Establishing a Family Philanthropy Program
It’s not necessary for a family to have a private foundation to establish a family philanthropy program. Studies have shown that individuals receive many of the same benefits from charitable giving regardless of the amount of money that they actually give.
Before engaging in family philanthropy, it’s important for the elder generation to first facilitate a family meeting, which should include a meaningful discussion about philanthropy with the entire family—ideally, one where each member of the family proactively participates. Research has shown that: (1) conversations between parents and children about charity have a greater positive impact on children than parents simply serving as a silent role model through their own philanthropic activity; and (2) talking about charity is equally effective regardless of a parent’s income level or a child’s gender, race and age. With the additional help of a neutral professional facilitator, this family meeting also could benefit from the inclusion of effective communication exercises as well as the use of tools to help the family members discover their common values and vision.
To maintain a strong family philanthropy program over time, the program should have the following four components:
1. Philanthropic projects should be chosen based on shared family values.
2. Family members should proactively participate in shared decision making.
3. Results should be reviewed and successes should be measured and evaluated.
4. The family should continually learn from experience in order to improve in the future.
Children can become part of a family philanthropy program as young as five years old and can begin to play a deeper role with respect to the actual administration and investments of the family philanthropy program before they’re teenagers. The family members could set standards for performance to accompany each grant given as part of the family philanthropy program, and selected charities that attain those standards might be allocated more funds in future years. Each child is capable of proposing and advocating a grant request, which could include site visits to the proposed grantee or even interviews. A family philanthropy program could even require each participant to make some type of personal investment in any organization that will be receiving funds, such as actively volunteering with the organization or making a small personal gift along with the larger donation from the family philanthropy program.
As part of the family philanthropy program, each younger family member might be given a relatively small amount to donate to charity on their own, and then a separate larger amount may be set aside for all of the younger family members (for example, siblings or cousins) to give away as a collective unit, in which case they will be required to discuss and agree together on the organization receiving the donation. Many organizations encourage children’s participation in philanthropic activities and would welcome the younger members to visit their facilities and even volunteer, which is often a terrific way to unite family members as they work together toward a common goal. For more substantial donations, particularly ones in which the family name will be recognized, involving the whole family can help instill a sense of pride in the family legacy. As long as the elder generation is not asserting too much oversight or control over the program, family philanthropy almost always is an extremely positive experience for the younger generation.
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What is the Spectrum of Impact Investing Approaches?
Given the field’s growth and increased number of actors, the last ten years have also seen a proliferation of definitions and terminology related to impact investing. In fact, strong opinions prevail regarding whether or not the term “impact investing” is the best to capture this field. While some prefer mission-related investing or sustainable/responsible investing, still impact investing is most commonly used.
Rather than arguing about the terms, let's discuss three approaches and one overarching strategy to describe impact investor practices. Depending on who you are—and your goals and capacity—you may have the resources and willingness for some but not all of these approaches. See the image of the home as a good metaphor for describing these approaches to managing and being accountable for your assets.
Clean Up: This approach reflects the belief that your assets should align with your values, and by holding or divesting specific assets you can increase that alignment and express your values. For example: Clean and remove toxins.
Renovate: In this approach, you select assets based on specific investment criteria that define eligible and ineligible investments with the goal of incorporating the positive and negative externalities into your investment decision. For example: Paint your house.
Add a Room: By picking a specific theme, you are using your capital to drive the generation of a specific environmental or social impact. For example: Add a new addition to your house.
Manage and Measure: This overarching strategy is to continuously measure and manage the positive and negative impact of your assets and respond to new data and events. You will track the emergence of new environmental and social movements, as they become impact investment products. For example: Maintain and repair your roof.
Rockefeller Philanthropy Advisors yesterday published its handbook for impact investors, a refresh of a guide they first published ten years ago, a lifetime ago in impact investing. It is a comprehensive (182 pages) guide to the nuts and bolts of impact investing, with some help from a 45-year old avatar investor named Sophia.
With so many people now trying to get themselves oriented in investing their money for social and environmental impact, it is excellent to have a fully updated primer for beginners, and a reference book for the more experienced.
The Handbook is available (for free) at: https://lnkd.in/dH8qK7U
Impact investing is becoming an increasing panacea among investors. I don't rule out that this will soon become not only an exclusive privilege for the "big boys", but will spread to retail investors, regardless of their portfolio size. After all, today you can invest with or for the social impact having just a few hundreds on hand.
I spent a good hour listening to UK social impact start-ups pitches to investors. Some turned out to be quite interesting, others a little too far ideologically or even geographically (yes, it still influences). But without exception, everyone's conclusion was one you want to write in capital letters:
GIVING * IS A NEW MARKETING.
* In the broadest context of this word: from the implementation of social responsibility strategies through the support of selected social initiatives to direct investment with or for social impact with or without financial return.
Fun fact: this year, the fingers of one hand are not enough to count the requests received by M. Čiuželio labdaros ir paramos fondas (M. Ciuzelis Charity Foundation) from various business entities for publicity in exchange for the support provided. Do you feel the difference? Not us who go and ask for the support, but vice versa. This is a direct reflection of the conclusion in capital letters.