Forbes Best-In-State Wealth advisor Cary Stamp, CFP®, introduces the concept of multigenerational family philanthropy, outlining the profound benefits of including teen and adult children in philanthropic discussions.
Hi, I’m Cary Stamp, I’m a Certified Financial Planner and I’m a Chartered Advisor in Philanthropy, and I’d like to talk today about how you can talk to your adult children about financial matters. Many of us don’t talk to our kids about money, and in fact, if you’re of my generation, your parents probably never brought up money. And if your parents were from the depression, they almost certainly never brought up the topic of money, how much they had, how they spent it, or how they made financial decisions. You were just supposed to figure it out on your own when you became an adult.
It works much better if you do talk to your adult children about your family finances, the family investments and the family assets. Why is that important? Because it allows you to pass the family values to the next generation. One of the easiest ways to do that is by having a family philanthropy meeting. Many of our clients use a vehicle called a Donor Advised Fund.
The Donor Advised Fund is simply an account where they get to hold some assets that were eventually going to contribute to charity. This Donor Advised Fund allows us to create an environment where the children, the adult children, usually, they can be teenagers, or on up, where those children get to make decisions about how the family contributes assets to better society.
So think about this for a second. As a family, you sit down, you have a conversation. The parents talk to the kids about their financial situation a little bit, you don’t have to give specific numbers. They say, we’ve created this fund that we’re going to make some contributions to charity and we would like you, children, to give us some input on how we make those decisions.
Now your kids might have radically different ideas than you do about charity and politics and giving away money. You get to control the conversation because it’s your money and it’s your values, but you also get to hear their voice and find out what is important to their kids, and also find out how your kids collaborate with each other, because this is an incredible exercise that allows your children to work on a project together while they are maybe living in different places, maybe married to other people, but they get to collaborate as family members.
So how do you do this? The first thing you do when you sit down to have this family philanthropy meeting is you want to come up with what is the mission of the family, from a philanthropic perspective. What do we want to accomplish? How do we want to impact the world? Is it through education; is it through poverty; is it the environment? What is the hot button for your particular family?
Secondly, you want to look at the organizations that you could possibly contribute to or form your own organization that could have an impact in that particular area. Find out where you’re contributing right now and where your kids are contributing right now. After that, you create a spending plan. How much do we have to give away each year? Usually, that’s driven by how much is in your Donor Advised Fund or how much you’re already tithing or giving away to various charities each year. You come up with a spending plan. How much are we going to give and what are we going to give it?
And the last thing is, give your children some input. It makes them feel empowered, it allows them to look at this from the lens of, Jeez, my parents were able to accomplish something fairly significant. They created enough wealth that we’re able to give it away. What are their values and how can we honor their legacy when they’re not here? So, allow your children to work together, that’s the other thing that I would say. Why? Because you don’t want them to have to work together for the first time when they haven’t had a working relationship in an extremely long time, when both mom and dad are gone, which is what we see a lot. Give them a project. This is ideal.
I’m Cary Stamp, I’m a Chartered Advisor in Philanthropy, and this has been a Principled Wealth Moment.