In January, Jersey Finance CEO, Geoff Cook, spoke with Philanthropy Impact on changing attitudes towards philanthropy and impact investing.
As attitudes towards philanthropy and impact investing have continued to evolve and as philanthropic endeavour has become more sophisticated, a gap has emerged between the desire to engage in philanthropic activity and the knowledge and tools required to bring that ambition to fruition.
The clear indications are that philanthropy is becoming increasingly embedded as a core part of a comprehensive wealth management strategy, and as a result advisors and specialist wealth management jurisdictions are having to adapt quickly and appropriately to ensure they adequately meet the philanthropic objectives of High Net Worth Individuals (HNWIs) and their families.
For example, research carried out by Philanthropy Impact in 2016 points clearly to the fact that clients are wanting more high-quality philanthropy advice and guidance than ever before.
It’s clear that there is a need for a more tailored approach to philanthropy as part of holistic wealth management strategies, and doing so can not only empower investors and families but actually also help advisers deepen their relationships with clients and enable them to support clients better in achieving their long-term goals.
Further evidencing this rise in philanthropic endeavour, the 2016 Coutts Million Dollar Donors Report, which logs donations of USD$1 million or more, logged 2,197 donations worth $56bn in total across the UK, USA and Middle East (GCC) in 2015. That represents a dramatic and rapid increase on the $17bn donated the previous year.
At the same time, those wishing to engage in philanthropy are actively seeking expert support – but support that, it appears, can be difficult to find.
A report published last year by State Street Global Advisors for instance – ‘The heart of wealth management: Helping clients align philanthropic and financial goals’ – showed that clients who are able to receive guidance on philanthropic planning from their advisor are 40% more likely to be very satisfied with them. It also found that 62% of investors agree it is important to educate the new generation about family values and legacy.
However, the same Philanthropy Impact research suggested that less than 20% of UK advisory firms currently offer specialist philanthropic advice, and the depth and breadth of this advice varies significantly, with respondents giving an average score for the advice they receive of just 5.9 out of 10.
Nevertheless, that research found that offering expertise on philanthropic giving and impact investing is not only good for the client, but for the adviser too. Providing this service helps attract new clients and align advisory firms with their clients’ core values and interests.
It is also more sustainable because it encourages clients to talk about their long-term goals and addresses the shifting values of the next generation and millennials, and of course the growing role of women in wealth.
There is undoubtedly a growing need for high quality professional advice, guidance and education when it comes to philanthropy.
According to a study by the Charities Aid Foundation and Scorpio Partnership (2015), philanthropists are looking for advice in a broad range of areas. Unsurprisingly, tax is a key issue (17% of respondents), but understanding need and selecting social causes (12%), selecting charitable organisations and projects (11%) and monitoring the impact of giving (11%) are all important areas where guidance is needed too.
Moreover, with philanthropy being a truly international affair now, support needs to be global in scope too.
A white paper, produced by Jersey Finance in conjunction with Hubbis in 2016, explored key trends in one of the world’s fastest growing wealth markets, mainland China. The paper, “The internationalisation of Chinese wealth”, concluded that ‘Chinese clients increasingly say they want to leave the majority of their estate to charity, or for philanthropic purposes’ and that ‘philanthropy is a concept which is gaining some traction among families, although domestic laws are not well developed yet in this respect’, suggesting some real scope for specialist international support.
Overall, the picture is one of HNWIs wanting to pursue philanthropic endeavours and needing broad professional advisory services to realise their ambitions and have a genuinely positive impact in communities around the world.
Against this evolving backdrop, Jersey has set out on a journey in recent years to create a robust professional environment for philanthropy and provide a framework for advisers to deliver high quality philanthropic advice.
We know that Jersey is already home to a number of internationally-focused philanthropic projects – for instance, trust and corporate services provider Minerva works with the Meghraj Charitable Foundation to target philanthropic activity on sustainable business or welfare-orientated projects making a social impact in East Africa and South Asia; Jersey was selected by RBC Wealth Management’s client as the place of incorporation for a foundation providing scholarships and training for young people in Asia; and BKS Family Office has created a philanthropic charitable trust to manage the inheritance of a European client who wished to have the monies used for medical aid, education, water distribution and helping the elderly, predominantly in Latin America, Africa and India.
However, Jersey’s Charities Law is continuing to be introduced in phases to enhance its framework even more and help meet the requirements of the modern-day philanthropist.
The Law has already seen the appointment of a new Charities Commissioner, who is independent and has responsibility for establishing a charities register – expected to come on stream in Q2 this year – and for ensuring that charities registered on it meet their legal requirements.
The Law has also introduced standards that those who run charities in the Island will have to abide by and a new test for what is charitable (the “Charity Test”), whilst in due course it will also enable a Charity Tribunal to be established. Ultimately, it is hoped that the Law will enable the Island to flourish as a centre for the administration of charitable and philanthropic structures.
Underpinned by a strong pool of philanthropic expertise, Jersey’s new law and regulatory regime is a clear demonstration of the commitment that Jersey is making to the evolving philanthropic landscape and an acknowledgement that more needs to be done globally to bridge the gap between philanthropic desire and implementation.