When people think about creating a legacy of philanthropy that extends into the next generation, they often will focus on discussions such as estate planning, investments, and financial security. But an equally important discussion to have is how to pass along the values and principles that helped build wealth in the first place.
Philanthropy offers families a meaningful opportunity to connect financial planning with shared values, creating traditions of generosity that can extend across generations.
Starting the Conversation Early
Introducing your children and grandchildren to charitable giving doesn’t have to require significant wealth. In fact, some of the most valuable lessons begin with more important questions rather than amounts to be donated.
Families can encourage younger members to identify causes they care about, help them participate in volunteer work, or help decide where a portion of the family’s charitable contributions should go. These experiences introduce important financial concepts, including budgeting, stewardship, and the impact of long-term commitments.
More importantly, they help younger generations understand that financial resources can be used not only for themselves but also to create opportunities for others. Introducing younger generations to the joy of giving can create a lasting tradition that they’ll want to pass on to their children as well.
Involving Family with Charitable Giving
As families accumulate wealth, charitable giving can become an important part of their bigger financial strategy.
Several ideas can help families establish a tradition of giving:
- Annual Family Giving: Establishing a charitable budget and involving family members in decisions about which organizations to support. It can be fun for family members to pitch ideas to each other regarding which organizations to support as a family.
- Donor-Advised Funds: Creating a dedicated charitable giving account that allows families to recommend grants over time, potentially involving children and grandchildren in the process.
- Estate and Legacy Planning: Incorporating charitable beneficiaries into an estate plan to ensure that philanthropic priorities remain part of a family’s long-term financial legacy.
Each approach offers different financial considerations, but they share a common goal: making generosity a deliberate and lasting part of a family’s financial life.
A Legacy Beyond Financial Wealth
One of the greatest opportunities in multigenerational philanthropy is the ability to connect family history with future impact.
An endowed scholarship, for example, can honor a family’s educational experiences while providing opportunities for students who may never meet the original donor. Over time, the gift becomes more than a financial contribution; it becomes a continuing expression of the family’s values.
At IMSA, this connection between generations is very meaningful. Alumni and families who have experienced IMSA’s impact firsthand have an opportunity to help give that experience to future students through charitable giving.
Ultimately, a lasting legacy isn’t measured solely by the amount of money transferred from one generation to the next. It can also be measured by the opportunities created, the values passed on, and the lives impacted along the way.
It’s important to note that before making a significant gift, donors should coordinate with their tax adviser and financial adviser. The most tax-efficient decision depends on the type of account, the donor’s age, income, holding period, tax basis, charitable deduction limits and overall estate plan.
This information is provided for educational purposes only and is not intended as legal, tax or financial advice.