For financial advisors, the subject of charitable giving has often been an exciting one. While it can benefit the donor in a variety of ways, the impact on the charity can resonate for generations to come. Generational giving, specifically, can help nurture cross-generational bonds with family members, teach fiscal responsibility to the younger generations and instill philanthropic habits within the family ranks.
1. Family Values and Beliefs
When financial advisors have conversations with the families they represent, it is important to understand what values and beliefs are important to each family. For example, if a family believes it is most important to direct their philanthropic efforts toward lifting up impoverished areas of their community, then suggesting they focus their charitable gifts toward local food pantries, women’s shelters or after-school programs could make sense for them.
A good way to start a conversation with clients is by asking questions. A few questions that could be good starters are:
- What philanthropic causes are important to you?
- Have you made charitable gifts to specific organizations in the past?
- How would you like to incorporate charitable giving in your financial future?
2. Leaving a Philanthropic Legacy
When talking about how families can leave a legacy for their relatives for years to come, there are a few ideas that financial advisors can suggest. One is setting up a Donor-Advised Fund (DAF), which is the easiest charitable giving vehicles one can use. It is very inexpensive for families to start, and heirs and loved ones can be part of the process of distributing grants to charity. Also, family members can be named successor grant advisors, allowing the DAF to continue to be a charitable tool used by the family for generations to come.
Another charitable vehicle that can be established in the name of the family is a private foundation. Instead of a DAF where donors recommend grants, a private foundation retains control of the funds throughout the whole grant making process. It is a great vehicle for families who would like to have full control of funds. Heirs and loved ones can be part of the process of distributing grants to charity, and the private foundation can last beyond a single lifetime.
3. Understanding Millennial Giving
One of the biggest aspects of understanding family philanthropy is learning how to engage Millennials. They love online and social giving and are very interested in quick connectivity and knowledge in a short amount of time. Statistically, Millennials are more passionate about causes and helping people, while previous generations were focused on lending support to bigger organizations. They are also more likely to donate to natural disaster relief, animal protection, environmental, and health charities.
In order to be able to engage Millennials, it is important to adopt a millennial mindset. Think about the following when discussing philanthropic giving with clients, as well as how to engage them in general:
- Sleek up-to-date giving
- Concrete results through successful programs and projects
- Encouragement to share results
- Social media outreach
- Peer network events
- Face-to-face engagement