If the family that plays together stays together, how about the family that gives together? There is no handy cliché for that one, but, as UBS Senior Wealth Strategist Christine Brown writes in the Advanced Planning Insights whitepaper "Engaging the next generation in the family's philanthropy ," philanthropy can bring the family together and teach valuable lessons in ways other activities can't.
What better tribute to your legacy than having the next generation carry on with the charitable work you've stood behind? At the same time, every generation has a voice, and making the world a better place takes more than one idea. Here are five tips for helping you engage with your family to create and sustain your charitable legacy.
1. Show your values in action.
Gather your family together to talk about your values and beliefs and how you've translated them into philanthropy. Take it a step further by offering some tangible examples of:
- Causes or foundations you have supported, including pictures (you may even be able to take a family field trip).
- Any specific outcomes your contributions have helped bring about.
- Personal stories of people you've met through the charities and groups you've been involved with.
2. Help them connect with their passions.
In the same way that you have causes that you care about, your descendants may have projects, initiatives and groups of their own that they want to support. While your descendants may see the world very differently than you do, remember that the first step is merely to engage them in conversation about philanthropy. Here are some questions to guide your discussion:
- What are some of your key values as a person?
- Have you thought about how those values might relate to charitable giving?
- What difference would you like to make in the world? What vision do you have?
3. Ask them to do some research.
Ask your children or grandchildren to research what organizations are working in the areas they are most passionate about. They should be able to:
- Explain the charity's mission to you.
- Describe why they think this is a worthy cause.
- Explain how the organization applies donations/spends money.
4. Create a joint mission statement.
Consider how you can come together around a common goal, even if the goal is simply to be better global citizens or local leaders (whatever language best connects the generations). Work together with your children and grandchildren to come up with a unifying statement about the family's philanthropy. Write it down and use it as a guide.
5. Consider next steps.
There are many different approaches you can take in involving the next generation in philanthropy, depending on their ages and the composition of your balance sheet. "Bear in mind that the overall goal is to engage them in philanthropy," says Brown. For example, you might consider:
- Earmarking a certain amount of money for children or grandchildren to donate to the organization they've researched. Depending on their age and financial status, you could also encourage them to give with their own money and match the donation.
- Setting up a Donor Advised Fund (DAF). This is a separate fund or account maintained and operated by a public charity—called a “sponsoring organization." A DAF lets you make a charitable contribution, receive the tax deduction and have a say in grant-making and investing the fund's assets. Involve your children in an informal way by letting them pick a charity to benefit from the DAF, or involve them formally by naming them as the successor on the account.
- Creating a private family foundation and running it together. If the family has significant wealth, you may wish to consider creating a private foundation and having family members assist with the foundation's grantmaking activities and operations. Keep in mind, however, that while they allow the family to retain a great degree of control, private foundations entail a number of administrative and regulatory burdens, including the filing of public annual returns.
Keep your philanthropic goals flexible, and be open to the idea that these goals may evolve as you engage with your family members. Charitable giving is a great way for your family to come together as a team to create a lasting and positive legacy.