Children of wealthy parents have always shouldered a special burden: knowing that one day they will control their parents’ assets. For just as long, their parents have worried how to prepare them for the responsibility.
Charles Collier, senior philanthropic advisor at Harvard University, has written Wealth in Families to help philanthropists look beyond the technical aspects of giving and reflect on important underlying questions: How does wealth affect your family? How can you develop your children into savvy investors and donors?
The book couldn’t be timelier. Recent research anticipates that between $6 trillion and $25 trillion will pass through charitable bequests alone over the next 50 years. How well today’s philanthropists teach their children to handle giving will in no small measure determine the future of American philanthropy. Today’s philanthropists “are going to transfer legacies of meaning as well as financial wealth,” Paul Schervish says early in the book, “whether they think about it or not.”
The book is directed at budding philanthropists—though more established donors might benefit as well—who most likely have not had the opportunity to think about how their money and giving will affect their offspring. Readers would do well to begin not at the beginning, but at the back of Collier’s book, where two excellent questionnaires will help them assess how they currently think their wealth affects their families. By answering these questions first, readers will develop a proper frame of mind for engaging the book itself.
Once in the book, readers will see that Collier weaves personal insight and the advice of numerous experts to explain topics ranging from the meaning of wealth and financial inheritance to the ins and outs of financial and philanthropic parenting. One of the more important questions the work addresses is how parents can share the benefits of their wealth without curbing their children’s hunger to succeed on their own. Clinical psychologist Lee Hausner sagely reminds parents that between ages 22 and 35, their offspring are active in “career-building.” During this time, young adults usually face considerable trials, and easy access to substantial money can sap their drive to achieve independently. According to Hausner, “often the motivation to stay focused and disciplined in these situations is the actual need to support oneself. Excessive funds make it easy to walk away.” Consequently, he argues, children should not receive “a significant financial inheritance . . . until they’re around 40.” By following this guideline, he believes parents ensure that their children will develop fuller and happier lives.
In order to cultivate savvy adult investors and donors, Collier wisely focuses on how to teach young children about wealth and charitable giving. He even outlines a myriad of valuable steps one can take to educate children about the world of finance and philanthropy. For children aged six to 12, Collier suggests that parents offer work for pay, promote saving money (even matching amounts saved over a year), and develop small levels of giving for them (even organizing visits to family-supported charities). During the teenage years, parents can build on these early lessons by requiring summer employment; offering lessons in budgeting, consumerism, and investments; and involving them in the evaluation and allocation of family philanthropy. As the young people move into college and beyond, Collier advises parents to provide their offspring with investment training opportunities and to place them on the board of a family philanthropic fund.
At any age level, both Collier and the experts he interviews encourage parents to recruit informal (family) and formal (non-family) mentors. Kathryn M. McCarthy stresses, however, that twenty-somethings should be afforded flexible educational programs to accommodate their changing lifestyles (which usually involve moving away from home, and career and educational pressures). As a financial advisor who once worked in the family offices of the Rockefellers, McCarthy suggests working with your young adult “to design a program” that enlists the aid of a local professor or lawyer “along with a plan for attending night programs or lunch discussions at a brokerage firm.” She further opines, no doubt in words harkening back to the history of the Rockefeller family and philanthropy, “Remember that the family’s philanthropic fund is the ‘think tank,’ a tool for charitable giving and financial training.” McCarthy and Collier remind readers that their children will learn much about evaluation, decision-making, investment, taxes, budgeting, and group work by being on the board of a foundation or family philanthropy committee (even if the participation is sometimes by e-mail and conference calls).
Before parents can reap the benefits of the ideas outlined above, however, they must first embark on a program of family philanthropy. But to do this effectively, it’s important to answer what Collier terms the “critical questions.” These include:
- What issues will be the focus of your family’s philanthropy?
- Do you want to help solve immediate problems, invest for long-term change, or both?
- Do you want to support established organizations, seed new projects, or both?
- Who will undertake your due diligence and site visits?
- Will you fund unrestricted support, specific projects, grassroots innovation, or research?
- How will you know you have been successful?
Clearly, these questions represent essential deliberations for any serious philanthropist. Moreover, parents and children will want to return to such questions as their family philanthropic endeavors evolve and expand.
For all of its merits, this book has one major structural downfall. Collier frequently strings quote upon quote, and his valuable voice disappears for stretches. This reviewer laments Collier’s periodic absences from the text because it seems that his counsel, whenever shared with his audience, represents one of the volume’s major assets. Despite this shortcoming, however, Wealth in Families generally supplies emerging philanthropists (and likely some more experienced major donors) with a useful sketch of the ways to start developing and articulating their own version of Andrew Carnegie’s Gospel of Wealth, and passing that legacy on to their young.
Robert T. Grimm Jr. teaches philanthropic studies at the Center on Philanthropy at Indiana University and is editor of Notable American Philanthropists: Biographies of Giving and Volunteering