Should We Be Giving Our Family Wealth Away?

Erin Hadary MBA, CFP®, CAP® | Partner

Through philanthropy, families have a significant opportunity to make an impact that will last for generations. And collaborating as a family on your philanthropic goals can help strengthen your familial bonds, as well as your intergenerational legacy. But the world of philanthropy is vast, and it can sometimes be challenging to have conversations with family members about gifting family wealth.

Why are you giving?

There are plenty of challenges in today’s world, so Erin Hadary encourages clients to have dialogue around giving by asking what topics matter to them and why?  Understanding what you personally hope to change allows her clients to be both strategic focused in philanthropic giving.

Define Your Giving Goals

While choosing where to direct your philanthropic efforts, be sure to think carefully about your goals. Often, when families make a significant donation, they wish to receive feedback about the impact of their gift. Decide what you want to achieve with your gift and how you will measure your impact. Would you like to direct funds towards a specific project or initiative, or do you want to let the charity’s staff decide where your gift is needed most?

Keep in mind that while many charities direct the majority of their funding directly into their programs, they still have general operating expenses. Offering flexibility in how your donation is used can set you up for a positive donor relationship in the future.

Think About Where Your Family Can Make the Most Impact

It’s understandable to want to direct your giving towards big-name charities — you’re already familiar with who they are and what they do. However, making a gift to a smaller charitable organization may have a much greater impact.

Get to know the nonprofit organizations in your local community, many of whom are dedicating their time to frontline work instead of building their brand and web presence. For smaller charities, even a modest gift can make a huge difference. And when you give locally, it’s easier to see the impact of your gift.

Hosting Family Conversations about Charity

As you begin talking with your family about charitable giving, it’s helpful to approach philanthropic goals with an open mind. You might have a specific organization or cause that you want to support maybe it’s the arts, early childhood education, or the environment. But be open to input from younger generations and make your philanthropic planning a collaborative process. When you give members of your family input into how you direct charitable giving, you build a sense of shared commitment and accountability. Involving your children or grandchildren in philanthropic giving has the potential to strengthen your family’s legacy for generations to come.

You should also be prepared to receive some pushback. Children or grandchildren may have expectations about family wealth and could have concerns that charitable giving will negatively affect their inheritance. Make sure to be open and honest with your children about your expectations, especially regarding work and education. Whether you are planning to hand over your family business to your children or not, keeping open lines of communication helps ensure everyone in the family can pursue their financial goals. What’s more, having these conversations early can help prevent disagreements about legacy management later.

Minimize your tax exposure

One benefit of philanthropy that can get overlooked is the tax benefits. Charitable giving can help you reduce the size of your estate, potentially helping you avoid costly estate and inheritance taxes.

There are numerous tax savings techniques to consider with philanthropic giving, including but not necessarily limited to gifts of noncash assets such as real estate or closely held family business interests.

Leverage your resources

Once you start diving into the world of philanthropy, it’s easy to feel overwhelmed by the options and the sheer level of need. Some individuals choose to set up a family foundation to manage their giving, but that isn’t necessarily a requirement. A family philanthropy advisor can guide you through your options and help you develop the best plan for how to utilize your wealth for the greater good, whether that’s setting up an endowment or using a donor-advised fund. Working with an advisor that offers family office services can help simplify the giving process.

Get Help from Moneta in Transferring Your Legacy

At Moneta, we’re committed to guiding families through the process of sharing their wealth wisely and strategically. If you’re looking for a wealth management team with a philanthropic planning advisor to help you with gifting family wealth, Erin Hadary, a Partner specializing in Legacy Planning Family office services at Moneta, is here to assist.

To learn more about our wealth management and family office services, contact us today.  Erin Hadary lives in Denver, CO but works with clients all over the country.

© 2022 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. Examples contained herein are for illustrative purposes only based on generic assumptions.  This is not an offer to sell or buy securities, nor does it represent any specific recommendation.  You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.


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