Updated March 2017 — For many people, the philanthropic instinct is a powerful motivator to do good in their community or across the globe. Whether first instilled by one's family, by their faith community, or through peers, the giving impulse can become a satisfying way of leaving a legacy — and helping individuals and causes with great needs. Passing that passion along to the next generation, however, takes thought, planning, and more than a little conversation.
"There's often the concern with wealthy parents, 'Is my child going to grow up and not have the same values I did?' That's a recurring theme we hear," says Daniel Harris, Senior Vice President for Philanthropic Services at Wells Fargo Private Bank.
"I think that's especially true with entrepreneurs. Often, they grew up without much wealth, but had the drive to succeed and start a company, and they're concerned their children won't have that same drive because of the different circumstances in which they grow up. So it's very important for them to talk to their children about philanthropy."
Modeling behavior is not enough
Harris emphasizes that when it comes to passing along the philanthropic instinct to younger generations, simply showing them good behavior to model is not enough. Research shows that conversations with children are the key. "It is a really important thing for parents to talk to their kids about why they're choosing to give to certain organizations. [Indiana University Lilly Family School of Philanthropy] did a study and concluded that modeling behavior by itself is not as impactful as both modeling and talking," Harris says.
But when is the right time to begin the conversation? Harris says it's around 5 years old, though the age varies by the maturity of the individual child. One way to help broach that discussion with a younger child is to begin the conversation within the context of receiving.
"I think the ideal time is around the holidays at the end of the year," he says. "Kids are going to be receiving gifts, and this is a good time to talk about other kids who are not so fortunate."
Parents can suggest dividing a child's allowance into three buckets — one for spending, one for saving, and one to give away.
It may also help young children to tie these conversations to something tangible of their own. For example, parents can suggest dividing a child's allowance into three buckets — one for spending, one for saving, and one to give away. "It doesn't have to be exactly thirds, but it is a recognition that we are fortunate, and we're not just going to spend all this allowance today," Harris says. "We're going to save some of it, and we're also going to earmark some to help others."
Getting at the why
The discussion is really about sharing the values behind giving. According to Harris, "If a parent or grandparent tells their kids, 'This is why I want to give to this particular organization,' then their values come out very clearly in that conversation."
In the end, it's crucial to get to the roots of why your family wants to give. "It's very easy to focus on the how of the situation," Harris says. But the issue of which philanthropic vehicle to use — a private foundation, donor advised fund, or a trust — is less important when it comes to passing down your values to your children.
"All of these can work equally well with children." he says. "It's more important to discuss the why of the philanthropy. Our team always talks about why the family is interested in doing what they're doing. We always try to draw out that 'why'."