This publication recently spoke to the London-headquartered multi-family office about trends in philanthropy and now the sector has adjusted after the pandemic-induced disruptions of four years ago.

Topics such as education, healthcare and perceived social injustice drive much philanthropic activity, a sector that has shifted from being in reaction mode during the pandemic, a senior figure at Stonehage Fleming, the multi-family office, says.

During the Covid-19 pandemic, philanthropists brought forward their annual giving plans, jolted by the scale of the emergency – a trend seen around the world.

Since the pandemic burnt itself out, focus has shifted towards a more proactive stance about causes; topics such as health, education and poverty remain central, Jack Henderson, associate director in the family office team at Stonehage Fleming, said. 

While November is often a month more associated with philanthropy – the “giving season” – the year-round concerns in the space are an important topic, Henderson said.

Some immediate challenges remain central. For example, Stonehage Fleming which has offices in Israel, as well as clients in much of the Middle East, remains strictly non-aligned politically; it works with clients with interests in the region and associated humanitarian causes, he said. 

A trend the MFO is noticing is "venture philanthropy" – an approach which applies most of the principles of venture capital funding to investing in startup, growth, or risk-taking social ventures. Rather than being purely interested in profit, venture philanthropy invests in projects that promote social good.

VP is about “aligning donors with people looking to support certain causes, and aligning investors for the long term,” Henderson said. “We encourage clients not to worry about failures.” 

A few weeks ago, Stonehage Fleming addressed and outlined the workings of VP in a report.

“Traditional philanthropists typically provide grants and subsidies. Venture philanthropists, on the other hand, offer their beneficiaries a variety of financing options. Rather than one-year grants, they often make longer-term investments that promote the charity’s growth, sustainable mind-set, and financial longevity. These investments take many forms, rather than an annual lump-sum as may be the case in traditional giving," it said.

“Venture philanthropy is part of the future of more sophisticated giving, providing philanthropic portfolios with intentional and impactful processes. Traditional charitable giving tends to release monthly or annual progress reports to the donor. These often highlight the positives and downplay any need for improvements in the charitable cause’s strategy. Instead, venture philanthropy positions donors as a collaborative partner rather than just a piggy bank,” it wrote.

The term venture philanthropy is gaining ground. In September, this news service spoke to the founding managing director of SCI Ventures, a firm which invests in treatments and technologies that can fix spinal cord injuries and paralysis.

DAFs
Another trend is the rising use in the UK of donor-advised funds (DAFs), already a much larger and established sector in the US. (According to National Philanthropic Trust UK, DAF assets under management totalled more than £2.5 billion ($3.21 billion) in 2022 – an all-time high.)

An advantage, so DAF advocates say, is that they enable donors to retain anonymity and tap into existing causes, pooling resources that generate benefits from scale. Another driver in recent years has been the rising levels of bureaucracy associated with charitable giving, which has driven up costs, Henderson said. 

“There is a lot more red tape than there was in the past in setting up your own foundations,” he continued. 

The multi-family office can draw on the experience of the founding families and other clients to feed into philanthropic conversations. “Learning from the practical experience of working with many generations of client families serves us well,” he said. 

Looking ahead, the organisation expects more work with families to formalise how they meet their philanthropic goals. “I am sure this will become a lot more important,” he added. 

It is clear that progress must happen. Last year, Stonehage Fleming said its 2023 Four Pillars Of Capital research found that although 86 per cent of families consider philanthropy a central part of their values and purposes, 64 per cent don’t have a pre-determined budget, and base donations on an informal process. Only 7 per cent of respondents had a formal process of weighing up the contribution they make.

(On a related note, see this opinion article from the editor about the role of philanthropic advice and trends in the wider philanthropic space.)

The revenue model
This news service asked Henderson whether the advice his firm offers for philanthropy is included in the overall service fee that clients pay, or whether it is separate. 

“We work with our clients and look to clearly define the scope of our engagement around philanthropic advice and support; in most instances this will be an extension of an existing relationship and provision of other advisory or consultancy services. Where appropriate, any associated additional charges will be incorporated into the fee arrangements we already have in place,” Henderson said. 

Looking ahead, Henderson expects that the way in which giving and its subsequent impact is monitored and reported will become more standardised and formal.

For other examples of coverage on these topics, earlier in 2024 this news service interviewed Nigel Kershaw OBE, FRSA, chair of The Big Issue Group, and co-founder of Big Issue Invest and The Big Exchange, for his particular insights on philanthropy and using investment as a tool for change.