With National Breast Cancer Awareness Month upon us and the holiday season already around the corner, charitable giving is surely top-of-mind.
This time of year provides the perfect opportunity to teach children an important lesson in philanthropy. Instilling the concept of charitable giving at a young age increases the likelihood that it will stick through the years. However, many parents may not be quite sure of the best mechanism for approaching and instilling the philanthropic mindset. It’s one thing to make a direct contribution to a nonprofit, but how do mom and dad ensure that that their children grasp the true value of charitable giving? Here are a few strategies:
Lead by example
It’s no secret that the majority of children grow up to be just like their parents. Children tend to imitate their actions and inherit their core values. Thus, if charitable giving is prominent and visible during childhood, it is safe to assume that a strong foundation for charitable giving will be in place for adulthood.
Parents need to ensure that they are taking proactive steps to incorporate aspects of charitable giving into their children’s lives. This might mean a conversation on the different strategies and vehicles for charitable giving (e.g. direct contribution, capital campaign, etc.), working together to identify a local cause that the family will support this holiday season, or volunteering time and resources.
It's certainly not essential that children become experts on tax incentives and all the nuts and bolts of charitable giving, but demonstrating firsthand that money and assets are for much more than spending can help them begin to comprehend the importance.
Put charitable giving into practice
Discussing and explaining the concept of charitable giving with your children is a great start, but it’s also prudent to let them see and feel their money and assets at work.
Consider working with your children to craft a high-level charitable giving plan. You can even start with Halloween later this month. Have them set aside a portion of their collected candy for donation to a local organization or hospital. Although Halloween candy is not money, it’s still an important asset in the minds of most children. Teaching them that this type of asset can make a difference for someone else is invaluable.
In terms of the holidays, earmark one of your child’s gifts for charity. Write them a check and stipulate that it must be donated to a charity or cause of their choice. This is a great mechanism for actively involving them in charitable giving.
The ability to donate to charity is not a given. It takes time and discipline to get to a point where philanthropy is feasible. Remind your children that a commitment to saving is a critical first-step in any charitable giving plan. If you happen to allot a weekly or monthly allowance, think about having them donate either a portion of those funds or an accrued amount at the end of each month or year. This conveys the important role that both saving and effective money management play in the charitable giving process.
Charitable giving is an incredibly powerful tool for those of all ages. Engraining the practice early on will only help your children deploy their money and assets more effectively as they age and transition to financial independence. iBi
Patricia Cutilletta is an Executive Director and Financial Advisor with the Wealth Management Division of Morgan Stanley in Chicago.