here welcome everyone and thank you for attending today's webinar. I'm David Shaw the publishing director for family business magazine. I hope that you and your family members are all in good health. Today's topic is philanthropy and the discussion will center around formalizing your philanthropic activities and some approaches that you can use to increase the effectiveness of your fillet your philanthropy and also ensure your desired Legacy and family continuity. We'll also examine how philanthropy and grant-making can be used as a training ground for your next gen. before we get started however make This here. There are some housekeeping tails for you. We welcome your questions and comments throughout the session use the question box that you find down below and you will be able to answer ask your questions or enter your comments at any time. We'll go for no more than 60 minutes today and get to as many of your questions and comments as we possibly can also a copy of the presentation will be available to everyone after the event and as well a copy of the slides those will be made available. So joining me today. Ashley are two philanthropy experts. Excuse me from Whittier trust both Ashley fontanetta and Channing Grigsby our vice presidents at philanthropic services for Whittier trust and they provide comprehensive services for clients who wish to begin a formal process of charitable giving enhance their existing philanthropy or explore new opportunities to increase philanthropic impact prior to joining Whittier trust Ashley worked as a financial advisor responsible for developing wealth management strategies for clients and their families and chanting work as the foundation director at Cain Anderson Capital Advisors responsible for all charitable giving focused on employee engagement and business giving strategies. So welcome Ashley and Channing. I wish you both a wonderful webinar here and I will turn this over to Ashley to get us started. Okay. Thank you so much David. Um, so thank you for having us. We look forward to speaking with you today, and we do welcome questions. So, please do ask away throughout the webinar, and we're happy to pause and take questions during the presentation and also have some time for questions at the end Channing next slide, please. We'll start by talking about the Whittier family and introducing you to their story, which is parallel to the story of our company NeXT slide, please. So as you can see Whittier trust company has a long history. We are the oldest and largest multifamily office headquartered on the west coast, and we started as the single family office for the family of Max Whittier. Max was an owner and operator of both real estate and oil companies here in California interesting little tidbit of History. He was part of the group that purchased and developed the land which is now known as Beverly Hills. So needless to say he did pretty well for himself and with your trust company as a family office. We formed around the needs of his family, you know one first one when Max passed away and the needs of his family and managing the inherited interests in those companies to later on and generations down the line when they sold their oil company. And that large liquidity event led to the need for in-house investment management and eventually our transition into a Trust Company both here in California and in Nevada, not only to meet the needs of the whittier's but during that period of time we expanded to begin serving the needs of other wealthy families today. We're serving just over 500 families across the country with a whole spectrum of their wealth management needs. But the family the Whittier family was always philanthropic going back to even the days of Max Whittier, he found ways to support his community and causes that he cared about it's a philanthropy has been a significant threat in Legacy of the whittier's back in 1955. They established a foundation office, which is now department that Channing and I work in philanthropic Services as part of Whittier Trust Company. But the you know, the success of the Whittier foundations is one that we like to share because when the when the four family branches the children of Max Whittier formalized their philanthropy the established private foundations and those foundations exist today and involve generation 5 of the Whittier family. And it provides a really nice backdrop for continuing to revisit the values and the history of the whittier's that those Generations now share when you think about a family tree and how it grows and expands when you get to generation 5, it's it's a pretty broad swath of individuals that we bring together now every other year around their families philanthropy, we hold what's called a G5 Retreat and those now cousins get to come together and we talk about their foundations. We talk about the philanthropy do education around the giving that they do as family, but it's also really kind of like a family reunion and a nice opportunity for them to gather and maintain that connection. Next slide please. Next slide please. So I mentioned formalizing philanthropy you might wonder what what did I mean by that formalized philanthropy is really stepping away from checkbook philanthropy where you're being more responsive to requests for Grants requests for funding or maybe sitting at fundraising dinner and you bring out your checkbook and and make contributions that way formalized philanthropy usually involves the formation of a charitable entity development of a mission statement and really defining a strategy around what charitable impact you'd like to make. There are a few examples here of what that might look like. But what we see from Decades of working in the space is that formalized philanthropy most often done through private foundations or Donor advised funds? Really develops a sense of responsibility and pride within a family that can be a very meaningful component of intergenerational wealth. next slide and many of you may be familiar with the shirt sleeves to shirt sleeves and three generations saying and unfortunately, it's a popular saying for a reason, you know, as this study from Institute for preparing errors shows 70% of intergenerational wealth transfers fail by the end of the second generation for reasons attributed to poor family communication and inadequate preparation. This image here shows that a lot of emphasis usually gets placed on the Family's wealth and on the assets less emphasis placed on the development of the family and having discussions around how to prepare family for the wealth that there to Steward not only for their lifetime, but hopefully to pass on to their kids and their kids Next slide please. So some of the benefits of formalizing your philanthropy either but beyond the obvious which are you know, there can be some significant tax in the state planning opportunities for establishing charitable entity. But what we see is that it really creates memorable experiences around Family Values it puts action to the words. You can talk about family values all you want but what's much better and more impactful are the experiences of family can share living out those values supporting organizations that espouses those values in the community and being part of that in and establishing as establishing that as part of what your family connects and enjoys doing another important thing that we see is that it can create a Level Playing Field for family members to come together and work collaboratively in within families, you know, not everyone has Same level of involvement say in the family business or they may not share any interest at all it seems and so what we find is that by coming together around philanthropy and really intentionally talking about how to support your family's values in the community. There's a common ground that emerges and that common ground and discussions around that Common Ground can sometimes repair or at least build relationships amongst family members. Environment for individuals to learn some important business fundamentals and things like analysis of investments in your charitable portfolio. How to read financial statements of the organizations that you're supporting how to evaluate and vet nonprofit organizations that you'd like to support it leads to an environment where it feels less like school and is a more enjoyable way to talk about and teach important business practices in the context of philanthropy. Next slide please. So some tips for Success that we've experienced our, you know, certainly start early a lot of people ask me and we'll you know, when should we start how how old should our children be when we start involving them in our family's philanthropy and I think the earlier the better I've done Grant making training for kids as young as seven eight years old, you know, but certainly even before that younger than that inviting kids to the table as the adults are talking about your philanthropy. Let them listen let them listen to the conversations and how your decisions are made and why it is that your family connects and and takes part in philanthropy together. That kind of Osmosis of just being around those discussions has a big impact and it keeps them interested in becoming involved as they get older. And developing family traditions around philanthropy is another way to just make it intentional and make sure that it happens on an annual basis. I find that, you know dedicating Thanksgiving to having conversations around maybe making gifts as a family or if you have a family Foundation hosting your annual meeting around Thanksgiving when the family typically comes together. Anyway can be a really special time. to ingrain this practice in your family traditions And in terms of involving the Next Generation, there's really no one size fits-all model for success. I think the most important thing though is to take into consideration where the next gen you know, where they are in their life, you know, we understand that through teenage years and into college. There are a lot of competing interests involving academics Sports, you know, extracurriculars relationships and on into career and so the next gen may not have as much free time or bandwidth to dedicate to really Hands-On getting involved in your family's philanthropy. And that doesn't mean that they aren't interested or they won't be interested in the future. But I encourage some flexibility around their participation during those years where there's other competing priorities, but some models you might want to try are volunteering as a family developing a family giving Circle what this looks like. Is that each participant Comes in with maybe it's a hundred dollars. You desert you can determine what dollar amount feels right for you, but each person contributes to a shared pot which then they can discuss how to contribute that money where to contribute it to what organization they might want to support and come to a collaborative decision about how they're shared funds can make a larger impact through a larger gift to the organization. They select Junior boards are great training ground for that younger generations to understand board service and how to be a responsible and educated board member of a Family Foundation. All probably another opportunity. That's maybe a little bit less intensive would be just inviting them to be a an advisor on the Family's donor advice fund comes with less requirements and probably, you know more flexible for those that don't have as much time to commit. Next slide please. Next slide please. So we talked about private foundations and Donor advised funds. Those are probably I think the most popular options for formalizing your family philanthropy and you may have one of these already or you may be thinking about establishing one or the other. So this is a helpful comparison chart that we like to share just to look at it just a high level side by side. What are the differences and why one might be a better fit for you and your family. Um now just in looking at this you might see that well, the donor advice fund has fewer requirements and regulations than a private Foundation, but that doesn't mean that they're always the better fit. I think it's important for families to First identify how it is. They want their Family Foundation or the family philanthropy to look what they want their personal involvement to be what type of assets they're planning to contribute, you know, there's there's what type of involvement they want their kids to have what type of Grants you'd like to make all of these things are important to think about before going down the path established. either a private Foundation Donor advised fund and the reason is this If you start with a private Foundation, you can transition to a Donor advised fund later down the line if you'd like. It's not without some effort. It takes some work and it's you know, certainly not simple to wind down a private Foundation, but it can be done and you can transfer those assets into a donor advice fund if later you find that that's a better fit. But if you start with a Donor advised fund, you cannot transfer that back to a private Foundation if down the line you realize that maybe private Foundation would have been better fit. Um, so I share that to say that it's you know, not a black and white, you know direct comparison of the two vehicles and you have your answer I encourage you to spend a little bit more time thinking more about your unique family situation and what it is you'd like to get this experience to make sure that the vehicle you select is the right fit. next slide next slide Thank you. So there's a another quick side by side that shows whether or not you know, yes or no some questions. You might want to ask about establishing a Donor advised fund. But just to reiterate I think these are some other questions that you might want to ask yourself and ask your family and anyone who will be involved with your philanthropy to think through these questions before you choose to establish a private Foundation or a Donor advised fund. Next slide please. And I'll pass it over to you Channing. Awesome. Thank you. so Ashley gave a great kind of explanation of the you know general advice funds and You know she mentioned before, you know, you got to kind of have some good calm family conversations inside kind of what the goals are kind of, you know to determine which kind of works for you and the private Foundation definitely has a lot more kind of oversight a little bit more attention to detail you have you know have to have or a directors you have to have annual meetings. You make sure that your everything's filed correctly with your most state and federal governments other kind of stuff. So it really takes this kind of has a little bit more and kind of oversight that you want to be sure you're ready to do it always is hard, you know, unfortunately Whittier, we're actually handling this with a client who and she's actually not a philanthropic client, but she has her an outside person kind of helping her health kind of stuff. She came across and issue with a filing that didn't get filed. And now we have to kind of we're trying to help kind of figure out how to make sure all the eyes are God and all the teaser cross. And that can kind of difficult just because you know with bureaucracy. It does take a little bit of time to get all the ducks in a row that kind of stuff. So you want to make sure that if you are going to go the private Foundation route, it's a great way to go but just make sure you kind of are ready to have all those tools in place to make sure that you kind of have everything handled correctly for it. And that is the nice part about kind of I guess a Shameless plug for wood here is that you know, we are able to do this for a lot of our clients make sure that you know, we have all their stuff kind of all of the annual filings handled all the meetings requests kind of done. I'll kind of stuff so it's just something to think about to make sure that you're ready for kind of the more kind of detailed oversight. Um so we can kind of talk about this but there is seven. I just saw in the first slide. You know that actually let me one thing. I forgot to mention on this one was one of the perks of our perks of a private Foundation is board compensation. Whereas a daf you can have no expenses that are related to it. So if it's a great training ground for all this kind of stuff for people to kind of get their feet wet, you can't actually have more compensation so that could be a plus for someone who's learning and trying to kind of establish a career which is pretty nice. and the the other thing I want to talk about was that with the private Foundation. You can have kind of a buffer around solicitations for Grants and such, you know, all of all people who are really giving they want to give and people come to them about a great there's so many amazing organizations out there. It can be hard to kind of decide where you want to focus your money, you know on kind of stuff. So having a formal Foundation kind of as allows you to create some parameters and a mission and a focus that kind of gives you a hey, you know, that's a what you're doing is fantastic, but we are kind of focused on education or a different area. It does kind of provide a nice little buffer around some of solicitations for money that can come about I'm gonna let Ashley kind of talk about some of the you know, the tipping stuff and the five percent distribution all that kind of stuff. Okay. Um, so we've outlined private foundations. We've outlined donor advice funds but in some cases the right solution is to have both both entities. There's some good reasons for this one. They work really well together. One thing we see quite often is that I know it can be difficult to make grants in the amount of 5% private foundations are required to distribute 5% of their net asset value at the end of each year throughout each year. And I can be actually hard to do and so one solution we've found is that if it doesn't look as though the the board has identified the right organizations to distribute that amount of money to you can allocate remaining funds into your donor advice fund that does qualify as part of your 5% distribution to satisfy the requirement of a private foundation and then the funds in your donor advice fund do not have a time limit on when they need to be dispersed and do not have a minimum required distribution. So you can hold on to those for later until you've identified the right organizations and how you'd like to support them. Another reason to have both is that maybe you have a private Foundation already, but you've identified that you'd like to make a charitable contribution of appreciated real estate. And if you look back at that side by side comparison the chart of the two entities side by side, you'll see that the deductibility for contributions to either of these entities is different the contributions to Donor advised fund receive and benefit from the maximum level of tax deductibility for your charitable gift for a variety of assets because the general advice fund is considered a public charity. There are lower limitations. There are higher limitations, I guess and lower deductibility amounts for gifts to private foundations. So with a gift like appreciated real estate, we do encourage that you consider making that contribution into a Donor advised fund because of course you'll benefit from higher level of deduction. Now this is an important point that not all donor advice funds are operated in the same way. They are hosted by what's called a sponsoring organization and not all sponsoring organizations allow you to do things like name unlimited generations of success or advisors or they may not be willing to accept and hold certain types of assets. You may have different Investments available to you in various platforms and advice funds. So we encourage that you shop around a little bit and find a donor advice fun. That's the right fit for you. Um, we're gonna read the fine print understand the operation of them understand what they can and can't do because you'll find some differences and sponsoring organizations can be anything from Community foundations to banking institutions. And so they operate quite differently. So, you know doing courage that please do spend a little bit of time making sure that the dafu open is on a platform. That's the right fit for you and your family donor. Husband's grants also allow for anonymity private foundations are entities that are stewarding public funds and you know, your family is the board is responsible for those funds and you have to file an annual tax return which is accessible to the public. And so we've had X we've had experiences where a board wants to make a grant or a board member wants to make a grant that the family would rather not have. Printed on their publicly available tax return which is called a 990 PF. And so what we encourage is that you have a Donor advised fund you move the funds into that daf and make your Grant from there because the donor advice fund can allow for anonymity. Of course, the fund would have to be named with something other than your family name to really accomplish that but it certainly can be done. So if anonymity is a concern a donor advice fund is a great vehicle to use maybe in concert with your private Foundation. It can also be a good fit. If a board member wants to make grants that fall outside of your foundation's mission, you can use the donor advice fund for that and then lastly it avoids what's called tipping for nonprofits and I won't spend a lot of time on this topic because it doesn't happen all that often and it's a little known rule out there for nonprofit organizations that are public Charities that the IRS wants to make sure that to qualify as a public charity. They receive broad public. And so anytime they receive a large portion of funding from just one individual that can be an issue for them. It could tip them from public charity status back into private Foundation status and they'll lose some of their tax benefits for that. So we do encourage that if you are choosing to support especially smaller organizations and your contributions on you know, an annual basis may start to add up to two thirds or more of their total annual support. It's important to keep an eye on that and connect with the organization make a plan for how to make those gifts to them appropriately to avoid tipping or simplest solution is to make that gift through a Donor advised fund because the Donor advised fund is not a treated to you as an individual. Those gifts are held by your sponsoring organization. It's a nice way to avoid the potential for tipping your nonprofit grantee. Looks like a couple of quick questions Ashley based on on that first. I think you addressed this already, but can a private Foundation donate to a Donor advised fund. I think you said yes. Yes, that's absolutely the case. So that was one and then when you're shopping for daffs and comparing them what what are some of the questions you think should be asked to see if it's the right fit for the family. Yes, I think one of the first is how many generations would you like your family to be involved with this Donor advised fund? And you know, what? What does that family tree look like if you have multiple Generations in mind or you want the ability for successive generations to name their own advisors. It's important to ask the donor advice sponsor how many success or advisor Generations? Will they allow you to name? Some only allow for maybe two or three Transitions and then they may incorporate the donor advice fund into their general fund to benefit the Greater Community. And so if you want this fun to be part of your family philanthropy for forever or for Generations, it's important to ask that question. It's also important to ask what type of assets they're willing to accept. If you have assets that you may want to contribute and hold their understand the way that those assets are managed on the daf platform. And that leads to another question which is what investments are available to me. It's good to take a look under the hood and see what what will make up your daf portfolio because you know, of course it's able to be invested and grow tax-free over time to maximize the potential of your charitable giving so understanding that is important and then any other questions that you might have about the types of organizations you'd like to support making sure that you're qualifying them in advance because donor advice funds are only able to make grants to 501c3 public Charities and some organizations that you might like to support could have a different classification. There are organizations that are I think there are 29 different categories of 501c's and so making sure that in advance of going the daf route that the organizations want to support our in fact 501c3. Excellent. Okay, I have other questions, but I'll hold fire for a while. So we are going to speak on family continuity now and this is obviously a very important point you want to make sure that through the entire process you are creating a situation with your family that is kind of welcoming accepting and you know not making a starting a private Foundation or even a daf kind of a contentious issue which can be kind of hard sometimes because people have different Focus points that they want to get across a different missions that are really near and dear to their heart. So, um some best practices that we have seen is as Ashley mentioned to kind of early on was having conversations right making those conversations and early practice in your family starting young that kind of stuff and kind of asking kids, you know where they're um, what what's on their heart? For example, my my nephew loves animals, so he has been really interested in giving to World Wildlife on that kind of stuff. So these are and he's nine, right so he has different ideas. Obviously those will grow and evolve as they get older but um in those conversations through those conversations identifying kind of what the philanthropic mission is gonna be, you know, kind of can you guys come to a consensus on kind of an area specific area? And you know, I'm the goals. Do you want to give you know larger amounts of money to a smaller number of organizations? Do you want to give smaller amounts to a larger number of organiz? Oceans and then also kind of seeing you know. What roles people want to play right? This is an important conversation to ask people. Do you how involved do you want to be? Is it something that you want to kind of be something that you're doing all you know kind of your priorities or something you'd want to just show up to once a year or once a quarter whatever it is. So really kind of allowing for a very genuine open conversation is very important. And in that same light, you know, really empowering the younger generations to have a voice sometimes if you you know have a head of a household to has been successful. Sometimes younger Generations feel a little intimidated to want to participate because they, you know, kind of feel I mean they should just kind of fall in line so really encouraging and younger generations to have that voice, even if it's on a smaller scale just allowing them to kind of slowly integrate into the process and kind of find their voice whether it is a private Foundation or a daf and a DF can be a really great kind of safe training ground. And for this and they can as they understand they learn how to research the right research organizations do the site visits do the follow-ups. All those kinds of things. They really then get an idea for what it kind of takes to maybe be a more board member, you know going forward. Any points here actually you want to touch on. No need to do a great job. Thanks. Um, so as I talked about the empowering of the younger generations and this is a good time for me to give kind of a real life example. We have a A family who is a multi-generation family and currently one of the generations is kind of in charge and they had a death of Jen. Let's call Jen three and so the daughter of a gen 3 person so she would be Gen 4 is asking to say, okay. So am I taking my mother's spot well. You know at the board meeting and they were kind of talking about. Well, it's not really, you know, as Gen 4 kind of old enough are they ready? You know kind of what are those conversations going on? And so it's really important to kind of understand and you know free generation to think about a succession plan and to say okay at what point do we think the next generation is ready? Is it 18 years old? Is it 21 years old is it, you know kind of when they whatever it is right to kind of just have those conversations so that there's a plan in place so that you know, it does kind of alleviate a little bit of Some issues, so it's not just a personal decision. It's kind of all right, let's have an established rule to say when each generation becomes 18. They join a junior board or they start being the ones to make suggestions and doing site visits and presenting research or whatever it is. But really giving them a role and really deciding what the role of each generation is going to be. So we've kind of given that a little bit to say, okay the head of the household kind of you know is bringing just bringing all the generations into kind of have conversations and then allowing a training ground for each generation to really learn and grow learn, you know how to speak their voice but also really take notes and understand to see what the you know, previous generations are doing and also learning to say, okay. Hey, I you know, I noticed that you guys are doing this way. I just learned about this. Can I offer a suggestion and really just kind of making it a very big family conversation that really is helping each generation because and that's not only feeling Key, but as well in family business right having people understand the mission understanding the nooks and crannies of the business understanding all these things to make sure that when it's their time to take over they are really kind of moving the mission forward and of course, there'll be tweaks and adjustments here and there but for the most part you want the general idea and the general mission to really be carried on from generation to generation to generation. So it's really important to kind of how this Consciousness early and also empower the younger generations and really have them understand it from the from the get-go. So I will let Ashley kind of walk through this as it's a little bit of a real life example. Yes. Thanks Channing. Um, so yeah, I can't reiterate enough what Channing was saying that it's you know, it's it's important to have the experience and and training for younger generations and experience working together on succession. But one of the things that I think is challenging for a lot of the clients we work with is just start the conversation how to start the conversation about, you know, getting involved with the family's philanthropy and what that looks like and so it can be really difficult just like it's difficult sometimes about money. It can be just as difficult to talk about family values and how you'd like to see those values lived out. So this is just a sample agenda that we put together for a family meeting we've used for clients and we put a structure to it. This is just a kind of a snippet of what the meeting entails but Structure we put in place helps facilitate the conversation and it starts with the older Generations talking about what are my wishes for you my family? What are the values that we have? And I'd like to see passed down in our family. What would I like our Legacy to be and you know, then make my wishes for me what are some of the things that I would like to have done in my final years, you know things related to my health and my lifestyle and how what kind of support what I like to see from you my family members. And then lastly what have I prepared for you and this is a nice introduction to talk about trust that have been set up for the family or various assets that are meant to be maintained and shared among generations for the future. And having these conversations it gives you a four it gives you a forum to talk about. These things and you know, so that it it gives you a reason I think to go into and delve into these topics, but more importantly everyone's together. And it gives the opportunity for discussion for questions for raising of concerns around what's what the plan is for family wealth and the outcome of this is that everyone feels involved informed, you know, the older Generations are able to set the tone. But the younger Generations are involved in the discussion because they'll be participants in carrying out this vision and we found this to be very successful and taking what can be a really difficult conversation. And putting a nice streamlined format format to it. This is also a great opportunity then to talk about philanthropy and how philanthropy ties into the family's Legacy and how it is that they would like to continue to live out their family values for Generations. Next slide one one point. I forgot to forgot to mention. I just want to make sure I touch upon was for Best Practices a good conversation with all so be the conversation around having independent individuals on a board. Sometimes that can provide some of ice oversight can also kind of help keep the mission on track because you know, there's no emotional kind of tie to it as they aren't part of the family and it kind of also maybe help to alleviate some family tension that can come and you know, especially as you know Generations past, you know people move on there's always emotion that gets tied to that and so one conversation would be to have is the discussion of do you think that you're bored needs some independent individuals to be on it to just kind of provide some of those things for you? good point okay, so now we'll close out with talking a little bit about how do you use philanthropy as a tool for for teaching, you know various practices and fundamentals of business even so I like to point out that philanthropy has and the nonprofit sector has its own vocabulary. But a lot of it can be translated directly into more traditional business speak. So just to point out a couple examples of that, you know, we talk about leadership in nonprofit organizations. Well that's management evaluating a strategic plan a strategic plan of an organization is their business plan or their business model. Um what we call sustainability, you might call scalability. And so there's a lot of ways in which you know getting to know how to vet and assess nonprofit organizations and proposals as a grant maker through your donor advice funding through your private Foundation can directly relate to training you may want to do in the realm of the family business and in context of you know, the business that potentially you may want your younger generations to become more involved in A lot of the concepts are largely the same between nonprofit sector and traditional business. next slide It's also kind of interesting that in Grant making we could use that term interchangeably with Investments. And so if you're interested is in teaching your younger generation about Investments Grant making can be a nice safe tool to do to use and to do that. Um, there are a lot of ways in which you know, making a grant in a nonprofit organization can be directly related to the research you may want to do on a company that you're interested in investing in. There's also things like recoverable grants, which allow for funds to be returned to your charitable entity that you can then redeploy. There's also something called a program related investment, which is something you can make from a private foundation and it's pretty unique because you can make a grant to a for-profit entity as long as Satisfy as some requirements and you know, I recommend don't do this at home on your own always involve somebody who's a knowledgeable expert in the area of pris if you'd like to go that route, but what's really cool about it is that you can engage in, you know, a debt or an equity investment in a for-profit company that's in line with your mission and imagine the experience that you're board members can have in participating in that way all the while using your charitable dollars. So it provides another lessons the risk, I think a little bit because if for example that company isn't profitable and doesn't provide a return to you you think of it as a grant that helped them, you know for their the work that they're doing that you believed in from start. On the next seven example of a PRI. I'll walk through. so this was a found private Foundation that was already engaged in supporting medical research and they had a family member who was diagnosed with early onset Alzheimer's So that became of a primary focus of theirs is what's being done in this area. What type of research what kind of Diagnostics are out there and they found a startup company that was working on some experimental testing using as you can see from the picture scanning of the eye. And so the foundation was actually able to utilize a PRI program related investment. To invest in the startup company and help them to really further their research and and continued with their stages of development. And in this case, you know, if the company is is successful and they generate a return to the foundation that money then needs to be redeployed as a grant out into the community again, so it's really a dual benefit. They've helped to support and further the work of an organism of a company doing work that they strongly believe in and that aligns with their mission and then the return on their investment turns into additional Grant making funds that they can go out and use to support another cause they care about so it's really a win-win next slide just another example one of the families we worked with on this was a family that has their own business and generation one came to realize that the generation two was not probably going to be so interested in taking over management of that business, but they were going to participate as board members and shareholders. And so the family was interested in how can we help to develop the business skills of G2, um, but in a way that you know doesn't put them doesn't put them on the spot. It doesn't make them feel intimidated because it relates so closely to the family business that they didn't feel as though they they could really take her so they form a family foundation and they said okay G2. We want you to manage this Foundation. We want you to be in charge. We're gonna step aside give you know, step out of our shadow give you room to grow and to live and to be successful and they certainly have they really found their their footing their voice in being the leaders of this Foundation that's really made a big impact and big impact in the area where they live it's given them kind of a status and the source of Pride to represent their family in the way in their community and they've now inspired their kids G3 to want to serve on this Foundation board. And so they're doing their training right now by participating in a Donor advised fund. Which as I showed earlier in the slide has fewer requirements and regulations is a little bit of a certain environment to serve on the board because you don't have fiduciary responsibility as you do on the board of a private Foundation. But so that G3 they're training and they're gonna step right up onto that board. It's been a really positive example of how to build confidence and competence amongst a family member on group that will eventually serve on the board of the family business. next slide Yep. It's another great story. Okay. So this one is it's another family we were working with and this was you know, few Generations Downs. So we're talking about Generation 3 and January 4 generation three, they're they were very interested in supporting veterans causes that was very meaningful to them and you know tightly related to their family values but generation their kids generation 4 They were not at all aligned. They didn't have that personal impact. They didn't feel connected to that cause and so Generation 3 was struggling a little bit to get G4 involved in their family's philanthropy. So that we they asked us to help out and we identified a unique grant-making opportunity. Um, it was through a vehicle of a social impact film that the foundation could support and this was a movie about documentary about veterans returning and reintegrating for service and it was really exciting for G4. You know, they were they were intrigued at you know by the opportunity to work on a documentary and see the behind the scenes what what that is all about and what goes into it and be kind of like, you know the producers of this documentary and In doing that and in being involved in hearing the stories of the men and women who were being interviewed for the documentary and getting to know the organization that was being profiled in this film G4. What did have that personal connection now with the cause and they had a greater understanding why their parents chose to so strongly support men and women who serve our country And so G4 developed in their own way. And an affinity for veterans causes and you know brought them back into a place where they were excited about supporting this they were excited about supporting the organization that was profiled in the film and it it solidified these family values that were part of the foundation's mission. So this family now was very Greatful for that experience and opportunity and they're in a in a great place now continuing to move forward and find more opportunities just like this to support with their philanthropy. And so I'll wrap this up just by saying that you know, we shared a lot of success stories today, obviously because those are the fun ones to talk about but philanthropy is not a silver bullet. It doesn't it doesn't fix everything. It doesn't repair all relationships and it doesn't always lead everyone's back to the same, you know path and to align behind one set of values, but I will say that it's worth trying. And it's worth it's worth engaging and in being family to come together around philanthropy. If it's not a home run right away, maybe adjust and try again. There are no shortage of people that you can call upon for support philanthropic advisors, like us people are available at your local Community Foundation who are experienced in this area have worked with families. Just like you and can help you navigate your own course. So, that's all thank you. There's some questions. First and this one's been hanging for a while. So I apologize for waiting so long in this but when you were talking about deaths and Foundations, is there a minimum regular balance or initial donation required for a foundation versus a deaf. I'll actually Yeah, thanks. Again. It's a question. We get a lot. Um and You know, I think it requires it requires the donor to do a little bit of come back at the envelope math on the cost to set up their Foundation. And what that results in? Did we really? No, can you hear me now? No, of course. Yes. Okay. Well, so what I think is important to do at the outset is to determine with the with the amount you'd like to contribute to your foundation. What are the costs to establish and set it up? what is 5% of that net asset value going to be and that's Likely going to be your distributable amount you can always give more of course, but that's the minimum you have to put out the door. And is that going to be enough? Is that enough to make an impact that enough to support the Charities that you want to support? Um and and go from there. There are costs, of course to associated with establishing a foundation on more so than a donor advice funds so for lower balances, you may want to just start with the donor advice on you may want to just do that. But again, you can't turn your donor advice fund into a private Foundation down the line. So we tend to encourage our clients our relationship minimum with your trust is 10 million. So we're working with ultra high net worth individuals and families. And we tend to see private foundations starting around the seven and a half million dollar Mark, but there's no you know, no exact science to it. It's whatever it's what feels right and feels best for your family. Okay, that that raises a there was another question which is if you're formalizing your family philanthropy or there other ways to do it outside of using either the private Foundation or daf vehicle. Yes, there are a lot of different nuanced ways. You can have a grant making or trouble entity. There are scholarship funds that you can establish. There are things called designated funds. There are field of Interest funds, um many different varieties that accomplish generally the same thing but have slightly different variables to them and types of Grants you can make I would encourage that you contact your local Community Foundation or a philanthropic advisor to discuss the different options available to you A lot of it too depends on maybe other factors like your tax planning. Um, like, you know what type of assets that you'd like to contribute. So it's a pretty comprehensive review that should go into determining other options. That might be a good fit for you. Okay. You've talked about that Junior board concept and can you give some best practices on how to make how to create one and make it work? what I I think that one of the best practices for this is honestly open communication and seeing if How involved in kind of the young it whether it's a younger generation or whatever it is that how involved they want to be and then allowing and then having them form a junior board as a training ground, but I think the open communication is a great place to start because sometimes people form a junior board. And as you saw, you know with the the veteran organization example, they weren't, you know crazy about that and that wasn't where their passion was lying. So putting them on creating a junior board and be like here you go. Here's a junior board, you know, if they're not kind of passionate about it that can be you know, a little bit hard to kind of for someone into it. So really open communication really understanding to say, okay. What is it that you are interested in how involved you if you don't want to be on the board. Do you want to be researching the organizations or however, you know, whatever those kind of questions look like, but I would just say open communication is one of the biggest key to forming a junior board. actually Yeah, I think you know another thing that I experienced was that we you know, we had a junior board. They were given an allocation of $10,000 each to make grants and they weren't doing it. You know, they weren't using that money and the the board said they just must not be interested. They're just not engaged. And I challenged that and ended up calling the next gen. I called the junior board and talked with him a little bit about you know, you know, you have this allocation can help you in making those grants and what I learned from talking with all of them is that they were actually very interested. But they were they were they were stagnant because they didn't know what to do. They didn't know how to start. They didn't know how to vet an organization. They were so concerned with doing it correctly with making an impactful Grant. They would rather not make any grants at all then make a grant that didn't that wasn't used properly or went to an organization where it wasn't gonna make a real difference. So what they really just needed was some support they needed some some help to understand the best practices of grant me and today I'm happy to report but every single one of them uses up all $10,000 that are allocated to Okay. Terrific. Well speaking of boards. This was brought up earlier having independent board members being helpful in certain cases, but what do you do if what do we do if we disagree on our philanthropic goals and can't find any Common Ground what's you know, this sounds like a family that has some other Dynamics issues as well are they? So this is a family who is having some Just given the way it was asked. Yes. So in the example I gave about um, you know, kind of the generation passing that board does have independent board members and I will say that in that conversation those in the board members did a really great job of being like hey, you know, this this conversation seems to be going this Direction Let's recall. You know this time and let's bring it back to this Mission. Let's bring it back to this focus and kind of all the independent board members really did was provide kind of some guardrails a little bit. So I think it also is important to find the right independent board members who really have an understanding have the right personality for it and are really there as a way to kind of provide some guardrail say Hey, you know, this is seemed to turn into a personal conversation, you know, can we kind of let's let's kind of steer it back into talking about the the board and the mission and that kind of stuff. So I think is independent board members. It just is mostly kind of putting some helping to bring the conversations back and keeping it away from the person all and just really making it about kind of the focus of the the foundation. Terrific. Okay. We're coming to the top of the hour. I wonder if you have a kind of a key takeaway for our audience. I can speak to that I would just say. Give it a try give philanthropy a try. Um, you know, and if you already have an entity set up and you're already engaged and you know, maybe like the the person who asked that last question it's not going as you anticipated. There are a lot of options and and other routes you can take some are very simple and some become more complex. So try the path at least resistance first and change things up if they're not working. It's your entity. It's your it's your family, you know Legacy to create and so I think the most important thing though is not to give up not to throw in the towel just find different ways to go about it if it's not working but there's the benefits far out way. I think any negative issues that might arise so my key takeaways to to give it a try don't feel you have to go It Alone find some help find find someone out there find an Visor or another family that also has a foundation talk with them about how they do things and continue to learn about the best practices that fit you and your family. Terrific. Oh, thank you very much. Thank you Channing. Thank you Ashley for sharing your time and your expertise today. If you out there would like to explore other opportunities to train your next gen, you know, consider our upcoming family business next gen event. It's our second. Annual Gathering of next genes be held online on a Friday half day easy for next gen to do. So. Please do encourage your next gents, and for those of you who are attending transition spring 2022. I look forward to seeing you next week in Tampa. So in the meantime, I'm going to wish you all a good day, and we will see you at the next webinar. Thank you. Thank you. here
Philanthropy as a Strategic Tool for Family Legacy & Continuity
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