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Adopting a multigenerational approach to your giving

Whether you’ve been giving for years or you’re just starting to give, you may be thinking about how best to get your family involved. Many donors want to create a culture of giving in their family and ensure that there is a tradition of generosity passed on through the generations.

Perhaps your children are already active donors themselves, or perhaps they’re unfamiliar with the charity sector. Either way, there are some key questions to ask and things to bear in mind.

Giving collectively or independently?

How do you want to go about giving as a family? Depending on how aligned you are, you may benefit from either collective decision making, or a more independent approach. It may be worth doing a goal setting exercise together to work through your aims and ambitions. Our expert advisers can provide support on how to approach this and guide you through the key questions.

If you’re very aligned in your goals it may be a good idea to make decisions about when and where to grant collaboratively. If your family are new to giving and are still forming their ideas, working together like this can be a good way to get them involved without feeling out of their depth making big decisions, which can be overwhelming at first.

On the other hand, you may find that you differ on important factors, such as your ideas about impact, or the region you prefer to focus on. Giving each person a pot of money with which to make their own grants may be the best option. This avoids a situation where too much compromise makes the outcome dissatisfying to everyone involved.

We’ve found that this arrangement can provide excellent opportunities for learning, both about each other and new charitable causes and initiatives, as family members share the projects they have chosen to support with each other. Having autonomy over small amounts of money can also be a good way to make giving more exciting to children or teenagers, motivating them to think in more depth about different causes and charities.

What can you learn from each other?

Trends change over time in the charitable sector and best practice is constantly being updated. This means that there’s probably something valuable your family’s generations can learn from each other. Coming together to share ideas and perspectives can be an excellent opportunity to give better and expand your understanding of how to make a difference.

Next generation givers (broadly defined as those 18-40) are driving major change in the sector. There’s been a shift towards focusing more on results and impact, with younger donors often less willing to give based on personal connections than previous generations. There’s also a shift towards viewing charitable giving with a social justice lens and focusing on more progressive causes, although some evidence suggests that the generations still have a lot in common when it comes to the issues which matter to them.

Perhaps most dramatically though, there’s been an expansion of the very concept of philanthropy, with next generation donors much more likely to be involved in impact investing and looking beyond grantmaking to think about things like activism and being responsible consumers

A broader, more results-based approach to charity has clear benefits. Focusing on outcomes allows organisations to maximise the cost effectiveness of their giving, creating more of the change they want to see in the world. Impact investing is part of a broader approach to doing good which considers positive social impact at every point in the lifecycle of capital. Notably, this doesn’t necessarily come at the expense of profit and can be both financially and ethically rewarding. For example, one study found that over the last 10 years, green energy investments have been several times more profitable than those in fossil fuels.

Blending your approaches

These dramatic shifts in the nature of charitable giving between generations mean that there’s much we can teach each other, but it’s not all one way with the next generation holding all the answers. While it's being somewhat overlooked by next generation givers, in favour of impact investing and market-based solutions, traditional charitable giving is still immensely valuable.

There are gaps that markets can’t and arguably shouldn’t fill. One example of this is very early-stage research, which is often seen as too risky for profit seeking investors and has been funded by philanthropists to great effect. For instance, the Rockefeller Foundation research credited with leading to the Green Revolution is estimated to have saved a billion lives. Similarly, some elements of the charitable sector simply don’t provide potential for financial returns and perhaps shouldn’t be optimised for profit, such as community groups or support services.

Bringing together knowledge of these more traditional elements of the sector with the newer perspectives of next generation givers means that multigenerational family giving has the potential to be truly transformative.

One well-known example of this is the Rockefellers. With new generations, their giving has evolved to include a broader range of issues and shifted towards evidence-based philanthropy and, most recently, venture philanthropy.

What might a multigenerational giving strategy look like?

A philanthropy strategy that brings together your family’s strengths might involve an updated investment strategy that shifts towards increasingly green and socially conscious investments, or new forays into areas such as social justice, alongside your existing giving.

Your family may also be interested in initiatives that blend traditional charity with newer approaches, such as CAF Venturesome’s social investments. This includes initiatives such as supporting social enterprises with a combination of grants and 0% loans to provide wrap-around support. It’s an innovative way to combine social investment and grantmaking, allowing you to reuse your capital again and again.

Whatever giving as a family looks like for you, the CAF team is here to help. We support results-driven giving, considering social impact at every stage of the Give, Grow, Grant process, rather than limiting it to the end stage.

If you have questions about the logistics of adding additional people to your Trust, want to learn more about initiatives such as CAF Venturesome or have any other questions, please get in touch.