Planning Your Legacy: How to Create a Philanthropic Plan

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Figuring out what to do with the money you’ve made is more challenging than you think

As a family business consultant, I work primarily with entrepreneurs who have created wealth over time—first generation wealth. These are generally people who have spent a lifetime building companies and have focused on what was right in front of them rather than the distant future. Many of them have built up substantial wealth over the years. But when retirement comes, and it’s time to start planning for the future of their money, most first-generation wealth has no clue how to give the money away. And why would they—especially if there is no family blueprint of how to proceed? While manuals and organizations to guide entrepreneurs how to give away their money do exist, first-generation wealth creators are often surprised by the complexity of the process.  Most assume that giving away money is easy, and are surprised by the myriad of decisions they must make to enshrine a legacy they are comfortable with—and proud of.

First generation wealth is, among other things, new. Many business owners started with nothing and are not used to having the amount of money they have accumulated through their work, and never pictured themselves having that much money. This can be an uncomfortable position to be in, strange as that may sound. But when you’ve made so much money that you have more than you want to leave to your children, you need a plan. And it starts with intention.

The Critical Question: Donor Intent

The first (and most important) step in planning what to do with your money is intent. How much do you want to give to your children, and their children? How would you like to make an impact, and on whom? Would you rather give your money to an organization, or create your own foundation and run it like a business? Your intent has a lot to do with your history. Defining your intent can be difficult, and even awkward, especially when family is involved. And it requires a long look in the mirror, and in some ways, a rediscovery of who you are and what your core values are. The main question to ask yourself is, what can you do with your money that will make you feel good about it? The journey can be arduous—especially for those who have spent a lifetime focused on nothing but business and family. But it’s a worthwhile exercise and will yield a clearer picture of your goals for your money. For these reasons, you may want to consider bringing in an independent consultant to help you through the process.

Identify Where and How You Want to Make an Impact

Once you’ve determined your high-level intentions, it’s time to start figuring out the how and where you plan to make an impact. For instance, if your values lead you to focus on helping children, you might decide to spend your money there. But it’s not as easy as writing a check. You’ll have to decide how you want to help children. Do you want to make an impact locally, by supporting programs for underprivileged kids? Or maybe you want to help orphans in another country. Start to narrow down your focus by asking yourselves these questions. Next comes the question of how—will you donate to a specific organization? If so, which one? If you have run a successful business for most of your life, you’ll probably want to ensure that the organization you choose is well-run and will be a good steward of your money. In my experience, many first-generation wealth owners choose to start their own foundations, so that they can have more control over how the organization they are supporting is run. After all, once an entrepreneur, always and entrepreneur. The bottom line is, you must do your homework before you commit.

Start Early—And Take Your Time 

Deciding what to do with the wealth you’ve accumulated is a huge decision, maybe the biggest you’ll face for the rest of your life. Start planning for it early—before you retire—and bring your family into the process early as well. Talk through it, think through it, work through it. Discover your intentions, share them with those close to you, and put them to work by making the world a better place, and creating a legacy you and your family can be proud of.

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