Thankful for Family Giving
As Thanksgiving approaches and we dream about just how high we can pile food on our plates, we also reflect on what this day means to us. Giving to others has been scientifically proven to bring us happiness. Many choose to make giving to charity a core tenet of their family values and structure, and the Thanksgiving table provides the perfect opportunity to have this conversation with younger generations.
Carol Kroch, Managing Director of Charitable Trusts at Wilmington Trust, says more and more parents are seeking ways to pass on their charitable values to their children. Parents are looking to bestow these ideals while still seeking maximum tax benefits and flexibility in their giving. So, what does it take for the conversation to move from the Thanksgiving table into reality?
Private foundations have long been a cornerstone of the American charitable sector, but Kroch says that they might not offer the best solutions and opportunities for families. The contemporary American family may not have the time or resources to commit to creating a private foundation. Based on the Council of Foundations’ information, it requires $10 million before a private foundation has enough funds to have a paid staff of a part-time CEO and part-time administrative assistant. The combined administrative expenses, legal hurdles, and responsibilities of running a private foundation can not only be a heavy burden but can detract from the potential charitable impact. The best alternative, Kroch says, is creating a Donor Advised Fund, or a DAF.
DAFs, unlike private foundations, can be created online within a day (private foundations can take months to set up). Instead of hiring independent staff and dealing with the legal issues inherent with setting up a private foundation, a DAF allows fund advisors to use the resources and expertise of a pre-existing entity to suggest charitable gifts. The ease of creating a DAF far outweighs the potential costs and risks of running a private foundation. While the simplicity of managing a DAF can also make it far more more appealing to the younger generation. As older family members seek to impart their charitable values on their children and grandchildren, a DAF will remain in the family but will enable the children to give easily and often, without making the family’s philanthropy their sole occupation.
Think of creating a private foundation like cooking Thanksgiving dinner. When you are finally finished cooking, you are too tired to fully enjoy the meal. The same can be said for private foundations. By the time you have finally surpassed the legal barriers and devoted the time and money to its creation, not only will the holidays be over, but your idea to bring everyone together in celebrating your family values around giving will feel more like work than charity.
Charitable giving can inspire and unite family members in a common vision. What better place than the Thanksgiving table for this conversation to begin?