Is philanthropy advice an optional extra for private client advisers?


Katrina McClellan


Is integrating philanthropy advice into an existing practice just an optional extra for some firms? The answer depends on who you’re talking with. A quick scan of the crowd at the opening event in Philanthropy Impact and STEP’s Philanthropy Programme highlighted that many organizations are seeing a growth in demand in the area, regardless of whether it forms a core part of their service offering. The question seems to be as old as musing on the sound of one hand clapping, and probably resurfaces just as frequently as well.

Naturally this is a fairly biased sample, the audience and panel largely composed of firms offering some form of philanthropy advice – the panel, chaired by Ceris Gardner, included Rachel Harrington (Coutts), Paul Knox (J.P. Morgan), Edward Finch (Buzzacott Chartered Accountants) and James Carleton (Farrer & Co). As individual potential donors, existing grantmakers and aspiring impact investors can all hold hugely divergent objectives, the general consensus in the room was that the space requires a vast range of advisory services. Demand has been driving supply in all areas: technical, execution, strategy and personal journey. This has forced many professionals to re-evaluate a few preconceived myths about the world of philanthropy advice.

Five myths about the world of philanthropy advice

Philanthropy advice provides all the answers: which causes are most worthy, matching the best donors with the most suitable partner organizations, how to pinpoint the optimum donation (or investment) amount.  You don’t need to know everything to be a good adviser; one of the most important qualities is passion and curiosity, which means leaving your own ambition for social change at the door. The panel underlined the importance of asking what an individual looks to achieve with their wealth, how they plan to measure their success, where they will look to find the relevant expertise.

The marketplace is competitive, and private bankers are crowding out other advisers. There is a whole ecosystem in place to support decision-making, research capacity and understanding impact. Add to this, the number of organizations who can offer third party expertise on local causes, international initiatives, donor vehicles. The discussion centred on the important role of community foundations in the UK as resources for donors, and as ideal complements to the expertise found in private banks and law firms. Participants acknowledged there are a host of independent researchers, intermediary platforms and think tank organizations who can provide in depth information to those who seek it.

Philanthropy advice starts with legacy planning and leaves no opportunity for lawyers and accountants to join the discussion. It deserves to be reiterated that giving while living isn’t simply the preserve of UHNW individuals. Advising a potential or existing donor on philanthropy can be part of an end-to-end process from wealth creation as a business to sustaining a foundation once the original individuals have moved on. It’s fair to say that wealth management services have an advantage as a forward-looking service, but all parties advising on wealth creation have the opportunity to become fully intertwined in an individual’s philanthropic projects.

Philanthropists are best left alone. This is a wide-ranging myth. Some believe that financial and legal advisers have no place raising the question of giving, unless it relates to technicalities and structures. The myth is further compounded by the lack of regulation and benchmarking of philanthropy advice in the sector. It also extends into the need for greater collaboration, support networks and partnerships. The panel again emphasized the quality of a good all-round adviser is inquisitiveness and human connection, in parallel to their technical expertise. The option of setting up a new personal foundation is always available, but the panel stressed there are greater opportunities for social value coming from existing initiatives. They underlined that contact with existing donors is a valuable asset in offering philanthropy advice – peer to peer sharing of expertise is hugely important at any stage of a philanthropist’s giving.

Philanthropy advice can’t bring anything new to an organization. Aside from the obvious opportunities for internal referrals and building connections with clients that go beyond auditing, the panel commented that there are also major potential organizational benefits. They commented on the risk of silos between independent business areas, where philanthropy advice can help a firm better understand itself and its expertise, developing a better integration between business units.

The Philanthropy Programme is a series of events designed to educate private client advisers in the field of philanthropy. The programme is jointly produced by Philanthropy Impact and STEP. The first event in the series provided an insight into the immediate questions surrounding philanthropy advice. We look forward to seeing the discussion continue throughout 2015.

Katrina McClellan is communications and events officer at Philanthropy Impact.

The Philanthropy Programme is a series of events designed to educate private client advisers in the field of philanthropy. The programme is jointly produced by Philanthropy Impact and STEP.

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