Charity & Philanthropy
A growing number of (U)HNWIs are considering 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 very 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 difference between charity and philanthropy
What is the difference between charity and philanthropy? Although there is not a set definition, it generally comes down to charity being more a one-time gift or action to solve somebody's (or a group of persons’) direct needs and philanthropy is considered more an approach or philosophy as to 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 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) actively support you with charity, unless you donate substantial amounts and would like to monitor what is happening with your donations, or you want to establish your own grant-making foundation or trust, because you wish to get personally involved.
Philanthropy is on the other hand a more difficult subject, and it could become quite a challenge to find a family office which is able to support you with it. The reason for this is simple. Because setting up a long-term philanthropic project (e.g. an agricultural development project in Africa), requires a completely different expertise than managing your accounts at several private banks. The family office will need to be able to support you with issues such as setting your philanthropic objectives, formulating a giving strategy, technical advice and operational management and the presentation of strategy initiatives. Even a smaller philanthropic project could prove quite difficult to manage once you have set it up. It would therefore be very favourable if the family office is able to support you in managing and monitoring the project or to help you select that already existing philanthropic project to which you want to contribute. As you may imagine, setting up a more sizable new philanthropic institution, to which external parties are also able to donate in the future, is a challenge that most certainly 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 their own charitable foundation in which clients can participate. There is another small group that maintains close contacts with external experts, but the average family office will have a hard time supporting you with philanthropy.
Growing interest in philanthropy
In the future a growing number of family offices will offer support with philanthropy as more and more (U)HNWIs want to get involved in charity or philanthropy. The best example for this is the 'giving pledge' initiative by Bill Gates and Warren Buffett. In 2010 they 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 has been 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 will therefore cause them to adapt over time so as to be able to offer 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.