A new era of giving: how family philanthropy is creating an impact

The background to the shift is growing awareness of wealth inequality, suggests US partner David Stein. “In recent memory there have been increasingly loud voices on social media and elsewhere that view wealth as a problem. For younger generations especially, philanthropy can be a balm for that, giving them a sense of purpose beyond consumption.”

Parents are also wary of what passing too much wealth to their children will do to their offspring’s motivation and values, says London-based partner Jaime McLemore: “Based on the very intimate conversations I have with clients about their estate planning, most are concerned about their children having too much money. They feel like they’ve seen what it can do to someone and they don’t want that to happen to their kids.”

These concerns led one couple, who had founded a successful business in London, to set up a family charity while their children were still in primary school. “The parents wanted their children’s inheritance to be more about stewardship of the charity than the wealth they would have themselves,” explains Philip Reed, the charities and philanthropy partner who assisted in that case. “The idea is that the charity will grow with the children, who will become trustees when they’re old enough. They’ll be well looked after themselves, but as parents our clients were thinking about their legacy more holistically.”  

Experience suggests that the children will thank them, with younger generations far less comfortable with inheriting wealth than in the past, particularly if they have not been prepared for the scale of their family’s fortune, Philip adds. “Some younger people are telling their parents, ‘Don’t give all that to us, that was your thing. We’d rather not have that level of wealth; we’d rather you gave it away and we’ll do our own thing with our lives’.”

An increased sense of responsibility has also led families to be more thoughtful about their philanthropic giving, the team suggest. While cultural institutions once received a significant share of private donations, today’s donors are prioritising global challenges such as inequality, climate change and public health.  

"Previous generations in Asia may have viewed philanthropic activities primarily as grant-making exercises directed primarily by the controlling patriarch or matriarch," says Singapore-based partner Stacy Choong. "If naming rights arose as a result of the gifting, that would be considered as a bonus for building their family legacy. Nowadays it is more common to see Asian families considering their family philanthropic endeavours together, and the views of younger generations will naturally influence the overall philanthropic objectives and mode of giving and support in Asia. There is therefore more innovation and a broader reach and impact from the family philanthropic capital."  

David Stein has seen clients step in to address areas where they feel government leadership is lacking. “I’ve worked with a married couple who are deeply invested in electoral reform. They’re not partisan, but they believe the system is broken and they recognise that government and major political parties aren’t going to fund initiatives that challenge the status quo, so they’re taking action themselves.”

Jaime McLemore agrees that donors are becoming far more aware of the impact of how their wealth is used, favouring measurable interventions. “I can see that almost all my clients have moved away from the model of blind grant-making and want to see what’s happening with their money.  Now, some of our clients are going on donor tours to places like Zimbabwe. You could look at it as moving toward the hyper-focused Bill Gates model.” 

While the Italian government does offer an “art bonus”, a form of tax relief on cultural donations, Giulia feels this is not a major consideration for her clients. “My feeling is that the next generation’s choices are not influenced by the possibility of a tax credit or a tax deduction and are more related to conveying their personal perspectives and values through their philanthropy.” 

Stacy recognises the role government can play in highlighting and potentially guiding philanthropic capital towards the otherwise unseen needs of society. She points out that the causes most often supported by the general public may differ from those that family foundations would support. Individuals tend to give to causes that move them personally, such as disaster relief or care for animals – and, in comparison, family foundations tend to give to causes that are more aligned with their family values. 

"These could be education, healthcare or the arts," she explains. "The Singapore government would offer to match certain donations by providing 1:1 dollar matching grants  – these dollar matching grants help to encourage the flow of philanthropic capital to areas which have been identified as more critical to support. This interaction between private individuals, families and public authorities shows how philanthropic giving can be better coordinated to meet the most pressing needs of the society."

Today’s philanthropists are much more interested in the impact their wealth is having – an area where the firm can support, by structuring agreements to ensure that the funds go where they are most needed, or indeed by stepping in where governance is seen to have fallen short. Michelle Chow recalls one instance where the firm had to step in after a client made a significant contribution to a charity, only to discover that a year later, the money had not been touched. The situation had to be sensitively handled, with Michelle persuading the organisation to give half the money back and provide much more information around how the remainder was being used. 

“We ended up with a much more detailed agreement,” she recalls. “My client told me, ‘I have learnt that philanthropy is harder than business’. I think everybody learnt a lesson because while he had perhaps been too trusting, the charity also appreciated that it couldn’t treat a donor that way and it has hired new people for its foundation since.”

In an age where private capital is increasingly stepping in to lead on global issues, deploying wealth thoughtfully, strategically, and with accountability can shape not just individual legacies but the world we live in. While approaches to philanthropy have evolved, the team does see one constant: donors remain most passionate about issues that they feel a close connection to, whether through their ancestry or life experience. 

“I have a client whose wife passed away while their children were still minors,” says Jaime McLemore. “Because of his experience, he wants to support charities in his will that help bereaved minors. We’ll never move away from people giving to causes that are personally meaningful to them – that’s a trend that charities can rely on.”