Family Values, Philanthropy
and the Next Generation
Understanding the Family BusinessTM
November 1996 Volume I, Number Four
by Joanie Bronfman, Ph.D.
Genus Resources Inc.
Philanthropy has a long tradition in family business as a way to make a contribution to the community while at the same time bringing tax benefits and enhancing the company’s image.However, at a time when many parents are seeking ways to transmit their values to the next generation, philanthropy can present unique opportunities to the family itself.It can function as a vehicle to teach and share family values and an opportunity for family members to work and make decisions together.
Transmitting values to children when they are very young is most effective.Responsibilityto their community can be a lesson taught when allocating the child’s first allowance. When my father first gave me my allowance, he gave me two dimes (that was a long time ago!)–ten cents was for me and ten cents was for charity.I quickly learned the value my father placed on giving to others.Other parents I know give their children money in three pots–money to save and invest; money to spend; and money to give to charity.
Some parents feel ambivalent when their children choose not to give to the parents’ favorite charity. But it is more important to allow young children to give money to causes that interest them and ones the children choose.UNICEF, the homeless, and child led organizations are causes that often appeal to children. Giving money to causes they care about enhances young people’s self esteem and encourages their continued philanthropy.
As the children grow up, the family may decide on a project that they will fund as a family. This is an opportunity for the family to work together and share interests with each other. In addition, it is beneficial for each family member, no matter what the age, to have some discretionary philanthropic money.Thus when Johnny wants to give to the animal shelter or Dad wants to give to his alma mater, both can do so with the discretionary money, and the family can seek out a project that appeals to everyone.
Often the vehicle for philanthropy is a family foundation. A family foundation may be endowed when there is a bequest, a sale of the business or as a result of tax planning. Other families may have a foundation that they pass money through each year.Pass-through foundations are often used by families as part of a plan to have an endowed foundation at a future date.
Another option is that the family can have a donor-directed fund at a community foundation whose goals they share. The foundation actually makes the grants, but the family makes the funding decisions. If the family is just beginning a process of collective giving they may want to develop a family mission statement to guide their philanthropy which will encourage intergenerational family members to explore shared family values.
Allowing the younger generation to play an active role in the family foundation can be an excellent way to teach about philanthropy. Bob and Wendy Graham started the Namaste Foundation in which all their children participate in making the philanthropic decisions.Those children who are old enough serve on the board of directors.Working together on the foundation allows the children to learn how to evaluate projects, make decisions collectively, and experience handling money responsibly.
In fact, Bob and Wendy Graham are unusual parents.They really wanted their children to decide how the foundation would work and what the foundation would fund. They feel more than rewarded by the self-esteem, competence, communication skills, values, and ability of their children to work together. Another family, inspired by what they learned from the Grahams, encourages each member of their younger generation ages five to eighteen to submit a project that will be considered for funding by the foundation.
The key to successfully involving the next generation in family philanthropy is the willingness of the parents to share decision making with their offspring.For those families that are willing to accept the challenge, the rewards can be great.