Center for Family Legacy The evolution of philanthropy in wealth transfer

Philanthropy today is emerging as a mechanism to unite families, help sustain wealth across generations, and extend a multigenerational legacy of positive community impact.

Truist Wealth’s Center for Family Legacy underscores these evolving trends in its research study, Bridging beliefs and behaviors: Key insights into effective wealth transfer across generations. Findings from this study reveal that families of wealth increasingly recognize philanthropy’s multifaceted role—not just as a tool for societal contribution but as a vital instrument for fostering family continuity.

Shared philanthropy allows families to unite around causes aligning with their shared values while expressing individual preferences. Open dialogue makes this balance possible. “The conversation about values and preferences creates deeper understanding and appreciation within the family, fostering shared engagement,” explains Silke Shilling, senior governance associate at Truist Wealth Center for Family Legacy.

Structured approaches help ensure that shared philanthropy is successful. Key elements include:

• Shared mission statements: Defining a broad mission based on the family’s shared values enables flexibility while supporting family unity.
• Junior boards or giving committees: These platforms for younger family members help develop leadership and collaboration skills by collectively deciding on philanthropic initiatives.
• Allocated giving funds: Designated funds allow individual members to support personal causes while aligning with the family’s collective giving strategy.

Center for Family Legacy Managing Director of Governance and Education Daisy Medici explains, “Families who align their values with shared philanthropy create opportunities for meaningful engagement and ongoing education.”

Generational differences in philanthropic priorities are often assumed to cause misalignment. However, shared values like education or community support can bridge these divides. David Herritt, head of the Center for Family Legacy, says, “Education, for instance, can mean different things to different generations—such as supporting schools locally for one generation and international outreach for another. But it’s something both generations can come together to support.”

The Center for Family Legacy’s research emphasizes that shared philanthropy aligns family members around common values and cultivates essential skills such as leadership and decision-making, particularly among younger generations.

Strategic philanthropy requires moving beyond ad hoc donations to develop structured plans that align with a family’s values and objectives. By doing so, families ensure that their contributions are purposeful and sustainable, creating a lasting legacy.

“Strategic philanthropy is about understanding what success looks like and creating criteria to measure impact,” says Herritt. Families who approach philanthropy with clear objectives can track the effectiveness of their initiatives rather than working with just their emotional or “gut” response to the outcomes.

As younger generations take on leadership roles, strategic philanthropy in a family must also adapt. Shilling notes, “Flexibility within the mission statement ensures future generations remain passionate and involved.”

Strategic philanthropy also involves the decisions made about funds before they are donated. Investments, the Center for Family Legacy recommends, could allow an even greater impact if they align with family values. Managing Director of Governance Carolann Grieve says this may take the form of excluding investments in mutual funds, equities, or other vehicles that conflict with the family’s principles. For example, a family working to support a mission of philanthropy around cancer research might want to scan the portfolio and exclude tobacco and other carcinogens. Conversely, a family whose primary goal is around climate change may want to specifically include investments in companies that provide green energy.

This commitment reinforces the family’s identity and enhances the impact of their giving. Teaching younger generations about ethical investing also encourages accountability and a deeper connection to their philanthropic goals.

Truist Wealth’s research underscores that strategic philanthropy aligns long-term impact with structured family values and objectives. For instance, philanthropic practices such as family foundations saw engagement increase significantly post-2015, perhaps driven by a broader recognition of strategic philanthropy’s role in addressing global challenges like climate change and poverty. Center for Family Legacy research revealed that 78% of surveyed wealthy families believe in the significance of a structured philanthropic mission to sustain generational involvement, reflecting a widespread commitment to long-term societal impact.

Not all wealthy families naturally prioritize philanthropy. Among those who do, some family members may want to engage but lack a clear pathway. Providing opportunities for these individuals often enriches the collective family experience. Herritt highlights a critical starting point: “Support for philanthropy begins with understanding what it means. It’s broader than just financial contributions; it’s about making meaningful decisions that positively impact the community and align with family values.”

Creating a family culture where philanthropy is celebrated and practiced can include written declarations. “We educate our families on the benefits of a philanthropic mission statement, and then guide them through the process of creating one that stems from their values and clarifies their shared goals,” says Medici.

A mission statement serves as a road map, ensuring family members understand the purpose behind their philanthropy and enabling collective and individual contributions. For families new to structured giving, developing this statement provides clarity and fosters alignment around shared objectives. It helps families say no or yes more confidently to giving opportunities.

Barriers to philanthropic engagement often stem from misperceptions or structural limitations:

• Perceived adequacy through business contributions: Families operating businesses may feel their corporate social responsibility efforts suffice, overlooking broader individual or family-driven philanthropy.
• Financial uncertainty: Younger generations may hesitate due to unclear expectations about future wealth or family financial stability.
• Time constraints and lack of framework: Many families desire to give back but struggle to prioritize or structure their efforts without guidance.

According to the research, families who prioritize philanthropy recognize the role it plays in establishing shared values and promoting financial literacy among younger generations. Furthermore, families emphasize aligning philanthropic goals with family objectives. This focus may lead to contributions being more meaningful and foster continuity across generations.

Shilling underscores this evolution: “Expanding philanthropy to include community impact resonates with the next generation.” This broader perspective bridges generational divides, allowing younger family members to express their values while building a legacy that aligns with the family’s mission.

Philanthropy serves as a powerful catalyst for wealthy families to contribute meaningfully to society and strengthen family unity and continuity across generations. By embracing the best practices of supported, shared, and strategic approaches to giving, families can create lasting legacies that reflect their collective values and adapt to evolving priorities. The experience of Truist Wealth’s Center for Family Legacy underscores that intentional and inclusive philanthropic practices not only address societal needs but also foster essential skills like leadership and collaboration among younger family members. This holistic approach helps ensures that the family's legacy of purpose and positive impact endures, reinforcing the importance of philanthropy in successful intergenerational wealth transfer.