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How to Create a Family Philanthropy Plan Thumbnail

How to Create a Family Philanthropy Plan

By: Thomas Morr, CFP®, CAIA

In a recent article we detailed strategies to help you reap tax and estate planning benefits when donating to charity. But have you taken a step back to think about your overall charitable giving philosophy? Every year, we are flooded with opportunities to donate to very worthy causes, and it can be difficult to decide which opportunities to take, and which ones to pass on. 

Spending some time to think about who you are and what your core values are can help you define your charitable giving philosophy. For example, you might identify certain causes that are most important to you, or a set of criteria that you want an organization to meet before you donate. Defining your values and donation criteria can help you devise a strategy that feels true to who you are. Furthermore, including your family members in the conversation can help you create a strategy that lasts for generations. 

Your Philanthropy Mission Statement

Start by creating a family philanthropy mission statement that details your family’s priorities and philosophy with regards to charitable giving. For example, maybe your family places a high value on supporting environmental conservation or medical research, or perhaps you believe strongly in helping to feed the poor or shelter the homeless. Religion and spirituality can also form the foundation for family philanthropy values.

Your philanthropy mission statement should also discuss how your family values money and wealth by putting them in the proper context: While they are important, they’re not everything. Non-financial values like personal responsibility, integrity and hard work are just as critical.

Your mission statement should also outline any specific charitable giving priorities you currently have. For example, maybe you have regularly donated to certain causes in the past, such as your religious institution, a children’s hospital, or local foodbank. If so, be sure to note these in your philanthropy mission statement so that these gifts may continue.  

Putting the Plan into Action

Once your family philanthropy mission statement is in place, consider establishing an annual family giving cycle. This cycle specifies a time each year when the family will research potential gift recipients and make annual gifts. 

Be sure to involve all appropriate family members in the process of researching and choosing the charities you will support. It’s often a good idea for family members to do hands-on research of potential charities by actively participating and volunteering themselves. This can help forge a powerful connection and build a strong bond with charitable organizations.

Charitable foundations are a common vehicle used by families to make charitable donations. These can take several different forms, including a Donor Advised Fund (DAF), family foundation or community foundation. Family foundations make private grants to charitable organizations while community foundation grants are administered by outside professionals. A DAF is a pool of money managed by a charitable organization (like Schwab Charitable or Fidelity Charitable) where all the assets in the account will eventually be donated to an IRS-qualified public charity.

Passing on Wealth and Values

Creating a family philanthropy plan is a great way to instill strong values in your children and grandchildren. At the appropriate time, you want to establish a forum for all family members to openly talk about issues such as family wealth and values. 

Establish a time to sit down with your family and allow each person to talk about the causes important to them. Even at an early age, children can offer input into discussions about how your family can support certain charitable causes. As they get older, children can provide more detailed input and assume more responsibility when it comes to your philanthropy plan. This will help ensure that your heirs have a better grasp on their responsibilities for maintaining your family legacy and values when it comes to philanthropy.

You might even consider creating a junior board of directors comprised of young family members, such as those between 13 and 21 years old. This junior board would operate as a subcommittee to the governing board of your charitable foundation. Members would be allowed to determine distribution of a small percentage (perhaps 5% or 10%) of the family’s overall charitable donation pot, according to specific guidelines.

Establishing a junior board teaches younger family members how to work together when making financial decisions. Additionally, you could ask junior board members to spend a certain number of hours volunteering at the charities they recommend. This can help teach them life-long lessons about the importance of giving away not just money, but also their time and talents to help support causes they believe in.

How A Financial Advisor Can Help

A Simon Quick advisor can help you create a philanthropy plan and mission statement to guide your family’s charitable giving efforts. To learn more, call us at (973) 525-1000 or send an email to info@simonquickadvisors.com.

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About Tom Morr

Mr. Morr joined Simon Quick in 2012 and currently serves as the Head of the Client Advisor Group based in Morristown, NJ. In this role, Tom is responsible for managing various aspects of the firm’s client advisory team, which includes Advisors, Associates, Analysts and Client Service Administrators to ensure they are providing the highest level of service to our clients. Tom completed Bryant University's Program for Financial Planners and became a CERTIFIED FINANCIAL PLANNER™ practitioner in 2016. He earned his CAIA Charter in 2014 and is a member of the Chartered Alternative Investment Analyst Association. Tom graduated from Siena College with a B.A. in History and a minor in Business. To learn more about Tom visit his LinkedIn.


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