Since 2001, wealthy Australian families have been increasingly taking advantage of Private Ancillary Funds (PAFs) as a vehicle to structure their giving. What these funds provide is no surprise; tax deductibility paired with the ability to custom-design your own support to the causes chosen by you and your appointed directors (which are often family members). What most founders would tell you is that the tax deduction itself is not necessarily what lures them to establish their foundation. Frequently they see the foundation as a way of connecting with and engaging their families.
Most of us do not, of course, have the recommended $500,000 + required to establish our family foundation. However, the lessons learnt and benefits achieved by these families through their philanthropy can be applied by most to their own lives. We can make a big difference simply by engaging and taking part.
Philanthropy is one of the easiest ways of sharing your personal values with others. Many of us get caught up in everyday life and don’t always take the time to reflect on whether or not we are teaching our kids what matters most to us and why, and if so, whether or not we are demonstrating these values we believe in through our behaviour and activities. Talking about “doing good” and actually “doing good” are two different things.
So what are others doing?
Dr David Kennedy’s ‘I Give One Percent’ campaign highlights how everyone can get involved and sets a target of 1% of net assets, which in addition to financial gifts includes gifts of time (volunteering), giving away un-needed possessions (recycling) and even gifts of self (giving blood).
There is no right or wrong way of giving: only a way that’s right for you. Having said this, by including some form of structure to your giving, it will make it easier to track your impact over time.
In terms of structuring your giving and getting started, there are plenty of options available:
You can start with children from a young age and an example of a tool that may assist is a money jar with three compartments: one for self, for saving and for sharing. This tool can assist in teaching kids that saving for the future and helping others comes first, and that if they’ve done well, they may then enjoy a reward.
When your friends and family come over for dinner or a barbeque start a conversation. Talk about your own passions and interests. A conversation on how to solve community problems and on personal experience in helping others is far more interesting than that of the new car in the driveway. Remember, giving should not be an isolating activity; it should bring people together.
You can easily combine a normal activity or sport (cricket, footy, netball – even poker) where everyone contributes a set amount to join in and rather than keeping the winnings, the winner(s) select(s) the worthy cause.
Kids Giving Back is a great example of structured volunteering for the family as a whole. It makes giving fun and involves an interesting activity for your family (and friends). Have you ever visited a homeless shelter, a medical research lab, an animal shelter or hospice? These family activities will be remembered by your kids for years to come and will visually demonstrate why a donation is needed and how it can help make a difference. Inviting friends to join may also mean that your kids will have shared the experience with their peers and feel at ease in discussing this with them for some time to come. Doing some good on your own is great, but with others it’s even better.
Giving circles are popping up all over the country. They vary in size, structure and focus, and are generally independent. They are great tools for individuals to donate their time and money to a pooled fund, where the proceeds are used to support a cause of interest. There are Impact 100 giving circles in most major cities and a simple online search will help you find many others. You could always ask your kids to identify a problem in the community or at their school that they would like solve and establish a giving circle to help address it. You may find that there are many other parents who would be happy to get involved.
Another option is go along to an event staged by “The Funding Network”. Members and guests are invited to attend local events where they can enjoy refreshments and informal networking, before social entrepreneurs with a compelling program pitch for funding. As a guest, you can ask questions to presenters and choose to pledge funding in an auction-like setting. It’s a great way of making philanthropy social and is a great option for those with older kids.
Using a sub-fund through a community foundation
Establishing a sub-fund is also an option, but often requires a minimum of $20,000. Whether you are considering establishing a sub-fund with a local community foundation or charity of your choice, make sure to look into this carefully as the requirements, as well as level of flexibility and control vary from institution to institution. Regardless, a sub-fund is a great way of accessing specialised expertise to assist you and you family with your philanthropy and to assist you in making a difference.
If you would like to get your family involved, there are a few things you may want to keep in mind:
Just because you’re older (and you’d like to think wiser) doesn’t mean your children won’t come up with some brilliant ideas and solutions. Don’t dismiss the cause, even if you don’t agree with it. Ask them why they are choosing to support it and perhaps together you can do a bit more background research.
Allocate time and set a structure, it will make it more important in your own and your family’s mind.
Different generations are interested in different things.
Stick to a few focus areas your family is passionate about.
How your family will benefit
It’s a big misconception that giving only benefits charities. Not convinced? Here are some benefits:
- Engaging your family in philanthropy can provide an opportunity to go over the family’s history. When else do we normally make the opportunity for this?;
- Researching organisations and the background to the issues they are aiming to address can provide some insight and deep learning opportunities for children. Encouraging them to research the causes they support will not only help them learn, but will also assist in developing their research and critical thinking skills;
- Your children will expand their networks and connect with new groups of individuals, especially if there is some form of volunteering or networking involved;
- Your children may see a new side of you and will learn about your values;
- Engaging your children in philanthropy and volunteering may assist with their career prospects in due course;
- If you intend on having “family board meetings”, your children will gain experience and learn about the formalities of board meetings; and most importantly
- Your children will learn to be grateful and understand how fortunate they really are.
At NFMRI, we believe that giving and sharing should always be enjoyable, regardless of which areas you are supporting.
Together, let’s ensure the next generation is not only an educated one, but filled with compassionate givers, sharers and helpers. This all begins at home.
If anyone has other great ideas and experiences to share I’d love to hear about them.