Alasdair Halliday AB ’82, philanthropic advisor and director of principal gifts for Harvard University Planned Giving, shares his thoughts on the challenges of family wealth, the benefits of giving charitably as a family, and how philanthropic advising can benefit members of the Harvard community.
Q: What is philanthropic advising?
Philanthropic advising is a relatively new area in the broader field of wealth advising, and it can mean a number of things. As Harvard practices it, it’s about helping individuals and families sort through questions they’re facing at the intersection of wealth, family, and philanthropy.
Anne McClintock, who is the executive director of University Planned Giving, and I lead that work for Harvard. The conversations we have with Harvard families give us a unique perspective from which to observe and learn—and we draw on that perspective, as well as the science and literature around family dynamics, to help others in the Harvard community.
Q: What types of issues do you address in family wealth conversations?
Let me say upfront that many people find it hard to understand why wealth would present challenges to families, but the challenges are very real. For example, wealthy parents with young families may worry that the money is going to undermine their children’s ambition or financial responsibility or independence. Wealth can also erect communication barriers within families, especially around money. That can lead to issues with trust and also make it harder to educate children about how to handle money. So you may end up with a situation where, through your attorney’s good work, your assets are well prepared for the children, but, because of these risks, the children are not well prepared for the assets.
The good news is that wealth can also bestow enormous blessings, some of which can help guard against the challenges.
Q: How do these issues intersect with philanthropy?
There a number of ways philanthropy can play a role in all of that. First, it can be one of the blessings I mentioned that help protect against some of the risks of wealth. Conducting philanthropy as a family can open up lines of communication as they learn to collaborate and talk together about their principles—about why it’s important to help others, which causes to support, and other things.
Family philanthropy can also help family members learn about money management and due diligence in a safe environment. And, of course, it cultivates qualities like generosity, gratitude, and empathy, all of which guard against a sense of entitlement.
Some of the charitable instruments through which people give to Harvard and other institutions can help families on a more technical level. For example, there are giving arrangements that transfer wealth to family members as a stream of income that may be less vulnerable to financial irresponsibility or lawsuit than a lump-sum gift. Other arrangements transfer wealth to children some years in the future when they may be better prepared to receive it responsibly. In the interim, the money is used to generate income for charity, which results in two great benefits—a big reduction in gift tax, and the opportunity to involve the recipients in family philanthropy.
For families that don’t wish to take on the management responsibilities and expense of a private foundation, a donor advised fund, which can be set up at an institution like Harvard, is an alternative that provides many of the same benefits.
Q: What kinds of challenges and opportunities does a family business present from the standpoint of financial planning?
As with family philanthropy, a family business can provide opportunities for family cohesion and identity, and for the development of capabilities in rising generations—all of that, of course, subject to cautions about being unduly prescriptive or protective with regard to the career paths of family members.
And yes, passing a family business from one generation to the next can be challenging inasmuch as the wealth contained in the business is more than just a dollar amount. It’s also a business concern, the success of which depends on the decisions of family owners and perhaps family managers. The income may also sustain many family members. All of that can greatly complicate the task of sharing a family business between different generations and branches of the family tree, and with new members as they marry into the family. There are charitable gift vehicles that can be helpful to parts of that process.
Q: What is the significance of practicing philanthropic advising at Harvard, which has played such an important role in the field through the pioneering work of your predecessor, Charlie Collier MTS ’73?
It’s a privilege for Anne and me to follow in Charlie’s footsteps at Harvard, and we’re blessed in so many ways as a result of his work. First, by the chance to learn from Charlie, who’s been enormously generous in passing along what he learned in 30 years of practice. And beyond that, we’ve been able to grow a culture—both at Harvard and at Harvard Management Company, which oversees the University’s endowment—that understands the significance of the intersection where wealth, family, and philanthropy come together.
We’ve built a set of services around that understanding that allows us to provide extraordinary benefits to the Harvard community. Whether it’s providing access to world-class expertise in planning with everything from public stocks to privately held businesses, pre-IPO shares, carried interest, and other complex assets; or sharing insights about a challenging family wealth issue; or providing a platform for families to do the rewarding work of guiding their own rising generation and sending great human beings out into the world.
Regarding that last point, there’s a growing body of evidence that giving to others is a gift to ourselves—that it can provide benefits in many aspects of our own lives, including health and relationships.
What Anne and I do helps people in the Harvard community experience that as they support the remarkable work Harvard does across so many fields—medical research, education, policymaking, sustainability, religion, law, public health, engineering, entrepreneurship, and on and on.
It’s a privilege to be able help families who are standing at that crossroads of wealth, family, and philanthropy, and I can’t imagine a better place to do it than Harvard.
Q: What is the one piece of advice you hope to convey to all families who come to you for philanthropic guidance?
Well, at the risk of overstaying my welcome, I’m going to offer two.
First, encourage family members to find and follow their own paths—in careers, in relationships, and in other matters at the core of identity. It’s important for individuals to separate from the family while remaining part of it. Giving people permission for that through words and actions can be an expression of great love. And second, talk. Find the courage to have challenging conversations. Even in the face of fierce disagreement and strong emotions, be present and respectful, try to understand each other…and talk.
Contact University Planned Giving to learn more.