Welcome to Legacy Builders: Strategies for Building Successful Family Enterprises. I’m your host, Cory Gagnon, and in this show, we explore different ways to take control of your wealth while building a lasting legacy. Together, we’ll cover global ideas, concepts, and models that help family enterprises to better navigate the complexities of family wealth. This podcast is brought to you by Beacon Family Oﬃce at Assante Financial Management Ltd. If you find today’s episode helpful, feel free to share, and don’t forget to hit the subscribe button.
Now let’s dive in!
In today’s episode, we delve into the world of philanthropy and how it intertwines with effective management of family wealth. Have you ever wondered what’s the difference between philanthropy and charity and why do we feel it’s such an important topic when it comes to wealth management within family enterprises?
In the words of Melinda Gates:
“Philanthropy is not about the money. It’s about using whatever resources you have at your fingertips and applying them to improve the world.”
In the context of family charitable giving, philanthropy plays a crucial role in legacy planning, presenting a great opportunity to pass down shared values across generations in the hopes of leaving a positive mark on the world.
As you probably know, generational wealth often includes a variety of assets, such as real estate, businesses, investment portfolios, and other forms of financial holdings. This wealth is built over time through successful entrepreneurship, investments, inheritance, or a combination of these factors.
The goal of generational wealth is to provide financial stability, security, and opportunities for future generations. It allows families to maintain their standard of living, fund education, support charitable causes, and pass down a legacy to their heirs. By incorporating philanthropy into wealth management, individuals and families can align their values and goals with their financial decisions. Philanthropy allows them to make a meaningful difference in areas they are passionate about while also leaving a lasting legacy for the rising generation to honour. It provides a sense of purpose and fulfillment beyond financial success.
Philanthropy plays a crucial role in legacy planning, allowing shared values to be passed down across generations. At its core, is the act of giving back and making a positive impact on society. It goes beyond charity, focusing on addressing root causes, creating lasting change, and improving the well-being of others. Wealth management, on the other hand, is about effectively managing financial resources to build and preserve wealth across generations.
If you’re just entering the world of philanthropic endeavours, my advice would be to start small and take a thoughtful approach. Begin by identifying causes that resonate with you and your family. Educate yourself about the different philanthropic vehicles and strategies available. Seek guidance from advisors who can provide expertise and help develop a strategy aligned with your goals.
But why am I even sharing this topic with you?
It’s because family philanthropy fosters a shared sense of purpose, strengthens familial bonds, and instills social responsibility within the family. From this, two things stand out as to how your family can use your wealth for philanthropic causes:
The first – making a lasting impact
The second – Filling gaps through innovation.
Unlike short-term charity, philanthropy focuses on creating lasting and sustainable change. It aims to tackle the root causes of problems rather than merely alleviating their symptoms. By investing resources strategically and working towards systemic solutions, philanthropy has the potential to make a significant and enduring impact on communities and society as a whole. Philanthropy fills gaps where public funding or market mechanisms fall short. It supports initiatives that may be too risky or lack immediate financial returns, allowing for innovation and experimentation. Philanthropists have the flexibility to support unconventional ideas, pilot projects, and research, driving progress and advancing new approaches to social issues, and your family can also be a part of this.
One of my clients, let’s call her Jane, Jane is a high-net-worth individual who has been a long-standing client of mine. Over the years, we successfully managed Jane’s substantial financial portfolio, providing her with excellent returns and personalized financial advice. However, lately, Jane has been contemplating the idea of integrating philanthropy into her wealth management strategy.
During one of our scheduled meetings, Jane expressed a desire to explore philanthropic opportunities. She explained that she has been fortunate to accumulate substantial wealth, and feels a deep sense of responsibility to give back to society and make a meaningful impact.
I, of course, understand the importance of philanthropy in wealth management so we began discussing the possibilities. We start by asking Jane some questions about her philanthropic interests, causes that resonate with her, and the legacy she hopes to leave.
She shared her passion for education and her strong belief in equal opportunities for all children, regardless of their backgrounds. She also expressed a desire to address environmental sustainability and support initiatives that combat climate change. I explained the various philanthropic vehicles and strategies available to her, highlighting the benefits of setting up a family foundation, which would allow Jane and her family to have direct control and involvement in the grant-making process.
I gladly shared some success stories of other clients who have incorporated philanthropy into their wealth strategies and family philosophies, because these stories showcase the transformative power of giving and the lasting legacies these families have created.
A bit careful at first, Jane was ultimately very excited about embarking on her philanthropic journey. She appreciated our guidance and assistance in conducting thorough research on potential charitable organizations that align with her causes of interest. She was also very interested in involving her children and creating a family culture of giving, ensuring that philanthropy becomes an integral part of their shared values and legacy.
With a deeper understanding of the philanthropic landscape, Jane was determined to make a significant difference in the lives of others. She looks forward to collaborating with us to further develop a comprehensive philanthropic plan that not only aligns with her values but also leaves a lasting positive impact on the causes she holds dear.
Jane is still very grateful for the comprehensive support we provided since it enabled her to feel confident in her journey into philanthropy, and now she is sure it will be meaningful, impactful, and a testament to the power of the areas of managing wealth that goes beyond financial gains.
So why did I tell you about Jane? Simple – it’s because engaging family members of each generation provides a unique opportunity to unite them around a common cause while cultivating a profound connection to the reason for their philanthropic decisions and strategic choices. Ultimately, this inspires a deeper commitment to the family’s philanthropic values, ensuring a sense of social responsibility and a culture of generosity within the rising generation.
Uniting generations around philanthropic goals creates an intergenerational exchange that enriches the philanthropic process, facilitating a deeper comprehension of the current issues that relate to the shared values of the family. Through open communication and collaborative decision-making, family members can collectively identify and address critical challenges that affect the welfare of the communities that matter to them.
What’s exciting about including the rising generation is that they are capable of developing a sense of agency and recognizing their potential to affect positive change from a young age. Family philanthropy is capable of attracting substantial support and working together with other philanthropic organizations, nonprofits, and governments on a global scale. Through strategic partnerships and collective action, family philanthropy will affect systemic change and leave a positive legacy for future generations.
So what are the main benefits of giving?
Philanthropists often possess significant influence, resources, and networks. By leveraging these assets, they can advocate for change, mobilize collective action, and drive collaboration among various stakeholders. Philanthropy can be a powerful force for social change by bringing together diverse perspectives, expertise, and resources to address complex challenges.
For donors, it brings about a sense of fulfillment and happiness. Research suggests that acts of generosity activate reward centers in the brain and can lead to increased well-being and satisfaction. Financially wealthy individuals may donate to experience the joy and satisfaction that comes from helping others and making a difference.
High-net-worth individuals often feel a sense of responsibility toward society. They recognize the advantages and privileges their wealth affords them and feel obliged to give back and contribute to the common good. Philanthropy allows them to use their resources and influence to address social inequalities and promote a more equitable society.
I like to mention legacy and impact as, in my experience with my clients, many wealthy families aspire to leave a positive and lasting legacy. By donating to charitable causes, they can ensure that their wealth has a meaningful impact beyond their lifetime. Philanthropy offers an opportunity to shape and influence issues they care about deeply, leaving a legacy of positive change and impact.
It goes without saying that tax benefits are one of the perks of philanthropic work since charitable giving can provide tax benefits in many countries. Donating to registered nonprofit organizations or foundations can result in tax credits, allowing wealthy individuals to reduce their taxable income or estate taxes. While tax incentives should not be the sole motivation for giving, they can be a factor that encourages philanthropy.
Last but not least, a final benefit for today’s conversation is networking and reputation: engaging in philanthropy can enhance a wealthy individual’s reputation and social standing. It provides opportunities for networking and connecting with other philanthropists, influential individuals, and leaders in the nonprofit sector. Meaning, being associated with charitable causes can positively impact your personal and professional reputation.
Clients often ask me what is the best time to start their philanthropic journey.
The best time to engage in philanthropy is a personal decision that can depend on various factors. Here are a few considerations to help determine the timing that works best for you:
First – it’s important to ensure that your own financial needs are met before committing to philanthropy. Take the time to establish a solid financial foundation and know your level of abundance. This ensures that you can sustain your philanthropic efforts without compromising your own financial well-being.
Next – know that philanthropy requires dedication, time, and energy. Consider whether you have the capacity and commitment to actively engage in philanthropic activities. It’s essential to be emotionally and mentally prepared to devote yourself to making a positive impact.
Now, the best time to engage in philanthropy is when your values and passions align with the causes you wish to support. Take the time to reflect on what matters most to you and identify the issues or areas where you want to make a difference. This alignment will help sustain your commitment and drive in the long run.
Philanthropy itself is not limited to a specific timeframe. Many individuals engage in it throughout their lives, adapting their efforts as circumstances change. Some start early, even with smaller contributions, while others may choose to focus on philanthropy later in life when they have accumulated more resources and have gained a deeper understanding of social issues.
Ultimately, there is no universally “best” time to begin your philanthropic endeavour. It’s a personal journey that can be shaped by your circumstances, values, and the availability of resources. The most important aspect is to approach philanthropy with genuine intention, informed decision-making, and a commitment to making a positive impact.
As Sir Richard Branson, one of the biggest benefactors and philanthropists in the world highlights:
“Philanthropy is not just giving away wealth; it’s investing in a brighter and more equitable future for all.”
Along with Sir Branson’s words, there’s another famous quote that is often mentioned when talking about philanthropy – “The man who dies rich dies disgraced,” emphasizing the importance of giving back and sharing wealth. Andrew Carnegie, a 19th-century industrialist and philanthropist, is credited with the quote. Carnegie’s most notable philanthropic endeavour was the establishment of public libraries. He funded the construction of thousands of libraries across the United States and other countries, with the goal of providing free access to education and knowledge.
Carnegie believed in the philosophy of “The Gospel of Wealth,” which argued that wealthy individuals have a responsibility to use their fortunes to benefit society. He believed in distributing wealth to promote the betterment of society rather than leaving it solely to heirs.
Increased funding for charitable organizations by known individuals such as businessmen or celebrities sets a positive example and encourages fans and followers to consider charitable giving as well. It can inspire individuals from all walks of life to give back, creating a culture of generosity and philanthropy. Likewise, wealthy individuals have the same opportunity to act on their local or regional scene.
So what happens if you decide it’s not for you or your family?
The impact that not giving back has on society as a whole is quite significant.
It leads to insufficient support for social causes since many nonprofits and charitable organizations rely on donations from wealthy individuals to fund their operations and carry out their missions. Without significant contributions, these organizations may struggle to provide essential services and support to vulnerable populations, impacting education, healthcare, poverty alleviation, and other critical areas.
It greatly limits funding for research and innovation: philanthropic donations often support scientific research, technological advancements, and innovation in various fields. Without the financial backing of wealthy donors, progress in areas such as medical research, environmental sustainability, and social entrepreneurship may slow down, hindering potential breakthroughs and advancements.
Of course, without generous donations, fewer resources are available to tackle societal challenges, resulting in less progress and positive change in areas such as education, healthcare, environmental conservation, and social justice.
Did you know that charitable giving in the U.S. reached over 471 billion dollars in 2020? This includes donations from individuals, foundations, corporations, and bequests. The reason I began this episode with a quote by Melinda Gates, is because the Gates family is often recognized as giving the most to charity, particularly through the Bill & Melinda Gates Foundation. The foundation has made substantial philanthropic contributions, addressing global health, education, poverty alleviation, and other critical issues.
Another worthwhile cause, The Giving Pledge, launched in 2010, is a commitment by billionaires to give away the majority of their wealth to philanthropic causes. Over 200 billionaires from around the world have signed the pledge. Some that joined the pledge are Bill and Melinda Gates Co-founders of Microsoft, Warren Buffett the Chairman and CEO of Berkshire Hathaway, Mark Zuckerberg and Priscilla Chan co-founders of Facebook, and Richard Branson the founder of Virgin Group, just to name a few.
It promotes a Culture of Philanthropy among the wealthy. It sends a powerful message that wealth carries a responsibility to contribute to the betterment of society. This can influence other affluent individuals to follow suit and engage in philanthropic activities. It also amplifies the Impact of Philanthropy. By pooling together the resources of billionaires who have joined the Giving Pledge, there is potential for significant collective impact. The combined efforts and resources of these philanthropists can tackle complex global challenges, fund innovative projects, and drive systemic change.
Like all philanthropic work, it inspires and sets an example: it inspires others to consider the importance of giving back. The visible actions of billionaires who have made the pledge can inspire individuals from all walks of life, including other wealthy individuals, to engage in philanthropy and make a difference in their communities.
If you want to learn more about the topic, I recommend reading “The Art of Giving: Where the Soul Meets a Business Plan” by Charles Bronfman and Jeffrey Solomon: This book explores the intersection of personal values, philanthropy, and effective giving. It provides practical advice on strategic philanthropy, family engagement, and creating a meaningful legacy.
And if you’d rather watch something related to the topic, The Philanthropist a series on Netflix that follows the journeys of ten philanthropists from different backgrounds as they strive to make a difference in various areas, including education, healthcare, and social justice. It offers a deep dive into their motivations, challenges, and the impact of their philanthropic efforts.
Today we talked about the potential to effect positive change through engagement in family philanthropy. With great wealth comes a sense of social responsibility. Philanthropy provides an opportunity to address systemic problems and contribute to positive change. By supporting causes such as education, healthcare, poverty alleviation, environmental conservation, and social justice, wealthy individuals can help create lasting solutions and improve the lives of others.
By investing in causes and initiatives you believe in, you can make a meaningful impact that continues to benefit future generations. It provides an opportunity to shape the world and leave a positive imprint on society.
Thank you for joining me for another episode of Legacy Builders. Again, I’m Cory Gagnon, your host, and if you enjoyed today’s episode, you can subscribe on Spotify, Apple Podcasts, or your preferred podcast platform.
If you would like to help support this show, you can do so by leaving a rating and review. Until next time, stay intentional about building your legacy.
Legacy Builders: Strategies for Building Successful Family Enterprises is brought to you by Beacon Family Office at Assante. Are you worried about losing what you have created, and seeking ways to transition your wealth across generations? Beacon Family Office at Assante supports our clients transition their wealth while maintaining relationships. If you would like to access more content we have created, you can visit us at BeaconFamilyOffice.com or for more details on our services and to book an initial call.
Thanks again for listening, and until our next episode stay intentional about building your legacy.
This program was prepared by Cory Gagnon who is a Senior Wealth Advisor with Beacon Family Office at Assante Financial Management limited. This is not an official program of Assante Financial Management and the statements and opinions expressed during this podcast are not necessarily those of Assante Financial Management. This show is intended for general information only and may not apply to all listeners or investors; please obtain professional financial advice or contact us at [email protected] or visit BeaconFamilyOffice.com to discuss your particular circumstances prior to acting on the information presented.