A century has past since the creation of the Rockefeller Foundation, and the spirit of family philanthropy still results in the creation of powerful foundations and other socially responsible financial endeavors. Translating family ideals into effective philanthropic giving requires planning, communication and constant evaluation. Various powerful factors influence the quantity, quality and nature of a charitable donation. A cohesive plan allows for families to target where their area of concern exists, and how to best provide efficient philanthropic giving by choosing from an array of options.

Although the idea of giving for the sake of giving seems intuitive, there are many factors impacting decisions. For instance, some family members often argue with one another, these elements can come to a head and further complicate the situation. Therefore, it is extremely important to develop a decision-making framework before deciding to make calls on philanthropic family endeavors.

Philanthropy to Strengthen the Family Unit

Philanthropy serves as a medium to demonstrate core family values. When the children grow up, and can they understand the essence of charitable contribution, and perhaps break from the mindset of “take” that many fortunate children are susceptible to. Finding avenues towards social betterment can help families stick together and find common ground. Acting as a champion for the same cause can strengthen family ties. By maximizing family engagement, a better legacy is left and the family becomes a more integrated unit. As a family grows their foundation and cause, they share the progress, inspiring a sense of togetherness that’s impossible to replicate.

By developing a cohesive strategy, older generations can be sure that their daughters and grandsons will become increasingly involved in the future. By obtaining a position in the family philanthropy, younger generations can gain experience in unique and challenging roles. This skill set will help them find success in their careers, enabling them to have the resources down the line to reinvest in the family philanthropy.

Greater Social Impact

By developing a clear strategy, families are capable of creating a larger net social benefit. Putting all effort towards a specific cause is better than scattering wealth and losing sight of goals. This also protects against running into too much administrative mess. Focus is a more admirable asset than gold reserves when it comes to philanthropic family planning.

When a comprehensive strategy is implemented, the family is able to utilize resources outside of just grant dollars. A meeting of the minds will benefit strategy and management. A clear goal is optimal for leveraging human capital and allowing for specialization.

Developing a Strategy

Clients must first understand their principal mission. Second, they must find an avenue where their goal can be fulfilled, devise proper strategies towards that initiative and allocate resources carefully to the plan. After implementation, scheduled procedures for constant evaluation and refining should be set in place.

There’s no shortage of demand for philanthropic giving. According to the National Center for Family Philanthropy (NCFP) there are 1.5 million nonprofits, 500,000 of which came to be in the past 10 years, with a need for over $2 trillion in revenues. On the other hand, there are only 38,000 family foundations, $295 billion in assets and $18.5 billion in grants. In tackling this need, families must pinpoint what is it that they want to collectively accomplish.

First, families may want to look back on past philanthropic giving and have an open discussion on what interested and engaged all units of the family. Then, the interests and passions must be aligned with initiatives that saw strong growth and return in the past. Families can also chose avenues with reasonable assumption they do will well in the future.

Once overlapping areas of interest are targeted, they can be integrated with the trustee’s preferences in regards to a set of criteria. These criteria should be inclusive, taking into consideration geography, population and approach.

Like any experiment, research, trial and error, and experimentation are vital for devising a family philanthropy strategy. In conducting research, there are resources easily available to meet or virtually contact philanthropy experts and grantees. Families should observe other models and execute communication with persons of influence and specialization to gain insight from their experiences. The last step in this experimentation would be to make exploratory investments and finally to agree on a cohesive family plan going forward.

Governance as a Key to Success

Sometimes, it is best to conceptualize the family as a business unit while structuring your family foundation and roles for philanthropic giving. A well-governed plan will help ensure fairness and proper allocation of resources and management. Making sure the venture is working smoothly will nurture the survival, enhancement and proliferation of the cause.

Many family-run businesses have gone awry, such as the tragic fate of the Schoen family, founders of the U-Haul Empire. However, a cohesive philanthropy strategy can help a family business. Life is Good founders, Bert and John Jacobs, decided to partner with an established non-profit called Playmakers, to help children overcome socio-economic disparities, violence and illness.

A structured leadership group and giving committee may be put in place, with procedures about who makes decisions and how they are reached. Meeting dates should be set, and due diligence processes should be utilized. Crafting a formal legacy plan provides guidance in the case of a death and protects family assets.

Many families may find it optimal to seek help from a professional third party. An increasing amount of family offices now offer philanthropy as a unique service offering, distinguishing themselves from traditional wealth management services. (For more, see: Top 3 Trends Affecting Private Wealth Management.)

Deciding Which Form Works For You

Obviously, it is not strategic to give money away to whichever organization one desires when you are trying to honor your family’s set mission. There are various avenues for giving with their own benefits and drawbacks. A clear game plan includes deciding which form of philanthropy works for your particular cause, goals and unique family situation.

If the initiative is extremely important to the family, they may want to develop a foundation with a specific major initiative. (For more, see: How To Start Your Own Private Foundation.) On the other hand, if the family values are well established, the family may want to implement a general request for proposal (RFP) process and provide specific guidelines to prospects. A family must ask what kind of support they are looking to give, whether it be general operating support, emergency response or aiding a particular project.

Perhaps the family will help develop a multiplicity of organizations or decide to invest in a particular community and the programs within it. They may make a few targeted and strategic grants.

Changing Philanthropy: Looking Beyond Grants

Grants have been the traditional way for families to enjoy the multifaceted joys of giving. However, there are new and developing ways to give in more creative, tax efficient and effective investments. For example, impacting investing is on the rise. Families should consider among themselves, or with their advisors, options for community investments, proxy voting and shareholders advocacy.

Although technology and virtual connection allows for far-reaching and immediate response, it is also extremely important to consider the value of face-to-face volunteer and interaction. The family could volunteer as a bonding experience, tying the generations together and to the cause.

Get Creative And Have Fun

Due to generational differences, some families may choose to develop separate donor-advised funds that can be used by particular family members for small contributions. Generations have different preferences regarding philanthropic giving. For example, millennials tend to prefer giving to global organizations more than their parents and grandparents, who prefer giving to local causes.

A cohesive strategy for family philanthropy requires finding common ground and setting aside time to reflect and work towards social betterment. As a family philanthropy starts to help a cause, it can end up helping families find joy in a different sense.

Continual Evaluation

Like all sustainable, effective endeavors, the family philanthropy strategy requires continual reflection and refinement. Families must not be married to tradition, hierarchy or internal systems. Families should always be open to external feedback, general trends and changes in the philanthropic, investment and business environments.

Always ask the following questions – what worked best? What did we enjoy most? What issue engaged all units of the family?

The Bottom Line

Devising a strategic, cohesive family philanthropy strategy requires proper goal alignment, planning, management, procedural rules and constant evaluation. Families should consider creative avenues of giving, as the landscape is constantly changing. Options such as social investing may be more effective than traditional grant giving. Ultimately, families will benefit from an integrated family pursuit, engaging all generations and ensuring a meaningful legacy. A comprehensive and well-integrated philanthropic mission will ensure a legacy of tact, innovation and empathy.

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