Philanthropy – the benefits flow both ways
05 Sep, 2017
Kiwis are a generous bunch. According to Philanthropy NZ, in 2014 New Zealanders gave almost $2.8 billion to charitable causes, of which 55% came from individuals. But could more come from families with a high level of wealth?
There are many positive reasons for wealthy families to be generous in their giving, but it’s a confusing landscape for those trying to make a meaningful difference. At the last count, there were 27,847 registered charities in New Zealand (roughly one charity for every 170 New Zealanders), many of whom do great work but sometimes they appear to be fighting for similar causes to other charities and competing for the same dollars. Faced with this unclear pathway and, often fatigued by numerous approaches, many high net worth families simply put their philanthropic aspirations to the bottom of their “to do” list, to be addressed some other time. Often, despite their best intentions, they just never get around to doing anything about it, apart from the occasional, spur of the moment reaction.
However, there are many reasons to keep a structured philanthropy strategy on the agenda for high net worth family discussions. Here are just a few;
- Succession planning; Philanthropy is about selfless concern for others, but it is also of immense benefit to the donor and their family. It’s a great way to get the family around the table and discuss shared values. These conversations can be used as a backbone for wider discussions around succession planning and it’s a great opportunity to give younger generations of the family a chance to participate in decision making and strategy.
- Wealth management; Family discussions around philanthropy are important preparation for the younger generation to start thinking about managing the family wealth in the future. Many of the most successful and wealthy family groups around the world have noted that their families learn more about wealth preservation and wealth management by learning how to prudently give money away rather than by simply accumulating wealth and spending.
- A fulfilling life; Family members learn through philanthropy that wealth is not just about being able to afford what they want, but it can be a powerful tool to create better lives for others. This leads to more purpose, fulfilment and ultimately, happiness.
How to get started?
So where to turn when trying to look through the fog of the charitable sector and starting to think about focused philanthropy? Many people and organisations are keen to give advice on this subject, but a good place to start are reputable organisations such as Philanthropy NZ, the national organisation offering representation, networking and information to the philanthropic sector.
Locally, there are community foundations – these are one of the world’s fastest growing forms of philanthropy (commonplace in other countries but relatively new to NZ). The popularity of community foundations is due to their simplicity, and commitment to donor’s wishes. They take care of compliance and administrative matters, investment and governance so donors can focus on the giving and the benefits their gift will bring. An example would be the Auckland Foundation, an independent charitable foundation which manages endowments for philanthropic clients.
Nationally, there is The Gift Trust, an organisation providing advice and support on all aspects of giving. It aims to further philanthropy in New Zealand by helping donors give easily and effectively.
Sensible and effective philanthropy is not easy. As Andrew Carnegie (the American industrialist and philanthropist) said “it is more difficult to give money away intelligently than it is to earn it in the first place”.
But there is a responsibility that comes with wealth to investigate and put in place effective philanthropic strategies and, as outlined above, there are well run and informative organisations in place to help start this process.
The act of formulating and implementing such a strategy has many benefits to a wealthy family.
Disclaimer: This article is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.
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12 Sep 2017