Financial Poise
Organized philanthropy for families

Smart Giving Gives Back: The Surprising Benefits of Family Philanthropy

Create a Structured Family Giving Plan with Organized Philanthropy

Bringing family members together to invest philanthropically is a game changer, but organized giving can challenge even the strongest families. Yes, philanthropy is about generosity, but it can also feel like a time-consuming obligation. It can be messy and administratively intensive. And that’s all before you start to measure social ROI. So, how can you reap the benefits of family philanthropy?

Family Philanthropy Reflects Family Values

Maybe it’s time to think about philanthropic giving in terms of value rather than of giving. Identify the things your parents and grandparents cared about. It might not mean much at first, but it can be an exercise in strengthening family bonds. Maybe your grandfather was on a hospital board, but you’re not interested in giving to hospitals; maybe your mother volunteered at your school, and you’re not exactly excited about giving to an educational system that doesn’t demonstrate year-over-year improvement.

Philanthropy means “love of humankind”—not “giving to nonprofit organizations through a 501(C)(3) PF.” Traditional sources of philanthropy have, in the past, driven how it plays out. The 2018 U.S. Trust® Study of High Net Worth Philanthropy found that tax efficiency is less important as a driver than it was just a few years ago. Instead, making an impact is a key driver, and wealthy individuals donated to organizations based on the organization’s mission and business practices. In fact, many donors are also impact investors, focusing on funds that promote positive environmental, social and governance change.

Donor Advised Funds can be versatile vehicles, but they are also transactional. Goals and intent need to drive the source of giving and not the other way around. Most high net worth families give directly through a checkbook or personal assets, outside a formalized family giving structure. Only 49% of donors have a strategy for their giving, which presents an opportunity for families and their financial advisors or family office to create a family philanthropy plan.

According to research, millennials care deeply about specific issues rather than institutions. They want to be part of organized philanthropy, but they want to actualize it differently. Sometimes, that means finding new ways to explore social investing. They want to use new sources and methods in diligence, and most importantly, they want to use their skills and knowledge, not just their financial resources. While almost all wealth generators feel it’s important to talk to the rising generation about money, I often hear that they just don’t know where to start.

Give with a Purpose

Smart giving doesn’t just benefit causes, it creates purpose. Business owners pour blood, sweat and tears into a business only to be at a loss for meaning and purpose when that business is sold. Being on either side of a liquidity event is an inflection point that’s ripe for conversations about intentional philanthropy, either individually or with your wider family.

The times around celebrations and memorials that bring families together, either joyfully or somberly, are also moments to think about giving and the benefits of organized philanthropy in an area of need. Lifecycle events like marriages, divorces, deaths and graduations are times to engage the rising generation in learning and collaboration that can instill values and cement a legacy.

Families are families. Everyone has stories about being teased and slighted, and everyone has their favorite aunts, nephews and siblings. That’s just human nature. The reasons for bringing family members to the table (and that’s the board table, not the dinner table), transcend past behavior and current feelings of like or dislike.

Create a Framework for Smart Giving

That said, choosing who sits there (at least initially) and the policies and framework for meeting and decision making, is a bespoke task for each family, and one that is critical when it comes to the hope a giver will ultimately experience the benefits of family philanthropy. Outside advisors can customize a governance model and process specific to a founders’ intent in a way that builds legacy and honors the intentions and activities of other members. Advisors act as honest brokers bringing internal and external information to the conversation to set the table for success.

The member who drives organized giving has the opportunity to create a framework for that giving and codify it in a legal document, either by-laws, a trust document or in a covenant with other members, like a meeting agreement and position descriptions for trustees.

These documents should frame:

  • Membership
  • Criteria for service for family and possibly non-family members
  • Outlined terms and succession
  • A process for learning and decision making.

These are messy, thorny conversations that can set the table for future collaborations that spill over into other parts of family life and values.

Family philanthropy brings connection, meaning and purpose into a family, often at a moment in time when it is most needed. Family members who may seem distant and uninterested can rise to the occasion with surprising insights when the board table is set with guidelines for decision making and inclusion. The benefits of organized philanthropy within a family can be surprisingly wonderful for a family of givers.

[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: Estate Planning & Asset Protection-101 and The Legal & Tax Aspect of Investing: Asset Protection; Estate Planning, and Tax Efficiency. This is an updated version of an article originally published on August 1, 2018.]

©All Rights Reserved. January, 2021.  DailyDACTM, LLC d/b/a/ Financial PoiseTM

About Caren Yanis

Philanthropic Adviser to UHNW/HNW families, corporations and institutions. Caren built and ran Oprah Winfrey’s philanthropy in the 2000s and has extensive experience working across generations on models for effective family learning, cooperation and investing for social benefit. Caren is a regular speaker at wealth management conferences.

Read Full Bio »   •   View all articles by Caren Yanis »

Article Comments