In 2006, while closing a $230 million deal to sell his financial firm, AssetMark Investment Services, Ron Cordes realized just how little he and his wife, Marty, had discussed money with their daughter. Ron was working around the clock, and one day Stephanie—16 at the time—declared to him, “I hope they’re paying you overtime.” Ron couldn’t help chuckling: CEOs may work overtime, but most don’t get paid by the hour.
Fast-forward to 2014, and it was Stephanie, the Cordeses’ only child, who was a step ahead in financial sophistication. After learning in a finance class about trusts and the role they play in passing wealth to the next generation, Stephanie asked if she had one. Ron could only shrug: “We had never set one up,” he says. And the stakes were even higher for the Cordes family because they control a charitable foundation with more than $10 million in assets.
When it comes to talking about estate planning—a topic that combines the ultra-awkward subjects of death and taxes—families with fortunes aren’t any more comfortable than the average American is. But when the older generation wants to leave a philanthropic legacy (and on average, the wealthy plan to give away 12% of their estate to charities, according to U.S. Trust), the conversation can’t be put off. Families fare better when they work together to develop a detailed wealth plan in which a “mission is clearly stated,” says Greg Mech, managing director at high-net-worth wealth management firm Caprock Group. That’s the journey the Cordes family took this past summer.
Ron and Marty started the Cordes Foundation in 2006 with some of the proceeds from the AssetMark sale. They devoted it to helping women entrepreneurs in underdeveloped parts of the world. As cochairman, Ron has become a prominent advocate of “impact investing,” which involves investing in companies whose values align with the foundation’s and avoiding those that don’t. The Cordes Foundation, for instance, does not invest in companies that lack women in their top ranks. By 2014, 100% of its endowment was invested according to impact-investing principles. Ron is “basically transforming the business model” for his foundation and guiding others who are curious about it, says Paula Goldman, global leader of impact investing at the philanthropic Omidyar Network.
Notwithstanding their commitment to empowering women, Ron and Marty avoided recruiting Stephanie. “We never wanted her to feel as if we pushed her into this,” says Ron. She didn’t seem to have philanthropy on the brain, either; after college, she took a job selling advertising at Self magazine. But three years ago she joined her parents on a retreat the foundation hosts in Ixtapa, Mexico. After interacting with some 400 leaders and entrepreneurs devoted to eradicating poverty, Stephanie found that selling $250,000 Mercedes-Benz ads no longer seemed fulfilling.
Three Keys to Leaving a Legacy
Here’s how to increase the odds that your philanthropy will outlive you.
Develop a mission.
Discuss what values your family cherishes the most and leave wiggle room in the mission statement so future generations can put their own stamp on the foundation.
Offset your weaknesses.
Not everyone excels at investing or networking. Hire outside help to bolster weaknesses in your family’s skill set.
Let the kids drive.
Give your heirs projects to run so they can get practice utilizing their skills—and possibly failing—before they take over.
Stephanie, now 26, joined the foundation in 2014 as vice chair. She convenes with her parents and their foundation advisers for regular meetings at the round dinner table in their Park Avenue apartment in New York City, where the doorbell is on the fritz. It was there that the team decided to narrow the foundation’s focus—a move catalyzed by Stephanie’s interest in the fashion industry. Now its grants and investments primarily support women entrepreneurs whose businesses enrich their communities and engage women throughout the supply chain. This includes supporting clothing-focused efforts like the U.S.-based nonprofit Nest, which helps entrepreneurs in disadvantaged countries scale up their apparel-production shops.
Seeing Stephanie’s passion for this work helped persuade Ron and Marty to include her this past summer when they at last updated their estate plan and set up that trust. When Ron and Marty will have both passed away, 75% of their assets will transfer to the foundation via the trust. None of the funds earmarked for the foundation will be hit with an estate tax (assuming one still exists; congressional Republicans and President-elect Trump say they plan to repeal it).
Stephanie will choose which 25% of the couple’s assets she would prefer to keep for herself. She will pay estate taxes on any assets transferred to her that surpass the federal level, which is currently $5.45 million. That will leave her with the means to devote as much time as she wishes to the foundation. “We would fully expect” the directors to vote Stephanie in as chairwoman, says Ron, though that’s not required. As chair, Stephanie would decide whether impact investing remains part of the foundation’s strategy, and she would have the flexibility to change the focus of future grants as long as the foundation holds to the agreed-upon mission that she helped create.
Whatever Stephanie chooses, her actions will have helped the Cordes Foundation continue its work even after Ron and Marty no longer can. “Every parent wants to leave a legacy,” says Ron. Now he’s pretty confident he will.
A version of this article appears in the December 15, 2016 issue of Fortune with the headline “Keeping Charity in the Family.”
