It is the “Giving Season” – that time of year when, in different parts of the world, thoughts turn to how to pass on resources, both monetary and non-financial, to good causes. 

Philanthropy has long ceased to be a fringe area for private client advisors and banks. This is now a Prime Time activity. But what does the wealth sector, including family offices, regard as the priorities for clients?

HNW individuals want to give what they can but they are also impatient about a lack of perceived results. Considering that many wealthy people rose to their fortunes by entrepreneurship and learning to sweat the fine details, this attitude isn’t surprising. 

According to Ocorian, a provider of services to high net worth individuals and family offices, financial institutions, asset managers and corporates, philanthropic giving by family offices is set to grow strongly over the next two years, according to a poll of family office managers from around the world. But here is the kicker: Family offices want to see some investment return. Around two-thirds (67 per cent) expect to see some form of return on 25 per cent or more of their philanthropic giving; 16 per cent expect to see a return on half or more of their donations. For the Ocorian report, 309 people around the world were surveyed.

Philanthropists have certain expectations. 

“The level of philanthropy from family offices and ultra-high net worth families is increasing and they’re less interested in their money going into a vacuum – they are enjoying increasing involvement and want to see tangible outcomes from their donations,” Lynda O’Mahoney, global head of business development - private client at Ocorian, said.

And in managing expectations, realism about what’s achievable is essential. Elizabeth Cribbs, executive director, senior strategist – family advisory and philanthropy services, at UBS, told Family Wealth Report that families realize that they cannot always “go it alone.”

“The biggest trends we are seeing, and ones that we hope will continue, are our clients giving 'in community' and in partnership,” Cribbs said. “Clients are increasingly interested in learning from their peers – whether it be at in-person philanthropy roundtables or global video calls around certain topics.”

“Fortunately, philanthropy isn’t proprietary, and clients are willing to share best practices and ideas with each other and learn from experts. We are also seeing increased partnership with nonprofits. Money is a coveted resource, but clients are also giving of their expertise, connections and their 'grace and space’ if nonprofit partners need to rethink their plans or strategy. We always say – nonprofit partners are tackling extremely hard problems. Just as in the for-profit industry – one needs to constantly innovate and tweak – the same holds true for the nonprofit world and our clients, many of whom are entrepreneurs or business leaders themselves, are supporting this,” Cribbs said. 

(On a related front, this news service has opened nominations for the fourth annual Wealth For Good Awards.) 

Proactive
Another example of a trend is what might be called “expected giving”: instead of reacting to a natural disaster such as Hurricane Helene in September, philanthropists are preparing for others, and trying to get ahead of when trouble strikes. It also appears that budgeting for charitable giving, rather than treating it as a one-off matter, coincides with higher levels of giving overall. Vanguard Charitable, a sponsor of donor-advised funds (DAFs) in the US, found that among donors with a charitable giving budget, 83 per cent donated to disaster relief in the past 12 months, as opposed to 61 per cent of donors who did not have one. (Its findings stemmed from a poll of over 2,000 US adults.)

Getting involved
Sometimes described as an “on-ramp” activity, philanthropy gets younger people interested in managing money, binds families together, and is a good way for wealth managers to make new connections in this time of multi-trillion wealth transfer. The business is evolving. There has been the rise of DAFs in the US, for example, with a total of $251.52 billion in assets (source: National Philanthropic Trust). DAFs provide a relatively straightforward – and anonymous – way ot philanthropic giving, also plugging into existing causes and avoiding certain costs. There is a smaller DAFs market in the UK. 

Foundations remain a big area also. Among foundations in the US, for example, assets increased by $30 billion, or 2 per cent, to nearly $1.6 trillion during the second quarter of 2024. (Source: The NonProfit Times, July 2024, citing data from FoundationMark, which tracks the investment performance of 50,000 foundations representing about 98 per cent of total foundation assets in the US.)  DAFs and foundations have their pluses and minuses, depending on why and what they are used for. (See an article here.)

The aftermath of the pandemic, worries about cultural and social strife at home, wars and natural disasters around the world, give those of a generous inclination plenty to get energized about. UBS’s Cribbs made a point that is becoming familiar: Philanthropy strengthens family ties, gives younger people a chance to make an impact, and flattens hierarchy. 

“We always tell clients when we are facilitating a philanthropic strategy session or whiteboarding – there is no 'head' or 'foot' of the table. It is a roundtable discussion where all voices matter. Although family members have individual passions and priorities – family members can usually agree on a few focus areas where they jointly want to make an impact. Then we segue into where and how they want to engage, and how they can support each other,” Cribbs said. 

Those who want to support causes also need to get their feet wet to learn about the workings of philanthropy, and a simple set of tools are important. 

“Families who might not be ready to share their full financial position with young adults often use their foundation or DAF balance sheet as an opportunity for the next generation to learn about investments and make some decisions around them,” Cribbs said. “When families are used to the cadence of convening, communicating and sharing ideas, discussing the broader wealth transition plan follows easily as a next step.”

Cribbs said this time of the year is an important period for conversations. 

“We see clients giving kids of all ages and even extended family members the opportunity to “gift” out of their DAFs. Some DAF providers call them 'giving certificates'. It is a great non-commercial gift option. We also tell clients – engaging the next generation in philanthropy doesn’t have to be complicated. Whether it is taking younger kids to the store to pick out a holiday treat for their school bus driver, arranging a family outing to a local senior center to spread some holiday cheer or discussing grant proposals for critical causes during a family dinner – the point is to take action and make an impact in a way that is meaningful to that family,” she said. 

The role of the philanthropy advisor to HNW individuals is also a relatively new area. 

A recent book, Advising Philanthropists: Principles and Practice, by Emma Beeston and Dr Beth Breeze, spells out some criticisms of philanthropy and defenses of the space, such as how charities can go into difficult areas that governments, for understandable political reasons, might not want to enter. (This news service has written editorial on the subject here.)

Gaps remain, however. 

There are opportunities, wealth managers say, for HNW families to embed philanthropy more deeply in their lives. Nedbank Private Wealth, which operates in London, the Isle of Man, Jersey and Dubai, says philanthropy can be used to foster trust and raise skills of heirs, but it found in a survey that 57 per cent of Millennials with wealth of more than £25 million ($31.4 million) say their family has no philanthropic arm. 

That said, it appears that families – as measured via family offices – are keen on philanthropy in general. According to the Ocorian survey mentioned above, 70 per cent of family office professionals, including those working for multi-family offices, estimate that giving will rise by 15 per cent or more over the next two years. Around 25 per cent think spending on philanthropy will rise by 20 per cent.

The Ocorian study of family offices, covering a segment collectively responsible for about $155 billion in AuM, found that the main areas for philanthropy will be healthcare and medical research.

(See here for last December's thoughts about philanthropy on both sides of the Atlantic.)