Family business legacy planning involves many considerations, such as training, timing, and transferring of interests. Another component of this planning should entail the long-term vision of philanthropic goals for future the generations. In 2015 eighty-one percent of the largest family businesses performed philanthropic endeavors, likely understanding that this charitable spirit was a key element of keeping the bonds of family strong through generations. Below are the top four considerations to look at when bringing philanthropy into the folds of your closely held business.

1. Philanthropy can provide the clearest picture of your family business.

Family values are the connective tissue of family businesses, and charitable work offers a tangible way to demonstrate these values to the community and marketplace. A family’s values can be broad in nature, so it is advised to pinpoint which values and goals the business wishes to focus on.

2. Benefits to the next generation are plentiful.

Involvement in the charitable aspect of the family business can strengthen the bond between members across generations. The philanthropic platform presents an excellent opportunity not only to bring the next generation on board, but also to allow them to make their own mark on the business. The ability to exhibit the new generation’s values on topics such as fairness and work life balance allows a breaking away from the previous generation’s mold. Additionally, involvement in this work is a way to teach financial stewardship and delivers quantifiable results in spreading the family’s values to newcomers.

3. There are various ways to achieve family business philanthropy

First, the business can consider outright cash gifts to a charity of their choice. This is the most straightforward way of demonstrating the business’ altruism and requires little to no responsibility. Another minimally involved option is the use of donor advised funds. These funds are less hands-on, but come at a higher price due to paying for administration by another. Next, the business can consider establishing a family foundation—a vehicle for the family to come together that is separate from the family business. This option allows for impact investing, which generates financial returns and makes social impacts. Family foundations can have an impact on a global scale, and they require substantial involvement and oversight. Lastly, the family may consider planned giving through trusts, which entails giving an asset to the trust but retaining an income stream from the asset. It is important to note that whatever option the business decides to implement, there should be clearly defined review dates and metrics to evaluate the charitable efforts. This review allows for flexibility to decide if the family wishes to continue its support or turn its attention to new causes.

4. Wealth management

Supporting charities and transferring wealth can complement a family’s wealth management strategy. The business’ attorney can work in tandem with the family’s estate planning attorney to ensure profitability and optics while smartly optimizing wealth management. Tax strategies may not be the primary driving factor, but they are a consideration and benefit. Philanthropy can be an efficient way to present the family’s values, have a positive impact on communities, and ensure intelligent legacy planning.