Key points
- Your family philanthropy strategy starts with getting all family members on the same page
- Research and choose the right causes together, to ensure your goals are aligned
- Deciding on the appropriate philanthropic structure is complex but crucial for effective giving.
Building a wealth management plan is complex – the cornerstone of any plan aims to answer the questions ‘where do I want my money to go, and why?’. Many people hope to leave a positive legacy, and charitable giving is a popular way to tangibly support causes that matter to you and your family. Whatever your motivations, it’s important to balance who or what you want to support with delivering the biggest impact, and building a philanthropy strategy provides a structure to support meeting these goals.
The first step involves taking time to understand what causes are important to each family member and how you can collectively support them. Involving multiple generations in the strategy planning can create a legacy of giving as well as providing the rising generation with a platform to meaningfully contribute. When a family is ready to build a philanthropy strategy, there are a few steps that can be taken.
Identify your family’s core values
A helpful starting point is to reflect on what truly matters to family members. Understanding shared core values will help you focus on causes that resonate with family beliefs – and provides a ‘north star’ to ensure the strategy stays aligned with broader family goals.
Research charitable causes
Take the time to research causes and organisations as a family or give different members, particularly younger children, the opportunity to research and advocate for their chosen charity. Look for transparency, impact, and how effectively they use donations. This ensures your contributions make a real difference.
Create a family giving strategy
Consider your family’s financial goals, the causes you care about, and the best ways to support them. This could include direct donations, setting up a donor-advised fund or establishing a private foundation. A well-planned strategy ensures your philanthropy is both impactful and sustainable. Consider giving time and skills as well as money – this lets you understand how a charitable organisation works, as well as showing you first-hand how well aligned an organisation is to your purpose.
Choose the right philanthropic structure
Deciding on the appropriate philanthropic structure is complex but crucial for effective giving. Whether your family prefers to give as individuals, a community group or a business, there are many options. Structured giving options can have the added benefit of tax incentives while providing ongoing and sustainable support to the causes you choose.
Engage the next generation
Involve the younger generation in your family’s philanthropic efforts. It creates a shared sense of purpose while instilling the values of giving. By engaging them early, you ensure that your legacy of generosity continues for generations to come.
Consider charitable giving in wills
Including a gift to a charity or establishing a charitable trust in your will is another way to ensure your family’s philanthropic efforts continue beyond your lifetime. Bequests allow you to allocate specific assets, amounts of money, or a percentage of your estate to the causes you care about.
Impacts on tax planning
While it might be more intuitive to address charitable giving at year end with your advisors, it is more nuanced and requires in-depth consideration of what the family wants to achieve as part of their long-term objective. Seeking advice from philanthropy experts can help you to fully understand your tax impacts, and the best way to balance your taxation compliance with your philanthropy goals.
Structuring your giving allows capital to grow over time and gives you the flexibility to either provide a reliable source of income for your chosen charities or adjust your benefits to support different causes year on year.
Next steps
If you are ready to start your family’s philanthropic planning, clients should contact their Pitcher Partners representative to learn more about building a philanthropy strategy .
