Define your personal philanthropic mission

A compelling plan to make a genuine impact on the world has a variety of components.

A growing number of families are thinking “big picture” when it comes to both their financial and philanthropic planning. Through community support projects and initiatives, philanthropic endeavors have the power to promote well-being and make a meaningful impact on people’s lives.

For many high-net-worth families, philanthropy is the vehicle that enables them to contribute to key causes, embody their values and strengthen their legacies for generations to come. But building a compelling philanthropic strategy – with its various components – demands a strong sense of purpose from the outset.

The “heart” component

Philanthropy is deeply personal. But making a significant, positive impact to the causes you care passionately about requires a clear mission and strategic approach. As causes and issues evolve over time, defining a core mission can help you and your family stay focused and dynamic.

As with any good plan, begin with your family’s “why”:

• Bond over your shared beliefs and values.
• Pinpoint what distinguishes you from other philanthropic families.
• Determine what you want your efforts to accomplish.
• Consider the motivations behind the philanthropy (personal experience, social justice, sharing success with others, faith or heritage, and so on).
• Identify the specific causes or communities that are most important to you and your loved ones.

Once your family has crafted a mission statement that articulates your philanthropic values, beliefs and principles, you’ll have a strong foundation to guide your charitable work while also planting the seeds of a legacy you can be proud of. Your advisor may be able to connect you with professionals to help you polish this mission statement and craft a plan to put it into action.

The “head” component

This component refers to the approach you’ll lead with in your philanthropic endeavors. One of the most common strategies involves supporting a nonprofit with direct donations. While this approach may – depending on country and jurisdiction – present an opportunity for your family to benefit from tax incentives or exemptions, there are other options that may use your resources to aid your causes more effectively.

For example, when working with your professional advisors, you might consider establishing a private foundation. In the United States today there are over 140,000 private foundations. Among philanthropists, foundations remain a popular option because they offer an effective channel to advocate from, permanence, prestige, tax exemptions and, of course, the legacy they allow families like yours to build.

Alternatively, you and your team may decide that establishing a limited liability company (LLC) or using a donor advised fund (DAF) are better vehicles to help you enact the change you envision in the world. The important first step is to weigh your options.

The “hand” component

Playing an active role in – or having a “hand” in – philanthropy is the key to putting your vision into action. There’s no doubt that financial contributions make a huge impact. In 2021 private and family foundations gave, on average, $40 million more than in the year prior – with foundations giving fewer grants than in earlier years but at a higher concentration and dollar amount.

But depending on the cause you pursue, you may find it more worthwhile to contribute your time over your money. You and other members of your family may consider running for local office or lending your skillsets more directly as board members of an organization or nonprofit. If your family decides that a leadership position isn’t the right fit, consider pro bono work, acting as a mentor behind the scenes, or even donating the use of your property and real estate.

Philanthropy comes in many shapes and sizes, so it’s important to identify the avenues that empower you to make the impact you envision and leave you with a feeling of fulfillment.

The “joining hands” component

When you “join hands” and coordinate your efforts with other likeminded philanthropists – both individuals and families – you can combine resources and harness the power of community to achieve incredible outcomes.

For causes that impact millions of people – climate and environmental issues or initiatives focused on helping youth, for example – coordinating your family’s resources with other people and organizations might not only increase the reach of your philanthropic efforts, but may even allow your projects to operate more nimbly and with greater agility in the long term. While pooling donor funds and group fundraisers are by no means new ideas, a collaborative approach to philanthropy could allow you to push your ambitions to new heights. Consider asking your advisor about philanthropic strategies that align with your financial goals.

To start building your philanthropic legacy, you’ll need to initiate a few conversations. While your advisor may help you explore your options financially, you will likely need to enlist other professional services to help launch your philanthropic venture – including a CPA, estate planner, business attorney, a branding expert or agency to help you craft a mission statement that describes your organization’s purpose for existing, and more.

Sources: foundationsource.com; kiplinger.com; givingcompass.org; assetmark.com; wealthmanagement.com; fa-mag.com; causeiq.com