It’s better to give than to receive

Philanthropy is hot – and �growing. The �reason for this growing trend is a result of �several factors: �surplus wealth �capital; a global move toward social responsibility among the wealthy; and the numbers of major families already pledging funds toward causes. A recent study into philanthropy by Scorpio �Partnership illustrated the �emergence of a more strategic �investment-minded approach to �giving and a need for enhanced �professional advice to develop �philanthropy strategies. The study was conducted on 34 �families in the UK, Switzerland and Germany, with between $90m and $2.5bn in total wealth. The average family gave 5 per cent of their net income for causes as varied as �historic �restoration, education, �climate change and terrorism. The research found that most wealthy philanthropists are project-�orientated and want to see tangible outcomes of their philanthropic endeavours. They also prefer a �strategic approach to giving (see Fig 1). Many UHNW philanthropists, �particularly those from financial �backgrounds, are also treating their philanthropic journey as a venture capital business venture. In fact, they are even prepared to take risks with the capital. They also aim to exit their endeavours within 3-4 years and then deploy their strategic �philanthropy capital elsewhere. Furthermore, the research found that philanthropists who gave the most personal time and capital to philanthropic endeavours are highly strategic in their project selection, often binding it to a clear theme for their personal/family foundation(s). Many larger families placed funds in three categories based on thematic issues for the core capital and an “opportunistic fund”. The latter �strategy is based on the recognition that philanthropy is emotive and ad hoc funding is still likely to occur. Indeed, strategic philanthropists retain funds to deploy on spur-of-the-moment �initiatives (see Fig 2). The research also uncovered �variations in national attitudes toward donating. For instance, German �families are discreet in their giving process, as well as localised in their (German and Eastern European) �orientation. However, UK and Swiss families are more international in their giving due to the cosmopolitan nature of the UK and the major international charities based in Switzerland. In the context of philanthropy today, there is a growing need for �advisors who can guide – particularly first-time �philanthropists – through the philanthropic process, helping to define goals, levels of involvements and providing project feedback. Interestingly, many families saw this as a highly specialist role, and one that a bank could not easily fulfil. This has a clear impact on the trend for banks to offer philanthropic �services to both deepen client �relationships and attract new ones. Graham Harvey, analyst, Scorpio Partnership