A recurring theme among Canada Gives’ donor advised fund clients is the sheer joy they experience from philanthropy. They often remind us that one of the most satisfying aspects of accumulating significant wealth is having the opportunity to give it away to the causes that mean the most to them. Building a lasting legacy, preferably across generations, and making a meaningful difference is a key driver of their generosity.
In that sense, philanthropy is often a family affair—a passion shared between parents, children and grandchildren. That was exactly the case for one Canada Gives donor client from Saskatoon, Saskatchewan, a successful business owner who recently established a family foundation account at Canada Gives. He could have simply issued annual grants to various charities from his Foundation, but he decided to take it a step further.
To introduce the idea of philanthropy and instill the importance of giving back, he offered each of his grandchildren $5,000 to set up their own donor advised fund and make their own charitable disbursements. The purpose in doing so was to encourage the grandkids to find charities they loved, ones that aligned with their personal passions—or at least things that they thought were interesting and kept them engaged—and develop a regular giving plan. The ultimate goal was to get his family involved in the process of being philanthropic and all that comes with it, from vetting recipient charities to directing grants and even building an understanding of investment management.
The donor advised fund advantage
He saw the donor advised fund structure as a great way to build a philanthropic succession plan for his family. That’s a good thing, because in many cases, the next generation doesn’t always want to pick up the charitable torch—especially when a private foundation is involved.
The reason, of course, is because private foundations can be onerous to manage and require regular administration. Philanthropists who go that route are tasked with processing donations, issuing tax receipts, managing banking and bookkeeping. The duty of processing grants to charities and tracking grant receipts also fall into their lap, unless they outsource the private foundation’s management to a third party, which can become costly. Establishing a private foundation can take on average six months to a year and involves legal and other costs. A Canada Gives Foundation account, by comparison, takes a day to set up, at no cost, and involves no time commitment by the donor on governance, administration or reporting.
A donor advised fund with Canada Gives also offers greater flexibility—including the ability to assign the management of investments within the account to an advisor of the donor’s choosing. Another attractive feature is the flexibility to change advisors/investment managers at their discretion, all while steering donations toward their preferred non-profits. In short, a Foundation account affords wealthy families most of the philanthropic benefits of a private foundation without the burdensome oversight responsibilities.
Making philanthropy work for the next generation
The key to building a multi-generational giving legacy is building an interest—even a sense of philanthropic responsibility—among children early on. But it also takes an acknowledgement of the average Millennial/Gen Y’s lifestyle: fast-paced, passionate about the idea of charitable giving, but often so busy that dedicating the time for philanthropy can be a challenge. Making giving easy is an important way to make it a lasting habit across a family.
One way is to schedule annual or bi-annual family philanthropy meetings. They’re a great way to make sure you spend time together—often around the holidays—while also working with family members to refine their giving strategy and select the charities to which they’ll be donating over the coming year.
Creating connections with charities
As our donor client from Saskatoon understands, another important part of philanthropy is engagement. Finding ways for the entire family to become involved with their preferred charities beyond basic donations is an ideal tactic to put names, faces and real meaning behind giving. When teens or young adults, especially, can see the impact that each donor dollar can make on a recipient organization or group within a community, the value of those donations takes on greater importance—and even a sense of urgency, as in crises such as the coronavirus pandemic.
Make no mistake, the next generation is just as passionate about creating lasting change as their parents and grandparents. But it’s a desire that must be nurtured and facilitated to ensure it makes sense for their lives and circumstances. A donor advised fund is an ideal structure to ensure a wealthy family’s philanthropic legacy extends from one generation to the next.
The Canada Gives Team