Incorporating philanthropy planning and giving into the family office structure is a powerful tool to help transform communities and create lasting legacies. For family offices, philanthropic giving has benefits beyond strictly financial. See how having a philanthropic vision for your family office can optimize resources while also creating a positive social impact and strengthening family bonds.
Finding a Philanthropic Purpose
Each family office will have their own reasons for giving, so establishing a philanthropic purpose that is custom to each family’s core beliefs, objectives, and resources available is essential. Conversations about the philanthropic purpose should take place between multiple generations of the family to ensure every family member’s values are understood.
Once a philanthropic purpose has been established, it's important to envision specific places where resources will be dedicated. Taking general giving goals like advancing social welfare or environment sustainability and dividing them into specifics will ensure that the giving has a meaningful and measurable impact.
How To Give Back
Once the philanthropic goals are in place, it’s time to determine what actions will be taken to achieve these goals. Donations and charitable giving are great ways to provide financial support to nonprofit organizations and to convey your family’s values and interests. A donation doesn’t always have to be a check written out to the organization of your choice - it could also be something like establishing a scholarship in your family’s name for students from underserved communities.
Setting up an endowment or foundation to manage and distribute your funds is another way to give back systematically, and foundations are generally managed by a third-party organization, making it more hands-off for the family. A Donor Advised Fund is another great option to manage charitable donations on behalf of an organization, family, or individual.
While donating is one way to live out your philanthropic efforts, investing your funds into companies that prioritize environmental and social governance (ESG) or companies that focus on your personal ideals (also called impact investing) is another great way to demonstrate the shared values within the family structure. Impact investing demonstrates your support for a cause while also giving you the possibility of generating financial returns.
Not all philanthropic giving has to be monetary either; volunteering your time and energy or encouraging and facilitating volunteer work among employees is a great way to give back to your community while displaying your family’s interest and care for bettering the community. Using your talent and connections can also fulfill your philanthropic goals. Generally, family offices are composed of individuals with many talents, from accounting to legal services, and these are skills that could be leveraged among organizations that do not have the funds to hire someone to do the work. Furthermore, using family ties and connections to benefit an organization is a great way to show support for a particular cause and to create a lasting legacy for generations to come.
Benefits of Philanthropy in Family Office
Practicing philanthropy within a family office has many positive impacts on both the family and on others. Communities can greatly benefit from this work, and the resources family offices have access to have the potential to help promote education opportunities, infrastructure, and overall quality of life for those within the community. Working towards these shared goals not only cultivates stronger bonds within the family unit, it also fosters a deeper relationship with the broader community. As an added value, many philanthropic activities offer tax benefits that can play into the family office’s overall financial plan as well.
In summary, the impact of philanthropic giving within a family office is profound and far-reaching. This work goes beyond the financial aspects of charitable donations and tax planning - it has the potential to build a lasting family legacy while bringing people together.
