Yes, Clients Really Do Want You to Ask!
Highlights from the report “Philanthropy in the Family Office: a Global Perspective” prepared by Eileen Wilhem
The following material is based on the “Philanthropy in the Family Office: A Global Perspective” white paper presented by the Global Family Office Community in partnership with Hammer & Associates. As the first independent global report aimed at helping family offices approach, incorporate and measure philanthropy in a thoughtful and effective way, this white paper is the result of a comprehensive research exploring the role of philanthropy in family offices globally through in-depth conversations with family offices, high-net-worth individuals and philanthropy advisors.
The summary below highlights some of the key points of this report and serves as a gateway to the full white paper.CAF America deeply appreciates the generosity of the Global Family Office Community and Hammer & Associates for sharing this valuable research.
Wealth is increasing the world over. In the past 7 years alone the number of High Net Worth (HNW) and Ultra High Net Worth (UHNW) individuals has grown significantly: a 54% increase in millionaires and a doubling of the number of billionaires. As wealth increases, so does philanthropic activity.
HNW and UHNW clients regularly identify philanthropy as one of their top four concerns in terms of advice, service and support.
Family offices are often trusted with philanthropic giving. However, in spite of the growing interest in philanthropy, many family office staff are reserved when it comes to raising the topic. The following reasons were found to be commonly cited during the interviews:
- They don’t know if the family is interested in philanthropy
- They don’t think it is their role to initiate this conversation
- They don’t have philanthropic expertise: thus lack confidence in how to properly advise the family.
Research shows that the most successful family offices manage virtually all aspects of a family’s financial life – from how wealth is acquired and managed, to how it is distributed. They are uniquely positioned to implement effective and meaningful philanthropy. Their flexibility and agility enable them to act swiftly as interests or opportunities arise.
In line with the above, the research found that —
Philanthropy is a way for families to bring their values and their legacy to life.
Discussions around personal values, interests and family stories are meaningful and bring multiple generations together around common ground.
Philanthropy inspires innovative thinking and passion for change.
Wealthy individuals who are creative, entrepreneurial and savvy want to innovate in solving world problems, just as they innovate in their business. These individuals have the skills, sophistication and agility to envision and act on new ideas. The more they know about their options, the more they are able to take strategic action and bring forth tangible results. Knowledgeable advisors bring significant value to these discussions.
One recommendation for new wealth donors is to balance enthusiasm with knowledge. Lisa Parker, president of the Lawrence Welk Foundation and Vice President of Philanthropic Services for The Whittier Trust Company remarked “In the Silicon Valley region, the hot seat of innovation, we see entrepreneurs starting their own nonprofits and initiatives, but these are not always well thought out. While fresh ideas and an entrepreneurial approach are badly needed in philanthropy and the nonprofit sector, so is wisdom from long-standing philanthropic support organizations on what is, and what is not, effective giving. There is a massive body of wisdom and research that gets left on the table.”
Philanthropy softens discussions about more complex family and governance issues.
Research shows that families who prosper from one generation to another do so because they have robust governance structures in place. Philanthropic conversations serve as an entry point to other more potentially contentious discussions such as family governance, succession, and unproductive dynamics.
Philanthropy teaches the family to work together and promotes family unity over time
Drawing family members together around a philanthropic cause teaches new skills including collaboration, compromise and shared decision-making. This can bring new layers to relationships and boost the changes for family unity over the long term. Gillian R. Howell, National Head, U.S. Trust Philanthropic Solutions says “philanthropy is the glue that holds families together for generations.”
More focus on global issues
Less focus on funding within a certain geographic area and more in favor of funding on global issues such as climate change, access to fresh water and sanitation, human trafficking etc.
How to give internationally?
Cross-border giving is challenging. Many of the wealthy are global citizens and want to give globally but don’t know how. They want to give back to their countries of origin or where they made their wealth.
CAF America has been breaking down barriers to global giving for over 20 years. We can help donors and their advisors navigate those challenges by making global giving easy, effective and impactful for US, and for US/UK dual citizens.
Giving is an investment, not a handout
New wealth philanthropists want to know what is the Social Return on Investment. What is the long-term gain from short-term support? Many seek to solve issues vs. support them.
Through our Advisory Services, CAF America helps develop and implement innovative and impactful philanthropic strategies. We then monitor, manage and measure results not only for outputs, but also outcomes.
Impact is imperative
How can we fix what is wrong? New approaches to giving care about solving the root cause of the problem and demonstrating a measurable change. Less about the program itself, more about what it achieves.
New wealth donors want reporting not just on the money and how it was used, but also on the overall performance of the organization.
New wealth donors want to do more than fund for a few years and move on. They want to know the organization will continue when they stop funding it. A common question is “How do we make sure these people don’t rely on us forever (or see us as the bad guys when we retreat)?”
The more engagement, the better
New wealth philanthropists want a more personal, hands-on connection with those they give to and are willing to give their time, skills and connections along with their money. Smart nonprofits engage their donors hearts, heads and hands.
To learn more about the findings of this research and how can family offices approach, incorporate and measure philanthropy in a thoughtful and effective way you can access the full white paper here.