One way of creating multigenerational wealth within the family that is common among wealthy donors is to indulge in philanthropy, which are like the building blocks. Involving the family in philanthropic activities has a lot of benefits from improving governance and family leadership to creating a long-term identity of the family and defining it appropriately and going up to creating family legacies with a purpose.
People willing to pass on the mantle of philanthropy down the generations to establish a legacy of generous donors must rely on the spirit of family philanthropy. Still, to see it work for them, it would require careful strategising. According to Jonah Engler, it entails a thorough understanding of how wealthy families engage in collective philanthropy is necessary to develop strategies that work well and help to achieve the goal.
Enhancing governance and family leadership – the Jonah Engler way
Engaging in philanthropy provides an excellent opportunity for family members to learn about their passions, interests, and skills as well as preferences in the context of the family, and it can provide into the family dynamics. Each member can discover the roles that they can play in philanthropic endeavours. Some members might be organisers; some might be visionaries while others might be networkers.
Similarly, there would be others who could be researchers, case promoters, or evaluators. Philanthropy can benefit from all these skills.
The practice of family governance gains ground through charitable trusts, family foundations, and Donor-Advised Fund (DAF), which serve as a relatively neutral ground for learning about one another and exercising family interactions.
The platforms of philanthropy provide an opportunity for better mutual understanding as it teaches about how to deal with challenging family relations, how to engage in collective decision making, and managing conflicting viewpoints.
Practising philanthropy in the family gives room to the family elders to stay involved in family matters by helping younger generations to crat their identity and learn the ropes quickly for participating in family decision making. All the elements align the family through a common cause that supports family integration and cohesion that makes everybody proud.
Engaging generous donors in the family
Understanding the fundamental functions fulfilled by philanthropy in the context of wealth planning is particularly vital for fundraisers working with affluent families that have a few generations in philanthropy. Non-profits desirous of engaging major donors can explore the possibility of tapping into the passions that drive the family of philanthropists and try to build strong relationships by creating opportunities for dialogue with prospective families.
When engaging potential donors who are part of a family, non-profits have an essential role to play in helping families shape the identity and legacy they want to create. One approach is through bespoke experiences and events that drive a family towards a specific mission or through education campaigns.
Another way would be to identify and create compelling and suitable philanthropic vehicles that are unique to the family. It could be like naming an initiate or award in their honour that allows the family to feel a distinct sense of ownership.
Non-profit fundraisers can receive sustained support from a family of generous donors as they can serve as a significant giver as well as a champion of the organisation by upholding their mission. Non-profits or donor seekers must understand the passions that drive a family and how those passions keep them connected and collectively represent a unit that should help to maintain a pipeline of major donors through the generations.
Strengthening family identity
In addition to facilitating governance, families that engage in philanthropy consider it an excellent tool for spreading values across generations and synchronising it. Many seasoned wealth planning experts who have seen family donors from close have observed that the focus of the families is often too much on the technical aspects of the process. It includes portfolio management, estate planning, and tax planning when building a strategy about wealth continuity.
This appears to be a deviation because, according to the wealth experts, the best planning occurs when the family focuses on the goals and purpose of their wealth. The stress should be cultivating and preserving family values and less about managing the cost of portfolios.
Values are integral to family identity because these are the guiding principles in difficult times. Family philanthropy perfectly taps into the evolving values that guide the decision-making process about wealth.
Engaging with philanthropy allows the family elders to share basic family principles, beliefs, and history, thereby passing down family values through the generations. Simultaneously, it provides an opportunity for incorporating the perspective of the NextGen – to hear their voices and give them the scope to challenge the existing organisational systems and bring to the table new technological solutions and ideas.
Family continuity thrives on this multigeneration interaction. In the process anchors the family identity in the past with a face to the future.
Adding new meaning to legacy
In creating a family identity that passes its value through the generations, philanthropy also creates a spiritual and ethical continuity in the family.
A philanthropic legacy passed down the ages is an act like the passing of the torch that has an element that links the past through the present to the future.
Engaging family members in philanthropic activities like a charity that aligns with the family history, passions, and beliefs create a transcendental but intangible continuity between several generations within the family.
Looking at family philanthropy from a broader perspective, the legacy is a social footprint left by the family on the community to which it belongs and operates. Families can define how they would like to be remembered by the communities they serve by choosing the level of commitment and type of actions to take to improve matters from local to global standards.
Philanthropy is a useful tool for creating continuity of family wealth. It helps to strengthen family governance and leadership, reinforces family identity, and helps to create meaningful and lasting legacies.
Any family concerned with family wealth continuity based on a multigeneration wealth strategy would find philanthropy worthwhile to fulfill their goals.