Giving across generations: How to find family harmony

Insights
November 2020

“The family that perseveres in good works will surely have an abundance of blessings.” – Chinese Proverb

 

Giving together as a family–in a coordinated and strategic fashion–has benefits that go well beyond doing good in the world.

 

Involving children in the family’s charitable efforts teaches them values of generosity, gratitude and kindness. For high-net-worth families, educating and involving children in philanthropic planning and giving can also prepare the next generation, fostering financial stewardship and a desire to give back to one’s community or to global causes.

 

Research shows families that participate in philanthropy together often create a deeper bond and engage in significant and effective strategic giving, helping to solidify the family’s philanthropic legacy.

 

However, if not done right, philanthropic planning across generations can be fraught with tension, as is often the case with family when visions and values aren’t aligned. Deciding how, when and where to strategically give can also become an issue if personal agendas clash and communication breaks down among family members.

 

Creating a philanthropy plan is one way to ensure family harmony is maintained. Similar to financial and estate planning, the philanthropy plan sets out giving goals and expectations. It can keep families on track and be used as a guidebook for when wealth is transferred to the next generation.

 

Here are some tips on how to create to build a family’s charitable legacy while ensuring harmony:

 

Set up a formal family meeting

 

Families typically get together around the holidays and during life events such as birthdays, graduations or the birth of new members. Taking advantage of the time together to discuss philanthropy is a great way to start the planning conversation.

 

If your family prefers a more formal engagement, or there are geographical challenges, a scheduled family meeting may be a better way to begin. A virtual meeting to begin the discussion on the family’s philanthropic goals is easier than ever via the various technology options now available.

 

Regardless of how the meeting is arranged, the goal should be to gather together to explore the values and passions that can serve as the foundation for giving strategically.

 

To define your giving values, experts recommend families think about and discuss questions such as:

 

-What charities have you donated to in the past?

-Was it a good experience or bad and why?

-Is there a particular philanthropist that inspires you?

-What are the biggest social problems in the world today, in your view?

-What local community causes do you want to support?

-What legacy do you want to leave?

 

By discussing the answers to questions like these, families can hone-in on what’s important to them and where they can make the most impact that aligns to their giving goals. It’s the passions and positive experiences that are likely to inspire families to be actively engaged in philanthropy.

Keep in mind family members may have different interests and causes they want to support; especially if multiple generations are involved.

These diverse values should be respected and encouraged and used to make broad, inclusive decisions about where philanthropic funds should be directed.

 

Involve professional advisors in your giving strategy and planning

 

It’s important families lean on their professional network and advisors to ensure their giving is aligned with their financial and estate planning goals. Wealth planners, financial advisors, tax advisors or accountants and family office professionals can support the family in navigating the strategic planning and execution of the family’s charitable wishes.

 

Your professional network may also act as a guide when navigating disparate family wishes and misalignment when it comes to philanthropic planning itself or the desired outcome. Advisors can act as an impartial third party, helping to foster better communication in support of the family dynamic.

 

Start building the plan

 

While the conversation about giving and family values should be detailed and wide-ranging, the plan itself shouldn’t be. Keep it short. Make the goals broad. Part of building the plan is to prioritize your philanthropic motives.

 

For instance, the goals might be to donate to three different types of charities in areas such as healthcare, education and the environment. Decisions on which charities to select can be made later and revisited over time.

 

Also, consider crafting a vision and mission statement to articulate the difference you want to make through your giving and to ensure all family members are on the same page. The vision statement should answer questions such as: What changes are we looking to make with our family wealth? Or, what legacy do we want to leave long term?

 

The vision and mission statement will clarify your giving goals and also help prospective charities to better understand why you chose their organization and how to distribute the funds.

 

The plan should also be relatively short term, for the next one to three years. Needs and circumstances can change quickly and you may want to pivot your giving plans depending on the wishes of those involved.

 

To increase accountability, the plan could also assign roles and responsibilities to different family members. For instance, who will work directly with the charity or wealth advisors to discuss the donation? Should one family member handle the paperwork and discuss the philanthropic donations with the family’s wealth management advisor or others in their professional network? Writing down each family member’s role and responsibilities will set clear expectations and ensure family members understand how they are contributing to the overall philanthropic plan.

 

Keep the philanthropy plan relatively fresh

 

Your philanthropy plan should be reviewed regularly, at least once a year, to ensure goals are being met and to change course, as needed. The review should also consider whether the giving plan still aligns with the family’s vision and mission.

 

A check-up is also a good time to consider whether it’s time to switch roles and responsibilities within the family.

Maintaining the philanthropic plan also means ensuring you have a succession plan in place should significant life events, such as an unexpected illness, separation or divorce, or a death in the family occurs.

It’s a good idea to schedule a formal family check-in for a certain period to give participating members time to think of any changes they’d like to make and a deadline to focus their thoughts.

 

The next generation may also play an important role in carrying on the family legacy and ensuring their giving has a meaningful impact. The most successful philanthropy comes from having a well-thought-out plan that aligns with the family’s values and interests and is regularly updated to meet society’s, and the family’s, changing needs.

 

Taking the first few steps are often the hardest, but once a family starts the process and becomes engaged, the impact of their work can be widespread. The process can also inspire philanthropic values that last a lifetime and serve to bring families closer together.

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