This is the third in our series on true family wealth. We previously discussed the most obvious form of wealth — financial capital — and the most important form – human capital. Today we move on to social capital. Your family’s social capital is used to care for others beyond your family. According to wealth and family expert, Charlie Collier, social capital can comprise money, time and talent, and is limited only by your imagination. Why is this family social capital so essential to family wealth, and what does it mean for you and your family?
Giving is in the American DNA
We are a generous, selfless nation when it comes to giving away money. Americans gave away more than $375 billion dollars in 2015 according to Charity Navigator, setting new records in total, average and increases in giving. Religion takes the top spot among recipients each year at around 33%, followed by education (16%) and human services (12%). See the pie-chart for more detail.
The deeper you look at giving, by the way, the more you realize it is not at all confined to the super wealthy. Generosity is pervasive in every community, at every income level.
Do you remember the first time you gave away money? Did you earn it, and then give it away? Why? Or did you give away part of your family allowance? How did you learn to do that? As you can easily see, telling family stories around giving quickly builds and reinforces the importance of social capital, both for your family and for recipients.
Social capital comes in many forms
The most obvious form of family social capital is financial philanthropy — writing checks, awarding grants and making bequests — but there are many other forms. A few quick examples from our client base (names disguised) might spark some ideas for you.
- Kerry has organized a town Help Brigade — neighbors helping neighbors with routine daily chores that they can’t do, for whatever reason. No one is turned down, and no one is asked why. The Help Brigade walks dogs, goes to the grocery store, might pick up your kid after school, wash dishes and so on. Very simple, personal and powerful!
- Peter sold part of his company to his employees through an ESOP, instead of selling it to a financial buyer at a higher price. Employees now get a chance to own a piece of their own company at a discount and share all the rewards – and burdens – of private ownership.
- James is in his 23rdyear of the Jimmy Fund Walk, raising money for a cancer cure, and for cancer patient care. James’s list of contributors and the amount he has raised by now is truly large. The walk’s 9400 participants raised $9 million for Dana Farber last year.
- Eight year old Lily divides her allowance equally into saving, spending and giving categories, and then decides where and when to part with the giving amount. This is a very big deal for Lily, and the receivers think so, too.
- Janice writes big checks every year to causes she supports. Very big checks.
More than money
Think of your portfolio of social capital as a fluid mix of Talent, Time and Treasure. If possible, try to match your contribution to the current needs of the organization.
As the Red Cross can attest, money can help make a difference in a few days, following floods, tornadoes, and tsunamis, financing shipments of emergency goods from locations close to the disaster. On the other hand, offers of clothes and furniture, that need to be collected, sorted, stored, shipped around the world and then warehoused again and distributed to almost inaccessible areas, might take months to reach a family in need.
If you don’t feel your financial contribution is enough, you can always ask others to give. For inspiration and ideas read Arthur Brooks’s excellent article, Why Fundraising Is Fun. I happen to agree with Arthur, which is why fundraising is my hobby and passion.
John Osbon – firstname.lastname@example.org