This month we look at philanthropy and in a series of articles will delve into the sector. Here's an overview.

Wealth managers are endlessly hunting for that “added value” edge that wins over and retains clients. And to an increasing extent, it seems, philanthropy advice and support features on the menu, often as part of the main course. 

No longer just a “nice-to-have” option mentioned once the business of investment and tax is dealt with, philanthropy appears to be increasingly central, and firms are providing advisory/support services as a core offering. There are several reasons for this: firms can get into clients’ heads via philanthropy by finding out what often really motivates them; it can bind families together with shared values and specific goals, and it makes inheritors feel more ethically comfortable about their money. Philanthropy-linked events provide opportunities to build a firm’s brand – in a subtle way – and foster goodwill. For all these reasons and more, this news service is running a series of articles talking to industry practitioners about the space, its trends, issues and controversies. 

Philanthropy is now an important area, and rarely omitted from the websites and brochures of private banks. At the same time, advice being sought is not just about tax structures or writing cheques to existing groups. Increasingly, clients want to co-operate with other philanthropists (and save set-up costs) and get their hands dirty in working with the recipients of their aid. As a younger generation inherits wealth and gets more involved, their values are also becoming more evident, with greater enthusiasm being reported for environment giving (and possibly a cut in areas such as those with religious links), according to industry figures. A philanthropy consulting group in London which helps charities and HNWs come together on projects, told us: “Ten years ago we did a lot of work on cancer but no one has asked questions about cancer in years.” They said that they are seeing much more assertiveness from donors on what they want a charity to achieve.  

In the high net worth and ultra-HNW space that readers of this news service work in, there have been plenty of examples of “big gifts”: multi-million donations in countries such as the US to universities, business schools, medical centres and specific projects. Now a US presidential candidate for the Democrats, former New York City mayor (he was a Republican in that capacity) Michael Bloomberg has given $1.8 billion to John Hopkins University, his alma mater.

And this isn’t a new trend. A century ago, oil tycoon J D Rockefeller, and later his son and grandchildren, blazed a trail in philanthropy by showering tens of millions (billions in today’s dollars) on medical research and universities. The Carnegies, Mellons and Guggenheims in the US's “Gilded Era” donated huge amounts to philanthropic causes. In the UK, philanthropy-minded businessmen such as the Rowntrees and Bournevilles took a different course, building “model towns” for the mass public. So many of the parks, libraries, sports grounds, hospitals and recreation centres of the UK, North America and certain other countries came about in this way. 

Even in continental Europe, where the State has tended to be larger as a share of GDP and taken more control of such activities, there is now a good deal of philanthropy advice and support provided by banks such as Holland’s ABN AMRO, France’s BNP Paribas, and Deutsche Bank in Germany. In Switzerland, UBS, Credit Suisse and Julius Baer, to name the top three, make a big point of providing advice on philanthropy. UBS has been promoting its Optimus Foundation, for example, and last year the bank and its clients raised SFr65 million. 

With Asia reportedly minting two new billionaires a week, there has been growing focus on what philanthropy means in that region. Eighty per cent of the current available philanthropy is self-made and stands at around $8.6 trillion. In China, for example, there is a huge cultural expectation for families who’ve enjoyed business success to give back. What wealth managers are finding, and what one of the largest told us for this coverage, is that many families are asking themselves: “How much is too much for my children?” And once they have provisioned for themselves and their offspring, they are finding that there is an awful lot left over. For the self-made in particular, they want to use it to make a notable impact. This, in modern philanthropy terms, is perhaps why more money is being pooled among family offices to achieve the scale their impact requires. 

There is also a cluster of independent philanthropy advisors and lawyers and others who track the area, advising on structures such as trusts, cross-border transfer issues, and the challenges of building organisations and keeping them in their remit. In the US, an organisation this publication knows well is Strategic Philanthropy. Its chief operating officer, Susan Winer, is a regulator contributor to these pages and has an encyclopaedic knowledge of the sector. In the UK, groups such as New Philanthropy Capital help philanthropists navigate the reefs and shoals of the sector.