Philanthropy
The Expectations Of Billionaire Philanthropists
Billionaire philanthropists expect to see their hefty donations bear fruit in their lifetimes, as a trend toward effectiveness within philanthropy gathers pace, according to a recent gathering of some of the world’s wealthiest people.
Billionaire philanthropists expect to see their hefty donations bear fruit in their lifetimes, as a trend toward effectiveness within philanthropy gathers pace, according to a recent gathering of some of the world’s wealthiest people.
The Forbes 400 Summit – which aims to drive the habits of the world’s leading philanthropists through peer exchange – found that rich donors are increasingly happy to partner with each other, with companies, and with recipients so that they can see greater and faster results.
The event included keynote speakers and famed philanthropists Bill Gates, Warren Buffett and Oprah Winfrey. Topics such as the sharing of best practices and upfront education arose – on which there is more and more focus in the philanthropic community.
As H King McGlaughon, chief executive of Foundation Source, said recently on his firm’s rebrand, the world of philanthropy has changed “dramatically” over the last decade, with much greater focus nowadays on community, knowledge sharing and collaboration.
Philanthropy as a “risk venture”
Alongside the summit, Forbes has released a report sponsored by Credit Suisse, Next Generation Philanthropy: Changing the World. One of the key findings is that many philanthropists view the portion of their wealth they plan to donate as “risk capital,” and as such they are willing to consider “venture-like” giving, deploying the capital in projects that may fail, but which they can learn from for future ventures.
Tying in with this notion, over half of respondents aim to be business-like in their philanthropy, and want to actively use their experience in business in the philanthropic world. This desire tends to be more prevalent the higher up the wealth scale, said Forbes. This is perhaps unsurprising given the large sums of money involved: over half the people involved in the study plan to leave more than a quarter of their assets to charity.
This focused, business-like approach also leads to expectations of measurable returns within a set time frame. In fact, nearly half of respondents at the summit have set a time horizon of under 10 years to see a return on their investment. This is creating demand for new ways of tracking the impact of gifts, and 62 per cent of respondents say they currently use some form of tracking, such as the Impact Reporting and Investment Standards and the Global Impact Investing Ratings System.
Businesses also emerged as a popular partner for philanthropic endeavors, with 40 per cent of donors saying they partner with businesses for projects, compared to 28 per cent who partner with other non-profits and 22 per cent with government agencies.
Motivations, considerations
Taxes – a hot topic in light of the forthcoming presidential elections – were also seen as a driver of philanthropy by the rich respondents. Over half (56 per cent) felt that tax policy does have an impact on their giving habits.
Despite these more rational reasons for giving, respondents agree that the central motivation “comes from the heart,” with 70 per cent saying they are driven by personal values, 36 per cent by faith, 35 per cent out of a sense of duty or obligation, 32 per cent to leave a family legacy, and 31 per cent to add value to society.
Some of the things philanthropists consider when it comes to giving are: the organizational structure of giving, collaborations, vehicles of funding, measuring success and “passing on the torch” to the next generation, the report found.
The next gen
Today’s philanthropists believe they are setting an example for future philanthropists, according to the survey, and nearly half have a succession plan in place. Of those with investable assets of over $50 million, 59 per cent have established a philanthropic entity, and most want to see this continued by their descendants.
In fact, tomorrow’s philanthropists are already getting started, as this week in New York a large group of young philanthropists will gather from around the world for the Nexus Global Youth Summit. The group has a combined net worth of some $100 billion, the organizers said.
The goal of the summit is to create a network encompassing young wealth holders, young innovators and “movement builders,” with the purpose of transforming global philanthropy and social entrepreneurialism. The speakers and topics billed for the event illustrate just how discerning, and how global, next-gen philanthropists are.
As Money K, head of Citi Private Bank’s next-gen program recently told Family Wealth Report, the next gen has a “wanderlust” when it comes to business and entrepreneurship.
The Forbes study surveyed 264 high net worth individuals across the globe, including the US, China, Japan, India and the UK.