5 minute read
Feature: Giving
from ASSET 4 - 2021
by ASSET
Is giving the new getting?
Daniel Smith investigates philanthropy and the interesting ways it can be incorporated into financial plans.
Giving is on the rise. No longer is it the sole responsibility of the adviser to generate wealth, but also to find ways to allocate that wealth through gifts. Whether through charitable donations, trusts or investing on behalf of beneficiaries, philanthropic giving is on the rise.
According to Liz Gibbs, head of philanthropy at Perpetual Guardian, it is important to understand the deeper meaning of philanthropy.
“It is generosity. Usually, it means people donating money, but it can also include contributions of time, expertise, of engagement.”
Gibbs’ work sees her managing over 600 charitable trusts and helping to distribute the funding generated by those trusts for charitable purposes.
“One of our clients donated funds to build an online governance learning platform so that charities can help build their governance capability. It is not always just giving grants, it is often giving access to knowledge and technology.”
Importantly for Gibbs, is that philanthropy is becoming a key part of financial conversations.
“Philanthropy as a part of estate planning is certainly on the rise. Philanthropy NZ have done research which shows that between 2004 and 2014 the value of philanthropy in New Zealand rose from $1.4 billion to $2.65 billion. Since then we have seen that continue to increase.”
Liz Gibbs
Liz Gibbs
Gibbs says that for advisers who have clients that are interested in getting involved in philanthropy, it can be a great opportunity to bring their family into their decision making.
“Understand what your clients are interested in. Often it is not just discussing that with your clients but also with their children.”
Tyler Ward, trust manager charities at Trustees Executors, also believes that it is important for New Zealanders to learn how to properly donate their money.
“Here in New Zealand we are one of the most generous countries per capita, and that is only going to rise in a range of different ways.”
Trustees Executors have launched a new foundation to increase the efficiency of the administration work that goes on behind the scenes at charities.
Ward says: “The purpose of the Trustees Executors’ Charitable Foundation is to provide a vehicle that will make philanthropy more efficient, and reduce the administration burden on charitable foundations.
“By making giving simpler, more of the funds available go into benefitting the community.”
Ward believes that education can reshape the way that New Zealanders think about philanthropy. “A lot of people believe that in order to [support] charities you need to be rich. But with philanthropy you can help fund organisations [in many ways] every little bit counts.”
According to Ward, trustee organisations have a key part to play in aiding clients to engage with philanthropy.
“We need to get an understanding of what the client wants to support, and the charitable outcomes that the individual wants to achieve. There is the ability to set up a charitable trust which is a good option if somebody has a reasonably large amount of funds they are wishing to put aside.
“If they want to give after their lifetime then we can have a conversation [about] setting that up as part of their estate planning.”
Financial advisers, who are intimately familiar with their clients’ accounts and personal values are in the best position to bring about the giving conversation.
“It is all around having a talk with clients around what they are hoping to achieve now, and what they want their legacy to look like,” Ward says.
“What is really important to them is a great place to start the conversation.”
It’s not just the trustee companies that are discovering novel ways to help their clients engage with philanthropy, but advisers too.
Nigel Tate has helped his clients bequeath large sums of money to charity through an alteration in the way that their insurance is set up.
“I have a couple of clients that have had family members personally impacted by various ailments and wanted to donate to charities helping people who were going through a similar thing.
“When these clients got to a stage where they no longer needed life insurance for themselves, knowing their passion and involvement in these charities I spoke to them about transferring the ownership of their life insurance over to the charities.
“The client continues to pay premiums and when they pass away there is a decent payout to the charity.”
Tate has helped many of his clients give in this way and the families of all of them have been happy with the result.
“Every one of them was a personal experience. One client told me: ‘I had never even thought about this. I could never have afforded to donate this amount of money to the charity had I not used insurance to do it.’”
Fund managers, with their access to large amounts of capital can get creative with the ways that they engage in philanthropy.
Just ask George Carter, managing director at Nikko Asset Management who has worked with his team to find a way to utilise an investment fund to promote real change.
“For a fund manager trying to do good, I believe it is quite conceivable that people might want to utilise some of their assets not just to generate returns for themselves, but to generate an outcome that has an impact outside of the realm of finances.
Tyler Ward
Tyler Ward
“We are launching a fund where people will be able to use their capital to do a particular philanthropic good rather than any financial return.”
That philanthropic goal is tackling the global problem of human trafficking in Southeast Asia. Nikko have teamed up with LIFT International and Tearfund NZ to set up a permanent income stream to engage head-on in a fight against modern day slavery.
Carter explains: “It is a PIE fund. Investors will put their capital into the fund and we will put that capital into investments, predominately bonds and cash but with some equities. Any return that is then generated from those assets will be donated to LIFT International whose explicit goal is to work for the prevention, detection and prosecution of those involved in human trafficking and modern day slavery.”
The goals of the fund are bold. They began with Carter considering what was the best way for the financial services industry to do good in the world.
“Our skillset is that we are really good at managing money. So why not utilise these skills … for commercial purposes, for philanthropic purposes. If people are giving from their core skillset back into society, the results can be tremendous.”
