Creating a Legacy of Caring: Teaching Kids About Philanthropy

Creating a Legacy of Caring: Teaching Kids About Philanthropy
A Composition Chapter Series conversation with Eva Fordham

Meghan McCartan, Chief Marketing Officer, Composition Wealth
Eva Fordham, Philanthropy Advisor

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MEGHAN: Hi, everyone. I'm Meghan McCartan, the Chief Marketing Officer at Composition Wealth, and I'm happy to welcome you to another one of our Composition Chapter series. We talk to experts about things tangential to financial services that affect our families, our goals, and the world in general.

One of the most important of those is philanthropy and giving back, being a part of your community. Today we're going to talk about how you get your kids thinking about philanthropy, and how, at different ages, you can set a good foundation and go from there. We'll be talking about little kids all the way up to young adults.

I'm super psyched because the person we're getting all this expert information from is Eva Fordham, and this is what she does. Eva, welcome. Would you give us a little of your background, how you got into this, and what you love about it?

EVA: Thanks, Meghan. Glad to be here. I've worked in philanthropy for over 20 years. Most recently, I was a fundraiser for various nonprofits in the San Francisco Bay Area and down in Los Angeles, working with ultra-high-net-worth individuals to help them with their charitable giving within an organization.

I've now transitioned to the other side of the table, working with the same crowd but helping them with their charitable giving directly. That's everything from identifying causes they truly care about, to refining a strategy, to family dynamics (my favorite), and all sorts of things that help make a philanthropic experience the most wonderful and fulfilling one it can be.

MEGHAN: I'd love to dive into what you just said. Family dynamics. Can you give us some examples?

EVA: Sure. With the wealth transfer happening, we're starting to notice a lot of older children, and by older I mean in their 30s and 40s, who are now being introduced to their family's foundation, or to charitable giving, and are trying to wrap their heads around it. What I really enjoy is helping bring everyone into the fold to learn about the family's purpose behind giving.

But it's a wonderful offering to start doing this with children when they're much younger. I'll talk about ways to bring kids into the fold so that once they get older, it's not a surprise that their family has a foundation, let's say.

MEGHAN: Let's do that. When is it appropriate to start talking about this? Do you start when kids are younger, with time and contributing as a volunteer? And when do you start talking about money? Let's talk through some of that.

EVA: I like to think of it in three stages, and you can start as early as the first phase, when children are about 5 to 10. You're not talking about big investments here. You're talking about volunteering and time.

From a nonprofit perspective, there are regulations, so they may not be able to bring young children on site for an activity. So you can do the activities at home, side by side. A parent and a child, or children, can bake cookies and take them over to the local fire department. Or they can go to the store together, buy toys, and bring them to a toy drive.

That way, everybody's still young, they have a very tangible experience, and it starts developing really warm memories of contributing back to your community.

MEGHAN: That reminds me of something from when I lived in New Jersey. Our street was all kids. It wasn't a pack of friends who ran together, but every year around the holidays, we brought everybody to somebody's house and stuffed stockings for soldiers. It was a project I'd seen, and the kids had a great time. My kids are big kids now, but they still remember it, and the neighbors still say, "Remember how we used to do that?"

I feel like you can make it a party, and then the kids have a really positive association with giving back.

EVA: That's a great example. I love hearing that. It's also a good way to talk about what's happening in the world and make it a little more real.

MEGHAN: Going from there, when is a good time to start talking about money?

EVA: You could start to broach it around 5 to 7 years old, and I'll give you a really great example. One of my advisor colleagues up in Montana and her husband have a five-year-old daughter. They've introduced the idea of allowance, and they give her $5.

What they've encouraged her to do is divide up the money this way: $3 to spend, $1 to save, and $1 to give or share, for the charitable part. I think that's a really fun concept because we're back to the tangible. She has something she can hold on to.

Depending on how the household would like to do it, you could set a goal. When this gift pot gets up to $20, let's take the $20, go to the local pet store, pick up some food, and take it to the animal shelter. So we're back again to that real, tangible experience.

I think you can go almost that young and just start building these memories early. Then when they get older, they think, "Ah, okay, now I get how this works."

MEGHAN: I love that. Five years old, $5. The numbers probably make a little more sense to little heads, and they can track it easily. And going to the pet store to buy dog food is something a kid is going to love. They can see that they're bringing it to a shelter. It doesn't have to be a grand thing where we're saving thousands of dollars. They can see a local impact.

EVA: Absolutely.

MEGHAN: Let's talk about what happens as kids get older. Sometimes teenagers don't do exactly what you want them to do. What happens if you get pushback, and your kid says, "I'm too busy," or "I want to do something else with my money"? Do you have any examples?

EVA: You're absolutely right. Teenagers want agency and autonomy: "Let me do my thing." But there are still ways you can incorporate giving. I'll look at it from two angles, starting with volunteering.

You can keep the volunteering going but make it more peer-focused. Encourage kids to get their friends together to volunteer at the community garden, or do a clothing drive at school.

When we look at money, here's an idea I think could be cool. A lot of clients now have donor-advised funds, and we're starting to see an uptick of this within families. There may be an option to earmark anywhere from $100 to $500 for the child and say, "Here's your bit for charitable giving."

Then you can gamify it. One week at the dinner table, say to the child who has the donor-advised fund carve-out, "Think of two causes you want to support, do some research, and come back next week and pitch to the family." It has to be their idea and their thing. So they research two things they care about, come back the next week, and do the pitch. Then the family votes, and you run over to the computer and deploy the funds.

I think that's fun because they're not only learning about charitable giving. They're also practicing public speaking, research, and putting ideas together to be persuasive. So make it a game.

MEGHAN: I think that's incredible. I have two follow-ups. The first is, what happens if your kid says, "I feel really passionate about this cause," and you're thinking, "I don't really care about that"? What do you do?

EVA: I still think it's okay. That might be a reason to do the two-cause exercise, so they have options. Sometimes you let them figure it out. And if it's something local, you could visit the place and say, "I know you really care about this. Let's go see what they do firsthand."

MEGHAN: And on the donor-advised fund piece, I imagine you have to be careful not to say, "You're giving $100 to such-and-such charity, and that's really not going to affect them." Even a little bit can help. It's more about starting to build the muscle of giving.

EVA: That's exactly it, Meghan. When I'm advising people, I might say that $100 could go to a very small, hyperlocal organization and make an impact, whereas $100 to a billion-dollar organization, I'm not sure. But it's just like you said: get the habit going and get the ideas flowing.

MEGHAN: One of the reasons to talk to an advisor, or to someone like you, comes to mind. We did an earlier webinar with [the Labelle Foundation], who work with pets. They talked about how [the One Big Beautiful Bill] has made a difference in how you can give. If you use certain approaches, the charity gets 100% of the money instead of just part of it. I feel like that's something an advisor can help you figure out, to maximize what you're doing.

EVA: Absolutely. With the new bill that came in, there are different regulations coming through. Bringing in a philanthropic advisor along with your wealth advisor to help refine a plan is helpful, not only for the family but also for the charity.

MEGHAN: Because they can benefit more from the same amount of giving, if it's done the right way.

EVA: Absolutely.

MEGHAN: Let's talk more about those family dynamics. The kids are now 30 or so, and we're talking about more than $100. How do you navigate those conversations? What have you seen work? And sometimes we learn from mistakes, so what have you seen blow up that you'd recommend doing differently?

EVA: What brings it all together is that it's important to have these conversations with your children early. What I'm noticing, especially with family foundations, and it's no one's fault and no judgment, is that you sometimes won't see kids coming into the fold until they're much older, so they don't relate to the giving strategy.

A colleague told me about this recently. In really large foundations, families can be totally dispersed all over the country. The cousins don't know each other, and they say, "I don't want to support this." So the earlier you bring kids in to have the conversation, the easier it is to build a wonderful family legacy of philanthropy. You don't want to bring anybody in at the last minute, because they're just not going to get it.

As for the conversations across the table, I think they should be completely non-judgmental. Everybody has different ideas. If grandparents started a giving legacy, their thoughts are very different from their children's and their grandchildren's. So get everyone around the table to refine the whole strategy. Is supporting this cause as important to you as the newer causes that are coming up? Try to create a harmonious experience.

Sometimes I just think it's a lack of communication. Again, nobody's fault. It's just not top of mind until it is, especially when people inherit foundation responsibilities.

MEGHAN: Everything gets harder when there's money involved. If you foresee difficult conversations, who could someone turn to for help preparing?

EVA: When a difficult conversation is brewing, get all the advisors in place. Have your wealth advisors there and your estate planning attorneys there. Maybe think about engaging someone like me, a philanthropic advisor, so we can all sit around the table and create a strategy that can then go to the family when everybody's there.

Think about how you can have the most open, kind, and transparent communication possible. Also be open to whatever the outcome is, and know that we can't control the entire thing. The kids might have other ideas, and maybe it's okay to allow them to move forward with those.

MEGHAN: That goes back to what you said earlier. What the grandparents cared about might have been amazing, and as things change, we care about something different. One's not wrong and one's not right. It's about talking it through, as long as you have the proper motivations.

I'd love to hear a story or two, if I'm not putting you on the spot, about people who have really come together, or something you've seen that's been a giant success. I think we all love those stories.

EVA: One of my favorite families had a family foundation, and they were a large family. They started instilling values in their kids from a very, very young age. As the kids got older and the grandchildren came in, they kept everything really close with the foundation. The kids were encouraged to choose their own organizations to pitch to the family.

Each kid had their own designated amount, something like $10,000, $15,000, or $20,000, that they could choose how to give. The whole family was in lockstep with that, and the parents were very accepting of whatever the children had to offer.

Every Thanksgiving, they got together, and that was the thing. They ate, and then they talked about which charities they were going to support. Year after year after year. If you can create a commitment like that, where once a year we get together and do this, I think that's really helpful. And I keep saying it over and over again: the earlier you can start, the better.

MEGHAN: I like that. I bet it's something people look forward to: "I can't wait to tell them about what we've done, or what I've found."

That brings me to my next question. As you research charities, I feel like Charity Navigator is something you can look up to see whether a group is a good one and what their spend rate is. What advice do you have for people evaluating different nonprofits?

EVA: Charity Navigator is a great tool. When people are evaluating nonprofits for very large gifts, there are a couple of things to look at. The platforms are wonderful, but sometimes they focus on something that may not be important to the donor. For example, some donors are committed to funding overhead rather than specific programs. I don't know that the platforms offer the best information for that, but they're a great place to start.

When I'm evaluating what makes a good fit, I scour the tax returns, known as 990s, based on what's important to the client. If a client finds salaries important and thinks high salaries may not be a good fit to fund, the 990s paint a great picture of that. You can also see cash flow and financial stability more easily in a 990 than in a nonprofit's annual report.

You could even use AI. I don't really encourage it, but you could upload a 990 and ask certain questions and see what pops up. For donors who want to get heavily engaged with a nonprofit and are making huge gifts, though, I would point them to that extra level of review rather than relying on a platform.

MEGHAN: I want to dive a little deeper into something you just said about salaries. Larger nonprofits can have salaries that make you think, "They shouldn't be making that much money." I don't think that's necessarily the right attitude. You do want someone who's being paid fairly. Can you give us some perspective on that, and on how organizations are using their money? For example, are you getting a million dollars in fundraising because you spent $1.5 million on a gala? That's bad, right? Talk a little more about those details.

EVA: Sure, absolutely. On salaries, a CEO can't make a million dollars just anywhere. But if it's a billion-dollar organization, I think it's okay. If it's a $2 million organization, my flags go up. So look at the whole picture.

Something else I've noticed: if a CEO is making a million dollars and their assistant is making [amount unclear], I start to wonder about that, too. A 990 will show you different things when it comes to salaries. My whole thing is: what's the organization's overall budget, and how does everything else fit into that?

When I do this work and review a 990, I don't discredit a nonprofit right off the bat. I create a list of questions and then call them and say, "Hey, I noticed this," or "I noticed your cash flow took a dip. Is there anything we need to know before we make an investment in your charity?"

MEGHAN: That's super interesting. Obviously, if you're working with an advisor who specializes in this space, someone like you, you can help with that research. But if I'm trying to figure this out on my own, I could call the charity myself and ask a couple of these questions, right?

EVA: Absolutely. I highly encourage it. There's a notion of "just get it done, click." But if you really want to learn more, nonprofits have a whole department of people you can speak to. You can also visit the nonprofit, and there are a lot of things you can do to learn how your gift is going to make a big impact.

MEGHAN: And I'll tie that back to why we started, which is talking to kids about this. I think that's a good lesson, too. As the parent, I'm going to do this level of research. Why don't you look into this, too? Then you're prepping as a family, and everybody's a part of it.

EVA: Exactly. If it were an annual event, this would be a great thing to do. Let's say we're getting ready for our Thanksgiving family meeting about our charitable giving. These are some places we're considering, and you can delegate it out to everybody. What are you going to research? Can you help with this? Can you call them? Can we volunteer? Stuff like that.

MEGHAN: One last follow-up. I think this has been helpful, and hopefully people can get some ideas from it. I loved it when you talked about gamification. I'm sure there are resources that can help families with these conversations. Is it worth finding books at different levels that can drive the conversation? Do you think those resources fall on deaf ears, or do they really help move the conversation forward?

EVA: I think they drive the conversation a lot, and I'm pretty confident there are a few books out there that would absolutely help. Some financial institutions also have giving guides for children, which are very easy to find with a Google search.

Beyond that, all the kids love YouTube now. Are there YouTube videos that demonstrate giving, or that show other children volunteering? I bet there are. I think it's about meeting kids where they are and how they like to absorb information, and then finding that kind of content for them. Maybe there's something on TikTok. I'm sure there is.

MEGHAN: It's interesting that you say that. Last summer I was watching a series with my daughters. A guy named Ryan brought his girlfriend, Hailey, along, and they stayed in the best VRBO in each state. They wanted to find the craziest one, and they were raising money for St. Jude. There was an episode every day, about 20 minutes, and I think it was on TikTok.

I started talking about it, and so many people in my world said, "We're watching that too. We're doing that as a family." It was cute, and it was interesting to see these VRBOs, like a missile silo. It was also interesting to see brands engage. They did different things to raise money, and different brands got involved to support it. They were hoping to raise a million dollars, and I think they ended up raising about $13 million for St. Jude.

To your point, it met people where they were. They made it fun, and a lot of different pieces plugged into it. As a mom, I'm not necessarily ever on TikTok, but I can see how something like that becomes something you all watch and talk about together as a family.

EVA: Yeah, great.

MEGHAN: Well, Eva, this was awesome. Thank you so much for sharing your knowledge about how to share. We'll make sure we have your information in the notes so people can follow up, visit your site, and get more information as needed.

EVA: Wonderful. I'm happy to chat with anyone, anytime. Thank you so much, Meghan!