From Checkbook to Family Fund: Why Organize Your Giving?

A great enthusiasm is building for getting the most out of your charitable giving, for working with your family in this pursuit, and for focusing for greater impact… in Israel!

This past month I was invited to speak at a conference in Israel convened to encourage private philanthropy, particularly encouraging very generous Israeli families to organize their giving. Sheatufim: The Israel Center on Civil Society hosted the conference. Its founders include many prominent Israeli donors and family foundations who would love to see both the establishment of multi-generational traditions of giving and greater donor focus for maximum impact.

Two things particularly impressed me during my presentations in Israel. The first is that the questions donors and family members asked me in Tel Aviv were not all that different than the questions donors and family members asked me in Jacksonville, Florida the week before. Our hopes for a meaningful life, for our families, and for our communities of concern transcend geographic and political lines.

The second impression was my delight in the enthusiasm of the Israeli donor families who wanted to share with others the joy and fulfillment they experience in their own giving. I am always happy to travel in support of advancing family philanthropy; but there is nothing more powerful than the personal story of the giving family, particularly the willingness of that family to share their hopes, their experiences, their foibles, and their accomplishments.

As with many other global groups, they were most interested in the American experience of family giving. What motivates someone to give and, more to their current interest, what motivates someone to organize their giving into a foundation or fund?

Interestingly, most of the research on motivations for giving has focused on the fundamental reasons for giving at all, but what does prompt someone to move from independent acts of personal generosity to a more formal, often shared, vehicle for giving?

Public Policy

Clearly, American public policy, specifically our tax advantages for charitable giving, is the first factor mentioned in driving those with means to establish a formal giving vehicle. And, there is no question that tax advantages likely prompted your wealth planner or legal advisor to suggest a fund or foundation. In fact, whenever I speak outside the United States, I renew my appreciation for the public policy that encourages personal initiative for the public good. We should celebrate that policy, appreciate the good work that results from this initiative, and protect the right to engage in this critical work.

But tax policy has its limits. As one donor once said to me, “taxes got me in the door; they didn’t keep me in the room.” He was acknowledging that taxes provided a great incentive, but something more had to be in play for him to sustain his commitment to foundation giving. And he knew that tax advantages provided no motivation for his son and daughters to continue this work into the next generation. Further, for those living in countries beyond our own, comparable public policy likely doesn’t exist. They need to look for motivations to create family philanthropies outside tax advantages.

Focus and Impact

One of those motivations is the desire to take what may be disparate acts of charity – often responding to personal requests for gifts – and transforming them into a more coherent, focused charitable vehicle. Organizing your giving may offer you the opportunity to articulate values, determine a mission, set a strategy, and assess your effectiveness and impact. And, while I object to those who would demean the notion of a checkbook philanthropist (do we really want to discourage those who respond to charitable requests by writing a personal check?), there is little evidence that those generous, responsive givers have a thoughtful plan for ensuring their gifts advance their own philanthropic interests and have the best possible outcome and impact.

Legacy

By moving from personal to organized giving, you have the chance to see your own philanthropic leadership along a continuum; it is grounded in the influences of those who came before you and inspirational to those who will follow. When donors speak to me about establishing their foundation or fund and their hopes for it, I am in awe of the power of what is often unspoken but eloquent nonetheless. Donors want to know they made a difference, not just in business but in life, and that they mattered. They want to pay tribute to those who helped them along the way and they want to encourage those who follow.

Involve Family and Others

The freedom to be captivated by a great charitable opportunity to the point you fire off a personal check is marvelous. But it is harder to manage your giving in such an independent, spontaneous way when you want to share your charitable experiences with your family and others. The prompt for a foundation or donor advised fund, for a giving arm of your family business or office, may well be your desire to “share the joy!”

Ensuring Future Philanthropic Capital

Finally, while the question of perpetuity or the lifespan of a giving vehicle is much on the minds of donors today, there are those who would like to see some of their wealth preserved for future charitable giving. That giving may be within the donor’s own lifetime or for generations to come. A formal vehicle offers that possibility. Whether you want to ensure continued support for a cause or a community, your goals for that ongoing good work may be realized by any one of a number of giving vehicle options.

There are many others reasons for establishing a formal giving vehicle, and I hope if you have one I haven’t mentioned, you’ll take a moment to share it with me.

If we are all to be successful in encouraging other families to take part in this extraordinary work, we have to rely less on chance and more on the created circumstance (like the conference in Israel). We have to build on instinct by providing inspiration and instruction. Those who value the opportunity and the results of family philanthropy must share that – through their history and stories, their grants and grantees, their relationships with family members and colleagues, and in their advocacy for the continued privilege and right to pursue the common good.

Never underestimate your own power to be an advocate and a mentor in encouraging other donors and families. I saw that power firsthand in Jacksonville, Florida and Beit Yehoshua, Israel. I once asked a group of donors why they started their foundations. The two most popular answers: to give back and to make a difference. Taxes speak to the framework for giving but gratitude and optimism are at the heart. Build on the best hopes of those who need your wisdom and experience. You are the best advocates for both favorable public policy and passionate philanthropic giving. You inspire me every day.

Virginia M. Esposito
President, National Center for Family Philanthropy