Involving the family in giving
Involving the family in giving
Build a foundation for giving in future generations
September 1, 2023
Philanthropy is a great way to increase connection, share values, and create meaning between family members. When families discuss their values and giving goals, they can find ways to make more of a difference. This article provides six strategies to approach these conversations.
1. Grow your connections with family members
Personal values are the leading factor in the decision to contribute to a particular cause or charity.1 Involving children and grandchildren in philanthropy is a way to share and pass on a donor’s values. Having the feedback of younger generations in giving decisions can also make the giving experience even more joyful.
A simple way to initially connect with children and grandchildren is to tell stories and share memories about the giving traditions of their parents and grandparents. This storytelling shows them role models, and research confirms that parental role models have a profound effect: 81% of adult children give when their parents give.2
“I look back on why we are so passionate regarding philanthropy,” said Ralph B., who uses a Schwab Charitable™ donor-advised fund account for his giving. “I can trace it to my mother’s value of ‘teach by example.’ She kept me informed of what she was doing, and I would go with her when she was invited to a thank you event or special meeting. While I never asked her, I believe she knew I was learning and sometime in the future I would follow my own path in this area. That is the same line of thinking we use today with our own children.”
2. Give younger generations a voice
Parents and grandparents can lead giving conversations and lead by example through stories, but children may be more engaged if they are also asked about their core values and how they would approach researching and selecting causes and charities that reflect their values. This activity provides them with an opportunity to be active participants in the conversations and process. This can lead to children requesting charitable gifts in their name, and parents and grandparents gaining insights that change how they make their giving decisions.
“Our kids are aware of the organizations we contribute to,” said Mary Therese D., a donor with a Schwab Charitable account. “Their perspectives have taught us information from a broader perspective.”
Donors engaging other family members in charitable conversations may also experience that some core values differ among individuals. This is completely normal and families should welcome and embrace those discussions. The objective is to have a forum in which values are openly shared and translated into family or individual donations.
3. Learn about family members’ giving patterns and motivations
Parents and grandparents hoping to instill a charitable mindset in children and grandchildren may take satisfaction in knowing that significant populations of younger generations already give to charity. Baby Boomers have the largest population of donors, but philanthropy in the U.S. spans across all generations of adults.
4. Maximize your giving with a charitable legacy plan
An estimated $72 trillion will be left to heirs and $11.9 trillion will be left to charities through 2045 through estates and estate planning strategies.5 While donors may have charitable legacy intentions tied to this wealth transfer, execution of legacy intentions is best ensured with a legacy plan.
Why develop a charitable legacy plan? Half of Schwab Charitable donors view charitable giving as a key aspect of their overall legacy.6 These donors say it is important to leave a lasting impact on charitable causes close to their hearts and set children or grandchildren up to continue their giving beyond their lifetime.
A legacy plan typically is part of an overall estate planning strategy, and the plan’s primary objective is continuing donations with maximum charitable impact while reducing estate taxes. In general, legacy plans either identify organizations as beneficiaries of charitable assets or allow surviving individuals to use charitable assets for grants to the organizations of their choice.
Plans may exist within a will, another legally binding document, or a charitable giving vehicle. The structure or depth of a plan will vary based on philanthropic goals, including the frequency and amount of giving as well as the number of individuals who might be involved in implementing the plan.
Here are some questions to consider:
- What values or interests define my charitable legacy?
- Which causes or issues are most important to me?
- Which causes or issues are most important to my family?
- Would charitable organizations addressing these causes or issues benefit more from a one-time gift or a recurring series of gifts?
- What role do I want family members to have in continuing this legacy?
- Do I need to have charitable assets allocated for use in multiple ways?
- How will this plan integrate with my estate planning strategy?
5. Consider using a donor-advised fund to engage the family in giving
Donor-advised funds (DAFs) are charitable accounts offered by public charities. Donors open an account, make irrevocable and tax-deductible contributions to the account, and recommend grants to charities at any time. The contributed assets can also be invested for potential growth that’s tax-free, which means more assets to give to charity.
Family members who are at least 18 years of age can be individuals on the account, which means they may have contributing, investing, and/or granting privileges. An account can have a special name, such as the ABC Family Philanthropy Fund. These features make the accounts helpful for family engagement, and two thirds of Schwab Charitable donors say they involve family members with their donor-advised fund.7
Donor-advised fund accounts also have legacy or succession planning features. At Schwab Charitable, donors may select any one or combination of three options:
- Naming family members or other individuals as successors on their account
- Recommending charitable organizations as beneficiaries of final grants of their account balance
- Recommending charitable organizations for recurring grants over a specific timeframe (the Schwab Charitable Legacy Program)
Schwab Charitable donors can establish and change legacy or succession plans for their accounts when or after the accounts are opened.
6. Create a routine for when to have giving conversations
Teresa’s family has an annual tradition that involves the whole family in giving through their Schwab Charitable account. Every year before the holidays, each member of the family is allocated an amount to grant from the account. Each family member then recommends charities to receive the funds, based on their personal values and experiences over the past year. During the holidays, they talk about their choices and explain why they selected those charities. The family includes younger children, and this tradition emphasizes the idea that to help someone else is a gift for them as well.
Thanksgiving is often a time of values-based conversations and expressions of gratitude. For Sid and Flo, each adult and teenager in their extended family sends them an email on Thanksgiving Day with the name of the charity they recommend to receive a grant from their Schwab Charitable account. Sid and Flo publish and mail an annual report to each family member of the charities supported. “It is heartwarming to hear feedback each year not only about why they made their choices, but also how it has brought them closer together and closer to the communities where they live.”
Other Schwab Charitable donors say they initiate more frequent engagement, such as weekly family calls with printouts of grants recently made in honor of a family member. This type of discussion provides a sense of grant ownership and accountability.
“We want to ingrain in them the idea that giving should have a purpose and they should understand where their donations are going and what benefit they are providing,” said Schwab Charitable donors Thomas and Loddie F.
A less formal but memorable event is to have giving discussions at the annual birthday celebrations of family members. A donation can then be made in an individual’s name to one of the person’s favorite charities.
Help your family create a giving strategy with these resources
Schwab Charitable has tools, information, and other resources available online to inform and guide families throughout their philanthropic journey.
- Plan your family giving with these guidebooks, roadmaps, and videos
- Download the Schwab Charitable Giving Guide for the Involve Your Family module
- Watch the Family Tradition video featuring Schwab Charitable donors Milt and Judi
- Watch the Four Generations of Giving video featuring donor Elizabeth
- Listen to our Giving Across Generations podcast episode
- Learn about succession plan options with a Schwab Charitable account
- See how a donor-advised fund works
For questions or assistance with philanthropic planning or charitable giving, call Schwab Charitable at 800-746-6216.