It’s often said that family and money don’t mix well. However, I would challenge the notion—I literally wrote the book, A Passion for Giving, on the topic, providing practical guidelines to leverage family wealth for impactful philanthropy. Giving is not just good for the world, but also integral to nurturing healthy family dynamics—and may even be the secret sauce to preserving multi-generational wealth.

Values Alignment Strengthens Family Bonds

There is a trend known as “shirtsleeves-to-shirtsleeves,” which describes the tendency for the next generations of wealthy families to overspend, resulting in wealth reduction. I believe, however, that giving may be the key to disrupting this cycle. Incorporating philanthropy early on disrupts that paradigm. Future generations are less likely to squander wealth when they see themselves as stewards of their family legacy with a greater purpose. When families have a stated mission to give back—with serious, intentional, mindful philanthropy—it has been shown that these families build their wealth alongside their charitable giving.

Philanthropy and values alignment—shared giving values—can be a powerful way for families to connect on a deeper level. Multi-generational families can come together to support causes that resonate with their collective beliefs. By coming together to support causes or engage in charitable activities that reflect their shared values, families not only make a positive impact on the community but also strengthen their own relationships in the process. However, the key to successful and impactful giving requires a strategic plan.

Identifying Shared Values: Mission Philanthropy

The first step is crafting a philanthropic family mission statement. Families can get started by gathering multiple generations together in a values-oriented conversation. Discuss the problems that spark passion amongst members of the family. We use a Venn diagram tool to map out the intersecting values of those seated at the table. To facilitate a constructive conversation, pose some of these questions:

  • What does the family stand for, i.e., what’s your DNA?
  • Are you focused on identifying a solution to a particular issue? Example: A disease a loved one suffered through, environmentalism, social justice, etc.
  • What legacy do you hope to leave through your philanthropic efforts?

The resulting statement should be a tool that clearly, simply, and directly answers the question, “What do your family’s philanthropic efforts work to accomplish?” It should ultimately serve as your “elevator pitch” and help everyone stay on the same page.

This exercise can also serve as a valuable investing tool. Take these values and apply them to guide which sectors to invest in. If, for example, you’re focused on environmentalism, you’re less likely to have mining and oil companies in your portfolio.

Read the full article about family giving by Peter Klein at Exponent Philanthropy.