytic Capital Consortium, catalytic capital has four attributes: patience, flexibility, risk tolerance, and concessionary terms. First loss is only the most expensive form under "concessionary terms."

For Taiwanese families, the easiest and most underestimated are actually the first two. Patience means accepting lock-ups of ten years or more without requiring quarterly liquidity. That costs nothing but time, and most capital that has to report performance to its investors regularly finds it very hard to wait ten years. Flexibility means being willing to close on non-standard terms such as small tickets, staged investments or convertibles, which is precisely the natural advantage of a family's short decision chain.

And it comes with a very worldly reward. A survey published in August by Hong Kong's Sustainable Finance Initiative shows that the biggest challenges for Asia-Pacific family offices in impact investing are quality deal flow and exits (26%), followed by finding credible co-investment partners (18%). Good deals are themselves a scarce resource, and a family willing to be the first to say "yes" is often allocated deals first. What the first check buys is not just sentiment, but valuation, board seats, information rights and follow-on rights.

In catalytic capital, the cheapest thing is time; the most expensive is loss. If you are willing to wait ten years, you are already one of the scarcest kinds of capital in the market.

Families do not have to go it alone

One more thing is worth saying clearly: a family's role in impact investing is rarely played alone.

The best structures often have each force bring what it does best: banks bring distribution and structuring, foundations bring philanthropic capital willing to take losses, public funds bring policy signals and risk sharing, and corporates bring orders and industrial validation. Families bring time, and special assets the market cannot sell.

Singapore's Asia Impact First Fund is one example: a US$20 million fund anchored by DBS Bank with US$10 million, joined by several family offices, family foundations and business groups. A single family's ticket may be too small and its risk too concentrated; entering alongside other forces is what lets a family's time and flexibility make a difference.

After letting go of control, something has to catch it

If a family office only handles allocation and succession, it manages a pool of money. When it starts asking "what do we have that the market cannot buy, and what could it make happen?", it is managing the family's next fifty years.

In the first report of the same research program, Professor Fan wrote that letting go of control is what buys a family fifty years of lasting stability.

I would add one line: after letting go of control, something has to catch it. What catches it is the family's shared understanding of "what we want to make happen." And impact investing is precisely the way to turn that shared understanding into something actionable, measurable, and open to scrutiny by the next generation.

The author is an executive director of the Taiwan Impact Investing Association, a partner of Sustainable Impact Capital (SIC), and chairman of DoublePortion Capital.