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It’s that time of year when our mailboxes are full of letters from charities that are doing good work in our communities and around the world. They appeal to our hearts, our consciences and our wallets, with hopes that we care about their cause and still have room for another charitable contribution before the end of the year (or that we need to improve our tax situation).

CC by asenat29

CC by flickr user asenat29

As you read through the deluge of appeals, do any of the following questions resonate with you? Ponder these questions on your own, with your spouse or family, or other giving group:

  1. Do I [we] want to give?
  2. How do I decide which organizations to fund?
  3. How do I know if they will use my funds wisely?
  4. Are there other organizations/people that need funds more but cannot afford to send out a glossy year-end appeal letter? If so, how do I find them?
  5. What is motivating my giving?

As I sift through the letters, I find myself thankful that my husband and I put together a “generosity road map” back in January. This annual plan enables us to direct our giving funds to the causes and people we care about all year, therefore alleviating any guilt or panic in December when the appeals start arriving and our financial picture/tax situation comes into clearer view.

However, having a road map doesn’t make us immune to the questions above, so here are some of my thoughts that may be a guide as you consider the questions for yourself.

If you’re questioning whether to give or not, consider the following:
  1. Giving is good for your health—a Syracuse University study showed that giving improved people’s health and well-being as people felt less stressed and more able to handle their own financial and family issues. I know I could use more of that this time of year.
  2. Giving brings joy—as we GIVE to charities, we GET the joy of meeting the needs of others.
  3. Giving teaches our heirs the value of caring for others in the world—don’t we all want our kids to grow up as people who care about others in the world and look for opportunities to meet the needs of those less fortunate?
  4. Giving allows us to make a difference. Your $25 donation to the local food bank will feed five families this week who have fallen on hard times. Those families would certainly tell you that your giving made a difference in their lives.
If you’re questioning where to give your funds, ask yourself the following:
  1. What do you feel called or led to give to?
  2. What causes/issues are you passionate about?
  3. Do you have a specific geographic area that you want to give in?
  4. Do I have other resources to give that would also be beneficial to organizations I care about (e.g., my time or expertise)?
If you’re questioning if a charity will use your funds wisely, try this approach:

Consider thinking of your giving like your investments. Evaluate the performance of the organization (just like you would a company you’re thinking of investing in), see if they’re actually doing what their mission says, and check to make sure they’re using their funds in responsible ways.

When we give, we need to think of it not as giving our money AWAY or just “doing charity”, but rather as making an INVESTMENT into the change we want to see happen in the world.

If you’re wondering whether there are other organizations that better suit the needs you want to give to, but you don’t know who they are, try this:

Consider hiring a philanthropic advisor (just as you would hire a financial or tax advisor) to help you find those organizations. This will enable you to have confidence that you’re giving in the most strategic way to move the needle on the things you care most about.

If you’re confused about your motivation for giving, consider the following wisdom:

“Where your treasure is, there your heart will be also.”

Put your money where you want your heart to follow, and then sit back and enjoy the pleasure of meeting a need, thinking of others before yourself, and leaving a legacy of generosity.

If you’d like help navigating this season or if you’d like to develop a generosity road map for yourself or your family that will help you avoid future year-end giving pressure cookers, please feel free to give me a call at 360.451.0709 or email me.

 
CC by flickr user peddhapati

CC by flickr user peddhapati

As I continue to have the privilege of walking alongside families in their journeys of generosity, I find myself asking this question: why do I think “strategic philanthropy” is so important?

Is it because I like to be intentional about things in life and so I want to do my giving that way too?

Is it because I think giving with a vision or passion is better than giving just because it’s good for the cause and for me?

Is it because I believe we only make a difference if we give strategically?

All of these possibilities are partially true, but a deeper analysis of the costs and benefits of strategic philanthropy are in order. To understand what I mean, we’ll pose strategic philanthropy against what I call “random charity” and see how things shake out.

CC by embemama

CC by flickr user embemama

1. Definition

Strategic Philanthropy
Deciding/knowing what you’re passionate about and investing in organizations that are doing good work in those areas.

Random Charity
Giving to anything that passes by, whether or not you care about the cause or know if the organization is effective.

2. Example

Strategic Philanthropy
Giving $5,000 a year to three organizations that fight breast cancer because your mother fought that battle and lost, and you don’t want your daughter’s generation to face death as the only option if they get breast cancer.

Random Charity
Sending $10 to every appeal you get in the mail – from the Salvation Army to the World Wildlife Fund to the local symphony.

3. Impact on the cause

Strategic Philanthropy
A cause you care about gets furthered because you invested more heavily into it vs. spreading your funds around, and you’re more likely to see a return on your charitable investment.

Random Charity
Many causes get a nice little donation (which might help them take another, more serious donor out to coffee), and you’ll probably never know what your funds were used for.

4. Impact on you

Strategic Philanthropy
You get more joy because you know what your funds are being used for, and have invested in something that makes your heart beat.

Random Charity
You get some joy knowing that you got to support a lot of organizations, even if it was just a little bit.

5. Impact on your giving

Strategic Philanthropy
When we have issues we care about and want to make a difference in, we often give more because we are more deeply engaged/interested.

Random Charity
When we don’t have specific causes we care about or support, we often give less because we know they won’t really miss our $10 anyway.

6. Impact on the charitable sector

Strategic Philanthropy
If all givers were strategic, the charitable sector would undergo a sorting out, and the organizations doing the best work would likely rise to the top and keep making a difference because donors are investing in good work.

Random Charity
If all givers gave randomly, any organization that put together a pretty mailer would get funds, whether they do good work or not.

7. Impact on the world

Strategic Philanthropy
If breast cancer research pays off because you and a bunch of other folks invested strategically, your daughter (and all of the young women in world who come after her) may know how to avoid getting it or if she does, she won’t have to fear dying like her grandma did.

Random Charity
If the art museum gets $10 and the boys & girls club gets $10, and the xyz charity gets $10, the world might move a bit closer to bettering people’s lives who are served by those organizations.

As you can see, my bias is toward strategic philanthropy, but both paths can produce beautiful generosity that changes the world in some way.

One last note: there is the possibility of being too strategic, which can result in not being able to give to a more immediate need because it falls outside your focus areas (i.e., a natural disaster in a part of the world that you don’t focus on). However, that can be easily solved with some great tools that allow you to move the needle on what you care about all the while maintaining flexibility to give as needs move your heart when they arise. (We’ll have more on those tools in a later post—keep following!)

If these thoughts resonate with you and you’d like to get more strategic about your personal or corporate giving, I’d love to hear from you. Drop me a note at heather@marigoldassociates.com.

 

CC photo courtesy of Steven Depolo

Earlier we discussed the value of using deliberate training strategies such as allowances and budget management to teach children financial skills. In this segment we’re going to tackle the problem of how to form our children’s attitudes toward money and work. These are rarely shaped simply by education. They are rooted in the basic practices and habits of family life.

Shirtsleeves to shirtsleeves in three generations?

You may have heard the phrase “shirtsleeves to shirtsleeves in three generations.” It refers to the fact that often a person’s attitudes toward money and work can be traced to where they are in the family wealth cycle. Those in the first generation of affluence learned how to earn and manage money because they had to. There were no family funds to buy them everything that they needed, wanted, or thought they wanted. They had to work to pay for any extras and even in some cases, the necessities, like clothes. If they wanted a college education, they had to take out loans and work part time. By the third generation, the work ethic has often declined to the point where the accumulated wealth of the family is depleted by a generation who has learned to be consumers rather than creators of wealth.  But it doesn’t have to play out this way.

We interviewed a member of a fourth-generation family of wealth who illustrated this pattern clearly. His side of the family had continued to live productive lives. Their wealth had increased in every generation. Another branch of the family, the “country-club cousins,” had burned through their inheritance. Their kids would be back to shirt-sleeves. The difference? He pointed out the window to an 8-year old neighbor kid, mowing the lawn across the street. “See that kid? His family is worth millions. But they live modestly, and expect their kids to work as soon and as hard as they are able. See that other kid next door? He’s 16 and has never held a job. His family doesn’t have the wealth of the other, but probably never will.”

In our work with entrepreneurs and families, we have heard variations on this story over and over again. The families whose children grow up to be hard-working productive contributors are expected to work and be responsible, just like everyone else. They live comfortably but modestly. They also recognize that their wealth is a responsibility, not a privilege. It is to be used for good, not exclusively for pleasure.

Five Things You Can Do to Teach Your Children to Handle Wealth Wisely

 

1. Let them learn the joy of working hard and the reward that follows.

It may be tempting to think that schoolwork is enough to accomplish this, but schoolwork has sadly become more about performance achievement. In contrast, work contributes to the well-being of others and is a piece of a larger enterprise.

2. Never use money as a reward for achievement such as grades.

Such practices teach kids that money is the only reward that matters, and they distract them from the intrinsic pleasure of doing well.

3. Live modestly.

This is often very difficult for those who want to enjoy their wealth. One entrepreneur we interviewed came from significant poverty and loved the lavish lifestyle he was now able to afford. The children of his first marriage had blown through every cent he had given them. He didn’t want the same thing to happen to the kids of his second marriage, yet he couldn’t give up the ostentatious lifestyle. Eventually he had nothing left to pass on.

4. Be wise with your inheritance strategy.

Let your kids know from an early age that they will be expected to work and live responsibly. Make a commitment to yourself that you won’t give large sums of money to adults who have not demonstrated the capacity to use finances wisely.

5. Don’t use your wealth to protect your kids from the harsh realities of life.

Admittedly, this is difficult for any parent, but your children need to be exposed to those in need in order to build their sense of empathy and gratitude. You can build their hope by demonstrating how your wealth can make a difference in the world. Involve them early in giving back through hands-on service in their community. There are many excellent organizations that provide opportunities for young people to develop their skills. Social Venture Partners is one good example.

There is little in life as satisfying as seeing your children flourish in their lives; delighting in their life’s purpose. Whether they end up with modest or robust incomes, they will need to know how to work hard and manage their finances. As parents you can make a significant difference through financial education and creating a family environment that forms their character and values.


We originally wrote this series of blogs on “Raising Children in a World of Wealth” for our friends at Highland Capital. Highland Capital is a wealth management firm that is dedicated to not just managing their client’s money, but also are invested in helping them live fully. Read the first and second blogs.

Tagged with:
 

This is Part 2 of a series of three blogs on Children and Wealth. Read
Part 1 and Part 3.

photo by lwagener

Kids typically don’t pick up basic life skills through osmosis. They have to be taught how to clean a bathroom, check the oil in their car, and manage their money. Often what they have learned about money is “ask and ye shall receive.” As you can probably guess, this bit of wisdom doesn’t lead to financial independence. A good financial education can provide a wonderful foundation for your child as he learns to manage wealth on his own.

The goal of financial education is to form financially responsible adults with positive values about money and useful financial skills. Financial training and education should begin as soon as children are old enough for pocket money, around kindergarten or first grade. There are several good programs on money management for children available in your local bookstore or on Amazon. These offer common-sense approaches and point out typical mistakes that can derail the enterprise. One such example we like to recommend is Making Allowances: A Dollars and Sense Guide to Teaching Kids About Money by Paul Lermitte with Jennifer Merritt.

Keep in mind that the biggest obstacle to the success of financial training is whether busy parents will commit the time and energy to stick with it!

The details of the plan that you decide to use can vary, but generally it should include the following elements:

    1. Develop an allowance system.

    An allowance system is a basic contract between you and your child that guarantees you will give her a set sum of money to cover out-of-pocket needs on a regular schedule. In return, she agrees to responsibly contribute to the family by performing basic chores. Start simply and add funds and complexity as your child demonstrates readiness. The allowance amount should be appropriate for their expenses. By adolescence, kids should be able to manage their clothing budget. By the time they reach college they should be able to handle all of their own living expenses within the budget they are given. This will give them lots of experience having to make difficult choices. Do they save money to travel on spring break or buy new clothes every month?

    2. Let them control their own funds.

    Resist the temptation to “help.” Let them learn from their mistakes. No bailouts! On the other hand, do not use the allowance as reward or punishment for behavior.

    3. Talk with your children about money and your family financial decisions.

    Show them how you decide to make substantial purchases, shop for the best product/prices, ascertain what you can afford. Be sure to provide examples of decisions that include delaying or denying purchases.

    4. Use moderation in your giving.

    It is not good for your children to have the most expensive and latest of everything. No teenager ever needed a $300 pair of shoes!

    5. Give them something to work for and save toward, for example, an iPhone or a car.

    Help them learn the habit of putting away a portion of their income (gift and earned) for a larger project. As they master the early stages they may able be handle to loans and repayments for larger purchases, though saving is a better model.

    6. Help them establish the habit of giving to others.

    Remember, however, it is not theirs to share if you have handed it to them. In order for them to feel the benefit of giving, it needs to come from their own pocket.

Beware the financial education you provide your children will bring up all your own issues about money. You will discover what those are as you implement a money management system for your children. Over-protectiveness will come up as you find yourself tempted to give them a “bailout” when they have overspent. Equating money and self-worth will lead you to want to give your kids expensive gifts to keep up with their schoolmates. Using money as a reward or punishment will demonstrate your own need for control.

We hope you will follow one of the excellent programs that offer detailed instruction in wealth management. While education is essential, it is not enough on its own. The deeper challenge lies in developing character, values, and a commitment to living a life of purpose. Formation of character and values within family practices plays a prominent role in limiting the negative impact of wealth on your children. This is the topic of our next blog in this series.

We originally wrote this series of three blogs on “Raising Children in a World of Wealth” for our friends at Highland Capital. Highland Capital is a wealth management firm that is dedicated to not just managing their client’s money, but also are invested in helping them live fully. Read the first blog here.

photo courtesy of lwagener

When you stop and think about it, financial wealth can have a profound impact on individuals and families. Most importantly for parents, the use of their wealth can have unintended impacts on their children.

This series of three blogs is intended to introduce parents to the potential impact of wealth and ways to mitigate those impacts. The first is on what you need to know.

What You Need to Know

Will your children be positively or negatively affected by the financial wealth you share with them?

Increasingly we are hearing parents express concern about the impact of wealth on their kids. We sometimes behave as though wealth is always a good thing. Most of us spend a lot of time trying to increase our share! But the reality is that there are plenty of reasons to be concerned about the negative impacts that wealth can have on young people who don’t understand what it takes to earn it or the ways that it shapes us and our relationships.

The value of wealth lies in its power to expand opportunities and resources that can strengthen families and provide a good life for children. There are extraordinary young people coming from families of means who are thriving and contributing positively to society. There are also extraordinary young people coming from families of means who are floundering amidst the wealth, overwhelmed by abundance and opportunity.

Affluence increases certain risks. There are far too many examples of young people whose lives have been distorted by wealth. The negative impact of wealth can result in a broad range of life problems, which include:

  • Lifelong financial dependency;
  • Loss of hard won family wealth due to mismanagement or unhealthy lifestyles;
  • Destructive values about money such as equating money with self worth or believing that happiness depends upon having all the latest trends;
  • Over use of credit, ending in unmanageable debt;
  • Family conflict and resentments about money and inheritances;
  • Loss of incentive to live a life of substance and meaning.

Gift that it is, wealth apparently has the power to build or destroy. What makes the difference?

We have been studying multigenerational families of wealth for many years, and here’s what we’ve found. Some of the families we have observed have practices that consistently result in generations of children who become creatively engaged in life. They contribute to their families and communities through productive lives. Other families have struggled. Their children are voracious consumers of wealth who have failed to build their lives around a meaningful purpose. In the worst cases, there have been drug and alcohol problems, eating disorders, family alienation and estrangement.

We observed that the successful families have deliberately prepared their children for wealth. Beginning at a young age, they have provided financial education and training, formed their children to have strong values including a work ethic and integrated certain practices into their family life.

This is the first of a series on how to prepare children for living with wealth. We will tackle each of these topics – education, formation and practice – in the blogs that follow. In the meantime, here is something you and your family can do in preparation:

    Discuss with your spouse what you’ve done to prepare your children for wealth.  What concrete steps have you taken?  Where are you succeeding? Where could you improve?

    Talk with your children about their views about wealth.  What do they think money is for?


We originally wrote this series of blogs on “Raising Children in a World of Wealth” for our friends at Highland Capital. Highland Capital is a wealth management firm that is dedicated to not just managing their client’s money, but also are invested in helping them live fully. Read Part 2 here.

 

CC photo courtesy of ptmoney.com

In our work with highly successful clients, we have seen close-up how wealth has its own set of problems. It is easy to understand how wealth makes life easier, but just how does it make life more difficult? That’s what Center on Wealth and Philanthropy at Boston College set out to study.

While most surveys of wealthy people ask them about which luxury goods they want to purchase, Robert Kenny and his colleagues wanted to ask more personal questions about their hopes, challenges, and life philosophies.

Their top three concerns echo Marigold’s research and observations.  Here is an overview of what they found:

1. Parenting

Being a good parent was the most frequently mentioned aspiration in life for Kenny’s research participants.  Wealth contributes to the ability of parents to provide security, afford good schools, travel and offer other diverse life experiences. But unexpected by the researchers was the sheer volume of responses they received to the question of how wealth got in the way of good parenting. Concerns about how their children would be treated by others were predominant:

    Would they be stereotyped as “trust fund babies?”
    Would they ever know if people loved them or just their money?
    Would they feel they deserved their achievements or simply had collected the advantages of their privileged lifestyle? 
    What would motivate them to lead a meaningful life?

Raising children in a world of wealth complicates the already difficult task of parenting. And with so many high-profile media reports of wealthy kids gone wrong, it is easy to see why they worry.

2. Isolation

As wealth increases so does isolation. We know that isolation is one of the most detrimental influences on our sense of well-being. We need relationships to survive. What is more, we seem to have a basic drive for them. Psychologists, sociologists and theologians find that human beings have a fundamental need for inclusion in group life and for close relationships.

Common sources of social support are often unavailable to the wealthy for a variety of reasons. They have what everyone else wants, which can mean that they have a greater need for security to protect what they have. Often they end up erecting boundaries to protect themselves, their family and their property.

Even their friends and family may treat them differently as a result of their wealth. Some may expect to get a share of their wealth. Others may be intimidated and feel unable to “keep up” with their lifestyle so they cut off or create distance in relationships. When the wealthy family needs support, they often get the message that because of their wealth, no one takes their problems very seriously.

As a result of these difficulties, wealthy people may migrate to neighborhoods and communities of others in a similar social class. In a sense they become part of a (classy!) ghetto. This may change their worldview, values and sense of identity, further isolating them from their family and old friends.

3. Burden of Responsibility

While wealth expands freedom of choice, that same freedom can be overwhelming. Especially for those who take their responsibility seriously, deciding how to best use their abundant resources can be paralyzing. Wealthy people are frequently besieged by numerous competing causes and organizations, all apparently worthy. How can they be sure that their hard-won money will be used appropriately?

Philanthropy requires a unique set of competencies that include deciding when and how much to give, setting priorities among competing needs, assessing quality of potential grantees, setting up appropriate financial and legal vehicles for giving, managing the ongoing relationship with grantees, and tracking outcomes.  All of these skills require expertise. Developing this expertise takes time and education.

Heather Tuininga, our marigold philanthropy expert will be writing some blogs on this topic in the near future. In the meantime, we can see evidence of this from Warren Buffet who famously gave his money to Bill & Melinda Gates because he was confident that they had developed the competency to give money away well. He explained,

“I don’t think I’m as well cut out to be a philanthropist as Bill and Melinda are. The feedback on philanthropy is very slow, and that would bother me. I’d have to be too involved with a lot of people I wouldn’t want to be involved with and have to listen to more opinions than I would enjoy. In philanthropy also, you have to make some big mistakes. I know that. But it would bother me more to make the mistakes myself, rather than having someone else make them whom I trust overall to do a good job. In general, Bill and Melinda will have a better batting average than I would.”

Francis Bacon is given credit for the proverb, “Money is a good servant, but a bad master.” Of course, money is important for life, but it doesn’t solve all problems. At the end of the day, no matter what our wealth, we still have to grapple with our humanity and the needs it presents. Preparing the next generation, connecting with others and being able to contribute to the common good are essential to a good life regardless of our bank balance, but these can pose particular challenges for those with wealth.

In upcoming weeks we will look at these issues more closely and provide supportive resources in each of these areas.

What aspect of wealth do you find most complicating? Please leave your comments and questions below.

“Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”
—2 Corinthians 9:7, NIV

 

photo of cupped hands holding grains of rice

CC photo courtesy of Mr. Kris

Impulse or Strategy?

I confess—for too long, I simply made spur of the moment decisions about whether to write a check for some worthy cause. When a phone call came from an organization that fit with my values, I would decide whether and how much to give based on my checkbook balance that month.  I hated getting those calls and had strategies for avoiding answering my phone in the evenings, even though I LOVED the organizations and the work they were doing.

This could be called “impulse giving” or “random charity.”  Though many of us feel stuck in this rut, there is an alternative:  strategic philanthropy.  When I became more strategic and intentional about how my giving resources were deployed, it certainly increased my cheerfulness as well as the impact of my gifts.

Strategic giving includes:

  • A focus on achievable outcomes from your giving.
  • Setting priorities for the things that matter most to you.
  • Aligning your philanthropic resources with your values.
  • Tracking your impact over time.
  • Setting up donor funds and foundations that work.
  • Giving your kids habits of saving and giving.

Heather TuiningaHeather Tuininga, our newest Marigold Advisor, is a friendly, compassionate expert when it comes to managing giving.   She has an array of helpful tools that can reduce the pressure and increase the joy and freedom inspired by generosity. In the upcoming weeks you can look forward to reading blogs by Heather that will increase your understanding of good ways to give. She enjoys walking with others as they develop their philanthropy skills and has employed these tools in her own life. You can see from her picture that she is indeed cheerful!

In the meantime if you or someone you know could benefit from attention to any of these issues, feel free to contact Heather.

Why does giving make us cheerful?

If you are a regular giver of your time, energy, and financial resources to worthy causes, you may have noticed that it really does make you feel better to give. This benefit comes from shifting our focus off of ourselves and increasing our sensitivity to others. Generosity makes us feel more connected and positive about our ability to do good. It even helps alleviate depression. To better understand the positive impact of generosity not only on the recipient but on the giver, read more at here.