Banks and philanthropy advice: what’s happening in emerging markets?

Alliance magazine

As we have seen throughout this special feature, major financial institutions and wealth advisers in Western Europe and the US are increasingly beginning to offer their clients philanthropy advice services, though all our contributors seem to agree that overall the amount on offer is very small compared to the actual amount of philanthropy. What is happening in emerging market countries, Alliance asked a number of people either active in philanthropy or from the banks themselves.

Generally speaking, it seems to be largely the international financial institutions that have started to provide philanthropy advice. Few local institutions have entered the field as yet.

A limited role for local banks

In Sub-Saharan Africa, we found one exception, BoE Private Clients in South Africa. According to a company representative, it currently invests over ZAR3 billion on behalf of the philanthropy sector, and aims to ‘act as a one-stop shop for donors … in order to encourage philanthropy and giving whether by corporates or individuals; and to strengthen our non-profit sector by providing specialized investment advice and services to organizations on longer-term financial sustainability.’ Another respondent was more sceptical, saying that he ‘suspected that their motivation is predominately commercial, rather than philanthropic!’

ABSA Bank, another South African bank, was also mentioned as offering philanthropy services, but our informant described them as ‘not publicly active’. Another informant said that the two leading Kenyan banks she asked about this didn’t provide such services – both thought she was asking about their CSR work.

In Central and Eastern Europe, too, local banks seem to be almost completely absent from the field. A Russian respondent said she was ‘not aware of any real cases’, while an informant from Slovakia said that although she knew of two private banks who claimed to offer such services, their value is limited by the institutions’ rudimentary knowledge of philanthropy. ‘At the end of the day, they do not create much value in the development of philanthropy.’

No one we contacted in the Middle East or in Latin America was aware of any local bank offering philanthropy services.

There seems to be slightly more on offer in India. While a number of respondents mentioned that Indian banks have started to include philanthropy advice in their services to high-net-worth clients, it seems that it is still at an early stage and the value of the advice is debatable. ‘I don’t believe they have arrived at the right offering, nor have they marketed it effectively,’ said one, while another said that services are focused ‘more on the legal/tax advice around giving, not on what people can do’.

One of the reasons for this might be that, as two people pointed out, Indian private wealth managers have yet to see a great demand from clients. As one noted, however, they can see this is changing and ‘are keen to understand how they can offer this [service] to clients’. But she felt that they are still not keen to provide it in-house, ‘so there is a role for a partnership model’ with other organizations. In addition, ‘tax relief is not seen as a motivation to give, which is perhaps another reason why asset/private wealth managers have not naturally included it in their portfolio of offerings’.

An example of how the partnership model might pan out is provided by Barclays Wealth, albeit an international rather than a local bank. They are planning to extend their client philanthropy service, offered in the UK and Ireland, to Europe and India. They are starting with Mumbai, working with three third-party advisers, Dasra, CAF India and Give India. There will not be a dedicated adviser within the bank but the office  is committed to the idea of offering a philanthropy service to its HNW clients and will drive it forward. They hope Europe will follow later in the year.

International banks to the fore

As mentioned above, in most emerging market countries, it seems to be almost exclusively the international banks that are offering philanthropy advice. Any advice on philanthropy in Russia, for example, is likely to come from international wealth managers who ‘would provide this kind of service from their European offices (UBS is particularly known for this)’. Many of the people we spoke to singled out UBS as a provider of philanthropy services for donors and would-be donors in developing countries.

In the Middle East, too, it seems that international banks are serving Middle Eastern clients (again UBS was mentioned). In both Mexico and Brazil, international institutions are active in the field. Once again, UBS was mentioned and, in the case of Brazil, Credit Suisse. But in Mexico at least, they had met with limited success.

Another bank active in this field is HSBC, which, according to an HSBC Asia representative, offers a wide range of services in the Asia Pacific region, including formulating and implementing plans for strategic giving, structuring vehicles and providing administrative support, and next generation training. ‘It has a historical and sizeable charitable trust business, a dedicated philanthropy advisory/trust administration team, a large corporate foundation donating in the region, and an extensive branch footprint in Hong Kong and China.’

How good is the advice on offer?

Even among the more sophisticated and developed economies such as Singapore, good philanthropy advice from financial institutions can be hard to come by. According to one informant there, though financial institutions, especially international ones, market themselves as capable of advising on philanthropy, their services are ‘not very comprehensive’ and are ‘normally tied to their trust and fiduciary services’. They also tend to be ‘quite tenuous as they are not considered to be “profit centres”’. In other words, if cuts have to be made, philanthropy services are the first to go.

According to the HSBC Asia representative quoted above, private banks have been the ones most likely to offer philanthropy advice but ‘trustees, law firms and a few accounting firms have also shown an interest’. But she feels that the quality and extent of the advice is variable, banks with dedicated staff in Asia being ‘the most active in delivering these services’.

To sum up, almost no local financial institutions offer philanthropy advice in emerging market countries. A more likely source of such advice appears to be international banks, prominent among them UBS. Where services are on offer, from whatever source, their value seems to be limited. Many of the people we spoke to feel that the commitment of even international banks to philanthropy advice is ambivalent. So, a long way to go!

Alliance would like to thank all the people contacted in connection with this article, though we do not have the space to name them all here.

For more information
Click here for more on the state of philanthropy advice in different regions of the world.

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