What do banks offer in terms of philanthropy services and what are the benefits for both bank and client? Caroline Hartnell spoke to some of the leaders in this field: Mario Marconi at UBS, Mark Evans at Coutts, Philippe Depoorter at Banque de Luxembourg and Nathalie Sauvanet at BNP Paribas.
What does Banque de Luxembourg offer its private clients in the way of philanthropy services?
The main service we offer our clients is to help them to establish what I call their donor profile – in the same way as we have already helped them to establish their investor profile. As soon as we have enough information, we try to put them in touch with the right people or organizations.
What we do next is help them to structure their philanthropy. First, they really have to think about what they want to do and where, for how long, and how they would like to engage. Only then can we find and structure the right vehicle. They need to understand that they do not necessarily have to set up a foundation as sometimes it’s not worthwhile. For most of our clients, a sheltered fund within an organization like Fondation de Luxembourg or King Baudouin Foundation is by far the most convenient. In this case, we introduce them to the foundation. Sometimes we help clients to set up their own independent foundation for public purposes – this is something that we can do. If necessary, we work with a lawyer who specializes in this area.
From the client’s point of view, this seems like a good offering. But from the bank’s point of view, why are you doing this? You’re not a philanthropic organization.
The first question I asked myself when we established this advisory service in 2008 was: do we have any legitimacy as a bank to advise clients in philanthropy? I was pretty convinced that we had. Philanthropy is about trust and money, and as a private bank we are a depositary of the money and the trust of our clients. It is easier for a person who wants to engage in philanthropy to talk to their private banker, who already knows 80 per cent of the client’s story, than to have to start from scratch with someone else. And who should this person be? There are in fact very few philanthropy advisers in Europe.
There are two reasons why we offer these services. First, because it increases the trust of our clients and strengthens our relations with them. Our mission is to accompany our clients throughout their lives. If we can help them to carry out their philanthropic projects, they’re grateful to us, and more likely to stay with us for the rest of their banking business, which is our main purpose.
The second reason relates to asset management. When appropriate, we manage the philanthropic assets. As bigger donors tend to just distribute the revenue, the rest of the assets can be managed by the bank.
But your clients could choose to have their assets managed by another bank?
Whether they set up a sheltered foundation or an independent public foundation, they can choose whether they want us to manage the assets. And if they trust us to manage their non-philanthropic assets, it’s likely they will trust us to manage their philanthropic assets too. Here we add value for our clients because managing assets is what we do best.
Of course, there are some clients who don’t want to establish a foundation at all – perhaps because they want to give all their money straight away. So that money does leave the bank.
Are there aspects of your clients’ philanthropy that you don’t get involved in?
We don’t get involved in anything to do with project selection, monitoring projects, impact measurement, and so on. As a bank, we do not have experience of these activities and as such are not in a position to add value. If a client asks us what kind of project we would recommend, or if this NGO is better than another, we prefer not to answer. If we recommended the wrong NGO, we’d be responsible.
So would you refer them to a philanthropy adviser?
If they are setting up a sheltered foundation, for example with Fondation de Luxembourg, they can advise them. Most of our clients are older people with average donations of €5 million. They want to be generous and do it in the best possible way, but they are not aiming to be strategic or looking for highly sophisticated advice. The sheltered foundation will be able to advise them.
But if we have a strategic donor with ambitions, we will refer them to an independent adviser. There aren’t any in Luxembourg at the moment, so we’d probably refer them to one such as wise in Geneva with whom we have had excellent experiences.
To sum up, we prefer to do what we are good at and focus on the areas in which we have legitimacy to act and can add value. This means three things: developing the philanthropic profile, structuring the vehicle and managing the assets. Everything else we outsource. And if the structuring aspect is too complicated, we work with lawyers.
Philippe Depoorter is Head of Philanthropy Advisory Services and Secretary General at Banque de Luxembourg. Email Philippe.DEPOORTER@bdl.lu