APF

Many families are starting to experience a transfer of responsibilities to the next generation as well as many non-profits are also starting to see changes in the donor composition of their fundraising programs. This is due in large part to the huge generational shifts occurring in the global population today. With this expected growth, some fundraisers are betting on the new generation to take over as the leading donor segment in the short term. But industry opinion is mixed on what power philanthropy has the power to unite generations through a shared vision for an entire family especially as the Next Gen enter their adult years and the responsibilities of home, career and family consume them.

However, philanthropy in Africa can be understood as grounded in the diverse cultural and economic realities of the continent. It is believed that engaging family members in philanthropy from a young age can enrich the family, instill and demonstrate family values, and secure a rich and dynamic legacy. The rise in high net-worth families in Africa is increasing interest in formal philanthropy. The first generation of Africans who accrued wealth are shaping a philanthropic vision for the family; but it is the next generation who will sustain it. The new generation has unprecedented financial resources, bringing new ideas to the traditional world of charitable giving.

Families highly committed to a legacy of philanthropy often focus heavily on the style, amount and method of their giving. This focus overlooks the need to identify an individual who will manage the family’s legacy. For families who are hesitant to plan what happens after a matriarch or patriarch dies, it can be difficult to ensure a philanthropic legacy is stewarded well. Therefore, it is necessary that the first generation of givers who accumulated the wealth identify the individual(s) best able to execute their philanthropic goals. The first generation often fail to identify and adequately prepare the second (or next) generation who may become responsible for leading the family’s philanthropic legacy after their death. A philanthropic legacy requires succession planning. To the first generation of givers who create the philanthropic legacy whether you’re considering how to engage the next generation of your family or paving your own way in the world of philanthropy below are a few  easily applicable considerations:

• Be open and honest about your philanthropic goals with one or more family members. It is common for many family members of high net-worth individuals to learn about the family’s wealth from someone outside of the family (such as the estate attorney or wealthy advisor). Engage your family and/or your children about your philanthropic vision and goals, either one-on-one or in a larger group. Ideally, all family members should have some understanding of your philanthropic vision. At minimum, be sure your family is aware of the issues you believe to be the most critical in making the world a better place.
• Identify the individual(s) who have the personality or patience to unite family members. When identifying a potential steward or successor of you philanthropic legacy, consider who in the family has the personality or patience to bring others together instead of a person who might create a chasm of dissension among the family. To help clarify who is a suitable steward, answer the following: • Which individual(s) does everyone in the family enjoy receiving a letter or a phone call? • Which individual(s) in your family may be seen as fair-minded or open to listening to various opinions or views, even if they may not always agree with you?
• It is an illuminating exercise to engage minor-aged or adult children in family philanthropic goals. Educate, expose, and focus on nurturing their motivation and intent. One should not worry too much about selecting a particular issue. It is more important that your children understand their responsibility in a global community. With your minor or adult child, begin sharing your areas of interest by conversing about the issues that affect their life. Your role is to help connect that issue to what matters most to them. Help your child understand why an issue you care about might actually negatively impact something about which he or she cares.
• Engaging the next generation with opportunities to make decisions, contribute their ideas or advise on your decision-making is important. If you have already established a foundation or set up a modest fund, encourage communication among family members by creating an informal advisory board. This advisory board might not have any legal obligations or rights; however, it will give you and your family an opportunity to practice necessary skills in listening and group decision-making.
• Encourage the next generation of donors to contribute to positive change in their communities by sharing your own family’s history of giving time, talent and treasure. Philanthropy, whether you give from a personal bank account or via your family’s foundation, can be a continuation of a family’s history.
• It should be noted that in future years, social media will also increase in importance, helping those philanthropists who use it wisely to generate buzz about their causes and raise money, the youth of today are primed and ready to harness this and including them from an early age in engaging in philanthropy will aid this evolving connection between philanthropy and social media.
• As philanthropists take the lead in aiding important causes around the world, they will require more information about the cultural issues they may encounter, as well as knowledge of what’s already out there to avoid duplication.
• Last but not least, choosing the right partners for collaboration may serve to enhance the philanthropic mission exponentially.

It is important to consider these questions often and early to identify and engage a potential steward. Engage a potential steward early to give yourself and the family the opportunity to better understand the rationale driving your support of a particular issue. If you, the next generation and the potential steward of the family’s philanthropy embrace the opportunity to learn and explore together, it could excite and expand the next generation’s interest in your issues as well. In essence, the mission and its longevity are at the core of every family’s philanthropy, but the choices hardly end there, as there are many important administrative and operational issues to consider. These include choosing among different philanthropic vehicles and creating not-for-profit and profit hybrid structures that allow better tracking of funds and that highlight impact in a clearer and more tangible way.

In engaging the next generation it is imperative to note that there are notable differences in the giving motivations and priorities between Western high net-worth individuals and their African contemporaries. Humanitarian Graca Machel defined African philanthropy as driven by solidarity rather than mere charity. In the U.S, about a third of all charitable giving goes to religion; in South Africa, giving to social and community development is the major recipient of charitable aid. Generally, as noted by a UBS-Trust Africa report surveying African wealthy givers, African wealthy donors are motivated “by their proximity to the needs and challenges faced by their communities. This proximity informs the types of organization that receive their gifts. The report further stated that most African philanthropists “top three motives for giving were the expression of personal values, family’s legacy and tradition, and wanting to give back”. By placing value, tradition and legacy at the center of charitable giving, African philanthropy can avoid the pitfalls West-based foundations have failed to address. For most African donors, tax benefits were a negligible motivating factor. Less than a quarter of wealthy South African donors reported in a NedBank survey that increased tax benefits would encourage them to give more.

Generally, within African philanthropy, a common misconception is that Africans are hesitant to give to institutions, recognizing that the needs of their own family and community are so great. This assessment is misguided as many wealthy African donor give to non-profits, unrelated individuals and religious institutions, which made up 72% of the total giving in 2015. In South Africa, giving to unrelated individuals (20%) outstripped giving to extended family (7%). African donors are rightfully hesitant to accept philanthropy as practiced in the West. Therefore, the next generation have the opportunity to learn from past mistakes, re-center the love of humankind at the core of giving, and continue the diverse African norms that fuel giving.

The next generation of African philanthropists have a ripe opportunity to define philanthropy stripped of the cultural and economic baggage of the West. But they also have a responsibility to interrogate the social and economic constructs in African cultures that impede giving and that is reflective of the love of humankind. The next generation of philanthropists in Africa should avoid giving that has little respect for community or culture and instead engage in philanthropy that embraces as many people as possible to decrease social and economic inequality. Ways to do this should be discussed in conversations that start within the family as, most times, philanthropic giving as a family value is one of the strongest and most sustainable forms of giving. This is an exciting time for African philanthropy as it shapes a more thoughtful, culturally-relevant giving in the future. As Africa experiences an increase in wealth inequality, African-led grant-making institutions and philanthropists are centering Africans’ allegiance to community and respect for tradition to re-shape philanthropy on the continent.

To conclude the first generation of African high net-worth individuals have the ability to establish philanthropic groundwork for generations to come.  In order to achieve this a succession plan which involves all suitable family members should be established and members of the family should be in line with the philanthropic vision and goals. Family trust and legacies remain the dominating force among first generation wealth accumulators. Not only does it bring family members together as they work towards a shared goal to address a challenging societal issue, it fosters continued philanthropic work among the next generation.