Philanthropic giving remains a leading concern for the world's wealthiest individuals. Done well, it's a powerful tool that adds meaning and purpose to life. For many individuals, strategic philanthropy is a way to articulate the purpose of their wealth and to better understand its value, as they seek to have more of an impact on the causes that are important to them.
In the past few years, we have seen tremendous innovations in giving and philanthropists are now donating in ever more diverse ways. For an increasing number, creating a legacy is no longer the only priority. The focus has turned towards innovative, impactful ways to support social and environmental causes.
To help explain the new philanthropic lifecycle, this article brings together the insights of Darren Kelland and Laura Nevitt (Hawksford), Charlie Tee (Withersworldwide), Victoria Papworth (Coutts) and Paul Knox (JP Morgan Private Bank), to discuss how, across various firms and disciplines, they collectively bring purpose and impact into play in the lifecycle of their clients.
Beginning your philanthropy journey
High net worth individuals may start their philanthropy lifecycle at different stages, and with very different ambitions. Some might include self-made entrepreneurs, those with inherited wealth, or business people who've accrued significant wealth in the commercial space.
These different starting points can influence the role philanthropy might play in the early stages of a client's giving journey.
"Sometimes, particularly for our entrepreneurial clients, philanthropy can often seem like a conversation that they want to have at the end of their wealth journey," says Victoria Papworth, Coutts. "For those individuals who have perhaps inherited wealth, their relationship with philanthropy often starts much earlier."
"I thought about the wealth lifecycle of a client, and, for me, there are two distinct opportunities for individuals and families to become wealthy. One is through commercial ventures, and one through inheritance," adds Darren Kelland, Hawksford. "Quite often, those then become the starting points for discussions with professional advisors around structuring the future."
Nowadays, the lifecycle of philanthropy often begins with these conversations. Hawksford's private client services team encourages clients to examine their goals and values when it comes to their wealth, and the causes that matter to them.
"First and foremost, clients want to make sure that their immediate family needs are catered for," says Laura Nevitt, Hawksford. "If they feel comfortable, and they have sufficient wealth for the family going forward, it's then that we can start talking to them about how they can deploy some of that wealth for charitable purposes."
Victoria adds: "It's not just about the money or what you want to do with it, but the purpose of your wealth? What is it for? What is it not for? Once you have established your family security, once provisions for your health are in place, and your children are supported as they start their life's journey, what do you want to do as a family to explore your family values?"
Creating a family legacy
When it comes to the new lifecycle of philanthropy, for many clients, family is at the heart of the journey. Whether it be the creation of family trusts or charity foundations, or passing on philanthropic work through multiple generations, the family structure can serve a useful tool when it comes to innovative giving.
Combining the experience of multiple family members, pooling resources, and sharing opinions can lead to diverse and meaningful philanthropic objectives. For many clients, their entrance into the philanthropy lifecycle begins when they start to frame their wealth around family.
"Ideas around charitable giving and philanthropy may be different between generations; it's important to get a consensus from the family as to what they're seeking to achieve collectively," says Paul Knox, JP Morgan. "One area where we can see values differing is around ESG and impact investing.
"Any family or trust with a portfolio needs to be thinking about ESG right now, irrespective of whether a family has grand overarching philanthropic aims or not," adds Charlie Tee, Withersworldwide.
While ESG investing and philanthropic giving are two separate disciplines, considering the relationship between the two is a new and important stage in the philanthropy lifecycle.
Giving and the next generation
Driving the new philanthropy lifecycle is, for the most part, the younger generation. Bringing a fresh approach to the philanthropic space, the younger generation are often seeking advice on turning their charity ambitions into a reality.
"I'm certainly noticing that there is a trend in recent years around the younger generation and charity. They're starting early, at 20 years old or so, and they're very philanthropically minded. They have a cause they want to do something about, and they're passionate," says Charlie.
Laura adds, "It's the younger generation who increasingly lead conversations around what money is for, and what it is not for. We're moving away from just wanting to actively invest in something which offers positive social change, but to actively disinvest from those things that are negatively impacting on the planet or upon communities."
Charity beyond a lifetime
"When I started out in my career, most of the discussions I was having with clients about philanthropy and charitable giving was, what are they going to do after death? What are they going to put into their will? But now, it's much more about what can we do in our lifetime?" explains Charlie.
And indeed, this is another key part of the new philanthropic lifecycle: more than ever, clients are looking to give while they're alive, and finding solutions to problems relating to causes that mean something to them.
Celebrity and high-profile wealthy individuals have played a part in this change; speaking openly about their desire to spend and give during their lifetimes. More than anything, philanthropic strategies are growing ever innovative. For many high net worth individuals, giving has become more hands on. This personal involvement in philanthropy is proving rewarding, and is providing individuals with lifelong purpose.
"All of our clients are human at the end of the day, and they still have things that have happened to them, in terms of life events – the death or illness of a family member, for example. That can change the dynamic around philanthropy," says Darren.
"Finally, people want to be remembered for more than just being someone who got lucky. They are asking, 'what good can I do? I want to pass on some of my luck to others'."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.