With rapidly growing wealth in emerging economies, the coming of age of a generation of digital natives, and a bevy of international giving networks, it is no surprise that the wealthier donors become, the more likely they are to focus on global causes, writes Strategic Philanthropy's Meg Lassar.

Editor’s note: Here is a guest article by Meg Lassar, of Strategic Philanthropy, an organization based in Chicago. Family Wealth Report is delighted to share these insights and welcomes any reader reaction.

No matter where in the world you work, you have probably noticed your clients adopting a more global approach to their philanthropy. Credit Suisse and Forbes Insights just released a report relating to this trend. The survey of 264 philanthropists documents how the culture of giving is evolving around the world. For example, 55 per cent of those with investable assets of $20 million or more say they’ve witnessed a growing culture of giving over the last five to 10 years, and 73 per cent say philanthropy has become a more dominant topic of conversation during that time.

With rapidly growing wealth in emerging economies, the coming of age of a generation of digital natives, and a bevy of international giving networks, it is no surprise that the Credit Suisse/Forbes Insights report concluded that the wealthier donors become, the more likely they are to focus their philanthropy on global causes.

Increases in philanthropy have been documented in countries where economies are expanding and wealth is growing, and a slow global recovery does not appear to be adversely affecting philanthropy.  In India, one of the fastest growing economies in the world, the average contribution to charity among HNWIs grew to 3 per cent of their total income in 2011, up from 2.3 per cent in 2010, according to Bain & Co’s India Philanthropy Report 2012. And more than half of those surveyed by Credit Suisse/Forbes Insights expect to boost their donations again in 2012. In addition, the Credit Suisse/Forbes Insights report noted a burgeoning culture of giving in both Latin America - where average annual wealth growth is expected to average 12.1 per cent for the next five years - and in Asia, where the population of UHNW individuals is expected to exceed the US by 2025.

As more philanthropists go global with their giving, their advisors will require more information about the various cultural, political and legal challenges their clients may encounter as well as a greater awareness of the opportunities available to clients interested in philanthropy on a global scale.

One such opportunity is the annual Mashable Summit, held in September during UN Week in New York City. Hosted by social media news website Mashable, the 92nd Street Y, and the UN Foundation, the event aims to address the question: “How can new technology and new media create solutions for the biggest problems facing my community?” This year, in a sign of the changing times, the summit took the conversation global by convening digital leaders beyond the US’s borders - in cities as diverse as Mogadishu, Manila, and Nairobi - in an effort to spark international collaboration.

Similarly, the annual Nexus Youth Summit brings together young wealth holders and social entrepreneurs with the purpose of transforming global philanthropy. Last year’s summit inspired $10 million in philanthropic donations and helped launch dozens of cross-border partnerships. Whether clients are looking for meaningful ways to invest their philanthropic capital or are themselves pioneering a new social enterprise, the summit - which also hosts events in London and Beijing - provides access to a network of supporters with whom they can exchange ideas, problem-solve and create new ventures aimed at solving the world’s most pressing challenges.

Hurdles

Although global givers are increasingly connected to one another, international donors can still encounter various hurdles when they try to extend their philanthropic reach beyond the borders of their home countries. Thirty per cent of respondents to the Credit Suisse/Forbes Insights survey said they have faced difficulties dealing with government infrastructure, and another 31 per cent said that understanding cultural differences has been challenging.

Having legal counsel with specific expertise in cross-border giving can help donors and their wealth advisors navigate complex government rules and regulations. This is especially important in light of the actions taken over the past year by the governments of Russia and Canada to pass new laws prohibiting certain classes of civil society organizations from receiving foreign funds. Donors and civil society organizations should also consider becoming stronger advocates for better laws governing charitable transactions both within and beyond the borders of their home countries. In Brazil, for example, such efforts have resulted in legislation that is currently being drafted to create a framework to incentivize philanthropy.

Momentum

Recent developments indicate there is momentum building around creating a more fluid culture of giving between countries. For instance, during the Nexus Summit, the law firm McDermott Will and Emory released the preliminary findings of a global report on tax incentives for philanthropy which will serve to encourage new legislation and mobilize support for a new UN Resolution calling for a Global Campaign for a Culture of Philanthropy.  The Campaign will include efforts to encourage wealth holders around the world to advocate for laws in their home countries that promote philanthropy since the majority of member states in the UN system do not have such laws on the books.

In addition, on September 24, US Secretary of State Hillary Clinton announced new US Treasury Department and Internal Revenue Service guidelines "aimed at lowering the legal barriers and administrative costs associated with cross-border philanthropy in support of civil society worldwide." The proposed revisions to "equivalency determinations" (ie, the process by which a US grant maker evaluates whether an intended foreign grantee is the equivalent of a US public charity) allow foundations to rely on a broader range of professional tax advisors when making such determinations. It is expected that these new regulations will pave the way for the creation of centralized equivalency determination information repositories, such as NGO Source, that enable US-based foundations to streamline their international grant-making processes.

Thanks to the ubiquity of social media, the 24-hour news cycle, and the recent spate of natural and humanitarian disasters, wealthy donors - especially young wealth creators - are increasingly looking for ways to invest in social enterprises and donate to high-impact organizations regardless of where in the world they are located. Wealth advisors must therefore amass at least an elemental understanding of the current global giving landscape in order to ensure their clients have access to the best philanthropic opportunities and can adeptly navigate the complex cultural and political issues inherent in cross-border giving.