The COVID-19 pandemic has been an inflection point for all of us—in our personal lives, our work lives and in what we consider important. For many wealthy families and family offices, it has been a time of rapid decision-making to ensure the family’s health and safety is taken care of, their finances are in order and their teams are operational and secure now that they’re working remotely. But in the midst of that flurry of activity, the pandemic has also offered a time for reflection on the family’s values and their ability to help. The health pandemic shifted global focus to a new set of imperatives including support for first responders, funding for vaccine development and donations to food banks, among others. In the wake of the COVID-19 crisis, philanthropically inclined families may find themselves asking: Where can I be uniquely helpful, what can I do now—and if not me, then who?
Engaging Family Members in Selecting Your Cause
Whether shifting the family’s charitable focus for the short-term or long-term, or considering a philanthropic mission for the first time, the process starts with the question: What do we want to support? While a simple question, it’s often emotionally fraught, with different family members and different generations prioritizing different causes that are dear to them. It’s worthwhile to take the time to consider those differences and create a framework by which each person can be involved meaningfully in their own way. Having the right governance mechanisms in place is important here. Defining the mission of the family’s giving and the requirements by which all opportunities will be measured helps to ensure that each cause is evaluated on its own merits and that the decision-making process is inclusive of all family member’s ideas.
Determining the Appropriate Level and Type of Involvement
Then, it becomes a matter of how. For many families passionate about philanthropy, most are eager to not just impart their generosity but also their insights. Being hands-on is an important part of giving and actual personal engagement is what frequently feels most fulfilling. However, in situations like COVID-19, where a unique circumstance dictates a specific set of needs, the family itself may not have the same expertise or capabilities as they would for a cause they’ve chosen independently. It then becomes a balancing act to ensure that the efforts are as effective as they are satisfying—maybe partnership is a better route for identifying the right organizations to fully trust and hand off too.
Measuring Your Impact
Finally, more and more families are prioritizing measurement, being able to follow and track exactly the impact that they’re making and ensuring that there is accountability in their philanthropic work. This element has particular significance in the current situation, where the demand for resources in certain areas is so immediate. The families want to ensure that their help is not being routed through red tape but rather delivered directly to those who need it most. There is also the consideration of how to magnify the impact of the giving through driving awareness and motivating others to do the same. Perhaps the family or a member of the family is a public figure who can leverage their celebrity to drive greater fundraising, or perhaps the funds are set up to create a matching program that promotes giving from a broader population.
Maximizing Your Support
In as much that COVID-19 has created a critical need, the government response through the CARES Act has made the present a very beneficial time to give. Essentially, the CARES Act has created an unlimited charitable rollover from IRAs for this year, giving taxpayers the ability to make unlimited charitable contributions from IRA funds in 2020 with no adverse federal income tax consequences. Anyone can now take a cash withdrawal of any amount from their IRA, contribute to a public charity and receive a 100% deduction offsetting the income for the contributed amount. This can be particularly significant for wealthy givers, allowing them to offset their adjusted gross income via every dollar that goes to a philanthropic cause. While it can be difficult to find any silver lining to the current situation, this tax-break opportunity to give back is rare, and therefore worth careful consideration.
As families have conversations around the immediate causes they want to support, they should keep in mind the family mission and governance framework to help them zero in on what they should do and how best to do it. Family and individual donors have historically been just as essential to making a positive impact in times of crises as NGOs or government bodies, and this time around, it will be no different.
Bill Woodson is the executive vice president, head of wealth advisory and family office services for Boston Private.