For members of the older generation, it’s not unusual to be concerned about children who, without appreciation for the effort necessary to accumulate wealth, have accepted the affluent lifestyle. Or, there’s concern about children who’ve pursued high-powered, high-paying careers without taking time to get involved in their own communities.

But how can parents influence their offspring to value good fortune and contribute to the communities in which they live, especially after those children have become adults? Advisors often recommend various charitable planning ideas such as charitable lead trusts and charitable remainder trusts with particular attention to the tax savings generated. Those benefits can be significant. Less often discussed are the non-tax benefits of planned charitable giving, which may address longer-term family dynamics and give parents a sense that they can influence the decisions their children make in the long-term.

Financial Responsibility
Administering a family foundation requires discipline and an adherence to guidelines that can prepare children for their anticipated inheritance. Because a foundation must distribute a percentage of its assets every year, the process requires, among other things, an understanding of the impact of investment decisions, how to monitor an investment advisor’s performance, and how to budget grants—not only currently, but also to maintain viability over many years.

The family foundation provides a safe environment where parents can teach fiscal principles by example. The opportunity for the children to witness their parents working through these issues or to actually work with them on these issues is invaluable.

Social Responsibility
A family foundation also can help instill social responsibility. Even children caught up in their careers can appreciate the benefits of participating in the grant-making of a family foundation. The ability to fund charitable organizations provides significant community benefits in the form of social welfare programs, education, arts, faith support, and health care. It also can provide children with the opportunity to be involved in the community and, hopefully, a sense of obligation to help others.

Even somewhat disinterested children can’t help but be impressed after making a “site visit” to a local charity and talking to the staff and beneficiaries of the organization. These processes, easily incorporated as part of the annual gift distribution, tend to lend a more serious nature to the responsibility of making grants year after year.

Family Communications
One interesting aspect of the family foundation is how it can be used to create family unity, even when the family is scattered across the country or separated by busy schedules. Most families who administer foundations meet at least annually to determine goals and objectives for the year. Those meetings offer a good opportunity for everyone to gather, perhaps during the holidays, and work together to discuss their personal passions and how best to respond to the needs of their communities.

Whether modest in size or very large, all foundations have limited resources, and the process of deciding which charities to support and to what extent encourages personal reflection on core individual values, family values, and how to best achieve a desired result. The foundation can be structured to encourage consensus or allow for individuality among the participants, as desired.

And yes, a family foundation, as well as other charitable planned gifts, also can provide significant income tax and estate tax benefits. In conjunction with attorneys and tax advisors, investment and estate professionals can help develop a funding plan to maximize benefits that enable parents to leave a legacy of responsibility to their children and help to their communities. TPW