Although you may not know it, you likely began to learn about money at a young age. If you’re like most people, you had a piggy bank when you were young. Your parents probably encouraged you to only break into it to buy something special. Fortunately, the piggy bank concept has changed to include sharing. Some of the new banks have three compartments for categorizing money labeled: save, spend and share.
While saving to buy something isn’t such a new concept for kids, I think it’s great idea to start them early thinking about a portion of their allowance money going to help others. With this type of bank, parents and grandparents are encouraged to give in denominations of three so the child can evenly and easily dispense it among the three compartments. Conversations would follow about the reasons for the different categories, providing balanced ideas about money.
Of course, sharing money isn’t a concept just for children.
Philanthropy for the Whole Family
What philanthropic causes are you interested in? Since children follow what they see us modeling, talk to them about why you give to these causes. It can be a natural springboard for discussions around family values. Being intentional about including the whole family gives everyone an opportunity to take part in making a difference. This could include giving to community causes, supporting charities, or providing for needs where you worship. (For related reading, see: How to Select a Charity.)
You can even develop a family foundation as a means of making a lasting impact on the positive changes you’d like to see in your world.
The Family Foundation: A Legacy of Giving
A family foundation is a private foundation funded by the family’s assets and can be run by family members following IRS guidelines. It can continue as long as you wish and can be adapted as your family’s interests change. There can be tax advantages, but many people like the idea largely because control remains within the family.
With the ability to continue generation after generation, the family’s values and legacy are perpetuated. It can be drafted to even include younger family members as junior advisors. It is a great way to give them real world experience while doing good. Be sure to contact your financial, tax and legal advisors to see if this is best for you.
Benefits of the Family Foundation
The Foundation Source talks about the family foundation as an opportunity for making philanthropy a family affair. They mention five important immaterial benefits of a private foundation for families:
- Help instill values and traditions
- Maintain family ties
- Deepen social consciousness
- Increase personal fulfillment
- Develop “real-world” skills
With family members so geographically spread out, foundation meetings provide families with another reason to get together. It becomes more than an opportunity to discuss where to give, but to reaffirm family values and be supportive of each other.
While I don’t recommend starting a family foundation purely for financial benefit, there are some tax advantages such as: income tax deduction, capital gains tax savings, estate tax savings, tax advantaged growth, and expenses can be written off, including travel.
Giving back and philanthropy provide a wonderful opportunity for your family to bond together, affirm values and support something enduring. Aside from the tax advantages, its benefits are personally fulfilling.
(For more from this author, see: Your Legacy: Tangible and Intangible Wealth.)
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