Business owners intuitively understand that an unplanned succession process usually equals trouble. It often happens, but few would say it is a good idea. Even a well-planned succession can be difficult as families seek to navigate differences, adapt to changing priorities, and deepen engagement across generations.

When families want to work together or involve the next generation in the family business, they often turn to philanthropy as a unifying tool – helping to transmit core values, strengthen family identity and legacy, and make a positive impact. However, many families that are engaged in philanthropy fail to think about the challenges of succession within their philanthropic giving entity.

There are many parallels between a successful business succession and a successful philanthropy succession:

• Relationships: Leadership succession processes are also relationship transitions. A process that destroys relationships is a failed transition.
• Core values and vision: The core values and vision of the senior generation must be honored as a guide throughout the transition process while also creating space for the perspectives and goals of the successor generation.
• Strategies and structures: Succession only works when families acknowledge the need for an evolution in both organizational strategy and the governance structures that support strategy.

This article outlines common roadblocks families face, particularly business-owning families, as they use philanthropy to build family legacy and unity. It also offers practical strategies to help families develop a strategic, evolving approach, ensuring that their philanthropy remains relevant and meaningful, not just an easy default.

The power – and pitfalls – of family philanthropy

Many family business owners hope that philanthropy will serve as “the glue” connecting multiple generations and strengthening bonds within the family and business enterprise. This is often true, with, a study by the National Center for Family Philanthropy (NCFP) finding that 70% of participants felt closer to family members as a result of being involved with the family foundation.¹ Another study found that parents’ giving activity directly translated into greater philanthropic participation by their children, with 81% of children with parents who give participating in giving activities in 2022.²

Success of the type referenced above occurs when families are able to connect as peers and engage in open and honest discussions about the future of philanthropy in their family. At times, this can be difficult – especially when there is a disconnect between generational approaches.

Older generations, particularly Baby Boomers, are the ones who typically created the wealth that is being given away, and they are accustomed to being in control. This can lead to different perspectives when it comes to philanthropy: Boomers tend to give to well-established nonprofits and a limited number of specific causes. Meanwhile, millennials are more likely to have a broader focus for their giving and prefer taking a hands-on approach, favoring charities that offer meaningful volunteer opportunities.³

The trick is to acknowledge that the philanthropic process can either drive closeness in a family or create distance, and the way families engage in philanthropy often matters as much as what they support. The most resilient philanthropic families recognize that unity does not require uniformity – instead they build processes that accommodate evolving interests while maintaining shared core values. This balance helps philanthropic strategies stay relevant and inspiring for every generation.

Core values and vision

Just as giving methods differ between generations, so do causes and goals: The cause that unites the current generation may not interest the next. This may be a source of friction for parents bringing children into their philanthropy, as the next generation may feel they are being told to support something they aren’t interested in and become resistant and even distant.

Family philanthropy is most effective when it honors both the shared and individual values within the group. Rather than expecting every member to support the same priorities, families can invite each person to name their philanthropic interests, offer space for independent giving, and intentionally blend individual and shared goals into a cohesive plan. This approach can follow a framework of three different “buckets” of giving:

• The senior generation’s giving
• The successor generation’s giving
• The family’s collective giving

This framework makes space for expanding where and how the family gives by acknowledging individuals’ goals in balance with the family’s goals as a whole.

It’s important to remember that although acknowledging individual giving goals is a key step, this should still be in service of developing a cohesive plan for the family to give together. When philanthropy fails to fully engage the family, it is often less sustainable. The NCFP survey found that individuated family foundations have limited life spans, while participants in more collaborative family foundations reported having more positive experiences and greater perceptions of impact.⁴ Families wanting to create and sustain a philanthropic legacy need to have a clear mission statement that encourages collaboration and accounts for the different giving interests and values across generations.

Creating a living plan

How do you develop a shared mission while still acknowledging variety in family members’ values, interests, and giving abilities? Conflict can arise between honoring the values and legacy of the work that has come before different generations and being able to see themselves in that work – which is why it can be helpful to view family philanthropy as a living idea rather than something that’s set in stone.

Ways to recognize and incorporate this fluidity in your family’s philanthropic plan can include:

• A living family giving plan: Recognizing that family interests and abilities will change, build annual or biannual reviews into your family’s philanthropy so all voices – especially those of the rising generation – continue to be heard and help shape the family’s philanthropic work.
• Making space for life stages: Acknowledge that engagement can change. Family members in different life stages – careers, parenting, retirement – should be welcomed to participate at their capacity allows, knowing their contributions are valuable whenever they join. If family members’ philanthropic involvement can ebb and flow as their life stage dictates, they are more likely to feel included and to stay involved long term.
• Recognizing legacy: Remembering to celebrate the accomplishments the family’s philanthropy has achieved to date reinforces a shared sense of purpose and philanthropic identity within the family. Regularly celebrate family milestones, share stories of impact, and highlight diverse forms of involvement to reinforce a sense of purpose and inspire rising leadership.
• Acknowledging changing geography: Families are more dispersed than ever before, with members spread across different cities, states, and countries. When developing a plan, make sure the faraway members are included in the discussion, and remember that geography can also affect interests and values. Consider leveraging technology such as virtual meeting participation and online voting to include members who live far away and keep them connected.

New strategies and structures

As mentioned earlier, there are several ways to think about how we give and drive impact, and these often differ between generations. Being aware of the various levers for impact is key to developing a comprehensive plan for your family’s philanthropy, as each generation’s methods can inform and learn from the other’s.

Often, today’s most effective family philanthropy leverages a broad range of tools – combining traditional grantmaking through donor-advised funds (DAFs) and private foundations with additional forms of impact work, such as advocacy or impact investing. Intractable challenges – from education to the environment – often require a multifaceted approach and pulling many more levers: research, education, grantmaking, investing, lobbying, advocacy, impact investing, and market rate investments, to name a few.

In order to foster interest in rising generations, they need to be able to see themselves in the family’s philanthropy and to do the work in ways they find interesting – and more importantly, impactful. If families don’t make space for these new ways of giving, the next generation is going to look elsewhere for opportunities.

Setting you and your family up for giving success

Family legacy endures when the approach to giving evolves with each generation. Families should avoid assuming that the current approaches will automatically engage the next family leaders – intentional design is key. Acknowledging that interests, goals, values, and giving methods change across generations (and that this change is not a bad thing) and developing a framework that reflects this are essential steps in forming a successful, living philanthropic mission for your family.