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.
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.