For many families, the moment comes when they want to build a philanthropic legacy. It’s a powerful shift: from reactive generosity to a more intentional search for purpose and impact. But almost as soon as that ambition takes shape, a deceptively simple question can bring everything to a halt: “Where do we even begin?” The options are vast, and with them comes a natural response: hesitation. Research calls it “the paralysis of indecision,” when too many choices stall momentum and keep good intentions from moving forward.

Often, the first advice a trusted advisor gives is to set up a Donor-Advised Fund (“DAF”). It’s practical, straightforward, and tax-efficient, offering a simple structure for giving. Just as importantly, it creates an easy way to bring the next generation into the process by inviting them to recommend grants. 

This is not bad advice. A DAF can be an excellent administrative tool. As a financial vehicle, it offers convenience, efficiency, and even a degree of anonymity that many families value. It provides order for charitable transactions.

But for a family hoping to build a truly strategic philanthropic effort, this advice is incomplete. It gives you the engine, but no map. The harder truth is that focusing on the mechanics of giving before defining the purpose of giving is like planning the logistics of a journey without first deciding where you want to go.

While a DAF can be a useful component, describing it as a ‘simple tool’ sits in sharp contrast to the complex work of strategic philanthropy. The real journey starts with conversations: the foundational discussions that shape values, clarify purpose, and lay the groundwork for generations of impact. 

Here is a practical roadmap for moving toward a more purposeful family enterprise.

Phase 1: Build Your Foundation on Principles, Not Products

The most common mistake we see is families diving into what causes to support before they have collectively agreed on why they are giving in the first place. Any multi-generational effort requires enduring core principles to succeed. These principles act as compass points, guiding strategy and ensuring purposeful planning and alignment.

The first phase is about looking inward. It begins with open conversations to define the family’s core values. Bringing in a neutral outsider can help ensure every voice is heard. And this isn’t a vague or abstract exercise; it’s the foundation for everything that follows.  It’s about asking concrete questions: What does our family stand for? Where did our values come from? What kind of legacy, beyond financial assets, do we want to leave? This process forges a “collective dream” which is essential for effective governance; while grantmaking can succeed with good mechanics, governance cannot succeed without an overarching purpose.

The outcome of this phase is often a written mission statement or family constitution. This becomes a roadmap for future generations, a compass to guide decisions when the founders are no longer in the room. One foundation learned this the hard way: endowed with a fortune but lacking a statement of donor intent, the family had to undertake a long process of defining its core values and building a shared vision entirely from scratch.

Phase 2: Develop a Focused Strategy for Impact

Once the ‘why’ is established, you can develop the ‘what’ and ‘how’. A scattered, checkbook approach — giving small amounts to many organizations — rarely creates meaningful change. Without understanding the systems and levers that amplify impact, even generous gifts risk spreading too thin and achieving little.

Effective philanthropy requires focus. It means resisting the temptation to be “all things to all people.” Concentrating resources to maximise impact in a specific area allows families to leave their strongest and most lasting mark.

This is where a strategic family moves beyond the transactional nature of a simple, cause-neutral DAF account and begins to develop a Theory of Change framework to connect their giving to the specific outcomes they want to achieve in the world. A TOC is simply a hypothesis that makes your assumptions explicit: it articulates how you believe your actions and investments will lead to the measurable, long-term change you wish to see.

Another foundation operated as a vehicle for the family’s personal “checkbook charity” for decades. A new generation of leadership, however, guided the family through a facilitated process to find their shared values. This led to a pivot towards a focused mission of expanding access to quality education for underserved communities.. Moving from treating symptoms to tackling systemic problems is the essence of strategic philanthropy.

The Family Council Canvas can provide powerful insight at the transitional stage. It gives families and advisors a shared framework to capture diverse perspectives, align priorities, and pinpoint where giving can have the greatest impact. By setting the family’s journey, values, goals, and commitments side by side, the FCC helps focus efforts, reduce fragmentation, and translate purpose into strategy.

Small Aside on Strategy and Philanthrocapitalism

In a sense, the complexity also points to systems theory and the proper formulation of a strategy. One of my personal peeves is the confusion of what constitutes a strategy vs a wishlist. One is the temporal alignment and prioritisation of resources and actions for the purpose of achieving a long-term goal in a dynamic environment, the other is, well… a wishlist of outcomes. This underscores the need for a clear understanding of the family’s vision, mission, and values. These fundamentals must be defined before the journey can start in earnest.

We also have to tread cautiously a bit around the topic of Philanthrocapitalism. Coined by Matthew Bishop and Michael Green in their book of the same name (I have not read it yet, but have it high up on my reading list), the simple message from some banks is that you can “do good and make a buck while you’re at it”. I am pragmatic on this statement: if the effect is positive for society, then it’s better than nothing. But, I have to say, I’m not a big fan. One thing I do support, though, is that we need to have better governance tools in place to measure and optimise the effectiveness of initiatives. I will be travelling to Kenya in the next month for exactly this purpose: to see if a framework can be developed and made publicly available for both donors and charities to become more effective. More on this, though, after my trip.

Phase 3: Engage the Next Generation for Stewardship, Not Just for Show

The platitude to “involve the children in recommending grants” is perhaps the most superficial piece of common advice. While well-intentioned, it often translates into a token gesture. Our data and wider research show this approach is insufficient because it fails to build the necessary skills in financial oversight, due diligence, or collaborative decision-making. It avoids the essential conversations about wealth, responsibility, and the core purpose of the family’s philanthropy.

A more meaningful approach reframes family philanthropy as a “training ground” for the next generation of stewards. This is an intentional, long-term and difficult process that involves:

  • Experiential Learning: Go beyond reading grant proposals. Engaging younger family members in site visits to see the work firsthand provides a powerful connection to community needs. Involving them in the due diligence process builds critical analytical skills and helps them understand an organisation’s true impact.
  • Progressive Integration into Governance: Rather than an abrupt appointment to the main board, create clear “on-ramps” such as positions on junior boards or specific committees. This allows them to learn the ropes of governance in a lower-risk environment and prepares them for future leadership.
  • Fostering Autonomy: Provide a specific fund for the next generation to manage collaboratively. This “starter package” gives them ownership, allows them to explore their own passions within the family’s mission, and lets them learn by doing.

Preparing competent, confident, and committed leaders is what sustains a family’s philanthropic vision and allows it to evolve with the future.

The path from reactive cheque-writing to strategic philanthropy is a deliberate one. It begins with honest conversations about shared values, moves into a focused strategy, and culminates in preparing the next generation with care and intention.

When approached in this way, philanthropy becomes one of the most rewarding enterprises a family can undertake, strengthening bonds across generations while creating measurable, lasting good in the world.