Building Your Family Legacy Through Philanthropy – 4 Family Benefits from Giving
The More Than Money Institute, sponsored by the Project on Civic Reflection operated from 1990 to 2006. Starting in 1993, they published a quarterly magazine called ‘More than Money’. In publication number 9 they quoted the following statistics from “Lessons from Wingspread: A Report of Recommended Strategies for Promoting Philanthropy” (available from the Philanthropic Initiative, Inc., 77 Franklin St., Boston MA 02110):
- Households earning more than $100,000/year give an average of 2.5% a year to charity. (In contrast, households earning only $10,000/year or less give slightly more–an average of 3.6%)
- More than 2,500 American households each have a net worth exceeding $100 million. Top wealth-holders give away only a small percentage of wealth during their lifetimes. Estimates are that lifetime contributions total less than half of one percent of net worth.
- Only 20% of wealthy individuals make charitable bequests.
If these statistics hold true (and a March 10, 2010 article entitled “Wealthy Still Feeling Charitable, but Giving Less” from the Wall Street Journal Wealth Report show that they do), then why would you want your family to establish a philanthropic legacy?
Here are 4 family benefits derived from philanthropy.
Giving builds well being.
If your family has defined giving back as one of its’ family value or family mission items, then philanthropy provides an ongoing generation to generation method of meeting family objectives related to that value or mission item.
Individual family members derive basic human satisfaction from being an agent of benefit to others and to future generations – whether the cause is dedicated to people or to the arts, science, education, preservation of species, future of the planet and e.t.c..
Philanthropy can be an appropriate outlet for family member talents and energy. John D. Rockefeller (founder of Standard Oil) had only one son, John D. Rockefeller, Jr.. Although involved in the family business, and in his own right a real estate tycoon, his continuing and strong interest in philanthropy became his legacy.
Philanthropy adds stature.
Your family will gain recognition as well as political, social, and community influence.
Instead of the money going to the federal and state government via taxes, the family controls where to put the money to use (and has more since no taxes are due when given to public charities).
Managing the gifting activity provides experience and education for family members.
Your family members experience first hand, the power and impact of private giving on causes of their own choosing.
Family members learn skills which are directly transferable to business endeavors.
Investment principles and practices are used to ensure the allocated funds are maintained and grown to meet philanthropic needs.
Business rigor can be learned and experienced while establishing and running the philanthropic organization.
It is not easy to find a philanthropic initiative, determine the impact of your gifts on the social cause or determine the efficiency and effectiveness of the recipient charity’s administration of the funds you give.
Family members can learn about and benefit from the experience of setting a vision for the gifting effort; specifying the amount, type and timing of gifts and funds; coming up with and implementing a process to run the gifting program; deciding what kinds of gifts should be considered and what the family expects the impact of the gift should be; deciding what percentage each type of charity should get and which particular charities within the type are actually funded; as well as performing administrative and reporting activities needed.
Charitable activities increase family harmony.
Charitable activities allow members to join with other family members in a common non personal endeavor, growing family bonds and thus making members less likely to fight over other aspects of the estate.
Charitable activities can provide an important reason for out of state family members to attend the family meeting – so that they can fulfill their roles in charitable activities.
James E. Hughes Jr, in “Family Wealth – Keeping it in the Family”, suggests that charity can allow direct interaction and learning between Grandparents and their Grandchildren. He suggests that organizing the philanthropic entity lets the family learn about:
- Business items (legal entities, asset investment, asset administration, taxation, how the government supervises charitable entities, accounting, management of an organization, board of directors in an organization, shareholders in an organizations, distribution of assets through grant making, peer review, e.t.c.)
- Subjective/personal items (family member passions and values, the fun of being together, strengths and weaknesses of each family member, experience of making mistakes together, being/choosing leads, holding meetings).
And it creates new family stories of heroes and heroines to be passed down.
“More than Money” publication number 9 statistics from “Lessons from Wingspread: A Report of Recommended Strategies for Promoting Philanthropy”
Family Wealth – Keeping It in the Family by James E. Hughes JR. copyright 2004 Published by Bloomberg Press
Strategy for the Wealthy Family Seven Principles to Assure Riches to Riches Across Generations
by Mark Haynes Daniell copyright 2008 by John Wiley & Sons
Estate Planning for the Healthy Wealthy Family by Stanley D. Neeleman, J.D.; Carla B. Garrity, PH.D; Mitchell A. Baris, PH.D. Copyright 2003 Published by Allworth Press