Wealth only has four destinations: You can spend it, give it to heirs, give it to charity, or give it to the government. Author Morgan Housel has observed, “Wealth is what you don’t spend.” Wealthy individuals generally accumulate their wealth slowly by incrementally increasing their income and controlling their expenses. Even after accounting for all their financial needs, wants, and wishes, affluent families will have significant “excess” resources that will either go to heirs, charity, or the government. Discovering the joy of philanthropy during your life can be an incredible way to decrease income and estate tax while simultaneously reaping other non-financial benefits as well. Research has confirmed that generous people are objectively happier than others.
There is a joy that comes from living generously and giving back to others, and this joy is something that can be experienced by people from all walks of life. However, for high-net-worth families, the opportunity to make a significant impact through philanthropy can be particularly rewarding. By discovering the joy of philanthropy, wealthy families can make a lasting impact, share their values, and find a sense of meaning.
Making a Big Difference
One of the benefits of using family wealth for philanthropy is the ability for wealthy families to make a difference on a larger scale. With resources at their disposal, nigh-net-worth families can support causes and organizations that are working to address some of the most pressing issues facing our world, such as poverty, disease, and environmental degradation. By doing so, they can help to create a better future for us all.
A Sense of Meaning
In addition to the tangible benefits that philanthropy can bring, there is also a sense of fulfillment and purpose that comes from giving back. Many wealthy families find that their philanthropic efforts provide them with a sense of meaning and direction, since philanthropy allows them to use their resources and skills and contribute to causes that align with their values and interests. Connecting with others who share similar values and making a difference can also be a source of pride and satisfaction.
Active Engagement Brings Joy
For affluent families, family wealth philanthropy is not just about writing a check or making a donation. It is about actively engaging in the causes they care about and working to create lasting change. Whether it is through volunteering their time, sharing their expertise, or supporting organizations that are making a difference, they are able to make a positive impact in the world and discover the joy of philanthropy — bringing happiness to their own lives in the process.
Passing on Values
Philanthropy can also be a way for wealth creators to pass along their values to heirs and younger family generations. You can involve heirs in identifying worthwhile causes, developing and implementing a giving strategy, and collaborating on volunteer and service projects. Your philanthropic activities can help nurture a tight bond within your family by providing opportunities for family members to work together toward the common goal of making a positive impact in your community or the world.
These efforts can also help to create open communication and a sense of shared purpose within the family. Through these activities, young family members can learn about the importance of giving back to the community and civic engagement, as well as the values that are important to the family.
Creating a Family Legacy
Philanthropic activities can allow high-net-worth individuals to link their personal goals and values to the way they invest and spend their money. In this way, philanthropy can help wealthy families create a family legacy – a way to be remembered by both the community and younger family members that can be passed down for generations to come.
Get Started: Create the Legacy of Giving
Building a financial plan is a power tool to supporting generosity. Once you’ve quantified your financial needs, wants, and wishes adjusted for inflation for your entire life, you can more freely explore strategies to support goals for heirs and charitable organizations. Understanding the motivations behind your philanthropic activities — such as personal experience, faith, heritage, sharing success, environmentalism, etc. — can help your family determine causes that are important to you and focus your giving efforts in a strategic and rewarding way.
Once you’ve determined the destination for your wealth, you can locate the current and future growth in a way to reduce your lifetime total tax.
Overall, the joy of philanthropy and the role of living generously in wealthy families is one that is deeply rewarding and fulfilling. By using their resources to make a difference in the world, these families are able to leave a lasting legacy and bring joy to their own lives and the lives of others.
Do you need assistance creating a financial plan to support your wealthy family’s philanthropic endeavors? Are you curious about how private family foundations or donor-advised funds can further your charitable legacy? As a philanthropic investment advisory firm, Delap Wealth Advisory is ready to support and advise you. Start a conversation today with one of our advisors.
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