Family Office

Charity & Philanthropy

A growing number of (U)HNWI considers getting involved in charity or philanthropy. But finding a family office that is able to support you with this topic could be a challenge. There are only a few family offices in Switzerland (and the rest of the world) that have the in-house knowledge and the experience to support you with philanthropic services. The average family office will have a hard time supporting you with philanthropy.

The difference between charity and philanthropy

The first question to ask is what the difference is between charity and philanthropy? Although there is not a set definition, it generally comes down to it that charity is more a one-time gift or action to solve somebody's (or a group of persons) direct needs and philanthropy is considered more as an approach or philosophy how to make the world a better place to live and how to improve the living circumstances of all the less privileged in the world over a longer period of time. A good example of a philanthropic organisation is the Bill & Melinda Gates Foundation.

Charity

Charity is the less difficult of the two to explain and implement. With charity it is more a question of how much money you want to donate to which organisation. A family office will therefore not really (need to) support you with charity, unless you donate really serious amounts and want to monitor what is happening with your donations, or you want to establish your own grant-making foundation or trust, because you want to get personally involved.

Philanthropy

Philanthropy is on the other hand a more difficult subject, and it could become quite a challenge to find a family office that is able to support you with it. The reason for this is simple. Because setting up a long-term philanthropic project in i.e. Africa, asks for a different expertise than managing your accounts at several private banks. The family office will need to be able to support you with issues like setting your philanthropic objectives, formulating a giving strategy, technical advice and operational management and the presentation of strategy initiatives. Even a smaller philanthropic project can be quite difficult to manage once you have set it up. It is therefore great if the family office is able to support you in managing and monitoring the project or help you select that already existing charitable organisation to which you want to donate. And you can imagine that setting up a bigger charitable foundation, to which also external parties are able to donate in the future, is really a challenge that needs professional support.

Not every family office supports you with philanthropy

There are only few family offices in Switzerland (and the rest of the world) that have the specialised knowledge and in-house experience to support you with philanthropic services. And there is an even smaller number of family offices which maintain an own charitable foundation in which clients can participate. There is another small group that will have good contacts to external experts, but the average family office will have a hard time supporting you with philanthropy.

Growing interest in philanthropy

This situation could change over time as a growing number of (U)HNWI wants to get involved in charity or philanthropy. The best example for this is the 'giving pledge' initiative of Bill Gates and Warren Buffett. In 2010 they have invited the wealthiest families of the United States of America to commit publicly to giving the majority of their wealth to philanthropy after their death or already during lifetime. So far the giving pledge is a great success and it is clear that other wealthy persons living outside the United States of America will follow this example. For a family office wanting to serve its clients well, philanthropic services will get more important every year and therefore they will adapt over time to offering these services.

If you intend to get involved in charity and/or philanthropy we advise you to pay special attention to the capacities (or incapacities) of the family office you intend to use to support you in this field.