Philanthropy: strategic giving - a family affair?
“To give away money is an easy matter and in any man's power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man's power nor an easy matter.” Aristotle
Philanthropy essentially involves taking a holistic approach to charitable giving. It involves giving in a structured manner coupled with relevance, impact and sustainability and allows individuals to identify charitable causes that are specific to the individual’s ideals for society.
Philanthropy Ireland define philanthropy as charitable giving with a deliberate, targeted, long term perspective, to achieve tangible results. This definition encapsulates how philanthropy differs from ad hoc charitable donations in that it is strategic, given for a specific defined purpose rather than a general charitable intention.
The Irish people as a nation are generous, and charitable giving in Ireland is currently estimated at €570m per annum. It is estimated that 89% of Irish adults give to charity. This compares very favorably with the UK average of 58% or the German average of 40%. However it is estimated that only 15% of all donations are planned and regular for example by way of a percentage of income through direct debit with the remaining donations being unplanned and spontaneous. By contrast, in the UK, 36% of donors make regular donations.
It is envisaged that Ireland will see an increase in the level of philanthropy with the implementation of the provisions of Charities Act 2009 ensuring that going forward there will be greater accountability and protection against the abuse of charitable status and fraud. This will provide a robust and transparent regulatory framework to develop a stronger philanthropic culture.
Philanthropy is a relative new concept in Ireland. It has its origins in the US where there is a long tradition of involving families in charitable giving, through creating their own personal foundations. Warren Buffet is an example of this tradition. He donated a sixth of his fortune to foundations managed by his children having been famously quoted as saying that he wanted to leave his children enough “so that they feel that they could do anything, but not so much that they could do nothing”.
Increasingly, individuals want to make giving a family affair instilling in their children the desire to contribute to society as thoughtful innovative philanthropists. Making philanthropy a family affair has a number of advantages. It helps to bring the family together, educate children and make giving a more rewarding experience. In our experience, many clients feel that the conversation which takes place around giving to charity can help to bring the family together across generations; it can help to bridge the separate interests and passions of different family members.
Having a giving strategy in place can be very beneficial given the myriad of different causes and charities. It can help a family to define what it would like to achieve and what its preferences are. For example, what would the family like their donations to achieve? How should their donations reflect the families’ values? Are there particular causes or geographic regions which they would like to support? How will different members of the family be involved in the decision making process?
Many clients, particularly those who manage family businesses, have found that involving members of the next generation in philanthropy is an excellent way to teach them business skills too. Children can be asked to research issues they care about, consider possible charities and work through investment decisions. As they grow older, their evolving interests can help guide the family’s commitments so that the next generation is ready to assume leadership of the family’s giving when the time is right. Family Philanthropy thus becomes a legacy from one generation to the next, a way to learn together, have fun and give back.
At the private client department here in Deloitte, we would be delighted to assist you and/or your family in achieving your philanthropic objectives. This could involve recommending the most tax efficient ways of structuring your giving, assisting you in developing tailored strategies and structures to achieve your goals, and/or reviewing investment managers to ensure that they follow the family’s investment mandate.