Issue 26: 2014

Special Section — Family Wealth Services

The Unifying Power of Family Philanthropy

By understanding each member’s philanthropic goals, families can accomplish more.

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Family members who learn to give together can create shared values that bind them to one another for generations.

More than ever before, today’s family members are far-flung. They may be scattered all over the United States or all over the world. They inevitably have differing views on social, political, religious and cultural issues.

For many parents, particularly baby boomers, this is cause for concern, and while they say they plan to leave a majority of their wealth to their children and family, they are deeply concerned about whether they’ll be able to pass along the necessary values to go with those dollars — values about life, work and the meaning of wealth and what it can accomplish in the world.

According to U.S. Trust’s 2013 Insights on Wealth and Worth® survey, while most high-net-worth households believe wealth brings responsibilities to society, including philanthropy, nearly half of them are concerned that their children feel entitled to their wealth, and fully 58% believe their children are not well prepared to handle an inheritance.

But families can come together over philanthropy. Philanthropy can unite families and help them build an enduring family legacy.

“Philanthropy is values-based,” adds Claire M. Costello, an executive at U.S. Trust’s Philanthropic Solutions group. “It’s your value set writ large, and the highest articulation of what you stand for, what you find important and how you represent yourself in the world.”

The first step to establishing a set of family values is becoming fully comfortable with your own. While that may seem obvious, the very process of identifying your values, as an individual or as a couple, “can be revelatory.”

Establishing a set of values

The means by which a matriarch or patriarch begins to translate personal values into a family-wide legacy are as varied as families themselves. Smaller families with especially strong, open communications might start with informal discussions. “I encourage people to go home and talk about these things around the dinner table,” Costello says. “Such discussions can be enlightening and meaningful, revealing things that individual family members value most.”

Other families, particularly those spread across the map, might prefer the formality of a family governance meeting. Many families hold a “values retreat,” often facilitated by an outside advisor, with the goal of producing a succinct values statement articulating their most important shared beliefs. Almost inevitably, philanthropy serves as a point of common ground.

The first step to establishing a set of family values is becoming fully comfortable with your own.

While the elder generation can be the driver and the moral center of this process, attempts to impose values on others as a fait accompli may result in apathy or outright rebellion. If a family’s values are to survive, there must be buy-in from other members. That means giving everybody a say in how a particular value, such as self-reliance, translates into specific philanthropic goals and larger actions, such as alleviating world hunger. Family members should have age-appropriate opportunities to become engaged in charitable activities — be they financial power or volunteer opportunities where they can contribute more directly.

Just as important as getting the young to understand your perspective is understanding theirs. Here at U.S. Trust, for example, we hold workshops called Raising Philanthropic Kids. The idea is to help not just parents but also aunts, uncles and other adults to understand philanthropy and values from a child’s perspective.

“There’s a significant difference between individual gifts or gestures and creating a lasting legacy,” says Costello. “A legacy involves not only how you give, but also how you live, and is something you build upon every day. Legacies are often strongest when they are not imposed, but rather when they include room for flexibility and individuality, allowing family members to find their own personal and giving identities within the family context.”

 

 

IMPORTANT INFORMATION

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

The 2013 U.S. Trust Insights on Wealth and Worth® survey is based on a nationwide survey of 711 high-net-worth and ultra-high-net-worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents, 37% have between $3 million and $5 million in investable assets, 31% have between $5 million and $10 million and 32% have $10 million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in March 2013. Asset information was self-reported by the respondents. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95% confidence level.

Family members who learn to give together can create shared values that bind them to one another for generations.

More than ever before, today’s family members are far-flung. They may be scattered all over the United States or all over the world. They inevitably have differing views on social, political, religious and cultural issues.

The first step to establishing a set of family values is becoming fully comfortable with your own.

For many parents, particularly baby boomers, this is cause for concern, and while they say they plan to leave a majority of their wealth to their children and family, they are deeply concerned about whether Landscape they’ll be able to pass along the necessary values to go with those dollars — values about life, work and the meaning of wealth and what it can accomplish in the world.

According to U.S. Trust’s 2013 Insights on Wealth and Worth® survey, while most high-net-worth households believe wealth brings responsibilities to society, including philanthropy, nearly half of them are concerned that their children feel entitled to their wealth, and fully 58% believe their children are not well prepared to handle an inheritance.

But families can come together over philanthropy. Philanthropy can unite families and help them build an enduring family legacy.

“Philanthropy is values-based,” adds Claire M. Costello, an executive at U.S. Trust’s Philanthropic Solutions group. “It’s your value set writ large, and the highest articulation of what you stand for, what you find important and how you represent yourself in the world.”

The first step to establishing a set of family values is becoming fully comfortable with your own. While that may seem obvious, the very process of identifying your values, as an individual or as a couple, “can be revelatory.”

Establishing a set of values

The means by which a matriarch or patriarch begins to translate personal values into a family-wide legacy are as varied as families themselves. Smaller families with especially strong, open communications might start with informal discussions. “I encourage people to go home and talk about these things around the dinner table,” Costello says. “Such discussions can be enlightening and meaningful, revealing things that individual family members value most.”

Other families, particularly those spread across the map, might prefer the formality of a family governance meeting. Many families hold a “values retreat,” often facilitated by an outside advisor, with the goal of producing a succinct values statement articulating their most important shared beliefs. Almost inevitably, philanthropy serves as a point of common ground.

While the elder generation can be the driver and the moral center of this process, attempts to impose values on others as a fait accompli may result in apathy or outright rebellion. If a family’s values are to survive, there must be buy-in from other members. That means giving everybody a say in how a particular value, such as self-reliance, translates into specific philanthropic goals and larger actions, such as alleviating world hunger. Family members should have age-appropriate opportunities to become engaged in charitable activities — be they financial power or volunteer opportunities where they can contribute more directly.

Just as important as getting the young to understand your perspective is understanding theirs. Here at U.S. Trust, for example, we hold workshops called Raising Philanthropic Kids. The idea is to help not just parents but also aunts, uncles and other adults to understand philanthropy and values from a child’s perspective.

“There’s a significant difference between individual gifts or gestures and creating a lasting legacy,” says Costello. “A legacy involves not only how you give, but also how you live, and is something you build upon every day. Legacies are often strongest when they are not imposed, but rather when they include room for flexibility and individuality, allowing family members to find their own personal and giving identities within the family context.”