FOREWORD | OUR RESEARCH | 2020 AND COVID-19 | 1. TRANSPARENCY | 2. RELOCATION | 3. FAMILY & GENERATIONAL WEALTH | 4. THE ADVISER OF THE FUTURE | ABOUT BDO
NEWVALUES LEGACY & RISK | QUESTIONS LINGER OVER ESG & IMPACT | PHILANTHROPY TRANSDFORMED? | THE IMPACT ON LEGACY | THE SUCCESSION PLANNING STRUGGLE | CONCLUSION
NEWVALUES, LEGACY AND RISK FAMILY & GENERATIONAL WEALTH
GRAPHIC 9:
Our research shows no clear consensus on COVID-19 heightening social pressure on HNWIs to engage in philanthropy, with only 12.4% saying the virus ‘very much’ heightened pressure to give more (Graphic 9). A majority (80%) combined to say social pressure was ‘moderately’ heightened (39.6%) or ‘no different to previously (40%). However, research from Candid and the Center for Disaster Philanthropy shows around $12 billion worth of philanthropic giving in the first half of 2020, outstripping donations made for any other disaster on record, so it is happening regardless of any perceived ‘pressure’. BDO UK’s recent publication, PrivateView on Philanthropy, takes a closer look at philanthropy in times of uncertainty, particularly this year. Reassuringly, and as has been seen with the adoption of certain technological solutions mid-pandemic, crisis-mode administration and bureaucracy has kicked in. This reduction in red tape means the lag time between pledge and impact is shortened. While some due diligence processes and governance frameworks will return, or be retrofitted, this streamlined approach must continue post-pandemic. The appetite is there; process must not serve as an off-putting factor.
Next generation interest in philanthropy is unsurprising. It can be a good method for financial engagement and education, by putting the focus on people, rather than on money. Philanthropy can “bring humanity to wealth” notes one consultant. As with transparency, however, philanthropy may be a double-edged sword. With a spotlight on the wealth gap, people are both aware of, and angry about, wealth inequality. In some instances, public cynicism takes over and there can be “a negative perception that the uber-wealthy are dictating policy via philanthropy,” says one philanthropy consultant. This may leave philanthropists in a “no- win situation” and is a reminder that while the focus is rightly on outcome and impact, not on optics, a role may remain for reputation management. Crises often breed surges in philanthropy this is evident on a worldwide scale with COVID-19. Philanthropy has already seen activity targeted at helping communities and health systems cope with the immediate threat of coronavirus, while the sector will also play a vital role in mitigating some of the longer-term economic fallout.
PHILANTHROPY TRANSFORMED? Alongside moves to better reconcile financial performance and social benefit through ESG investing, there remains a role for distinct philanthropic efforts. Whether through charitable giving, establishing foundations, or setting up donor advised funds that integrate with existing wealth management plans, wealth owners have a number of tools through which to pursue philanthropy. Again, inter-generational forces come into play. If sceptics previously regarded charitable giving as a cathartic act, they now see a far more engaged approach motivated by not only the theoretical notion of ‘doing good’, but by achieving tangible impact. “It’s no longer a once-a-year cheque to the RNLI [UK charitable organisation, the Royal National Lifeboat Institution],” says one financial planner who has worked in multiple jurisdictions including Switzerland and the UK. “The next generation is more hands-on, whether through fundraising, sitting on boards or being actively involved in the businesses themselves.”
HAS COVID-19 HEIGHTENED SOCIAL PRESSURE ON HNWIS TO ENGAGE MORE IN ETHICAL AND PHILANTHROPIC INVESTMENT ACTIVITIES THAT DELIVER SOCIAL BENEFIT OUTCOMES? PLEASE CHOOSE ONE ANSWER.
39% 40%
12%
8%
very much so
moderately
not particularly / no different to previously
not at all
WORLD OF PRIVATE CLIENTS | NOVEMBER 2020 19
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