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Introduction At a special panel event hosted by David Bell of the Private Client Dining Club and sponsored by Hawksford, Sianne Haldane, Head of Planned Giving Philanthropy at Cancer Research UK, chaired a panel with advisers from Farrer & Co., Hawksford, UBS and Prism the Gift Fund, and scientists from Cancer Research UK to discuss the important and evolving role of the adviser and the increasing focus on philanthropy in financial planning for HNWIs.
David Bell, Private Client Dining Club
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Why is philanthropy becoming such big business for advisers?
Sianne Haldane, Head
of the adviser is, noting that “those who do
of Planned Giving
give and take professional advice to do so, give
Philanthropy at Cancer
more strategically have a greater experience
Research UK, began
and give 58% more than their peers.”
with the observation that, with a few
Sianne began by asking the panel, why is
notable exceptions like Further Education,
philanthropy becoming such an important
most charities in the UK, including
area for advisers?
Cancer Research UK, rely on relatively small donations. But the potential in the
James Maloney, Partner
philanthropy space is huge. Cancer Research
at law firm Farrer & Co.,
UK, for example, raised over £100 million
noted that the simple
through philanthropic gifts to help build
answer is that philanthropy
the groundbreaking Francis Crick Institute
is often the single most important thing for
where more than 1,500 scientists and
many HNW donors. As he explained, “when
staff work together collaboratively across
it comes to HNWIs, they may have been very
disciplines and disease types to understand the fundamental biology underlying human health and disease. But there’s a long way to go. Sianne mentioned a
“I want you to work with me, this is the single most important thing that I’m going to do in my life.”
successful in other fields, but philanthropy can give them something new, a real sense of purpose.” As a result, donors are highly reluctant to outsource decisions here to professional advisers. As he reflected,
recent article where the
“I asked a HNW client recently - which of
Beacon Collaborative shared that just 10%
your team would you like me to work on this
of the UK’s wealthiest 18,000 people donate
philanthropic project with?” He looked me
anything at all. This is despite the fact that,
straight in the eye and said, “I don’t want you
according to the Wealth-X Billionaire report,
to work with anyone else, I want you to work
philanthropy is the leading passion amongst
with me, this is the single most important
UHNWIs. Sianne noted how pivotal the role
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Anna Josse, CEO at Prism
thing that I’m going to do in my life.”
the Gift Fund, agreed
“When it comes to HNWIs, they may have
with Anthony, noting that
been very successful in other fields, but
in many cases, when a
philanthropy can give them something new, a
client opens a new philanthropic fund, “they
real sense of purpose.”
haven’t even taken away from their personal
Anthony Donatelli,
wealth, they’ve added more money. So not
Director of Philanthropy
only is the personal wealth looked after by that
Services UK from UBS
asset manager but their new charitable pot is
agreed and noted that
also looked after by their asset manager, so it’s
“beneficial owners of wealth don’t outsource
a route to more and new kinds of business for
philanthropy. It’s the topic where you’ll always
the adviser.”
get the meeting with the client in person.
Darren Kelland, Global
Someone like Bill Gates is not staying up
Head of Private Client
at night worrying about his 10% return,
Services from Hawksford
what really brings someone like that in for a
echoed the panel’s
meeting, is for them to understand - how can
views, adding that “the mere mention of
I part with this capital for the highest social
philanthropy gets clients’ attention … this has
return?”
become such a socially important issue that
Anthony acknowledged that there might be
clients are reaching out saying we want to do
an initial reluctance by advisers to engage
something or to give something back, even if
with philanthropic projects because of
they don’t yet know what that is.”
concerns that if clients give their money
Darren noted that there may well be a
away, it will negatively impact on their
mixture of motivations behind this kind
firm’s inflow of assets. But as he noted, “the
of giving: “Philanthropy is certainly quite
important point is what is best for the client, if
trendy at the moment. It used to be - I’ll buy
you are serving that client well, that will lead
a football team or I’ll buy a yacht, but now
to more business as long as you take a long
having a philanthropic foundation is a signal
term relationship view.”
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of how wealthy clients are.”
observing, “we see philanthropists who say
But whether clients are giving for status or for more meaningful reasons, Darren noted that donors want more control and to see more direct impact from their giving,
- this is the most important thing in my life
“...this has become such a socially important issue that clients are reaching out saying we want to do something or to give something back, even if they don’t yet know what that is.”
so I want something that I can control and I want to see the real impact of the donations in the areas that are important to me.”
Taking back control Anthony expanded on
first place...most donors don’t want to fund
the importance of control
something forever, they want to solve one
and seeing social return
problem and exit their philanthropy, like they
for donors. As one of 50
exited their business and go on to the next problem”.
advisers at UBS in philanthropy services, his aim is to help individuals maximise impact
For Anthony, questions around how much
with their giving. Anthony noted how the
donors want to give, legal vehicles, taxation
global value of billionaires has risen to
etc. are the more straightforward aspects of
$8 trillion today, from $1 trillion in 2000.
the conversation. The hard graft starts with
Crucially, 70% of this wealth is self-made and many individuals, think Bill Gates or Warren Buffet, as well as those who have signed up to the Giving Pledge, have opted not to leave their money to their families but to give it away.
demonstrating real social
“You need both investment and philanthropy in order to solve the sustainable development goals.”
As Anthony observed,
return on investment, what UBS defines as “driving measurable impact over time”. That may often involve advisers gathering and sharing independent evidence from credible sources on, for example, how literacy rates have
given so much of this wealth has been
risen within a specific group or how
generated through entrepreneurial activities,
mortality rates have fallen in a particular
it’s not surprising that “donors come to
area over a specific time period as a result of
philanthropy with the same business-like
the donor’s intervention.
mindset that got them their wealth in the
Anthony noted that showing this kind
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of granular impact is much harder to do
both types of investment as well as various
via what’s known as impact investing or
types of blended social finance mechanisms
sustainable investing, where investors are
all have their place: “You need both
looking for a risk adjusted financial return
investment and philanthropy in order to solve
whilst also doing some good. As he observed, the sustainable development goals”. “the philanthropic pot of capital is obviously smaller than the investment pot of capital, but the investment pot is not going to be able to have the same level of causal impact that the philanthropic pot can have”.
He referenced the example of an oncology fund set up by UBS. It was a private equity investment in companies that were trying to find the next drugs to cure different types of cancer, which raised $500M from
On this point, he noted that the ability
donors around the world. He explained
of impact investment funds to accurately
that while it will undoubtedly have a hugely
monitor impact may improve over time
positive impact, it’s harder to demonstrate
but for now, while positive impacts can be
measurable causal impact to donors in the
correlated, they can’t really be described as
short term.
being causally linked to investments. But,
Investment-Return Continuum
FOCUS
Societal Impact Mission Related Investment Continuum Achieving impact primarily through grant (some loan) funding
Seeking positive outcomes
Philanthropy Societal returns/ impact
FOCUS
Measurable high impact solutions to societal problems
Generally no financial returns to the social investor/ philanthropist
Venture Philanthropy
Social Investment
Matching the soul of philanthropy with the spirit of investment, resulting in high engagement and a long term approach to creating social impact
Societal return
Generally no financial returns to the social investor/ philanthropist
Secondary Focus: Below market financial return to the social investor or return not proven.
Sustainable investment, pursuing ESG practices/ positive outcome
Responsible investment, avoid harm/ negative outcomes
Impact *
SRI - ESG Investment
Relatively even balance on achieving a societal return as well as a competitive financial return
Maximising financial returns to investor Delivering competitive financial returns
Traditional Conventional Investment Maximising Financial Returns to investor, no regard for ESG
Secondary Focus: Creating societal returns
Delivering: Competitive financial returns
*Impact investment rests between social investment in social enterprises (whose primary purpose is a societal return of some type; and only secondary with some modified form financial return) and SRI/ESG investing (whose primary purpose is to maximise financial returns to investors whilst achieving some good which is secondary). Impact Investment is where there is an equal emphasis and balance between societal and financial returns on investment.
NOTE: the term Impact Investment is also applied to the full societal impact continuum The chart above reflects returns from the perspective of the investee and their impact - societal and/or financial. Investors including intermediaries would decide on the appropriate investment mix depending on their objectives for capital and their values. Ref: Aperio and Bridges
www.philanthropy-impact.org | Tel: +44 (0)20 7407 7879 | Email: info@philanthropy-impact.org Philanthropy Impact, 7 - 14 Great Dover Street, London SE1 4YR
Venture philanthropy Dr Stephen Shaw,
the space of two years and leveraged over
Associate Director -
$100M of funding. That’s a company that’s
Commercial Partnerships
really going on to great things thanks to the
at Cancer Research UK
backing of early venture philanthropists”.
outlined the remit of the Commercial
Expanding on new types of philanthropic
Partnerships team which aims to translate
investment mentioned by Anthony,
early research into products (therapeutics
Stephen referenced the Investment
and diagnostics) that benefit patients. He
Return Continuum diagram (produced by
explained that CRUK has different commercialisation approaches: partner alliances, licences, collaborations and spin outs. He expanded, “Cancer Research UK has been involved in the formation
Cancer Research UK welcomes entrepreneurs and investors with a successful track record in biotech to come onto advisory boards
and development of more
Philanthropy Impact). He explained how CRUK’s work spans the continuum with basic research being funded by Philanthropy and with alliances, start ups and new ventures funded through Impact Investing. He observed that the opportunity to change
than 30 spin out companies, one example is a
the way that research is funded and to speed
drug called Artios. It was spun out of Cancer
up its translation sits in the middle of the
Research UK funded research in May 2016
continuum - with Venture Philanthropy and
with a small amount of seed funding from
Social Investing.
Cancer Research UK and SB Health Investors,
He explained how Cancer Research UK
it went through a Series A and a Series B in
welcomes entrepreneurs and investors with
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a successful track record in biotech to come
Anthony picked up on
onto advisory boards, become investor
this: “If your objective is a
angels and to discuss the science, see where
risk adjusted return, also
their donations are going and have a direct
doing some good and the
impact on decisions, rather than just asking
level to which you can measure that good
them to “give and forget”.
might vary, then you want an impact or
Sianne pointed out that Cancer Research UK is ideally placed to offer a range of bespoke and tailored opportunities right across the continuum from 'pure' philanthropy to impact investing.
sustainable investment. If your goal, which many philanthropists goal would be, is I want to solve this problem even if it means having a 100% capital loss, then you are looking more at the philanthropic end of the spectrum.”
Talkin’ bout my generation Sianne asked the panel
that Hawksford were noticing a general
how they were seeing
trend amongst many investors, especially
attitudes towards
younger ones who tend to be more socially
philanthropy playing out at
aware, to want to know more about the
a generational level.
institutions that their capital is invested in, so that they can judge whether those types of
Darren agreed with
business align with their personal and social
Anthony’s point that it is
values. He concluded that as the wealth
likely that, as the industry
management industry matures, proving
matures, the need to be able
causal impact of investments will become
to demonstrate causal impact from social
increasingly important.
investments will grow. Darren also observed
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As he said, “clients are now asking the
both to make money and to do some good at
institution - what’s your corporate social
the same time.”
responsibility policy, what’s your attitude towards global warming, what are you doing about these things? It will no longer be enough to just say that we’re generating a return on capital return, clients want much more information about how the institution is
“Among younger philanthropists there is a different mindset. There is a sense of wanting both to make money and to do some good at the same time.”
giving back.”
Darren observed how younger clients “are much more alive to social issues [than older generations] and have a real hunger to make a difference. They’re also far more brazen about making their voice heard than the
“Among younger philanthropists there is a
older generation might have been.” He noted
different mindset. There is a sense of wanting
how this is having a knock on effect even for
both to make money and to do some good at
more traditional investors who are receiving
the same time”.
pressure from the younger members of their families.
James expanded on the generational mindset
Often their child has left university with
shift. Older generations,
no interest in a traditional career in law
he explained, had a more
or financial services. They are keen to do
traditional approach to philanthropy. The
something more meaningful. As a result,
standard road was to spend most of your life
Hawksford have noticed that often, “the
making your fortune and while away your
matriarch or patriarch in the family has said
twilight years giving it away. But as James
to them - why don’t you run the philanthropic
noted, while “that’s still the case for many
arm of the business, and increasingly this is
clients, among younger philanthropists there is
what we have been seeing.”
a different mindset. There is a sense of wanting
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Stop, collaborate and listen Sianne and Dr
collaboration between advisers happens in
David Crosby,
the world of philanthropy.
Head of Early
James noted that there is
Detection
still much work to do here
Research at Cancer Research UK both
and referenced some recent
observed how historically, scientific research
research from Scorpio that
has been quite siloed. But inside the Crick Institute, a very different philosophy is at work. More than 1,500 scientists and staff work collaboratively across disciplines and disease types to understand the fundamental biology underlying human health and disease. That includes cancer, but also cardiovascular conditions, neurodegenerative illnesses and infectious diseases. The point being that insights into one disease will often reveal a lot about others. Sianne asked the panel whether the same spirit of
revealed that, while the
“they are looking at their advisers [philanthropy consultants, wealth planners, legal or tax advisers etc.] and expecting them to work holistically, as part of a team who help to deliver across all the phases of work, from strategic planning, to implementation to the monitoring and evaluation phase.” 16
12% of HNWIs who take advice on their giving tend to give more than those who don’t, they are also often disappointed with the level of advice that they receive. He reflected that this is often because their network of advisers is not collaborating effectively with each other. As James noted, it isn’t enough for the lawyer or the tax planner or the wealth adviser to just cherish their own, separate piece of the jigsaw. James was optimistic
however and observed that “increasingly I
James agreed and explained
am seeing advisers working together and not
that the need to collaborate
acting in silos”. And that’s being driven by
in deeper ways is the reason
the clients directly, as he elaborated, “what
why organisations like
I see increasingly with clients is that they
the Private Client Dining Club and STEP’s
are looking at their advisers [philanthropy
Special Interest Group are so important. The
consultants, wealth planners, legal or tax
STEP Special Interest Group, he explained,
advisers etc.] and expecting them to work
comprises 1600 advisers from 60 different
holistically, as part of a team who help to
countries, who pool and share knowledge
deliver across all the phases of work, from strategic planning, to implementation to the monitoring and evaluation phase”. Sianne observed how she had seen how effective this type of collaboration could be with the example of
James agreed and explained that the need to collaborate in deeper ways is the reason why organisations like the Private Client Dining Club and STEP’s Special Interest Group are so important.
a recent Cancer Research UK donor who had pledged many millions following a holistic and joined up series of conversations involving her, the charity and her team of advisers, an experience she had found not only enlightening and empowering but also unexpectedly enjoyable.
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for the benefit of their members, clients and external organisations such as Philanthropy Impact to provide events in which advisers can meet, share best practice and find new ways to collaborate.
Get in the right vehicle While collaboration
As James noted, “what is expected of charity
between advisers is
trustees has increased exponentially over
beginning to pick up the
the last few years, demands have become
pace, Sianne asked the
greater. The public view and the media
panel for their thoughts on some potentially
scrutiny of charities has changed as well.” In
slower moving areas, specifically over how
James’s view, this may well be driving some
donors might opt to structure their giving.
philanthropists to look to other jurisdictions in which to set up their philanthropic entity.
James noted that when it
comes to donors who “want James reflected that from a tax relief, to give in a strategic way,
legal and cultural perspective, “the US is
who are thinking about
obviously very far ahead.” When it comes to
involving the next generation in their family,
Europe though, “Switzerland is one of the
or who want more control over projects”, it’s
more advanced jurisdictions. It’s a popular
still likely that they will want to set up their
destination for internationally mobile
own charitable vehicle. He observed that a
philanthropists looking to set up a charity.”
central question for many clients is around
He noted the example of a recent client who
which jurisdiction they wanted to establish
had “found the regulatory scrutiny in the UK
their charity in. The UK for example, is the
intrusive and wanted to move to Switzerland”
gold standard when it comes to regulation
where the regulations are not so oppressive.
and transparency. That can be wonderful,
While some philanthropists
especially for donors wanting to set up
might want to set up their
vehicles to continue beyond their lifetime.
own charitable vehicles,
But for others, the high level of scrutiny
Anna observed how Donor
and transparency can become overbearing.
Advised Funds (DAFs) are an increasingly
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attractive option. Anna explained how she
environment, why would you create your
founded Prism, a DAF to administer the
own charitable entity, whether that’s a grant
giving of individuals, groups and foundations making foundation or an operational charity?” making significant gifts to charities all over
Anna noted how a number of high profile
the world, especially those in the mid-upper
recent breaches of trust had only made the
end of the market. Anna agreed with James that the regulatory environment in the UK is increasingly fierce and this is partly
Donors can gift cash, shares, property, even works of art
regulatory environment more implacable, “the reality is that when [scandals] happen…think Kids Company, Presidents Club, Save the Children,
driving the growth of the DAF market. As she explained, “unless
Oxfam etc...the Charity Commission and
you have highly knowledgeable trustees who
HMRC jump straight in and create more
regularly keep abreast of the tight regulatory
rules.”
But as Anna explained, a DAF is a simple
But in reality, very few people, including the
way of avoiding all of this regulatory burden
adviser, know what options are available.
for donors: “The beauty of a DAF is that you
And when advisers work in silos, the
can simply open an account and label it an
situation can only get worse.
Own Name Foundation. So you can call it the
As she explains, “there is no reason why, if
Joe Bloggs Foundation. To the end charity, to
you’re a corporate lawyer you should know
Cancer Research UK for example, it appears
about certain charitable reliefs. But they exist
they know exactly who it’s coming from. Conversely as the donor, you may be very happy for Cancer Research UK to know about my £5 million gift, but actually regarding this other charity, I want to remain anonymous. So it gives enormous flexibility. It also deals with the issue of jurisdiction”, as she explains, “you could be a resident non-dom, Prism
and when a donor becomes
“There is about £750 million unclaimed every year just in Gift Aid. When I talk to those donors they are horrified. They say - but why didn’t my accountant tell me?”
has an off-shore bank
aware of it, it’s a revelation. I’ve met people who are incredibly sophisticated and are amazingly philanthropic and I’ve simply mentioned Gift Aid and giving cash, and they have not been aware that they could claim a further 25% on their gross donation. They simply didn’t know. There is about £750 million I believe unclaimed every year just in Gift Aid.
account so you can make a gift as a non-
When I talk to those donors they are horrified.
taxable remittance, but still benefit from Gift
They say - but why didn’t my accountant tell
Aid.”
me?”
Anna explained that Prism also works
Anna observed that often when she does
with advisers to educate them so that they
speak to the accountant, because they
can let the donor know about the most tax
aren’t looped into conversations with other
effective methods of giving. Donors can gift
advisers, they simply haven’t thought to
cash, shares, property, even works of art.
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ask (or have been too embarrassed to ask)
regulations to work more as it does in the US
questions about charitable giving. One
where you can deduct tax at source rather
solution of course, as had been mentioned,
than having to claim it back from HMRC.
is for the advisory world to “learn to
But as Anna wryly mused, this is unlikely
collaborate” in James’s phrase.
to change any time soon, as the perception from government is that Gift Aid is working
“There is about £750 million unclaimed every
like a well oiled machine and despite the
year just in Gift Aid. When I talk to those
best efforts of a number of stakeholders to
donors they are horrified. They say - but why
improve the situation, “thirty years on, we
didn’t my accountant tell me?”
are having the same conversation, just with different governments”.
Another solution, in the case of Gift Aid at least, is for the UK government to change the
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A global perspective Dr David
International Research Partnership and
Crosby and
convened the International Early Detection
Dr Stephen
Alliance which marries the best minds
Shaw observed
around the world with the most advanced
that Cancer Research UK is increasingly
technologies so that cancers can be detected
working in more global ways, funding
at the earliest stage when they are easier to
research in 36 countries and conducting 25%
treat.
of their trials with collaborators overseas.
Sianne Haldane asked the
Not only that, but half of the PHD students
panel how philanthropy is
that are funded by Cancer Research UK are
working at an international
from outside the UK. David cited CRUK’s
level.
Grand Challenge competition as an example of this global multi-disciplinary approach.
Darren noted that while
Through awards of £20 million, this
Hawksford have 50% of
programme aims to stimulate new behaviour
their staff in Asia they have
in science and to bring together large-scale
yet to see a wholesale desire
teams of the best people globally to confront
to set up philanthropic structures from
the really big challenges in cancer research.
that part of the world, potentially because
Another example is a collaboration with
a lot of wealth there has only been recently
the Indian Government bringing the best minds together to explore how to deliver innovation in cancer treatment in a low cost setting. CRUK is also at the heart of the
“So the UK takes a very impact led sort of focus and other parts of the world are starting to pay attention.” 22
generated. That in itself provides an opportunity. As he noted, “if you get it right at the start in terms of properly setting up philanthropic structures and encouraging clients to think
about their charitable giving, it can have much
Anthony gamely flew the
more impact over the long term.”
flag for the UK, noting that
Darren also observed how in the Middle East, particularly under Sharia Law “there are principles that encourage everybody to donate a proportion of their lifetime wealth to charity. Hawksford are having conversations with a number of Middle Eastern clients to encourage them to set up structures in Jersey to facilitate that element of Sharia Law that necessitates charitable giving.”
philanthropy is one area where certain aspects of the UK model are actually being exported to the rest of the world, including Switzerland, US and Asia. As he explained, this is often around “the way the UK banks tend to be more proactive about offering advice if a client is doing something which is harmful or could be more impactful. In the UK, UBS aims to let them know that what they are doing is
“If you get it right at the start in terms of
actually causing harm or they could think
properly setting up philanthropic structures
about it a bit differently and potentially have
and encouraging clients to think about their
more impact. So the UK takes a very impact
charitable giving, it can have much more
led sort of focus and other parts of the world
impact over the long term.”
are starting to pay attention.”
Looking to the future The excellent contributions from the speakers, panellists and audience highlighted the way that philanthropy is becoming more sophisticated, linking charitable giving with investment to meet the needs of the new generation of entrepreneurial philanthropists. Clients will increasingly seek advice on philanthropy and this is an opportunity for the adviser community. Advisers have a key role to play in being proactive and ensuring that their clients are well informed on the options for philanthropic structures, charitable tax relief and clients will increasingly expect their different advisers (wealth, legal, tax) to work collaboratively to meet their objectives. Philanthropic advice is becoming the most important advice that one will be giving their clients.
Authors Sianne Haldane
Darren Kelland
Head of Planned Giving
Global Head of Private
Philanthropy at Cancer
Client Services at
Research UK
Hawksford
James Maloney
Anthony Donatelli
Charities and Philanthropy
Head of Phillanthropy
Partner at Farrer & Co.,
Services UK at UBS
Deputy Chair of STEP Philanthropy Special Interest Group
Anna Josse
Report written by Ewen
CEO of Prism the Gift
Haldane of Studio Loki
Fund
on behalf of Private Client Dining Club and Cancer Research UK
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