For many ultra-wealthy inheritors worth $100 million or more, philanthropy is not an ancillary benefit of extreme wealth. It is a defining characteristic.
Research suggests these inheritors are not just interested in “doing good.” They are committed to making a significant, positive impact on society and the world. With that in mind, it is a little surprising that about half of ultra-wealthy inheritors recently surveyed reported only “directional philanthropic goals.”
While they are making concerted efforts to be philanthropic, the study of 114 ultra-wealthy inheritors revealed that 65 percent believe they can do a better job. They recognize opportunities to be more strategic and more effective. Part of the problem may be that only about a quarter of these inheritors have clearly defined philanthropic goals. Roughly 20 percent of them have not yet identified a cause that they are truly excited about supporting.
The philanthropic interests and needs of an emerging generation of ultra-wealthy inheritors are substantially impacting the practices of wealth managers and multifamily offices seeking to work with them. These inheritors are not looking to write a check for a tax credit. They are more frequently taking an active role and integrating charitable initiatives with entrepreneurial efforts.
Most importantly, they want help in making wise philanthropic decisions. This takes a number of forms. Many of them are eager to learn from the experiences of other exceptionally wealthy families. The extent to which wealth managers and multifamily offices can provide real opportunities for clients to share these resources makes these financial professionals more attractive. Along the same lines, the ability of these financial firms to help ultra-wealthy inheritors address this matter, for example, by providing philanthropic advisory services can prove very effective.
Ultra-wealthy inheritors have an overall strong interest in learning how other ultra-wealthy families are approaching various topics including philanthropy. Nearly three-quarters of those surveyed are interested in how other wealthy families and individuals are approaching philanthropy. By and large, they are highly motivated to understand what their peers are doing across a spectrum of activities and endeavors. By sharing with their peers, ultra-wealthy inheritors are able to expeditiously move up the learning curve.
About seven out of 10 ultra-wealthy inheritors are highly interested in being introduced to like-minded individuals. These are among their goals:
• Accessing resources and expertise.
• Learning about interesting opportunities and possibilities.
• Learning about best practices in various functional areas.
Those with such goals know just what they want to accomplish and are attuned to the ways they can meet these expectations. Very often this incorporates the structures they employ, such as foundations and trusts to achieve their charitable agendas. Professionals who are able to marry the goals and objectives of ultra-wealthy inheritors with the best charitable vehicles are essential.
The more wealth managers and multifamily offices can facilitate the philanthropic education of ultra-wealthy inheritors, the stronger the relationships they will build with these clients. It is worthwhile to note that when financial firms are focused on delivering value this way, they are likely to receive two to three times more clients referrals than financial firms that are not.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.
