Many families struggle with the ‘why’ of their wealth. Defining a philanthropic strategy is a great way for a family to articulate a purpose for their wealth. However, only 20% of families have a formal process for doing so.
At the start of COVID, there was concern that financial pressure on families would lead to a reduction in philanthropy. But in a recent survey, 43% of respondents said that the pandemic had not altered the way their family thinks about or acts when it comes to contributing to the community and wider society. The pandemic has also been effective in turning many families’ attention to the inequalities closer to home, which has led to an uptick in local giving initiatives.
The rising generation of family business leaders have been the driving force behind families increasingly integrating philanthropy into their business practices. Families are also using philanthropy to engage and educate their rising generation in the family business, and starting to think in a more holistic and cohesive way.
Philanthropy is a great entry point for young children about wealth – according to some it can start as soon as the child says ‘mine’ for the first time. Some experts encourage families to structure a three-part allowance for children: spending, saving, and giving.
But philanthropy is not a panacea that will lead to fighting family branches uniting around a common theme and singing kumbaya. Conflicts between family members or branches can actually be aggravated through highly emotional discussions around giving. Tread carefully, and first build a foundation around shared values.
Consider This: Is family giving a source of conflict in your family? or something that brings family members together? Do you give with a strategy or is it more scattergun? Are you inculcating the giving culture in your family into younger family members?
Further reading:
- Few wealthy families employ a philanthropic strategy
- Next generation takes philanthropy to the heart of family business
- How COVID-19 Changes The Face Of Philanthropy
- Experts see short, long term shifts with family business philanthropy
- Giving Across Generations: Maximizing Impact Through Family Philanthropy
Here is more on reading on conflict management in the family.
