09/20/2009 05:12 am ET Updated Nov 17, 2011

Your Social Capital: Invest It in Philanthropy

My first blog proposed that charity in America is not dead. I pointed out means by which we can affect the systemic change that is the heart and soul of philanthropy by getting personally involved volunteering with charities, specifically those that help children.

In this post, I want to focus on the phenomenon of "Social Capital" as the catalyst for change in our country. We all possess social capital to varying degrees. It is our discretionary income from which we make our charitable contributions. It allows us to invest in the future of society in areas we are passionate about and in those we strongly believe will make a difference in our society.

Our social capital is the money that, if we didn't invest in charity, the government would take in taxes and decide for us how to spend it. So, ask yourself the question: "Do I want to invest my own social capital or allow the government to use it in ways that could be wasteful, ineffectual and counter to my passions?"

This concept will allow you to not only assist non-profits, but also initiate and nurture the concept of philanthropy in your children and other family members. Why not create your own family "Social Venture Capital" fund and engage all the members of your family to decide how to raise the funds and where to make the investment? It can become an ongoing family activity teaching and bringing new ideas to everyone involved. Here are five tips and techniques for launching your own personal social capital fund.

Educate your family about philanthropy--discuss with your family what philanthropy is and why it's virtually unique to our country. Give them examples of famous philanthropists and what they've accomplished, like Andrew Carnegie and the Carnegie Corporation. One of Carnegie's lifelong interests was the establishment of free public libraries to make available to everyone a means of self-education. There were only a few public libraries in the world when, in 1881, Carnegie began to promote his idea. He and the Corporation subsequently spent over $56 million to build 2,509 libraries throughout the English-speaking world.

It was Carnegie, in his The Gospel of Wealth, who asserted that "all personal wealth beyond that required to supply the needs of one's family should be regarded as a trust fund to be administered for the benefit of the community". Does that premise still relate to today's world? What does your family think of that philosophy; or would they rather retain more money to accumulate additional possessions or go on more vacations?

Establish your fund--decide how much your family can afford--perhaps it's only $500 or $1,000, but it's a start. Do more if you can. Encourage your children to raise additional funds. Give them fund-raising ideas and help each other with the projects. Perhaps the family fund could match each child's results and double the amount of the gift they choose to make.

Choose the recipients--the entire family can become involved in this aspect as well. Perhaps each one will have his/her own favorite charity to support or maybe the family will agree to choose one or two and support them. Help them select a charity based upon its impact in the community or society. Let each person select their recipient and present a report to the family. Arrange site visits if possible, so you can see where the money will go and how it will be spent. Think of the emotional and educational benefit this hands-on activity will have on the children.

Follow up with visits to the charities--perhaps your family might become involved as volunteers and get to live out the missions of these organizations in a very personal way.

It does work--one doesn't have to be an Andrew Carnegie or Bill Gates to have your social capital investment pay big dividends. A few years ago, when I consulted in Denver, CO, one of my clients was a very hard-working, successful Asian family. The parents were major manufacturers in Taiwan, allowing their five children to become successful, accomplished professionals: a cardiologist, an orthopedic surgeon, a dentist, etc. They engaged my firm to help them invest their social capital because they wanted to ensure their giving would make a difference in the community.

We began from the very beginning, creating a mission statement, seeking out grantees, evaluating them, providing background data, making recommendations to the family "board" and arranging site visits to the charities. It was thrilling to watch the excitement grow as the family began to make grants and see the difference they made. It was truly a family venture that paid huge dividends both for them and for the community.

More recently, I was fortunate to meet an inspiring woman, Kathryn Playa, who is an actress. She decided to put her career on hold to create the Playa Foundation, whose mission is to support other non-profit organizations that nourish children's health, education and welfare. She made a huge investment, not only of her own financial resources, but of her time, her hopes and her dreams to make an immediate difference in the lives of children. To learn more about her foundation and, perhaps, invest some of your own social capital with her, go to

My point is that you, too, can become social capitalists like the Denver family and Kathryn Playa. It simply takes the commitment to helping people and to nourishing the budding philanthropists in your family who will go on to make a difference in their world.