Involving the Family in Impact Investing
By: University Impact
Tags: Philanthropy, Donor Advised Funds, Financial Advisor, Impact Investing, Family

The year 2020 has been one plagued by economic and social uncertainty. Individuals facing the threats of the novel coronavirus and other calamities of our world have caused many to sit back and reflect on what is most important in life. Those willing and able to help in their communities have felt a heightened responsibility to solve pressing issues; especially when the well-being of their children and grandchildren will be at risk if they leave today’s problems for a future world. Charitable efforts have increased greatly this year, and studies show they are on track to increase by 5 percent this year, with 67 percent of total donations coming from individuals.

As the desire to contribute to society has grown, people have turned to solving social issues through impact investing. Impact investing is found at the crossroads of philanthropy and traditional investing; individuals and institutions finance for-profit companies solving today’s pressing issues.

Engaging the whole family in impact investing is a great way to serve in the community and strengthen family bonds. Before increasing your giving, however, consider three tips to ensure your impact goals are deliberate and your family is engaged.

Create a family-specific impact strategy

Speak with all family members and build an impact investment plan specific to solving the issues your family cares about. Hosting a family meeting is a great way to collaborate on the ideas of participants and specific impact opportunities available.

United Nations Sustainable Development Goals

Choose a specific impact area to target; doing so will be vital to the success of family members’ impact efforts and retaining the interest of all those involved. The 17 sustainable development goals created by the UN provide options such as climate change, poverty, education, and gender equality, to name a few.

To successfully create a family impact strategy, we recommend asking these four questions:

What problems are we interested in solving?

Where (geographically) do we want to solve these problems?

What connections and knowledge do we have in our areas of interest?

Where can our money best be used?

Create a donor-advised fund

reate a donor-advised fund (DAF) and involve all family members in its use. They are a great way to combine the efforts of family members of all generations and focus on specific impact goals. A DAF can play a significant role in allowing older generations to delegate fund responsibilities to kids and grandkids so they can “exercise their philanthropic muscles.”

On top of allowing donors to receive an immediate tax deduction and to the hold money in the fund for future giving, a DAF can be a central hub for all charitable and impact efforts of the family. The deployment of its dollars can be made by multiple advisors and receipts can be easily traced back to the fund.

A DAF can play a significant role in allowing older generations to delegate fund responsibilities to kids and grandkids so they can “exercise their philanthropic muscles.”

Make impact investing a multi-generational effort

With the increase in estate tax deductions, wealthy families have gained more financial freedom and allocated more resources to the preservation of their charitable legacy. Involving multiple generations in an impact investment strategy is crucial to this process and a great way to ensure the spirit of charitable giving lives on. Requiring the stewardship of younger generations over certain duties of the fund helps them to exercise their skills as impact investors and trains them to be tomorrow’s leaders.

Share your knowledge and experience with your family about impact investing. It will have a lasting impact on everyone involved and help commit them to a life of selfless giving.

Contact us at contact@uitripledaf.org and visit https://uitripledaf.org to learn more about University Impact and our DAF sponsorship.