Role of strategic philanthropy in building multi-generational wealth

Strategic Philanthropy is not just about giving; it’s about giving with intention, purpose, and structure. It’s a tool that can empower families to build and sustain a legacy that transcends generations while creating a profound impact on society.

Many prominent families globally consider Strategic Philanthropy as a significant aspect of responsible wealth stewardship. The Walton family, founders of American multinational Walmart, established one of the world’s largest private foundations, the Walton Family Foundation.

Their strategic philanthropy focuses on education, economic opportunity, and environmental conservation. This foundation has made substantial contributions to charter schools and educational initiatives, enhancing the quality of education for children across the United States. There is also the Bill & Melinda Gates Foundation which is committed to driving impact in global health, development, education, and climate change.

With a strategic approach, it has supported vaccine development, malaria eradication, and agricultural research, saving countless lives and fostering progress in developing countries. Focused on innovation and global problem-solving, the Rockefeller Foundation has a rich history of supporting groundbreaking research and initiatives in areas such as public health, education, and agriculture.

Strategic philanthropy offers important benefits for multigenerational wealth building:

Alignment with Family Values and Mission: It allows families to align their charitable giving with their shared values and mission. This alignment fosters a sense of purpose and unity, extending the family’s legacy beyond financial wealth.

Promotion of Financial Education and Responsibility: Engaging in strategic philanthropy provides an opportunity to educate the next generation about financial responsibility and the importance of giving back. Involving younger family members in philanthropic decision-making imparts practical insights into budgeting, financial planning, and resource allocation.

Fostering Multigenerational Engagement and Cohesion: Strategic philanthropy strengthens family bonds by involving members of different generations in the planning and execution of philanthropic initiatives. This inclusive approach provides an opportunity for intergenerational learning, the sharing of unique perspectives, and collaborative efforts toward creating positive change.

Enhancement ofreputation and Influence: Strategic philanthropy can elevate a family’s reputation and social influence by demonstrating their commitment to social responsibility and positive change. This enhanced standing can lead to various advantages, including increased business opportunities, access to influential networks, and the ability to influence policies and social discourse.

Offers Tax Benefits and Wealth Preservation: Strategic philanthropy can offer significant tax benefits and wealth preservation opportunities. By structuring charitable giving strategically, families can maximize tax deductions, minimize estate tax liabilities, and secure their assets for the benefit of future generations.

Brings Personal Fulfillment and Happiness: Beyond the financial and reputational benefits, strategic philanthropy can bring personal fulfilment and happiness to individuals and families. By making a positive impact on the lives of others, family members experience a sense of purpose, meaning, and gratitude.
Character development through strategic philanthropy:
Strategic philanthropy goes beyond traditional wealth management. It equips the next generation with essential life skills and values that contribute to their personal growth and character development. Some of the crucial skills and values instilled by strategic philanthropy include:

Responsibility: Involving the younger generation in philanthropic decision-making and execution nurtures a sense of responsibility. They learn that their actions have a tangible impact on the lives of others, emphasizing the importance of making responsible choices.
Grit: The challenges and complexities of strategic philanthropy teach perseverance and resilience. The next generation learns to face obstacles head-on and stay committed to their goals, traits that will serve them well in various aspects of life.
Ownership: Strategic Philanthropy encourages ownership of the family’s legacy and values. Young family members take pride in continuing the traditions and principles set by their predecessors, fostering a sense of identity and belonging.
Follow-Through: Completing philanthropic projects and seeing the tangible results of their efforts reinforces the value of follow-through. This skill is invaluable in personal and professional life, emphasizing the importance of honouring commitments.

How to implement a strategic philanthropy plan:
Clarify Your Values and Goals: Begin by engaging in meaningful discussions to clarify your family’s core values and mission. Identify the causes and issues that resonate most deeply with your family.

Set Clear Goals and Metrics: Once your values and mission are established, set clear, measurable goals that align with your long-term objectives. These goals provide a roadmap for impactful giving.

Research and Due Diligence: Before making charitable contributions, conduct thorough research and due diligence on potential beneficiaries. Where possible, enlist the help of professionals to evaluate the landscape to identify credible structures and execution methods. This ensures that your donations are used effectively and responsibly.

Forge Partnerships and Collaborations: Strategic philanthropy often involves partnering with other philanthropists, companies, and nonprofit organizations. Collaboration allows families to leverage resources and expertise for greater impact.

-Prioritize sustainability: Emphasize the importance of investing in long-term solutions that create lasting change. Prioritize initiatives that build capacity and empower local communities.
-Continually evaluate and adapt: Regularly evaluate the outcomes and impact of philanthropic investments, making necessary adjustments. This practice ensures that your giving remains relevant and impactful over time.
-Engage the next generation: Strategic philanthropy is a great way to involve younger family members in the family’s wealth journey. By including them in philanthropic decision-making, you empower them with a sense of ownership, responsibility, and connection to your family’s values and mission.
Strategic philanthropy is a powerful tool that enables established patriarchs and matriarchs to create a legacy of multigenerational wealth while leaving a profound impact on society. It ensures that the desire for good is appropriately channelled in a manner that can deliver the best possible results.
Ojenike is a Family Wealth Advisor at the Meristem Family Office.