It’s all going to charity
Andrew Carnegie gave most of his steel fortune to philanthropic causes. Bill Gates is giving away most of his Microsoft fortune to the Gates Foundation and other philanthropic causes, leaving his children a small fortune to live comfortably. Mark Zuckerberg has vowed to donate 99% of his Facebook shares to charity. It became very popular among families of wealth to give everything to charity. It is a noble idea, sharing their wealth with those who have less.
However, this is not an excuse to avoid succession planning. In fact, if a family wants to give everything to charity, they need better succession planning and successor development. Why? Money has an emotional representation, not just a financial implication. When parents announce that they are giving their fortune to charity, children may think “Why because you don’t believe I can handle it wisely?” or “How can you trust strangers to handle all our money and not me, your child?”
From the children’s perspective, it makes sense. One aspect of money is a symbol of affection. We buy expensive gifts for people we care more about. We spend money for people we love and don’t think it is a waste. With people for whom we have no affection, we calculate the value of every penny we spend.
If you want to give your wealth to philanthropy, start the conversation early with your children about what money means to you in life and how you express your money. If you shower your children with creature comforts while telling them it’s all going to charity, you are telling them indirectly “I care for other people more than you.”
Start early and live a life that exemplifies strong values of good deeds, not just by giving donations but actually getting involved. Do it with your children and explain to them why you do what you do. Get them involved in your decision for philanthropy and start a dialogue. Let them get to know people you appointed to manage your philanthropic activities and explain why you chose them.
Giving all of your wealth to charity requires a lot of planning and preparation. Do it if you believe it is the right thing to do, not as an excuse to avoid doing succession planning.