Donor-Advised Funds: Strategic Vehicles for Family Philanthropy
Betsy Brill, President, Strategic Philanthropy, Ltd.
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- Proactive Next Generation Involvement
Family giving presents a significant opportunity to pass down values across generations and to teach valuable lessons related to wealth and inheritance. For these reasons, it is important to involve younger family members in the family's philanthropy early and often.
When inviting next generation members to participate it is important to recognize that they may approach giving differently than older generations. For example, Millennial donors (roughly ages 18-29) are typically more hands-on with their giving and more interested in giving globally than their parents and grandparents.
Some families decide to set up separate donor-advised funds that children or grandchildren can use to distribute small grants to organizations of their choosing. These funds allow for valuable learning around grantmaking, budgeting and working as a family. Other families invite next generation members to recommend one grant per year (for example in honor of their birthday or graduation) to a charity of their choosing provided they engage in the appropriate due diligence.
This training will help the next generation make good use of the family's charitable giving and instill them with a spirit of generosity that they are likely to carry with them.
Seeking out opportunities to collaborate with peer funders around projects of mutual interest can help families to leverage their charitable dollars and create a more enriching giving experience. Funder networks, like the Women Donors Network and regional associations, like Philanthropy New York, bring donors together to learn and connect with each other and with leaders in the field. National associations like the National Center for Family Philanthropy offer workshops and webinars on numerous topics related to family giving.
- Focus on Impact
Family members are more likely to develop a sense of pride around their giving if they feel like their gifts are making a difference. Developing evaluation criteria can help donors to assess the progress their grantees are making on specific social issues and/or can assess the change they're creating in select geographies (such as their hometown). The more families know about how effective their gifts are, the more wisely they will be able to spend their charitable dollars in the future.
Although giving away money is serious business, it should also be fun! Families who engage in meaningful giving together will find that while there are certainly challenges, there are also moments of great joy that result from connecting with loved ones and giving strategically to the causes they cherish.
The more involved a family is in how their Donor Advised Funds are put to work, the greater the potential impact and value of their charitable contributions. Drawing on the support of professionals who are steeped in philanthropy can not only help to ensure that the intent of your giving is followed but it can enhance the experience, increase the level of satisfaction from your charitable activities and deepen family relationships around shared experiences.
Strategic Philanthropy, Ltd. is a global philanthropic advisory practice based in Chicago serving clients worldwide. We work with individuals, families, closely-held and family-owned businesses helping them plan, assess and manage their charitable giving.