Citywealth interviewed philanthropic experts to get a grasp on the overall impact and major achievements successful firms have accomplished, going through useful advice for individuals and companies who are interested in philanthropic investments.
‘The giving away of money, especially in large amounts, to organizations that help people’, this is the definition of philanthropy from the Cambridge Advanced Learner’s Dictionary & Thesaurus. The philanthropic sector is expanding and taking new directions in the present scenario, offering advanced solutions in order to address, among other issues, current social and environmental problems with the help of UHNW and HNW individuals.
Citywealth interviewed some of the experts who have been nominated for Philanthropy Advisor of the Year at the Magic Circle Awards 2022 to get a grasp on the overall impact and major achievements successful firms in the philanthropic sector have accomplished, going through useful advice for individuals and companies who are interested in philanthropic investments.
Citywealth wants to thank: John Canady, CEO at National Philanthropic Trust UK, Anna Josse, Co-Founder and CEO at Prism the Gift Fund and Tom Hall, Managing Director and Global Head of Philanthropy Services at UBS.
Introducing (some of) the companies behind the nominated individuals for ‘Philanthropy Advisor of the Year’
National Philanthropic Trust UK
“At the National Philanthropic Trust UK all our work is centred around making philanthropy more convenient and efficient for donors; – explains John Canady, who gives more details about DAFs – For over 8 years NPT UK has been a leading provider of Donor Advised Funds (DAFs) for donors in the UK, and those around the world who wish to base their philanthropy from the UK. As awareness of these giving vehicles grows in the UK, donors and their advisors increasingly use donor-advised funds as the modern alternative to establish a grant-making charitable trust or foundation. Since every pound in DAF accounts is destined for charitable organisations, the rise in donor-advised funds is good news for British charities and charities around the world that receive grants from DAFs.
To put this in perspective, the NPT UK’s latest Annual DAF report showed contributions to DAFs in 2020 in the UK for a total of £609.8 million and a compound annual growth rate of 14.6% from 2016 to 2020. We are also delighted that Cazenove Capital has recently launched a new Donor Advised Fund, administered by NPT UK, which is the UK’s first-ever private label DAF partnership with a UK private bank to support their clients’ philanthropy.”
Prism the Gift Fund
“Prism the Gift Fund (Prism) administers the giving of individuals, groups and foundations making significant gifts to charities, not-for-profit and social enterprises all over the world. It is a Donor Advised Fund, a tax effective vehicle for one’s charitable giving; – says Anna Josse, who focuses on the results of her firm – Prism’s growth in financial year end 2020 was significant: donation income was £94m, distributions out to charities £53m. Assets under management in March 2022 are now over £180m. Prism’s donation income is now heading towards £500m since inception.
Using DAFs, and specifically Prism, enables donors to contribute donations easily and swiftly, and disburse funds globally with the knowledge that all the compliance, governance and due diligence is managed by their personal Relationship Manager.”
“Our purpose at UBS is to reimagine the power of investing and connecting people for a better world. We have been working with philanthropists for the last 20 years, helping our clients find their purpose and drive positive change; – mentions Tom Hall, who tells us more about his team – We have a team of 90 philanthropy and social investment experts around the world that help our clients achieve their philanthropic goals and, for the last two decades, the UBS Optimus foundation has focused on health, education, and the protection of children, as these are some of the most essential factors to ensure a successful future. We have supported innovations from inception to scale, working with social entrepreneurs and enabling social finance to tackle some of the most pressing global issues. Since establishing the Foundation over 20 years ago, we have raised more than half a billion US dollars.
We are pioneers in social finance and have amongst other things launched the world's first and largest Development Impact Bond in education in 2018, which has boosted literacy and numeracy skills for thousands of children across India. And we are now also rising to the critical climate and environment challenges, joining forces with leading philanthropists to support high potential initiatives in this space. In 2020, we also played a critical role in addressing the global health crisis by acting early and committing for the long-term as we did with the Ebola outbreak in 2014. Our 2020 Covid-19 Response Fund raised USD 30 million working with 48 partners across 35 countries. Our Ukraine Relief Fund has raised over USD 15 million so far to support those affected by the crisis in Ukraine.”
Trends in philanthropy
When approaching this sector, philanthropists and their advisors put in place strategies to analyse burning issues and, consequently, philanthropy is subject to variations of direction. Taking into consideration new emerging trends, John dwells upon “a growing trend which sees philanthropy as a ‘must have’ in the wealth management industry. The private client industry is placing increasing levels of importance on philanthropic expertise as their clients move away from cheque-book philanthropy and start to think more strategically and long-term about their charitable giving. Wealth managers and private bankers are responding by incorporate giving vehicles, such as DAFs, into their offerings. Many clients are also increasingly engaging their family and next generation in philanthropic activities as a means to pass on their family’s values or share experiences of philanthropic giving.” Given these two scenarios, John thinks that a Donor Advised Fund can be a valid solution: “A DAF is an attractive proposition as donors can set aside philanthropic capital, recommend how it is invested and then recommend grants to charities almost anywhere in the world, anytime, all while allowing the next generation to develop their own giving strategy, should they wish to. Through the provision of new giving vehicles like DAFs, the philanthropic sector is more closely aligned to the needs of the wealth management sector.”
Tom analyses trends which dominate the present era, not forgetting to list what to expect for the future: “Over the last decade, philanthropists have rightly become more impact-driven, looking to set clear objectives and gather proof of impact. Collaboration has increased – and we have seen the rise of public-private partnerships. Influenced by the UN Sustainable Development Goals (SDGs), people have been focusing more on issues rather than location, and we have seen the rise of big-ticket-donors. At the same time, we have seen philanthropy become more accessible to the greater public and growing interest in topics related to climate change and biodiversity. We believe philanthropy is entering a whole new era and expect to see trends like an acceleration towards more diversity, equity, and inclusion, trust-based philanthropy, rooted in values that help build mutually accountable relationships, or the need to add a lens, which means not only tailoring the intervention, but also setting up specific key performance indicators to measure how impactful their programs are on both education and interconnected issues within that setting, such as girls, people with disabilities or climate, for example.”
“Each donor is quite personal as to what motivates them to start their philanthropy and what inspires them to give; – says Anna, who goes on talking about Prism’s Collective Fund and the main trends the Fund has witnessed – Prism also offers an additional service, the Collective Fund, which is unique in the UK DAF market. The Collective Fund structure allows lead donors to raise money for a cause from a group of donors and respond to an emergency rapidly. From Prism’s Collective Fund model, we have seen an increase in the number of groups supporting racial justice and the environment. Our work with donors is often intergenerational and we can see how next generations want to support something which may be different to the main charitable objectives of a family foundation or family direction and their giving may be more niche.”
Sustainability and partnerships: the key elements to pursue philanthropic goals
Sustainability, simplicity and strategy are fundamental to achieve those philanthropic objectives clients yearn to. John states that “NPT UK is leading the way in helping donors make greater use of DAFs for responsible and impact investing purposes. We strive to make it as simple as possible to align a donor’s investment strategy with their philanthropic goals and values. That includes providing a range of sustainable and impact investing options for our clients and advising how to navigate this burgeoning market. For example, we are committed to increasing the number of pre-vetted impact investment options across different asset classes for our DAF clients. We also ensure we include investment managers or platforms that are committed to increasing their responsible and impact investment portfolios and offering more donors high-impact investment opportunities.”
Tom believes that working in partnership is crucial to catalyse solutions to concretely address social and environmental issues. “We need to take advantage of opportunities that have the potential to solve issues at scale in an evidence-based way, and this means working in partnership. The key is to crowdfund resources into the right interventions, and not dissipate across a plethora of things that may have impact at a micro level, but it does not really add up to anything. Without collaborating and working in partnerships and without working collectively, there is no chance that we are going to address any social and environmental problems. There has been a growing trend in collective philanthropy and UBS has brought clients together whose philanthropic goals align under three UBS Collectives, The Transform Collective (supporting family-based care as an alternative to institutional care and helping reform policies and practices to protect vulnerable children and strengthen families), The Climate Collective (supporting communities in Southeast Asia and beyond in developing climate mitigation and adaptation strategies, contributing to emissions reductions, and improving biodiversity) and The Accelerate Collective (using the tools of social finance to deliver greater health and education outcomes for vulnerable communities).”
Climate change meets philanthropic paths
ESG-related investments to tackle climate change are of extreme importance, also considering that they are connected with other key topics, like education and social injustice.
“According to the world’s leading scientists, we can avoid the very worst impact of an overheating planet if we cut our emissions in half over the next 10 years; – observes Tom, who insists on the crucial role of philanthropy in the fight against climate change – Philanthropy is urgently needed to identify and help scale a range of climate solutions to create a cleaner, safer and a more equitable future for all. To ring in the 20-year anniversary of the UBS Optimus Foundation in 2019 and acknowledge the vital importance of climate change in today’s world, we expanded (from focusing on children’s health, education, and protection) to cover environmental and climate philanthropy.
To make sure clients maximize their environmental impact with their philanthropic goals, we conducted an extensive landscape analysis to help us create a systematic approach for our clients to assess where to invest philanthropically, and how to best contribute to and accelerate environmental and climate action. We found that clients are eager to engage in sustainable land use, where they contribute to land restoration, conservation, food system transitions, climate-resilient agriculture, and agroforestry; and coastal and marine ecosystems, where they contribute to wetland restoration and conservation, sustainable fisheries and aquaculture, and help reduce ocean waste and pollution. We have also seen interest from clients wanting to collectively act and engage in this area, which is why in 2021 we launched our Climate Collective cohort, where clients, along with fellow philanthropists, best-in-class non-profit organizations and experts, drive collective impact by developing sustainable climate resilient livelihoods for communities and smallholders.”
John points out that “more private funders are thinking strategically about opportunities to integrate environmental initiatives into their programs and showing true leadership in delivering on those opportunities. No other issue reinforces existing inequalities on both a global and local level like the climate crisis. It is inextricably linked to health, economic, education, social injustice and gender inequality issues, among others. I also see a growing interest in philanthropy among socially conscious younger generations, who are highly engaged in the causes they believe in. Often, the real impact of ‘next-gen’ philanthropy lies beyond the traditional philanthropic funding and in innovative ways to drive social change through impact or ESG-related investments.”
“Some individual donors are engaged in supporting the environment and looking at the effects of climate change; others are supporting different issues, – mentions Anna, who adds that – Prism allows for a balance of donor funds to be asset managed with the firm of their choice. Most of the managers today will consider ESG whilst creating a portfolio. We are also seeing clients looking to align their investments with their philanthropy.”
Interested in investing in the philanthropic sector? Our experts recommend to…
… think about what you want to achieve with your philanthropic giving. For example, do you have short- or long-term goals? Are you looking to make the most of a wealth event? Are you thinking about legacy planning, or introducing philanthropy to your family? Do you want to contribute a range of assets, or just cash? Do you want to make bespoke investments within your philanthropic activity? After considering these initial questions, seek advice about the range of charitable vehicles available to you to suit your needs and resources. Setting up and operating an independent foundation suits some donors, but can also be onerous, expensive and time consuming. Bear in mind that convenience, tax-efficiency and versatility of DAFs have quickly made them one of the most popular tools to help donors achieve their rapidly-evolving philanthropic goals. – John Canady
… listen to some of the smart private client intermediaries out there. Do not wait to start a philanthropic journey. You will always gain more than you give. The DAF market is growing and rather than create your own grant making foundation with all the complex rules and regulations of the Charity Commission, just open an account at a DAF to start your journey. DAFs can also help direct you to the right people in the sector who can bring added value. – Anna Josse
… remind to yourself that your time, commitment, effort, and funds are solving problems and making a difference. For those that are not as knowledgeable about the space, if done well, these six key principles will minimize negative outcomes and help investors maximize their philanthropic impact at scale:
Your philanthropy strategy: Develop a strategy that matches your preferences. A strategy sets out what needs to happen so that you can reach your goals, how those actions fit together, and where you will act. This will be the basis for your philanthropic success.
Your giving structure: A philanthropic vehicle is a fancy word that means nothing more than a legal and organizational home for your philanthropy. A foundation, for example, is one well-known type of vehicle; but there are many other options available.
The situation or issue you want to address: It pays off to understand the issues, root causes and just how much needs to be done. Ending poverty, improving health and education, tackling climate change, spurring economic growth, among others. Awareness of these issues and reminding yourself that no individual can solve them alone is a starting point for any key cause you wish to tackle.
Cost-effective solutions you can engage with: Identify solutions and partners with whom you can work so that you can ultimately translate your vision and strategy into concrete activities.
The sustainability of your philanthropy: You want to make sure that your philanthropy drives long-term social or environmental impact, creates lasting solutions, and systemic change – even after you have stepped away.
The pathway to scale your impact: Scale is key if you really want to have a chance of denting the problems you are concerned with. The traditional model of setting up individual schools, hospitals, or institutions one at time, while well intentioned, will never drive the scale required to solve these issues as even the wealthiest philanthropists do not have enough resources to solve problems alone. - Tom Hall