Many people believe that having the privilege of wealth also carries the responsibility of being philanthropic. As it turns out, most high-net-worth and ultra-high-net-worth individuals self-identify as philanthropic, and their actions are evidence that this is more than a view, it’s a reality.
A recent study of single-family offices ranging in size from US $250 million to more than US $3 billion, with most respondents having oversight of approximately US $500 million, reveals some clear patterns to how the ultra-rich approach their charitable endeavors.
For starters, more than 95% of the offices studied confirm that the wealthy families they support are meaningfully involved in philanthropy. This can include both organized and responsive grant making, fundraising, and volunteer work, among other efforts.
And notably, all 81 of the wealthy families represented in the study use a private foundation as their primary vehicle for charitable giving. “Private foundations are a natural complement to a family office because they offer a high degree of control, customization and sophistication, which are critical qualities to many ultra-wealthy families,” says Angelo Robles, founder and CEO of Family Office Association and author of Effective Family Office: Best Practices and Beyond. “Furthermore, family offices are typically established to help preserve and enhance a family’s wealth, and foundations are designed to operate in perpetuity, so the two entities work together to reinforce the core wealth management objectives of their owners.”
At the same time nearly 65% of single-family offices are also using charitable trusts alongside their foundations. In most cases private foundations are the way they pursue their philanthropic missions and direct their giving, whereas charitable trusts are used to achieve estate planning goals while also providing ancillary support to philanthropic efforts by aligning with the families’ overarching goals.
Motivations For Charitable Giving
According to the 78 single-family offices who say their families are meaningfully involved in philanthropy, the three most pronounced reasons for doing so are caring, legacy and influence.
At its core philanthropy is about caring. It’s a way for the wealthy—and everyone else—to support causes that matter deeply to them, help others and make the world a better place. Virtually all the family offices surveyed cite caring as a strong motivation for their families’ philanthropic activities
For many high-net-worth families, legacy is a concept that has two independent components. The first is being remembered. This can include “doing good” for something specific, like solving a problem or supporting a community, or for humanity as a whole. The second is transferring core values to future generations. Philanthropy is an effective and powerful way to achieve both.
A majority of family offices say that furthering the family legacy is important. For roughly two-thirds, the status-building aspect of philanthropy is appealing, but for an even larger group, or 86%, the ability for their families to cement and instill their personal values in immediate and extended family members and younger generations is significant. "My own experience dovetails with the research showing that altruism—an intrinsic desire to make a difference in the lives of others—drives both philanthropy and legacy planning within multigenerational families,” says Joel Treisman, a multigenerational philanthropist, coach to successful families and founder of From Wealth to Wisdom. “Multigenerational partnering on philanthropy builds what I call ‘family capital.’ When working together to make good things happen for others, family members feel a shared sense of purpose and meaning. This strengthens the family identity, reinforces shared values, boosts the well-being of individual family members and promotes family flourishing."
Shaping society’s agenda by influencing key decision-makers is gaining traction with some wealthy families. They’re discovering that making charitable contributions can impact public policy, both directly (e.g., donating to political campaigns) or indirectly (e.g., donating to think tanks, legal groups, and nonprofit leadership training institutes). Influence, as defined here, is not about personal gain but about changing society in ways they see as beneficial.
Four in 10 families cite influence as the key motivator behind philanthropy, but it’s worth noting that influence and legacy can, and often do, strongly intersect. Influence can be exerted in a wide variety of ways and requires a philanthropic toolkit that is adaptable and effective. According to Abigail Seldin, CEO and co-founder of Seldin/Haring-Smith Foundation, which was founded in 2019 to expand equitable access to public services and support accountability for abuse of authority, “Championing high-risk, high reward projects requires flexibility. The foundation model enables us to incubate research and products that would lack a natural home in the non-profit space.”
Private foundations are a widely acknowledged way for family offices and the ultra-wealthy families within them to pursue their philanthropic goals but also to achieve the complementary goals of family legacy and family engagement.
“Most family foundations are established with two missions in mind—one that’s related to philanthropy and another that’s related to the family,” says Hannah Shaw Grove, chief marketing officer at Foundation Source and co-author of The Family Office: Advising the Financial Elite. “When families can effect change in the world while also strengthening their intra-familial connections in ways that build multigenerational unity, it’s exceptionally powerful for them. It can create numerous downstream benefits including greater family harmony and wellbeing.”
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