From Checkbook Philanthropy to Strategic Giving: How to Get Your Family on the Same Page
Instilling the idea of charitable giving in children and grandchildren at first blush may appear to be easy, but where to begin, and how to make it ongoing? More and more, wealth advisors are being asked by their clients to weigh in on strategies for fostering a family’s financial values, which frequently include charitable giving traditions.
An important first step in creating any multi-generational philanthropy plan is to advise clients to consider organizing their charitable giving, such as through a family donor advised fund (DAFs) at Greater Houston Community Foundation (Foundation).
The process of organizing charitable giving itself creates much-needed clarity around the family’s philanthropic purpose. This is because without an organized approach to family giving, it is easy for children and grandchildren to get confused about their parents’ and grandparents’ processes for making decisions about which nonprofits to support.
Case Study: The Unintended Consequences of Impulsive Giving
John, a successful entrepreneur, had always been passionate about giving back to his community. Over the years, he had written countless checks to various charities, often without much thought or consideration. His family had always been supportive of his philanthropic efforts, but as they grew older, they began to express concerns about the lack of transparency and coordination in their giving.
“It seemed like Dad was just reacting to every charity that came knocking on his door,” said John’s daughter, Emma. “We would get requests for donations from all sorts of organizations, and Dad would just send a check without even considering whether it aligned with our family’s values.”
John’s wife, Sarah, echoed Emma’s concerns. “I would often ask John why he was giving to certain organizations, and he would just shrug and say, ‘because they’re good causes.’ But we never really had a conversation about what those causes meant to us as a family.”
As the years went by, John’s impulsive giving began to take a toll on his family’s relationships. They felt like they were not playing a meaningful role in the giving process, and that their values and priorities were not being considered.
One day, John realized that he needed to make a change. He sat down with his family and explained that he wanted to involve them more in the giving process. Together, they decided to create a family foundation through the Foundation, which would allow them to pool their resources and make strategic decisions about their charitable giving.
The solution was a game-changer for the family. They were able to come together to discuss their values and priorities and make decisions that reflected their collective vision for making a positive impact in their community.
“Now we feel like we’re all part of the same team, working together to make a difference in our community. We’re no longer just reacting to every charity that comes our way – we’re intentional and thoughtful in our giving.”
Continue reading: The Future Is Now: What Is Next-Gen Philanthropy?
The case study presented in this blog is a fictionalized account of real-world business scenarios, created for educational purposes only.
Multi-Generational Giving: A Lasting Legacy
Establishing a fund at the Foundation can be an effective solution for many of your clients who are launching a multi-generational giving strategy. Here’s why:
Giving vehicles offered at the Foundation can offer a unique opportunity to involve extended family members in the charitable giving process. For instance, DAFs are a popular choice because they allow your client to name children and grandchildren as successor advisors, enabling them to take an active role in philanthropy. This not only fosters a sense of family unity and shared values but also provides a valuable learning experience for the next generation. By involving family members in the giving process, you can help create a philanthropic legacy that extends beyond your client’s lifetime.
When your client organizes charitable giving through a fund at the Foundation, the client can make a large transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Your client can then recommend grants to their favorite charities from the fund when the time is right. This is especially useful in the case of clients who sell a business or if they experience a large influx of taxable income in a single tax year.
Establishing a donor advised fund at the Foundation can be a better choice for your family-oriented clients than a donor advised fund offered through a brokerage firm. At the Foundation, your clients, as well as their children and grandchildren, are part of a community of giving and have opportunities to collaborate with other donors who share similar interests.
Greater Houston Community Foundation is dedicated to supporting clients and their families in creating a lasting impact through strategic grantmaking, family philanthropy, and education. We can help you and your clients develop a comprehensive charitable giving plan that spans multiple generations, ensuring that your family’s vision and values are perpetuated for years to come.
Tailored Philanthropic Solutions for Your Clients
We welcome the opportunity to work with you and your philanthropic clients to establish an enduring and rewarding family philanthropy program that is customized to meet each client’s unique purpose.
Our team of philanthropic advisors will work closely with you to craft a customized family philanthropy program that reflects your clients’ unique values, goals, and vision. Contact Andrea Mayes today to learn how we can partner with you and your clients.
More Helpful Articles by Greater Houston Community Foundation:
- Philanthropy Made Easy: 3 Do’s and Don’ts for Your Donor Advised Fund
- Charitable Giving in Financial and Estate Planning
- Meet One of Houston’s Hispanic Philanthropic Power Couples
- Philanthropic Partnership: Hope Biosciences Research Foundation
- Corporate Citizenship: Good for the Community, Stakeholders, and Businesses
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