1 – Teaching your financial values to the next generation.
Your financial values include your beliefs about how financial resources should be managed and utilized. We all have them, though we may not have taken the time to clearly articulate them to ourselves or our children. If you are reading this article, then charitable giving is likely already a part of your financial value system. Talking to your children and grandchildren about charitable choices is one way to increase the likelihood that charitable giving will also be a part of their financial value system. Consider sharing with your family the reasons you value charitable giving, how you make decisions about which charities to support, and the role philanthropy plays in achieving your financial goals.
2 – Sharing and discussing investment philosophies.
An investment philosophy is a set of guiding principles that informs and shapes your investment decision-making process. One way to share your personal investment philosophy is to set aside a pool of funds to be invested for the purpose of making charitable gifts. Consider engaging your family when you are considering the proper investment of those funds, and let members of your family make investment suggestions. This is one mechanism to share your tips for financial success without intruding into any personal financial affairs. It can help ease tensions that sometimes arise when the topic of money comes up around the dinner table and create a neutral field for lessons about investing to be passed along.
3 – Establishing a training ground for future family business board members.
Maybe you’ve identified members of the next generation who have an interest in participating in the family business, but you are concerned about whether they are ready to take on such a responsibility. Or perhaps your aren’t ready to begin business succession planning, but want to create a mechanism for members of the family to learn to work together, to engage in collective decision making and to demonstrate a commitment to a family venture. Some of our clients have used the governance of a family foundation to teach all of these lessons, in addition to those related directly to stewardship of charitable resources. However, the formality of a family foundation is not required to create this experience. A less formal family team that makes charitable gifts together around the holiday table could work just as well to start training future members of the board of your family business.
4 – Creating meaningful family experiences.
Sharing the benefit of your experience and knowledge around charitable giving as discussed above is certainly an important benefit of family philanthropy. Family philanthropy can also create powerful family memories. For example, some of our clients not only engage their families in decisions about where to make donations, but they follow up those donations with gifts of their time and talent. Each year at Thanksgiving, one family decides which charity it would like to support in the coming year. All generations contribute financially to the same organization and then plan a family trip to work side by side with that organization to carry out its charitable mission. Whether building houses in Costa Rica, serving food at the local soup kitchen, or clearing a hiking trail in the Shenandoah Valley, this family always has wonderful stories to share about time spent together.
If you are thinking about how your family can make a charitable impact in your community, or want to brainstorm ways to engage your family in your philanthropy, we are available to discuss these and other topics related to charitable giving.
Segment II of our series on family philanthropy will explore different giving vehicles. For some, family philanthropy automatically brings to mind the creation of a family foundation. While family foundations may be appropriate for some families, we will also explore other options, including donor advised funds and giving circles.