Can you name a philanthropist in 10 seconds?
Who sprang to mind? Bill and Melinda Gates? Andrew Carnegie?
‘Philanthropist’ is a grand title, but what does it really mean? Does it relate to how much you give, what and when you give or why you give it? Does the word ‘philanthropist’ mean the same as it always has or is there a new era upon us?
Wealthy families often choose to gift some of their fortune to others, whether directly, through foundations or via trusts. Some focus on one specific cause, while others spread their contributions across multiple issues. Some families have a clear and defined strategy with dedicated funds allocated to charitable giving. Some give because they feel it is the right thing to do, others for tax planning or reputational recognition.
Developing philanthropic strategies often serves as a good learning ground for the younger generations or for those who do not want to be directly involved in a family business. But today’s landscape presents new challenges. There is more pressure than ever to get it right. Being seen to give time, money or skills to the wrong party can lead to significant reputational damage, sometimes worse than not giving at all.
In this mini-series we will explore:
- Who qualifies to hold the title of philanthropist?
- How can you better plan your philanthropic giving to ensure it is right for you, your family and for those you wish to help?
- Practical tips to maximise the impact of your giving
- Why and how have our viewpoints on philanthropy changed?
- Whether giving time and skills rates as highly, or is cash still king?
Have times really changed?
The definition of philanthropy has clearly changed over time. Historically, philanthropy meant helping the poor, usually through financial donations. Today it encompasses a broader range of charitable giving, including the contribution of time, skills and expertise.
We should remember that major donors of the past did also share their ideas and innovations to drive change and improvements in areas such as health and welfare. Also, women historically gave their time to charitable causes during eras where it was discouraged for them to work but to take on a more traditional role within the family unit. However, today younger generations often consider themselves as philanthropic through their volunteering and skills-based contributions as opposed to financial donations. The onset of the modern workforce and environment, digitalisation and the rise of women in society have all played their part in shaping the way we look at charitable giving today.
Key considerations
- What should you do if you do have a significant pot of wealth that you would like to give away?
- How should you go about distributing it?
- What challenges might you face along the way?
- How do you both create and sustain a legacy in the longer term so that your charitable donations continue to have an impact over many years?
NextGen thoughts
The younger generations do not automatically share their parents’ values and often they are motivated by different things. With one of the biggest wealth transfers on the horizon, baby boomers are concerned not only about their business legacy but also their whole family legacy, including their philanthropic one. Therefore, to ease their concerns and allow the younger generations to feel empowered and productive in shaping their family dynasty, it’s essential that they create a meaningful philanthropic strategy that brings multiple generations to a point of mutual understanding to shape the future philanthropic legacy for the entire family.
If you want to create a legacy that lasts in terms of wealth preservation and philanthropic giving, each generation must have ‘buy in’ and a say. It is important for the older generation to realise that viewpoints will evolve. Building strategies and mechanisms that are flexible enough to allow for adaptation will help guarantee a lasting legacy over time. We often refer to NextGen education as key to creating a strong, stable generational bridge, and it is as important with regard to philanthropy as is it is to any other issue relating to family and business governance discussions.
Our next chapter dives into the business of giving, and whether philanthropy begins at home.
