With enhancement loans, the family's purpose is to increase…

With enhancement loans, the family's purpose is to increase the family's intellectual and human capital by increasing the independence of individual family members. Many families, and particularly many family trustees, cannot make the intellectual leap between the words "subsidy" and "enhancement." Too often requests for help by family members are treated as requests for subsidization and create dependence on the part of the family members. Dependence on subsidization, or as I call it "dependence on remittance," is an addiction that is as serious as dependence on alcohol or drugs. It saps the human and intellectual capital of a family faster than almost any other single liability on the family balance sheet. As with investment loans, proper lending procedures for enhancement loans are critical to the growth of each borrower's human and intellectual capital. When seeking an enhancement loan, the borrower should be encouraged to state how such a loan will increase his or her independence and how the loan will add to the family's intellectual capital. When a family's leadership begins to view distributions to individual family members as enhancement loans, and family members agree to formally apply to the family bank when seeking such loans, a family makes real progress in combating remittance addiction. When family members explain to their peers and advisers on the family bank board how a particular loan will be enhancing, they must be certain that their individual human and intellectual capital will really be enhanced. With enhancement loans, repayment comes in the form of the increased independence of the individual borrower and his or her increased capital. This idea has a long and fruitful history.

— from The Flight Plan (Purpose/Wisdom/Risk)

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