Families have long employed philanthropy as a teaching tool. However, each generation approaches charitable giving from its own perspective, and that creates new opportunities and challenges as parents begin to engage children in their philanthropic efforts. Who, exactly, will make up the next generation of philanthropists? What do they care about, and how do they learn? Perhaps most important, what are the most effective ways to encourage them to sustain a family's philanthropic goals and legacy?
Who is the Next Generation?
Each of the several generations alive today — from the Greatest Generation to Generation Y — has grown up under different economic and social circumstances, and with different views toward philanthropy. As we learned in our recent U.S. Trust Insights on Wealth and Worth™ survey, wealthy Americans regard philanthropy as one of their most important social responsibilities. However, for many of today's younger donors — those between the ages of 20 and 50 — the traditional approach of writing a check to a charity or serving on a board is less satisfying than being actively engaged in giving back. They may prefer a hands-on approach — for example, applying a venture capital model for social change by investing in people and their ideas.
Gen X and Gen Y actively use online direct-giving portals that allow donors to handle all aspects of their charitable giving.
Younger donors also tend to be more focused on the here and now than older philanthropists, and they may not be as concerned with their legacy, at least not yet. Rather than starting their own private foundations, they are looking for funding gaps or new initiatives and supporting organizations that include people similar to themselves in leadership positions.
And they love technology. They actively use online direct-giving portals to handle all aspects of their charitable giving.
How Do We Engage Them?
With each new generation, teachers need to use those tools that are most relevant to their students. Much of today's communication employs social media, blogs and Web sites. It's critical to consider these new resources in your own philanthropy and in making connections with your children and grandchildren. And while their parents' examples will probably always be the primary way that children learn, the older generation can engage children more directly in philanthropy in many ways.
With the very young (three- to five-year-olds), one effective option is to bake cookies to take to a veterans' hospital or adult day-care center. Allow the children to pass out the treats and talk to the people there.
When children are around age five, consider starting the tradition of making a birthday donation to a charity. The child selects the charity and makes the presentation. You provide guidance, funds and transportation.
As children begin to receive an allowance, talk to them about setting aside a portion for charity. Discuss who should receive the gift and how your children think it will help others. Suggest that they follow up with the organization to see how the contribution was used. Once children become a little older, involvement may take many more forms:
- Volunteer together. This can include anything from school community service projects to extended mission trips. Let the child participate in choosing the opportunity.
- Consider a volunteer vacation as a family adventure into a new culture as well as a giving opportunity. Such trips — often referred to as “voluntourism” — can be excellent opportunities for family members to share volunteer interests and build family traditions.
- Come together as a family to make charitable giving decisions for the family through consensus and interaction.
- Create a matching gift program to encourage children to raise funds or resources for charities of their choice.
- Establish or join a giving circle. These organizations of donors gather physically or virtually to pool research, interests and donations. Giving circles help donors increase their understanding of philanthropy, be more strategic in their giving, commit to multiyear gifts and engage more in their communities.
- Establish a donor-advised fund for the family or for each child. Less complicated than private foundations, such funds can be an excellent way to introduce long-term giving.
Help Them to Create a Philanthropic Vision
For members of the next generation to become and stay involved in philanthropy, they will need to create their own personal philanthropic visions. Young adults begin building that vision by analyzing their personal and philanthropic values. Much of this process is introspective, but you can serve as a guide by sharing your values and asking questions about theirs. Asking open-ended questions without attempting to influence the answers is the most effective way to begin to identify shared values and learn about new directions for family philanthropy.
Your Own GIVING As An Influence
Your philanthropy may focus on direct giving, or perhaps you have created a deferred giving entity, such as a donor-advised fund or a private foundation.
Direct donations can be made as gifts during your lifetime or as bequests through your estate that go directly to a charity. Decisions about such gifts usually don't require the continuing involvement of your family. However, talking with younger family members about your contributions is a good way to share your values and charitable vision.
Talking with younger family members about your contributions is a good way to share your values.
A deferred program, on the other hand, indicates a desire to create a legacy and offers you the opportunity to get your family involved and build a connection with the next generation. If your foundation (or donor-advised fund) will continue after you're gone, do you have a succession plan? You can help future stewards by bringing them in now, explaining why you formed the foundation, and discussing its past, current and future projects. You can include them on teams responsible for various foundation duties, and you might consider creating internships for younger family members. Incorporating social media to further the foundation's work could also help draw in the next generation.
Creating a mission statement can formalize and facilitate your family's philanthropic goals and methods. Taking the time to do this, individually or as a family, can be a rewarding experience and give you and your family direction for grantmaking, investment and management.
Putting It All Together
Family philanthropy is a powerful thing. It is a process that continues from generation to generation, allowing the spirit of your family to grow and spread while caring for humanity, the arts, the environment and so much more. You can help your children and grandchildren to embrace this philosophy by sharing your philanthropic vision with them.
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.
OTHER IMPORTANT INFORMATION
The U.S. Trust 2012 Insights on Wealth and Worth™ survey is based on a nationwide survey of 642 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 2012. Asset information was self-reported by the respondent. 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.