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Philanthropic Planning - The Selfish Side of Philanthropy

Some studies indicate that there is only one thing that separates the 1 in 10 family from the other 9.

Philanthropy.

We are not as optimistic about this conclusion as are the studies that make this statement. If it were that easy, the 1 in 10 family would probably be more like the 6 in 10 family. However, one thing is clear: every family that falls into the 1 in 10 category makes philanthropy an integral part of their legacy.

Despite this, as a society, we focus entirely on the external benefits of philanthropy.

When families are surveyed about their philanthropic efforts, tax benefits are the only selfish reason given, and even then, tax benefits rank near the bottom in terms of priority and importance. By and large, as a society, we engage in philanthropy because of external factors such as the desire to give back, to support our community, and to care for those less fortunate than we are.

This external focus is beneficial and necessary; it helps us focus on and address the needs of others, and helps us understand how fortunate and blessed we really are. However, our predominantly external focus misses the most rewarding, and perhaps the most critical, aspect of philanthropy: the benefits that accrue directly to the family itself.

A family that collectively engages in philanthropy must accomplish a number of complex and challenging tasks.

Admittedly, practicing philanthropy as a family is not easy, but the complexities and challenges facilitate a number of highly attractive characteristics we suspect every family strives to attain.

 The first is family unity.

In order to practice philanthropy as a family, family members must agree to pursue a common vision or strategy. Developing the philanthropic vision requires trust, communication, and mutual understanding. In many ways, it motivates a family to develop a larger vision for their family, of which philanthropy is one component. Nevertheless, in many ways, the family’s philanthropic vision becomes a unifying mechanism by which the family members work together to achieve common goals.

Contrary to family unity, but just as critical, is individuality.

Family members are often called upon to compromise or sacrifice in order to accomplish the family’s philanthropic vision. Each family member, however, is also capable of shaping the family’s philanthropic vision based on each member’s experiences, skill sets, and passions.

Families that successfully engage in philanthropy must simultaneously recognize the importance of family unity and the importance of family members’ individuality. Family philanthropy is an excellent mechanism to cultivate Human Wealth. Families that successfully balance unity and individuality do so with trust, introspection, communication, and the willingness to share ideas and embrace the vulnerability that comes with having an opinion or passion. All of these aspects support family unity and closeness, and at the same time, family member individuality.

The third benefit that accrues directly to families is failure.

Or rather, the experience and wisdom that failure produces. Philanthropy is challenging, and despite our best intentions and efforts, we will fail to achieve philanthropic goals from time to time. But as any serial entrepreneur can tell you, failure is a necessary and beneficial experience, and most often leads to greater success in the future. The key is to allow it to happen in a safe environment so that it becomes the learning and growing experience it should be, not the detrimental and divisive experience it can easily become.

Philanthropy requires many real-world skills.

This is especially true when private family foundations or donor-advised funds are utilized. As corporations, a private family foundation (and to a lesser extent, a donor-advised fund) requires the family to exercise a number of skills that directly translate into corporate functions and personal development. These include finance, accounting and investments, legal, board and organizational governance, leadership, communication, conflict resolution, research, accountability (on the part of each family member as well as on the part of the non-profits that are being supported), and depending on the foundation’s mandate, marketing and advertising. All of these requirements help build Intellectual Wealth.

But perhaps the most critical benefit that accrues directly to a philanthropic family is control and confidence.

That might sound counter-intuitive; giving time and or financial resources away amounts to control? As Bill Eck, a good friend and mentor in this area has said many times,

If we aren’t willing to give something up, whether it’s time or money, how can we be sure that it doesn’t control us?

Absolute control is not merely owning something, but rather, dictating its use and ultimate disposition, even at the expense of our own personal well-being.

When we can part with something that is meaningful in our lives, we truly know that we are in control of it, not vice versa.

The sense of confidence that comes with knowing we control the material things in our lives is perhaps the best lesson we can teach ourselves and our children. Otherwise, we are slaves to the material goods around us, and in our experience, in such a situation, it’s not long before a family loses sight of its real wealth; its family members, their experiences and wisdom, and their impact in their community.

In most cases, when philanthropic planning is used to benefit both the family and the community,
the benefit to both is even greater than it would be if the family was doing it
purely for the benefit of the community.

There is indeed a selfish side to philanthropy.

If you’re interested in learning more about the role that values can play in a family’s philanthropic effort, the importance of the Human and Intellectual aspects of wealth, or how families can employ an estate planning process that incorporates philanthropy, we encourage you to review the following sections:

  • Values – A family’s values embody the foundation of the family’s wealth. Values give the family direction and support. Values are a family’s DNA. Extracting the underlying, often hidden, values requires a purposeful process that goes beyond a brief consideration and simple conversation. Family values are simultaneously the family’s values collectively, as well as the values of each individual within the family.
  • Human and Intellectual Wealth –Family legacies are often described in terms of a family’s material wealth, but they are established, nurtured, and sustained solely by their human and intellectual wealth. Legacies cannot be guaranteed or mandated, because the obstacles to creating a lasting legacy abound. But there is one obstacle that rises above the rest in terms of its ability to separate the 1 out of 10 family from the 9 out of 10 family: The transition of Human and Intellectual wealth from one generation to the next.
  • Purposeful Estate Planning – The estate planning process as we know it fails almost every family that engages in it. Why? Because the process is almost entirely focused on minimizing the tax burden during a generational transition, the least important aspect of a family’s legacy. Purposeful estate planning supplants this inferior aspect with a focus on expressing the family’s values, and facilitates an effective transition of human and intellectual capital from one generation to the next.

If you want to learn more about the importance of philanthropic planning, find yourself asking any of the above questions, or have your own questions and would like answers, we encourage you to contact us only to answer your questions, not to sell you our services.

If you’re not ready to contact us but would like to learn more about the importance of philanthropic planning, we encourage you to review the following resources:

Books

  • Strategic Giving by Peter Frumkin
  • Understanding Philanthropy: It’s Meaning and Mission by Robert Payton
  • Philanthrocapitalism: How the Rich Can Save the World by Matthew Bishop
  • Inspired Philanthropy: Your Step-by-Step Guide to Creating a Giving Plan and Leaving a Legacy by Tracy Gary
  • Raising Charitable Children by Carol Weisman

Websites

  • www.valuementors.com – Promotes the identification and conscious awareness of values, in organizations and in families.
  • www.purposefulplanninginstitute.com – Promotes an estate planning process that focuses on the Human and Intellectual wealth that families possess.
  • National Center for Family Philanthropy – Promotes philanthropic values and excellence across generations of donors and donor families.
  • Wealth and Giving Forum – Organization of individuals and families of significant means created to promote greater generosity and serve as a resource for its members when making philanthropic decisions.
  • Guidestar – Resource for researching non-profit organizations.
  • Learning to Give – Develops lessons and resources that teach children K-12 about giving, civic engagement, and volunteering.
  • Council on Foundations – Nonprofit membership organization of more than 2,100 grant-making foundations and corporations. Provides resources for Foundations and philanthropic advocacy.
  • Women’s Funding Network – 135 organizations that fund women’s solutions worldwide, in an effort to combat poverty, advance health care, education, and human rights.
  • The Chronicle of Philanthropy – A leading subscription-based newspaper for the leaders of non-profit organizations, especially those that rely on external donors for funds.
  • Giving Institute – Educational resources for those providing counsel to non-profits, including research, advocacy, and best practices studies.
  • Foundation Source – Provider of outsourced support solutions for private foundations.