Establishing a tradition of family giving can align your loved ones around core values, foster financial education, and extend your philanthropy to future generations. According to a 2018 survey from the Women's Philanthropy Institute, 81% of adults who give say they learned the act firsthand from their parents.
My own giving has been shaped by the journey my parents faced as Korean immigrants coming to the U.S. after the Korean War. I try to explain to my kids how our current opportunities are due in part to the sacrifices our family made, and it has been a wonderful way not only to celebrate their heritage but also to instill in them the importance of philanthropy.
For those looking to create a family legacy of giving, consider these four steps to help get started.
1. Set your intentions
A variety of approaches exist to spark conversations about philanthropy with younger family members. For example, you might describe the most meaningful donations you have made recently, perhaps to a local cause close to your heart.
You could also try inviting participation by posing open-ended questions to each family member, such as:
- What causes are most important to you and why?
- How can we all work together to make the greatest impact?
- What role do you want to play in the family's giving plan?
Another option is to look at family members' volunteer histories and the issues that interest them to stimulate healthy discussion. It's often during such conversations that commonalities emerge, which can serve as the basis for a family's collective approach. The objective is to foster a philanthropic mindset. That may mean agreeing as a family to focus on certain causes while still allowing individuals to support charities of their choice.
2. Create a giving plan
One of the best ways to turn these conversations into action is to create a structured giving plan.
Start by drawing up an annual budget for family giving. You can earmark set amounts for your chosen charities and also designate funds for unexpected needs, such as natural disasters or fallout from human conflicts. Next, consider what other forms your philanthropy might take through a combination of time, talent, and treasure. For example, you may set aside a monetary gift from the entire family but also want family members to connect through a volunteer activity.
To engage younger members, you could also allot an annual gift to charities of their choice and ask them to articulate why they selected those causes. This affords them the opportunity to define their own giving priorities according to their values, and it could even influence the family's future charitable endeavors.
3. Choose a giving vehicle
As part of your plan, consider the benefits of giving via a specialized charitable vehicle, such as a donor-advised fund, private foundation, or charitable trust. If you contribute appreciated noncash assets like stocks held longer than a year to a donor-advised fund, for example, you may be eligible for a same-year tax deduction if you itemize, and you could also give up to 20% more to charities by potentially eliminating capital gains taxes on the appreciation. A donor-advised fund can also streamline recordkeeping and simplify receipt of gifts for the charity.
Leveraging one or more of these specialized vehicles can also help form a long-lasting family tradition. As your children and grandchildren mature, they can become more active participants in the charitable process, whether by serving on the foundation's board or becoming an account holder or a successor on a donor-advised fund account.
Giving with Schwab Charitable
A simple way to increase your giving power.
Schwab Charitable's donor-advised fund account is a simple, tax-smart solution for charitable giving. Once you set up an account, you can make an irrevocable contribution of cash, securities, or other assets, which are generally eligible for a current-year tax deduction. From there, you can invest your contributions for potential tax-free growth, with the objective of having more to grant to charity over time.
The beauty of this approach is that you can be strategic about your giving decisions. You can recommend grants at any time quickly and easily, and you can set up a one-time or recurring gift, depending on your charitable goals.
4. Maintain engagement
I like to occasionally bring up philanthropy in casual conversations with my family, which not only helps keep us on track with our charitable goals but also serves as a reminder of our shared values.
While the winter holiday season is a convenient time for such conversations, speaking to your family more frequently can also impart a charitable mindset among younger members and help ensure your shared charitable legacy continues for generations to come.
No matter where you are in your philanthropic journey, Schwab Charitable has a variety of resources to help you engage your family and establish a legacy of charitable giving.
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™ is the name used for the combined programs and services of Schwab Charitable Fund™, an independent nonprofit organization. Schwab Charitable Fund has entered into service agreements with certain affiliates of The Charles Schwab Corporation.
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.
A donor's ability to claim itemized deductions is subject to a variety of limitations depending on the donor's specific tax situation. Consult your tax advisor for more information.
This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.0822-25TD