Creating A Family Philanthropy Fund

How can we teach our kids about wealth, investing, and philanthropy in an understandable and engaging way? This is a different question than what my wife and I have asked ourselves in the past. We have worked hard to teach our kids about the value of money, saving, and avoiding consumerism. Our family also participates in charitable activities in our community, mostly focused on food security for both adults and children.  Our kids are teenagers now and old enough to engage in more technical discussions about money. I want to share with you a small philanthropy project we started with our kids and challenge you to do similar.

Family Philanthropy Fund

Over the Thanksgiving holiday break Mrs. R and I were talking about ways to help our kids understand that capitalism is a powerful mechanism that can be used to uplift and help people. We also want them to understand that you don’t have to be Bill Gates or Oprah Winfrey to participate. Even a small amount of capital can be utilized to impact others in a meaningful way for many years to come. Initially we thought about participating in micro-lending to people in underdeveloped countries. This could be a way to discuss with our kids the impact that having access to capital can have on people, but we decided that wasn’t the right approach for us. Then it dawned on me that our PeerStreet account was the perfect vehicle for us to be able to discuss wealth, investing, and philanthropy.  Earlier this year I setup a PeerStreet account with an initial investment of $10,000. My original reason for the investment was simply curiosity about the platform (you can read more about it here). What makes PeerStreet perfect for our our project with the kids is that real estate loans are easy for them to understand. They can see a picture of the actual house that money is being borrowed against. Also, annualized interest on a small loan amount of $1,000 or $2,000 is easy for them to calculate. Payments are received monthly and on various days, so the kids can check the dashboard a couple of times per month and watch the income accumulate.

Death and Taxes

We all have to die someday and we have to pay taxes. Our PeerStreet investment made about $140 in the fourth quarter and will be taxed as ordinary income. I don’t want this to become an overly complicated exercise for my kids, but I do want them to understand that taxes have to be paid on investment income. So rather than watching their eyes glaze over when discussing itemized deductions, ordinary income vs. capital gains, etc., we are simply using 25% as our tax rate. Again, this is an easy calculation they can do to determine how much of the income they can donate to our chosen charity.

Choosing A Philanthropy

So now the question is, what to do with the $105 they currently have available and the future income that will be generated by the family philanthropy fund. One of the aspects of micro-lending that Mrs. R and I really liked was that it is designed to empower people to create businesses that can sustain their needs. We want our kids to think about money as a sustainable resource. They could donate the principle one time or they can invest it so that it will generate money to donate year after year. This is one of the great blessings and advantages they have because they live in a highly developed economy like we have in the United States. Heifer International is an organization that takes this same concept and applies it to less developed economies. They operate in regions of the world where giving a family livestock and agricultural training can empower them in amazing ways. For over 70 years Heifer International has partnered with and helped communities in over 125 nations in order to lift over 30 million people out of poverty. This organization is the perfect fit for our goal of helping our kids think about wealth, investing, and philanthropy. We showed them this video on Heifer’s website that explains it all and they got excited!

Chickens and Ducks and Bees Oh My!

Heifer International doesn’t only develop dairy operations. They have many programs that are each designed for the various regions of the world where they operate. You can donate goats, alpaca, fish fingerlings, rabbits, a variety of poultry, honeybees, and much more. The prices range from $20 to $500, which fits our kids’ budget perfectly. It’s also possible to buy a 10% share of the more expensive animals like a heifer or water buffalo. So if your kids get excited and start singing “everybody wants a water buffalo”, they can donate $25 to help somebody get one.  Our kids talked about what animals they wanted to donate, and Mrs. R and I upped their budget for the first purchase to $120 to make the math easier. Here’s what they bought with their first round of investment income: geese, ducks, hope basket (rabbits & chickens), and honey bees.


Our family would like to encourage you to also create a philanthropy fund and give to Heifer International. We chose to use PeerStreet as our investment vehicle, but PeerStreet won’t be right for everyone because of the accredited investor requirements. It isn’t necessary to have a lot of money to start a fund. Consider starting with $1,000 invested in a stock or ETF with a 5-8% yield and purchase it through a platform like E-Trade. In a year your philanthropy fund would yield approximately $50 to $80 that can purchase lots of livestock. This may not sound like a lot, but over a ten year period your fund will have donated $500 to $800 while preserving the original investment.

If you decide to do similar to what we’ve done please tweet about it using #giveheifer and let us know by leaving comment on our blog.

2 Replies to “Creating A Family Philanthropy Fund”

  1. Very interesting idea! I think it’s great that you desire to teach your kids not only the value of earning but also giving.

    I may just do something like this myself…

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