Extremely wealthy families tend to be actively involved in philanthropy. Here are some of the ways they go about giving to charities—and how you might incorporate some of their strategies in your life.
- Determine your motivations for wanting to give back, and pursue strategies that align with those reasons.
- Take a formal, organized approach to charitable giving instead of “checkbook philanthropy.”
- Consider creating a long-term giving strategy, such as creating a Donor Advised Fund, a charitable trust, or engaging with a professional charitable organization.
- Work with a professional charitable organization to best support your causes, such as the Community Foundation for Greater Atlanta, the Jewish Federation of Greater Atlanta, the YMCA or the United Way of Greater Atlanta.
As families’ net worth grows, it often fuels a rise in the desire to “do good” through charitable contributions. Many wealth families hold a strong belief in giving back—seeking to make a difference in the lives of others, society and the world.
One of the five key concerns that the affluent tend to share is how to conduct charitable giving wisely and how to magnify the impact of their philanthropy.
However, the majority of people—including the affluent—engage in checkbook philanthropy, where individuals send cash or checks to the not-for-profits they care about. Often there is little to no planning surrounding this type of giving—donations are made sporadically and without regard to other financial issues and needs. In contrast, we see that the very affluent families tend to be more formal and systematic about their giving. This includes setting up private foundations, creating donor advised funds, or engaging in long-term planning to give to their favorite charities over time or through their Wills and Trusts.
Why do the wealth give to charity:
Caring. Families care deeply about certain charitable causes and helping society through careful planned charitable giving.
Influence. Some families donate to be able to use their influence to effect change.
Legacy. Many people create charitable gifts to honor loved ones or create a legacy of their family name.
Permanence. Families can ensure that the charitable institutions and causes important to them will continue to be funded indefinitely.
Why do you want to engage in Charitable Giving?
Instead, consider your own reasons for wanting to engage in philanthropy. What is important to you in terms of your giving? Do you want tax benefits, do you want to create a legacy, do you want to have control when and where donations are used?
Instead of giving when the mood strikes, consider adopting a giving strategy that is carefully planned. Giving options such as donor-advised funds and certain types of trusts can potentially enable you to make charitable giving a component of an overall wealth plan.
Finally, consider enlisting the help of a professional advisor who can provide insights and guidance into philanthropy in general and perhaps even assist in vetting specific charitable organizations.