As parents, we all have hopes and dreams for our children. We hope to see our children create loving relationships, achieve success in satisfying careers and make productive contributions to society. For many parents with strong moral, religious or civic beliefs, it may be particularly important that their children grow up to become caring, generous adults with deeply-held philanthropic values. Families with wealth may have more pronounced and complex reasons to promote philanthropy, such as a responsibility to give back. Parents also may be concerned about the potential risks of wealth on their children’s development, such as stunting their initiative, undermining their self-worth, or fostering a sense of entitlement, materialism, and isolation. Promoting appropriate and responsible philanthropy within the family is a wonderful way to surmount these challenges.
DETERMINING YOUR PHILANTHROPIC VALUES
First, let’s start with the most basic question: What are values? Values are your beliefs about what is important. Values define your view of the world and give meaning to your life. While we may not spend a great deal of time talking about our values, we know intuitively that our most important values are reflected not by our words, but by our priorities and actions, particularly when we are faced with tough choices. Sociologist Milton Rokeach has written, “A value represents a result that you believe is important, not just now, but in the long run.”
HOW DO CHILDREN LEARN THESE VALUES?
Values are developed through observation, experiment, experience and feedback. For young children, parents play the most significant role. Children watch their parents very closely; they absorb their parents’ values by observing their behaviors. By the time children are teenagers, they increasingly turn to others to help sort out their identity and define their value systems, comparing their observations in the world against what they have learned at home. Role models play a critical role at this stage and include friends, teachers, religious and civic leaders, employers, and, for better or worse, the media.
THE PARENTAL ROLE
Shaping a Child’s Philanthropic Values Develops an understanding of your own values, starting with your “money values.”
We all have beliefs about money. Affluent parents may have more difficulty clarifying these values since there are so many choices they can make available to their children. Your understanding of how philanthropy fits into your money values will determine the way you shape your children’s philanthropic values.
MODEL, COMMUNICATE AND CULTIVATE YOUR VALUES
Your money values will be most powerfully communicated in how you acquire, manage and spend money. Talk about money with your children in a straightforward manner. Money is often a taboo subject for parents and children, yet many experts believe that a reflective conversation about money is an excellent way to communicate your beliefs. “What would you do if you suddenly won a million dollars?” is a fun way to start a conversation about money and philanthropic responsibility. Life also offers many “teachable moments” for these discussions; for example, when you watch a news program about the homeless or when you talk about allowances.
EXPOSE YOUR CHILDREN TO THE WIDER WORLD
One of the pitfalls of wealth is that children may live in an isolated world and may not be exposed regularly to the “have not” segment of society. Our culture is awash with subtle and not-so-subtle messages about the “failures of the poor.” Sometimes our American spirit of individual achievement and competition can be understood to mean that everyone gets a fair chance. Parents can point out that the opportunities available to them, may not be as available to a poor family, but given the chance, would that family achieve the same results? Educate your children regarding these stereotypes and take proactive steps to broaden their horizons. Encourage your child to join after-school activities with diverse groups of kids. Get involved as a family in community service projects. Use travel together as an opportunity to “unshelter” your children. Recognize that your children’s charity should be their own choice, not necessarily your choice. Remember that charity comes from the heart.
WHAT ARE SPECIFIC WAYS TO ENCOURAGE CHILDREN TO “GIVE BACK”?
Philanthropy is often defined as an effort to improve society, based on love of humankind. While philanthropy usually includes money, it is most meaningful when it comes from the heart and includes the contribution of time and talents. The following principles may help to guide your approach to philanthropy with your children:
- Take a cue from your children. Listen to them and support their interests.
- Talk reflectively and provide choices. Lecturing and forcing are ineffective. Serve as a resource to connect your children to opportunities.
- Be sensitive to your children’s developmental needs.
- What may engage them at one age may be a turnoff when they get older.
- Don’t worry! As long as you model your own philanthropic values, they will get the message. You may not see the results until later in life, when your children become parents themselves.
CREATIVE APPROACHES FOR PRACTICING PHILANTHROPY
- THE 3-PART ALLOWANCE
– Many families find this practice useful for children of all ages. Divide your child’s allowance among 3 “jars,” for spending, saving and giving
– This will reinforce the importance of saving and giving and also will provide early practice in money management.
– Once or twice a year, talk with your child about the “giving jar” and help identify possible recipients
– Parents of older children can provide an added incentive by offering to “match” the contribution
- FAMILY RITUALS AROUND GIVING
– Rituals around holidays are especially meaningful when they include the value of giving. This can be as simple as donating a book to the library on each family member’s birthday or delivering a turkey to a homeless shelter on Thanksgiving.
- FAMILY COMMUNITY SERVICE PROJECTS
– Volunteering together as a family is an enjoyable way to share the philanthropic spirit.
- FAMILY FUNDS
– Invite your children to participate in your charitable giving by creating an informal “Family fund.”
– Encourage children to nominate their favorite charities or causes and then hold an annual family meeting to discuss their ideas.
– When the children are younger, it may be helpful to offer specific ideas, such as buying toys for hospitalized children or supporting baby animals at the local zoo. As they mature, you can show children how to research and evaluate their proposed charities for presentation at the family meeting.
– The Internet is a wonderful tool for the preliminary research, although nothing replaces the heartfelt experience of visiting organizations and seeing them in action.
- FAMILY FOUNDATIONS
– The family foundation is a legal structure that requires a modest amount of legal and financial infrastructure and maintenance
– Other philanthropic vehicles include donor-advised funds at community foundations or commercial institutions, charitable lead trusts, and “virtual” family funds.
Along with your family’s legal counsel I can help you select what is best suited to your situation and goals. Your choice of philanthropic vehicle, as well as the way you involve your children in the giving process, should be consistent with your parenting and family goals. Are you simply hoping to encourage your children to be altruistic? If so, any vehicle will suffice as long as it gives the young person an opportunity to give according to their interests and passions. Do you want to establish a family legacy? If so, it might make sense to set up a family foundation in which family members work together to address focused social needs.
Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. This material may contain certain forward-looking statements. These forward looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by American Economic Planning Group, Inc. (“AEPG”) will be profitable. Definitions of any indices listed herein are available upon request. Please remember to contact AEPG if there are any changes in your personal or financial situation or investment objectives so that we can review our previous recommendations and services, or if you wish to impose, add or modify any reasonable restrictions to our investment management services. This article is not a substitute for personalized advice from AEPG and nothing contained in this presentation is intended to constitute legal, tax, accounting, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Investment decisions should always be made based on the investors specific financial needs, objectives, goals, time horizon and risk tolerance. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of AEPG. Descriptions of AEPG’s process and strategies are based on general practice and we may make exceptions in specific cases. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.