The numbers are staggering—an estimated $30 trillion is expected to transfer from baby boomers to their heirs in the coming decades. How can your family ensure that this happens in a meaningful way?
The adage is well known: “The first generation earns it, the second generation maintains it and the third generation loses it.” But this doesn’t have to happen. By bringing all generations of a family together through philanthropy, it is possible to build a legacy that is not based on consumption and luxury, but instead on generosity and compassion for others.
The Pacific Coast Business Times, in its recent article, “Involve your children in philanthropy,” notes that the best way to involve children in philanthropic activities is to start early. You should identify opportunities at every age to include them in your family’s giving and volunteer work. Many younger families are already giving of their time and money, with 84% of millennials making a charitable donation and 70% volunteering their time in 2014.
Creating a more formal charitable giving plan helps emphasize the impact of giving and can create a culture of philanthropy that will carry on the family’s legacy. Start by laying the groundwork with these ideas:
Document the family’s giving history. This will lead to better engagement by the family of your philanthropic strategy and help to build interest for family causes.
Create a family mission statement. Developing family mission statements can be valuable. Work with your children to define the family’s mission and purpose for giving, and use it to outline the principles and behaviors that will guide your charitable giving now and in years to come.
Include everyone in philanthropic work. Start involving kids in volunteer work and decision making, as early as possible. Allow children to direct philanthropic funds. You can ask your kids to select a cause they’re passionate about and encourage them to research charitable organizations to develop a plan focused on how they will use donation dollars. Do research on charities and then, as a family, discuss a charity’s merits to decide whether or not to donate your funds.
Teaching your children that there’s more to philanthropy than writing a check is a valuable lesson. Volunteering time and taking leadership positions can be combined with making direct donations or using donor-advised funds. An estate planning attorney will give you the full picture of how charitable giving can be a strategic part of your family’s estate plan, including what it can and cannot achieve in terms of tax savings and transferring wealth across multiple generations.
Reference: Pacific Coast Business Times (September 8, 2017) “Involve your children in philanthropy”