With a renewed sense of purpose comes an opportunity to reshape priorities and practices for the next era of philanthropy. At Hawksford, we believe this shift in expectations opens up new and exciting opportunities for our clients, and the industry as whole.
To understand where philanthropy is heading, we participated in a webinar with Philanthropy Impact – a charitable organisation, whose mission is to increase the flow of capital for good by enabling private clients and their families to match their purpose driven wealth strategies with their values, capturing their impact/ESG investment and philanthropy preferences – to discuss how the trends of today will shape the philanthropy of tomorrow.
The webinar brought together the insights of Darren Kelland and Laura Nevitt (Hawksford), Charlie Tee (Withersworldwide), Victoria Papworth (Coutts Institute) and Paul Knox (JP Morgan Private Bank).
Wealth and the next generation
‘The Great Wealth Transfer’ is upon us. Financial experts and journalists have predicted that the next two decades will bring about some of the greatest transition of wealth between generations in history. Millennials are benefiting from Baby Boomers, large inheritance is bringing clients in their early twenties, and wealth is being generated by younger generations in brand new ways.
So, what does philanthropy look like when wealth is firmly in the hands of the next generation? As Darren Kelland, Global Head of Private Client Services at Hawksford, highlights:
“The role of the younger generation in terms of philanthropic giving is becoming increasingly significant. We often see that it’s young people in wealthy families who put their hand up for the role of overseeing the philanthropic arm of the family.
“What was acceptable in terms of the use of wealth in previous generations has changed in the younger generation. A key area where we see that transition is in relation to ESG and impact investing, not just in the wealth of families, but in their philanthropic viewpoint.”
Environmental, social and governance factors
For Laura Nevitt, Private Client Director at Hawksford, it’s an opportunity that brings new challenges to the table.
“We often have to find the right balance between the moral views of a family, which are increasingly ESG-related, with our fiduciary duty to preserve and enhance the value of the trust. However, the ESG landscape is rapidly evolving and the trade-off between financial and social returns is narrowing.
“As trustees, we approach ESG investing in the same way as traditional investing, by selecting the right manager, monitoring performance and assessing whether the investment strategy is being achieved which, in the case of ESG, includes assessing true sustainability,” continues Laura.
“This whole area is really exciting, we are seeing new trust structures being established with much more flexibility being built into the trust instrument, which will help facilitate ESG and social impact investing,” she adds.
According to Charlie Tee, Partner in the Private Client and Tax Team at Withersworldwide, considering ESG as a key trend in the future of philanthropy is crucial. “Any family or trust with a portfolio needs to be thinking about ESG at the moment. It’s becoming such an important part of the world we live in nowadays; it’s fundamental for philanthropy going forward,” says Charlie.
Legacy within a lifetime
When it comes to conversations about philanthropy, Darren Kelland distils the discussion down to two pivotal questions: “What is your money for? And what are your philanthropic goals?”
Victoria Papworth, philanthropy specialist at the Coutts Institute, expands: “It’s not just about the money and what you want to do with it. It’s about asking, ‘what is the purpose of your wealth? What is it not for? What do you want to do as a family to explore your own family values?’”
These types of questions are reshaping the world of philanthropy and will have a significant influence on the future. As Charlie Tee explains, “it’s now much more about asking what we can do in our lifetime. There has been a shift, driven by high-profile philanthropists like Bill Gates.”
A new type of purpose-driven giving is coming to the fore, agrees Paul Knox, Managing Director and Senior Wealth Advisor for the ASIAPAC region of the JP Morgan Private Bank. “Increasingly, clients want to use their wealth for philanthropic purposes during their lifetime. More than one individual has told me that family inheritance is secondary to dedicating their wealth to their philanthropy over their lifetime.”
“People want to be known for more than just their business,” continues Paul. “Doing something with an immediate purposeful impact in the philanthropic space means they’re recognised for that in their lifetime.”
A new approach
In light of the great wealth transfer, and a world with new and increasingly complex challenges, it is perhaps unsurprising that our panellists are predicting changes in the tactics used in philanthropic giving. The key takeaway? The importance and power of collaboration.
“We are seeing advice and structures which allow people to give collaboratively. We’ve seen the power and success of crowdfunding; it’s taught us that very small donations can make an enormous difference to a cause,” says Victoria.
Charlie Tee also recognises this new dynamic, and sees the inter-generational wealth transfer as a key part of the shift. “I suspect over the coming years we will see more collaboration. This is how younger people are doing business. This is how they’re networking. They’re making these kinds of decisions, to unite, because it’s the best way of advancing their individual causes.”
As Laura says: “The philanthropy and social investing landscape is broad and evolving rapidly. Developing a network of expert advisors is key to us being able to provide a holistic service to our clients and help them achieve their philanthropic goals and support their social values.”
As an organisation, Philanthropy Impact sits in a unique position at the intersection between philanthropy, social and impact/ESG investment and enables cross-sector collaboration and networking to solve many of the issues our global society face. They are about to embark on a project to design and develop a directory of resources through a web-based platform which will help philanthropists, impact investors and their professional advisors connect with specialists in the space.
Above all, philanthropists are becoming increasingly solution-focused, moving from general charitable giving towards goal-orientated philanthropic work.
“I think a lot of philanthropists are prepared to do whatever works best, in whatever circumstances,” concludes Paul Knox. “Philanthropy is often such a personal thing. Satisfaction is found in solving the problem.”
For more information on Hawksford’s philanthropy services, or to find out how we can support you with your philanthropic objectives, visit our website.