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5 Ways to Pass Philanthropic Values to the Next Generation

5 Ways to Pass Philanthropic Values to the Next Generation

April 10, 2024

5 Ways to Pass Philanthropic Values to the Next Generation

For those of us who are driven to make a difference in the world, charitable giving is often one of the paths we take to make it happen. Engendering a charitable mindset can be an effective way for parents and grandparents to pass down important values from one generation to the next. Below are five ways to get the whole family involved in the philanthropic decision-making process.

1. Direct giving – Donating cash, appreciated stock, or noncash items directly to a charitable organization is an easy way to further your family’s philanthropic goals. Depending on your individual situation, donations may be deductible from your income taxes. Even children and teens can participate in this type of giving by donating toys or clothing they’ve outgrown, setting aside a portion of an allowance for charity, or having a voice in choosing recipients for holiday giving or larger family donations.

2. Donor-Advised Funds (DAFs) – DAFS allow you to donate cash or other assets to a qualified charitable investment account and receive an immediate tax deduction. Since DAFs grow tax-free, you can choose to distribute funds over time to organizations that are important to you. Although your contributions are irrevocable, you retain an advisory role over how to invest the assets and how much to contribute to various charities.1

3. Family Foundation – A family foundation is a tax-exempt 501(c)(3) organization that must follow the same IRS guidelines established for private foundations. Most family foundations are run by family members who serve as trustees or directors on a voluntary basis. Foundations are funded with cash, non-cash or other family-controlled assets and can be an effective way for wealthy families to reflect their philanthropic values across multiple generations. However, this highly structured approach can be costly and time consuming to set up and administer over time.2

4. Qualified Charitable Distributions - If you are at least 70.5 years old, you can make a qualified charitable distribution (QCD) from an IRA of up to $105,000 in 2024, and these funds can be donated to one or more qualified charities.3 If you are of RMD age, this can satisfy your RMD requirement while providing potentially substantial tax benefits. Specific rules apply so be sure to talk to your financial and tax professionals before initiating a QCD.

5. Volunteering – Donating your time and talent as a family is a great way to introduce children and grandchildren to the joy of being of service to others. It can be a fun and effective way to work together to support the organizations and causes that really matter to your family. If your children aren't interested in volunteering their time, you can set an example by doing it yourself. Volunteer on a board of directors or through direct service to organizations that make a difference in your community. Invite your family members to events hosted by that organization and let them see first-hand the work being done to help others. 

I'm a firm believer that each of us can make a difference and that together it's what makes all the difference. To make family giving part of your financial strategy, call the office to schedule a time to talk.

1)Orem, Tina and Ayoola, Elizabeth, “Donor-Advised Funds (DAFs): What They Are and How They Work.” Nerdwallet.com, 6 DEC 2023, https://www.nerdwallet.com/article/taxes/donor-advised-funds.
2)”Family Foundations.” COF.org, https://cof.org/foundation-type/family-foundations. Accessed 26 MAR 2024.
3)”IRS Notice 2023-75.” IRS.gov, https://www.irs.gov/pub/irs-drop/n-23-75.pdf. Accessed 26 MAR 2024.