How to Create a Charitable Legacy

March 8, 2024
Nicholas Tedesco, president and CEO of the National Center for Family Philanthropy, and Sam Kang, president of Schwab Charitable, offer guidance for cultivating a culture of giving in your family.

Giving is central to many families' wealth plans: Half of all Schwab Charitable™ donors consider philanthropy an important part of their legacy,1 and many want subsequent generations to continue the tradition. But to be most effective, families need to be intentional about how and why they want to give.

We talked to Sam Kang, president of Schwab Charitable, and Nicholas Tedesco, president and CEO of the National Center for Family Philanthropy, about how to initiate and sustain a legacy of charitable giving far into the future.

When a family wants to create a charitable legacy, where should they begin?

Sam: Legacy building starts with proper planning. This means drafting a mission statement that codifies your philanthropic motivations. Which causes or organizations matter to you—and why? How will your family fund your charitable goals? What should future generations do to perpetuate this legacy?

Nicholas: The question of purpose is essential. You want to work as a family to articulate your motivation for giving, whether it's creating an opportunity for a specific community or making meaningful change across a certain issue. Building a philosophy around the reasons you choose to give can help carry your family's legacy forward.

Are certain charitable vehicles better suited than others to supporting a family legacy?

Nicholas: The vehicle you choose should align with your motivations for giving, as well as your resources, talent, time, and timeline. If your goal is to provide purely financial support over time, for example, a donor-advised fund—which allows you to recommend grants to public charities as you see fit and has a relatively low administrative burden—can be a good option.

Conversely, if you're looking to supply financial support not just to public charities but also to individuals or other entities, a private foundation—whose funds often can be used for a broader array of purposes—could be a better choice.

Sam: Donor-advised funds can be a simple way to establish a legacy. With Schwab Charitable's donor-advised fund account, for example, up to six account holders and up to four account users can add contributions and recommend grants. The account holders can also name up to 10 successors who can help continue the family's mission beyond the lifetimes of all account holders.

Learn more about Schwab Charitable's donor-advised fund account for legacy planning.

What's the best way to instill your family's philanthropic mission in future generations?

Sam: Involving kids and grandkids in the giving process, ideally from an early age, is critical. A recent study found that about 81% of adult children who give learned the behavior from their parents.2

You can start by sharing memories about the most meaningful gifts you've given or stories about people you've helped. As kids grow older, invite them to reflect on their own philanthropic beliefs—and perhaps even provide them with funds to donate at their discretion.

Nicholas: As younger generations find their footing, there may be friction between their own values and those of the founding generation. This is normal, and families should welcome and embrace discussions around those differences. After all, the needs of those less fortunate change and so should your giving. This is especially true from one generation to the next.

Speaking of change, are there new trends in family giving?

Sam: Many donors regularly support their favorite charities, but the past fiscal year also saw 68% of Schwab Charitable donors granting to charities they hadn't previously supported. I think this comes down to a desire to respond to new needs as they arise, such as recent humanitarian and natural disasters.

Nicholas: A lot of philanthropically minded families are feeling a sense of urgency now. They want to be more responsive to current needs, so they're revisiting their time horizons and even accelerating certain gifts.

Younger generations tend to support various interconnected causes to effect greater change. How can family philanthropy target those?

Sam: Giving with no designated purpose or restrictions allows organizations to use the dollars where they are needed most. That may not make sense for every dollar you donate, but it can allow nonprofits greater flexibility in meeting today's immediate needs and biggest challenges.

Nicholas: And don't be disheartened or dissuaded by the size of the challenge. No matter the amount, know that your dollars can make a meaningful difference to the lives of people and communities in need.

1What Does Legacy Mean to You?, Schwab Charitable Donor Forum, 2021. 

2Women Give 2018, Women's Philanthropy Institute, Indiana University Lilly Family School of Philanthropy.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Schwab Charitable Fund is recognized as a tax-exempt public charity as described in Sections 501(c)(3), 509(a)(1), and 170(b)(1)(A)(vi) of the Internal Revenue Code. Contributions made to Schwab Charitable Fund are considered an irrevocable gift and are not refundable. Please be aware that Schwab Charitable has exclusive legal control over the assets you have contributed. Although every effort has been made to ensure that the information provided is correct, Schwab Charitable cannot guarantee its accuracy. This information is not provided to the IRS.

A donor's ability to claim itemized deductions is subject to a variety of limitations depending on the donor's specific tax situation.