“Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times”, according to G. Michael Hopf.
The statement carries a beautiful symmetry and circularity, and evokes adages like “shirtsleeves to shirtsleeves in three generations”.
It’s that “good times create weak men” bit that gnaws at most every wealth creator and fills them with dread: how do we prevent our kids from becoming “weak” spoiled brats?
At an event recently, I had a penny-drop moment realising there is one simple thing that solves most of those parental worries.
Let’s first consider the challenges that face those born into “good times”:
- Entitlement. This is the most commonly articulated fear. When kids have won the genetic lottery, and at some point will be legally entitled to far more money than they may ever need, how to stop them feeling entitled?
- Isolation. Living in a bubble is often the tipping point. Being surrounded by others just like you at private clubs, schools, neighbourhoods, planes and the like. Such a life makes it too easy to lose touch with “the real world”.
- Education. Teaching kids not just the financial skills they need but also how to be a good stewardship/owner and what good governance and decision-making looks like in practice.
- Glue. A group of people with shared genetic material and shared assets is not a family. How to maintain a sense of connectedness and a desire to be part of the family?
One solution to these challenges is one thing … philanthropy.
Entitlement is privilege without obligation. Face it: you are privileged and so are your children. But you can balance that with a healthy sense of the obligation that comes with it: to use your wealth to help others.
Exposure to people who are lesser off acts as a hedge against isolation. Both visiting philanthropic project and hands-on volunteering get people out of the bubble and into the real world.
Philanthropy is an outstanding educational tool, especially because it can be very age appropriate. Kids as young as 5 or 6 can practice “spend/save/give” with their allowance. As they get older, they can participate in discussions about giving and about investing for purpose. A foundation – no matter what the size – can be a training ground for learning about investment.
Family philanthropy is ‘glue’ that can create positive shared experiences for family members, teach them to make meaningful decisions together, and help them find alignment on shared purpose.
Important to note:
- Family philanthropy is not a panacea. I’ve seen “family giving” used as a tool of power that has ripped families apart. It’s ugly.
- Size doesn’t matter. The principles are what are important. How you give counts more than how much you give.
- There are other ways to mitigate the risks associated with raising kids with wealth. Philanthropy just happens to be something that ticks most if not all boxes.
Good times don’t have to create weak men.
Strategic family philanthropy can break negative cycles for the better for both family and society.
Conversation Starters:
- What do you currently do to mitigate the risks associated with raising kids with significant wealth?
- How has family giving impacted the family? The gift recipient?
- What is one thing that surprised you about a family philanthropic gift experience?
Further Readings:
The Second Identity Crisis: How To Deal In A Smart Way With A New Phase Of Life
FAMILY FORTUNES
Do “Family Office” Courses At Universities Actually Help Preserve Wealth?
No kids? Here’s how to handle estate planning
Forget the family business. Wealthy heirs want to work for the family office instead
When the ultra rich hire family for their private investment firms, what to pay them can be tricky
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David Werdiger 