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Paying it forward

Could a philanthropic gift be the right succession strategy for your farm?

Without a family successor, Bob and Wynne Chisholm saw they could save the farm by giving it away.

In terms of size, W.A. Ranches’ gift to the University of Calgary’s faculty of veterinary medicine (UCVM) is the biggest donation of ranch property ever made to a North American university, adding up to 19,000 acres of land and 1,000 head of cattle for a total value of $44 million.

Although precedent setting in many ways, at its core, this donation made by Wynne Chisholm and her father, J.C. (Jack) Anderson of W.A. Ranches Ltd. west of Calgary, Alta., was merely a family farming and ranch succession plan, like many others, with a focus on legacy, sustainability and growth potential for generations to come.

Jack, in his 90s, and Wynne, now nearing retirement, had operated W.A. Ranches together for the last 15 years, but from the very beginning, questions about succession — and the question “who?” — were always in the air.

“Without a family member interested in taking the reins of our family ranch operation, the question of our succession was always in the back of our minds,” says Wynne. “We did a lot of soul searching and asked ourselves lots of questions.”

Again, they are questions that farmers all across the country will recognize. If there’s no clear successor, what do you do?

“Could we downsize and continue?” Wynne asks. “Could my husband Bob and I keep it running for the foreseeable future after my dad passed?

The family considered an employee buyout, but it just wasn’t feasible in size and scope. And the thought of downsizing was off the table too.

“The option of downsizing was not acceptable for my dad as he feels very strongly that if you aren’t growing you are going backwards,” Wynne says.

"Letting go is tough, tough, tough,” says Wynne, “and I still miss the cows and the land.” photo: Supplied

More possibilities came up too. “What if we had a big auction?” Wynne says. “Well, the thought of having everything that we had built split up was definitely not appealing — devastating actually.”

Like other farm and ranch families, they faced an intricate and complex puzzle of family relationship dynamics with different needs, passions, ambitions and stages of life.

Add to that legal, financial and tax issues and it can be a daunting task that tests the mortar and mettle of the ranch entity and the families involved. For Wynne, though, navigating a philanthropic gift made it even more challenging.

“For us, when you added philanthropy to the mix of succession planning, all of those new layers increased the complexity,” she says. “The process made me reflect about the number of farm and ranch families that have gone through succession and ranch planning. Sadly, I know of more families that have blown up their relationships over succession planning than I do families that have done it successfully.”

Now, some 18 months later, with time to reflect on the process and on the succession plan that led W.A. Ranches to that gift to the university, Wynne shares her insights of the experience.

“For me this is one of the toughest things that my husband Bob and I have ever gone through,” she says. “It was emotionally really tough and beyond that, it was extremely hard work for us. Even getting through the discussion of what we were going to do was challenging. Having no interested next generation was huge. Was our ranch and everything that we worked so hard for and built going to die out after my husband and I? Would we run the ranch until death do us part and die with our boots on? That was certainly Dad’s plan.”

In the beginning stages, although they didn’t have an appointed successor, what they did know for sure was that it was important that the brand of W.A. Ranches live on and it was important to Wynne that her passion for the welfare of the cattle she was raising continued.

Important too, was that the ranch continue to support ongoing participation and the development of youth and agriculture, and that their current staff have ongoing employment. And of course, that they could still visit the ranch.

“It was easy to identify what was important to us in our vision for the succession. It was from there that we started to look at answering the difficult questions as to how we could ensure that would happen,” says Wynne.

The arrival at a successor didn’t come entirely out of the blue, as they had shared a long, close and supportive relationship with the University of Calgary, developing the Anderson-Chisholm Chair in Animal Care and Welfare in 2014.

Additionally, because W.A. Ranches actively offered their operation for the university’s student outreach programs, Wynne knew that the UCVM was missing a dedicated cattle ranch for research, development and learning. Although the university was using commercial farms like theirs to do so, it added cost to their research projects and also increased the variability of the data due to the diversity of the ranches that were participating.

That created uncertainty about the feasibility of some of their research projects, and having a lack of a dedicated beef cattle operation hampered their recruitment of students and faculty and ultimately stifled the growth of the UCVM.

“We asked them, in an ideal world, if finances weren’t an issue and they could have anything they wanted in order to bring the university vet school to the next level, what would they really require and need to be able to play in a bigger space globally? Those conversations started in December 2017 and then I talked to Dad. I told him the university has some needs — is this something that we could help them with?

“At the time we didn’t know if that just meant a quarter section and 80 cows or a larger gift.”

For Bob and Wynne, here with new farm manager Ed Pajor, the donation took months of work, but paid off. photo: Supplied

From there, Wynne peeled back the layers of a succession plan, and once they decided on a larger gift of the ranch in its entirety, it was their hope that it would create a world-leading centre of excellence in beef cattle research. It would not only benefit students and faculty but result in shared learnings that would also serve to help fellow farmers and ranchers lift up their businesses.

But they were thinking broader picture too — asking the question of how this gift could positively influence and affect public policy and play in an even bigger space with scientific, evidence-based findings that would improve animal care. Could the ranch become a platform that could affect policy at all levels of government?

Wynne and Bob then pulled together a small steering committee including executive and senior leadership at the university, with the process of formal conversations between W.A. Ranches and the UCVM starting in early 2018.

Those conversations continued through to September 2018, and Wynne briefed her father regularly to ensure the family was all on the same page. The process demanded more than conversation, though, starting with a very detailed merger strategy before arriving at writing a formal gift agreement and the terms of reference required, as well as a thorough list of details of expectations.

The vision and terms of reference had to come from Wynne and Bob and honour what they, their son, and Wynne’s father wanted — a dedicated facility for research, community and industry outreach that had alignment to W.A. Ranches’ animal care and welfare, 4-H and youth.

“We went through massive levels of rewrites. There were so many hurdles that we had to work through before we knew if we could even make a deal. We had a huge project management plan. There are various levels of approvals at the university level and due diligence processes, including a whole set of charity tax and government rules and regulations that affect the nature of how you do gifts like this. That being said, what was reassuring throughout the process was that we knew it was a natural transition of brands. The reality was that the university was interested not just simply because we were a ranch, but because we had really high standards of animal care and welfare and that we had been a leader in sustainability practices. We had adopted technology very early in our operation and, as a result, we had phenomenal cattle records and years and years of data that they could extract and analyze.”

Fast-forward to today and W.A. Ranches at the University of Calgary, now officially the largest working cattle ranch operated by a university, is a successful merger of two brands aligned in vision, values and culture.

When asked if she is happy with the succession path that she and her father chose for the ranch that they built from scratch — Wynne’s answer is “yes.”

“Yes. I am happy with the decision that we made as a family to gift it to the University of Calgary. The value of the gift is now transforming education and it will evolve over time as the university realizes the potential of the land, cattle and space to do the things they need to.

“I know they will do wonderful things. Today they are on the very cusp and important new research is already underway. We don’t have any regrets about our decision to gift it to the university, but emotionally it was very demanding, especially when it tested our family relationships.

“Letting go is tough, tough, tough and I still miss the cows and the land. My husband describes the gift as being a very elegant exit. We didn’t have to divide the ranch and sell it in pieces. We take comfort in that and are excited about what the U of C will do with it and the amazing possibilities and potential over the next 100 years.”

Wynne Chisholm’s succession advice and insights

Open and honest communication

“Where succession has been done, and done well, there is an openness by the older generation to have the discussion. There is a willingness for honest communication.”

Succession takes time… but be careful not to take too much time

“If the succession planning hasn’t started for the next generation in their early 30s, and the next generation are in their late 30s or even 40s and they have their own families — there is pressure and anxiety about their future in the operation. Rather than focusing on investment into the operation, they will start thinking and planning an exit plan.

“Emotional resistance by the older generation often comes from the idea that they are too young to have that discussion; ‘We aren’t going to die yet!’ Or they really have a strong need and desire to participate in the operation. They panic as the farm or ranch is not just their livelihood but their identity, passion and lifestyle. They wonder what will they do then.

“Clarity of decision-making diminishes as we age. Sometimes as people age changes can be more emotionally driven and succession becomes a daunting task. Of course too, many would rather avoid possible confrontation or conflict so it simply isn’t discussed. It is so important to remember that a will is not a succession plan, and it can be changed at any time. In any business there needs to be a strategy and plan that is more than daily operations. Where will the business be in five, 10 or 20 years? What is sustainable?”

Keep exceptional records and data

“So much of what we do in farming and ranching lives and dies in the generations that leave. As with any business, record-keeping, reports and annual business analysis are crucial to the successor and the succession of the business.”

Get the right team and support

“Having the right team of professionals in place to help with the enormity and complexity of succession is crucial — from lawyers to accountants. Not only do they need to be exceptionally good at the details of tax implications and understanding farm and ranch succession, but they need to be people that the family involved feel comfortable enough to share the intimate details of emotional and financial information involving the operation.”

Think outside the box

“Sometimes it takes a new brave and bold approach to do or consider options that have never been done or accomplished. Especially in the tradition of ranching we can slip into doing things the way they have always been done. Succession is a different process now than it was in previous generations and it will be in the generations that follow. It is more and more common to not have a next generation interested in taking on the business of farming or ranching. As we realized, there are other incredible options to let the legacy of your operation live on successfully — with purpose and permanence.”

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