As the holidays approach, many of us feel a renewed sense of gratitude and connection. It’s a season for reflection on what we value, who has shaped us, and how we might give back. For some, that means volunteering or donating to a favorite cause. For others, it’s an opportunity to take a more strategic approach, creating a charitable gifting plan that weaves generosity into their broader financial picture.
Especially for affluent families and individuals, holiday philanthropy can form a key element in building a durable philanthropic structure that reaffirms, defines, and nurtures the charitable legacy of a multigenerational financial enterprise. By incorporating holiday traditions with charitable planning, donor engagement can be enhanced for both current and future generations. The holiday season offers many opportunities for creating legacy traditions that resonate both financially and emotionally, building a philanthropic tradition that can carry these values forward for years to come.
How can the purpose for family giving be clarified?
Every meaningful giving plan begins with clarity of purpose. Before focusing on how or where to give, take time to reflect on why generosity matters to you. What experiences have shaped your perspective on giving? Are there specific causes that resonate because of your personal story? Perhaps a founding family member struggled early in life because of a lack of education; this may indicate that providing educational opportunities for disadvantaged persons is a core value for charitable efforts. Or it could be that environmental concerns are front-and-center for someone in the family, which might lead to an emphasis on supporting organizations dedicated to conservation, sustainable energy, or other similar efforts. Whatever is most important and central to the values of the enterprise’s stakeholders should be considered as a focal point of charitable support.
Why are the holidays a good time to reinforce family charitable planning?
Several factors combine to make the holidays an especially impactful time for conversation, planning, and efforts around family philanthropy.
- Gratitude is “in season.” When we gather around a family table or spend relaxed time with family and friends, we often become more reflective and aware of our many blessings.
- A desire to share. Gratitude for our own well-being often leads to a consideration of others who are less fortunate, along with a desire to provide help. The onset of cold weather, holiday food drives, and other seasonal efforts create greater awareness of need.
- Gift-giving is prominent. Most of us already find ourselves in the rhythm of giving and receiving gifts, often leading to a willingness to give more broadly.
- Cultural and religious influence. Many faith traditions emphasize the importance of generosity toward the less fortunate, and to a degree this ethic is ingrained in society as a whole. These impulses can be especially influential during the holidays.
- Easy object lessons. Often, shopping with younger children presents teachable moments, such as encouraging them to choose a toy to be given away in a toy drive or taken to a local shelter.
- Giving generates a sense of well-being. As Ebenezer Scrooge famously learned, the practice of generosity provides emotional and psychological benefits to the giver as well as the receiver. Simply put, people who are grateful and generous are generally happier and healthier.
For these reasons and more, the holidays can provide many advantages for families who are building a philanthropic legacy.
How can younger generations be involved with family giving strategy?
As we’ve written previously, all effective philanthropic planning begins with good communication, and this should include younger children. Remember: children as young as age 3 are able to observe and internalize the basic principles of generosity, empathy, and sharing with others.
The holidays naturally bring families together, creating a meaningful time to talk about shared values and charitable priorities. Family members might be asked which causes they care about most, discuss ways to combine resources for greater impact, or consider how charitable giving could be integrated into the estate plan.
In fact, there’s no reason why family holiday giving shouldn’t involve organized “family meetings” where various causes the family supports are discussed and new efforts are considered. Some families even hold “pitch sessions,” where family members present a cause or organization for consideration and provide details for why it should be included in the family’s philanthropic plans. At appropriate ages, younger family members can be encouraged to volunteer with organizations of interest to become more involved and aware of their mission, resources, and activities. As they enter adulthood, they may elect to serve on a board or take some other leadership role within the organization.
When philanthropic principles are instilled at a young age and reinforced appropriately as children grow, family values around the importance of charity are internalized, adopted as core values for living. In this way, the family’s legacy is made more durable, capable of providing guidance for years into the future. The holidays provide a fertile ground for instilling and solidifying these values.
What are some key year-end tactics for family giving strategy?
Because family philanthropy is often integrated with tax planning, the closing weeks of the year provide a critical “final window” for assessing the progress of structured giving and making necessary adjustments prior to December 31.
- Donor-advised funds (DAFs) can be used to accept not only cash gifts but also appreciated assets like securities, real estate, business interests, and others.
- Charitable remainder trusts can receive contributions until the end of the tax year, but depending on the complexity of the assets, transfers may need to be initiated earlier to allow time for settlement and legal documentation. Assets thus transferred are generally considered to be removed from the donor’s taxable estate, reducing estate tax exposure.
- Coordination with overall wealth planning may include a time-sensitive Roth conversion, tax-loss harvesting, or charitable “bunching” to increase tax efficiency.
- Donating appreciated assets (often by using a DAF) can frequently provide a bigger benefit to charity, with the additional bonus of reducing the donor’s capital gains tax exposure.
- Reviewing governance structures of family foundations, trusts, and other entities should be a systematic activity, and the year-end period, when families already tend to gather, is often an advantageous time to do this.
For families seeking to build and maintain a multigenerational financial and philanthropic heritage, the services of a fiduciary financial advisor can be a tremendous benefit. Your GEM Asset Management advisor has the training, experience, and knowledge to help individuals and families who want to leave a lasting legacy and give back to the causes they believe in. If you would like to learn more about our services for helping affluent families preserve and propagate wealth, please visit our website.
