Wealth in Families: Asking the Essential Questions – March 7, 2006

Published on: by Gene Takagi Category:EVENTS, FUNDRAISING & CHARITABLE GIVING

I attended the Peninsula Community Foundation’s program entitled "Wealth in Families:  Asking the Essential Questions" on March 7, 2006.  The keynote speaker was Charles Collier, Senior Philanthropic Advisor at Harvard University and a nationally recognized expert in family philanthropy.  Although his program was directed at advisors to wealthy families, it had great relevance to charities that are soliciting major donors, particularly through planned giving programs.  Here are some of the highlights of Mr. Collier’s keynote address (mixed with some information from his book, Wealth in Families):

THE ESSENTIAL QUESTIONS:

  • What is really important to your family?
  • What are the true assets of your family?
  • What should you do to guide and support the life journey of each family member over time?
  • How wealthy do you want your children to be?
  • Do you feel you have a responsibility to society?

THE MEANING OF WEALTH:

  • Human capital
    • Who individual family members are
    • What they are called to do
  • Intellectual capital
    • How family members learn, communicate and make joint decisions (and resolve conflicts)
  • Social capital
    • How family members engage with society at large
  • Financial capital
    • Property of the family

A broader definition of family wealth incorporating the four components above provides a new approach to thinking about what families should do with their financial capital.  Collier states:

"For example, philanthropy can be a key component of a family’s social capital and can provide multiple benefits to family members as society.  Family philanthropy is a powerful teaching tool that provides a safe environment in which your children can learn about money management and working as part of a team.  Moreover, most families of wealth want to leave a legacy of values in addition to their financial wealth.  Philanthropy can be an important vehicle for articulating core values, providing a meaningful family legacy, and giving your children (and grandchildren) a valuable experience in competence.  A program of strategic philanthropy for family members enhances their human, intellectual, and social capital."

Collier’s presentation featured a case study on a family feud that likely resulted from such factors as (i) the parents’ failure to communicate with their kids about the money, and (ii) the parents’ attempt to retain control over the kids.  He emphasized that there is a huge underinvestment in the education of the children of wealthy families with respect to the money.  Collier noted this key question to ask clients:  "How can you encourage your kids to lead their own lives while staying emotionally connected to the family?"

In closing, Collier asked more questions:

  • What is the money for?
  • How do you grow great owners?  What are the core competencies?
  • What is the purpose and meaning of your money?
  • What would it do for the life course of your kids if you give them a say in their financial inheritance?
  • (To the kids)  How much money do you need from us to lead a worthwhile life?