Ask Molly: Three Ways to Create a Family Legacy Around Giving
Director of Philanthropy Molly Norton fields common questions from clients, colleagues, and community members.
Molly, my wife and I are trying to think through how to create a family legacy around giving with our children and soon-to-be grandchildren. We are trying to balance that we want it to feel structured and real, but we don’t have a lot of time, right now, to manage it. What are some of our options?
We’re often asked how to create a family legacy so that children and grandchildren carry on a tradition of giving. There are many ways to foster an intergenerational connection to philanthropy and inspire future generations to find passions and causes of their own. These can be as formal as a family foundation and as informal as an annual conversation about philanthropic passions.
Here are three ideas for you to explore:
A family foundation is established through the designation of funds from a single individual or family for charitable distribution. The foundation is a legal entity that requires at least five percent of its assets to be paid out annually. While some feel that the administrative time and costs of filing with the IRS, managing an endowment, and requiring annual meetings are too burdensome, many people like the legal structure because it guarantees that the board members—usually comprised of primarily family members—continue to meet to discuss charitable giving on an annual basis.
Family foundations can operate in many ways depending on their scope and size: with the volunteer time of their board members, by hiring a part-time administrator, or bringing on a full-time director and program staff. Before deciding to set up a foundation, it’s important to have clarity on how much you can set aside, and what you are hoping to achieve with the foundation—from its social impact to its role in your family dynamic—to make sure it is the best charitable vehicle for achieving your goals.
Donor-advised funds (DAFs) allow you to set aside a bucket of money specifically for giving, without a foundation’s administrative and regulatory requirements. While there are no requirements for meetings, bylaws, or the amount of money distributed each year, you can create your own internal structure within your family and stick to it on an annual basis.
We worked with one family to plan a Thanksgiving conversation with their adult children about giving. We built structure into the process by creating a questionnaire and planner for each family member to fill out and share. These were used as the basis of the conversation, so everyone had a chance to talk about the causes they were passionate about and why.
Revisiting this conversation on an annual basis (even now over Zoom) allows the family to stay connected and support each other’s philanthropic goals. You may also add formal financial support to this process by having family members vote on an organization presented each year for a family donation.
If you’d like help thinking through any of these ideas, reach out to our philanthropy team.
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