The following case studies outline some of the specific work we do for clients. Each case, just like each family, is unique, but there are often themes and challenges that exist for clients, and these cases explore some of the common reasons that bring clients to us.
Creating A Strategic Giving Plan
The Challenge
The MacRoberts loved the idea of supporting charitable causes, but as their assets grew, so too did the scope and complexity of their giving. Over time it began to feel out of control and out of alignment. Each year felt more complicated and uncomfortable and drifted away from their goals and aspirations for their giving.
The MacRoberts gave to the schools they attended and to other organizations because they had friends on the Board and appreciated the mission of the organization. While they felt deeply connected to two of these organizations, but the majority of their giving was reactive instead of proactive – they gave when asked rather than giving based on a specific plan. They also realized that they were writing checks to fulfill pledges when, in some cases, it would have been smarter to use appreciated stock.
And instead of looking forward to the process of making decisions, they began to dread it; each year felt more complicated and uncomfortable. The MacRoberts wanted to feel more connected to their giving by supporting issues and organizations that they had deep interests in. They also wanted to involve their children in their giving but weren’t sure the best way to do that.
As they thought about recent gifts, they wondered how much of a difference they were making. They found it challenging to decline requests: they could afford to give, which made it feel uncomfortable to say no.
They wanted to become more deliberate, strategic and selective.
The Solution
Forbes Legacy Advisors worked with the MacRoberts to create a Giving Plan. In developing the Plan, they became clear about the issues and causes they cared about and how to focus their donations. They developed an annual budget, established a donor advised fund and a plan to fund it using appreciated stock. The Plan also included a smaller portion of their annual giving to “reactive giving” so they could continue to support the efforts of family and friends raising money for causes they wanted to address.
In addition to establishing a budget and tax efficient way to fund their giving, the Giving Plan laid out a timeline and process for identifying charities that fit their interest areas, determining which groups they wished to support, and reviewing previous gifts to assess their impact. The Giving Plan and budget gave them a clear rationale for declining support that wasn’t a good fit.
As important to the MacRoberts, we created a budget for the children and helped each of them clarify issues they wanted to address. Our work included ongoing discussions with each child throughout the first year as they learned more about their chosen issue. One child supported a children’s theater in Boston while the other became involved in providing clean water to rural families in Kenya.
The MacRoberts have become more engaged and connected to their giving. Having a plan has freed them up to focus their efforts instead of feeling like they needed to be knowledgeable about all the causes they supported. The Plan also gave them a clear way to explain why they couldn’t support organizations that fell outside of their areas to impact.
Outcome
With a plan in place, the MacRoberts family has become energized, more confident and less stressed in their giving, with the following results:
1. Spending less time making decisions about organizations to support
2. Increasing their giving 20% in year 2
3. Establishing separate donor advised funds for each of their children in year 2
Shared Family Property
Situation
The Smithson family had enjoyed their farm in the White Mountains of New Hampshire for three generations. Four siblings in the second generation (G2) owned the property, having inherited the ownership from their parents. In their late 70’s, G2 wanted to transition the management and financial responsibilities to the twelve members of G3. The Farm has been a gathering place for holidays, birthdays and family reunions throughout the year. Their connection to the land and the memories created there run deep across all generations. Many of the kids swam for the first time in the spring-fed pond on the property, and they formed life-long bonds with their cousins on work weekends as they transitioned from one season to the next, hauling and stacking wood for the stoves and clearing the paths in the woods. They marked their arrival to adulthood by the first time they were trusted to host gatherings of their own friends.
The twelve cousins in G3 have their own families, many of whom are scattered across the country, making it challenging for many of them to visit more than a weekend or two each year.
The wealth generated in G1 was spread evenly among all the grandchildren in G3, giving them each a financial head start but they still need to work to support their families. Some in G3 worked in jobs that gave them financial flexibility while others have gravitated to jobs that require more simple lifestyles. The current owners recognized this financial disparity had potential to create tension as they considered the challenge of ownership among twelve cousins. The question of ownership was further complicated by an impending divorce in G3.
The second generation consulted some friends and an estate planning attorney who suggested that it might be a good time to sell the property. “There are more reasons to sell it than there are to keep it,” they’d been told.
The idea of selling the land felt gut-wrenching for the family. The Farm was part of their identity as a family and as individuals, with many of their best memories taking place on the Farm. It began to take on even more meaning to them as they watched their own children following in the footsteps they took themselves decades earlier.
The second generation of the Smithsons expressed a strong desire to keep the property and find a way to transfer ownership to their children, but they wanted to protect the property from being broken up because of financial disparity, divorce or proximity.
Solution
There was universal interest among the third generation to keep the farm. They wanted to find a way to create a structure that was fair and enabled them to minimize the financial burden of participation.
The family also recognized the importance of inclusion in this process and that having someone who is unbiased about the outcome would be the best way to create a solution that worked for everyone. Outside advice would also be critical to ensure they looked at options that worked for other families.
With strategic facilitation and oversight, the second and third generations of the Smithsons agreed to the following plan:
- Establish a membership agreement that includes:
- Governance practices that outline family council responsibilities and processes to follow for making decisions around property management, scheduling and usage
- Family Counsel – with representatives from each branch of the family
- Modest rental fee for usage
- Time allocation for each member
- Usage guidelines
- Create a Conservation Easement to reduce taxes
- Create a limited liability corporation (LLC) and transfer ownership of the property into the LLC
- Establish and fund a trust to support future property taxes and property maintenance
- Create schedule for four work weekends throughout the year to encourage ongoing participation and active management that also reinforce family bonds and provide opportunities to recognize and celebrate family traditions
Outcome
This new structure for the Farm made the transition from G2 to G3 easy and straightforward. The process included several group meetings to which all family members were invited. Those discussions enabled all family members to provide input and ask questions. Everyone felt the process and the resulting structure was fair. The second generation owners were relieved to be able to transition ownership and all the related responsibilities. And just as important, G2 was thrilled to watch their children and grandchildren build deep ties to the place they cherished while also creating a lifetime of memories together.
- New ownership structure designed to support and sustain the farm for future generations
- Governance that enables rising generation to learn and participate in farm decisions
- Structure that clarifies expectations and guidelines for usage, scheduling, financial obligations and how to resolve conflicts when they arise
- Process that creates tradition of stewardship while also sustaining family relationships
The “Flipped” Foundation
Situation
Mr. Murphy created a Foundation to give impoverished inner city kids an opportunity to spend time in the wilderness. Having grown up in the inner-city himself, with parents who struggled to make ends meet, his life changed dramatically when he was invited on a camping trip with a friend from school. This experience inspired him to give other kids the same opportunities.
Mr. Murphy created and grew his manufacturing company into an industry leader. He wanted his philanthropy to reflect his personal values and hoped to teach his kids about his views by including them in the Foundation’s giving.
Initially his three children (all young professionals living on their own) participated, but over time, their involvement waned. Mr. Murphy wondered why they lost interest. Did his children not understand the importance of giving back? Were they too focused on their own lives to see the need to support those less fortunate? Had their wealth unwittingly insulated his family so much from less fortunate families that they simply didn’t care?
Mr. Murphy was frustrated and felt like he had somehow failed to convey some of his core values to his children. He wanted to involve his family, but he wasn’t sure what could be done.
What he learned was that part of what needed to be adjusted was his own approach. In conversations with his children, we learned that they were quite interested and active in charitable giving. The challenge, as reported by his children, was that their father was so passionate about and focused on the causes that interested him that rather than participating in the process, they all felt the decisions had been made before they ever met. On top of that, when his children expressed a desire to expand the areas of interest to reflect issues and causes they each wanted to address, they felt shut down. Participating in the foundation, for them, felt more like an obligation than an opportunity to do great things together.
Solution
Upon hearing how his children felt about his approach to the Foundation decisions, Mr. Murphy agreed to expand the focus of the foundation’s giving to include an area that each of his children cared about. Rather than just one area of interest, they agreed that each of his children could add one of their own.
The Murphys also began to see opportunities to apply their own skills and interests in ways that could both benefit the Foundation’s impact objectives and allow them each to expand their knowledge and expertise. This approach enabled each family member to engage in ways that they found compelling. These changes transformed how the family approached their work with the Foundation.
Not only did his children become actively involved in the decision-making process, they each became experts in the areas they chose to focus. One of the children used her interest in statistics to create sophisticated scorecard that they all used to measure the impact of their gifts over time. Another used his desire to learn more about socially responsible and impact investing as an opportunity to suggest ways to diversify the assets of the Foundation.
By making these changes, the Murphy family became fully engaged in their giving – and also gained highly useful skills that they could incorporate into their professional work. Participating in the Foundation went from feeling like a chore to being a great source of pride and enrichment for everyone.