A growing number of wealthy families are turning to family
offices as a
way of managing their philanthropic giving - a move with numerous
benefits, but not without challenges, a new study in the US shows.
National Center For Family Philanthropy,
in collaboration with Family Office Exchange and the multi-family
office Threshold Group, explored the relationship between family offices
and family philanthropy and found that managing philanthropy via a
family office can be a very effective approach, particularly if there
are several branches to the family and if they use a number of
charitable vehicles. The research is based on a survey of about 400
family offices with foundations, and 15 interviews.
Highlighting how philanthropy is taken seriously by families
family offices, 84 per cent of the study participants said they have
paid staff to work on behalf of their foundation, while 60 per cent have
active boards of directors overseeing the foundation’s giving, for
which about a third (34 per cent) reported that a foundation chief
executive serves as the primary decision-maker. By contrast, only 5.7
per cent reported that the family office CEO played this oversight role.
Given this, 40 per cent of the family offices surveyed support more
than one foundation, while 16 per cent work with two and 22 per cent
with three or more.
The findings closely follow those stemming from Bank of America's
2012 Study of High Net Worth Philanthropy,
which found that average giving as a percentage of high net worth
household income "held steady" at about 9 per cent between 2009 and
2011, while three-quarters of wealthy donors expect to give "as much or
more" over the next three to five years (view here.)
In terms of what influences families in their decision to
family office, five main factors came up: coordination, control,
conflicts of interest, confidentiality and customisation. "Similar to a
family’s philanthropic interests, the ideal family office structure and
services reflect the mission and goals of the family," the report said.
Reflecting on the coordination aspect, it continued: "The
office coordinates the multiple dimensions and relationships of a family
including philanthropy, investing, estate planning, tax planning,
custodial services, and banking, etc. Beyond these professional
services, the family office can coordinate family governance,
communication, education, and other support required to meet the
family’s mission and goals."
Meanwhile, a family office can provide owners with control of
entire process and a single point of contact. This is important because
members "may not always be aware of the embedded conflicts of interests
that exist in relationships with product and service providers," it