UHNWs and Family Office Philanthropy

The following is an extract from the Jersey Private Wealth Report 2018.

Many UHNW wealthy families philanthropy is a dedicated part of their spending. The study found that Jersey private clients and family offices are extremely philanthropic. 

As it is globally, philanthropy in Jersey is driven by each individual’s passions, values or concerns. It provides a sense of purpose and importance, whilst being a personally fulfilling and rewarding experience for wealthy individuals and their families. 

As one private wealth professional stated, “It is not just UHNW individuals with ￡100 million plus, but those with ￡20-50 million, who are setting up their own charitable trusts. They want to make sure that they’re actively involved in supporting causes that are important to them.” This was also cited by many other respondents. 

Key Findings: Philanthropy 

• Wealthy individuals in Jersey want to give back to the local community 
• Most private clients in Jersey wish to remain anonymous, as philanthropy is personal and private 
• Philanthropic causes are driven by personal frustrations or concerns regarding important issues that are not being dealt with by an established charity 
• Philanthropy is a deliberate strategic vision for wealthy families in Jersey 
• One concern for UHNW individuals is the large administration costs of large charities 
• Wealthy individuals/families want to create their own structure, whether it’s a trust or foundation, and want to be involved and retain control 
• Patriarchs/matriarchs want the flexibility to include their children in the family’s philanthropic structure 
• Philanthropy is more important once an individual/family has created their wealth, rather than compared to an individual/family still creating wealth 
• Some Jersey-based private clients and family offices use their own wealth to invest in a philanthropic cause, however some will seek to collaborate with other like-minded UHNW individuals to co-invest together on larger philanthropic projects 
• Wealthy families employ the services of local philanthropic advisers to set up structures and provide good governance. 

Motivations and benefits

The research study found that Jersey private clients are extremely generous and want to create benefit, both to the local Jersey community and also to international projects. In return, they receive a rewarding sense of fulfilment and of giving back to local society and the world. The most popular areas include health/children in the community, environmental conservation schemes (such as rainforest or building a school in an underdeveloped country), creative projects (such as art or music) and education. Jersey philanthropists seek to: 

• Make a difference to society and to give back
• Create a better environment in which we live
• Help to educate the next generation to understand that their wealth can help others and they have a responsibility to do so
• Create a legacy for future generations
• Usually have a connection with the cause in one way or another, e.g. specific illness of a family member or friend, a tragedy that has affected the family or friend 
• In some circumstances, while motives are genuine, there is a great deal of kudos attached too. 

Successful entrepreneurs have created large amounts of wealth. They’re focused, intelligent and some make a great deal of money while they’re relatively young. As conveyed by one professional service provider, “perhaps their [UHNW] successful careers span 10-15 years, rather than the 30-40 years other people might experience. There comes a point where they take a step back, look at themselves and think, I’ve worked hard, but I’ve made some extraordinarily large amounts of money being able to do what I do. How can I give some of that back?” 

Jersey entrepreneurs are inquisitive and they naturally find causes that resonate with them and look to be as involved as much as they possibly can, because it’s part of their nature. Attention to detail and control is important to them. 

The study found that recently relocated high-value Jersey residents usually have their own philanthropic causes and so take some time to support the local community. The wealthier are getting wealthier and they reach a stage in their lives where they’d like to be seen to be giving something back. When they start to do that, it motivates and enthuses them, and gives another meaning to their lives. 

A philanthropic journey 

Jersey private clients interviewed are concerned that large UK charities have high administration costs and a large percentage of their donations contribute to the management of the charity, rather than to the direct benefit of the cause itself; this is one of the reasons given by the respondents to why wealthy families want to invest directly in philanthropic causes through their own foundation. 

The study found that most wealthy families become involved in a philanthropic strategy following a major event, such as the sale of their business or acquiring a substantial amount of wealth. However, a number of younger entrepreneurs are involved in philanthropic structures, “as I feel it is part of my social responsibility to give back.” 

Another UHNW individual shared, “To me, philanthropy is not just the giving of wealth, but the ability to make a change through the provision of skills and education ... even the most cutthroat businessperson finds a conscience later in life and thinks about philanthropic causes.” This has always been the case, but it has been accelerated by the way the world is currently evolving. 

A very private affair 

Private clients in Jersey want to remain anonymous when donating to good causes. 

“We like to stay under the radar when it comes to our philanthropic causes, we keep it very quiet, it’s a very private affair.” 

The study found that when private clients seek to create philanthropic strategies that help give back to society, they do not want to attract attention or publicity. Jersey trusts and foundations provide excellent structures to facilitate their requirements, “Donations as a family or personally have been generally anonymous through our foundation. I think it’s where there are scenarios, where if you can help to make a difference, or make something happen, it’s worth doing. It’s not a case of doing something because it makes you feel good. It’s about trying to change things for the better.” 

“It’s a very private thing ... and sentiment driven ... philanthropy is part of our inter-generational wealth strategy.” 

The research study found that while Jersey philanthropists are discreet, they are nevertheless influenced by the cultural philanthropic strategies in the US, where American billionaires, such as the Rockefellers, Bill Gates, Jeff Bezos, Mark Zuckerberg, and a number of seminars held on the subject, demonstrate significant amounts of wealth being handed over. However, private clients also see the scandals in the charitable sector, “the reputation of Oxfam, for example, has had its image tarnished as a result of negative news.” As a result wealthy families are bringing philanthropy in-house, as part of their family office, to actually supply the philanthropic effort and direct it themselves, as opposed to outsourcing it. 

Family and next-generation 

Private clients that were interviewed found that “family philanthropy is extremely rewarding for me, my wife and our children; discussing our individual passions and interests, agreeing [and sometimes disagreeing] but sharing a family focus, it’s important, we have created a family charter with the help of our wealth adviser.” 

The study found that private clients and family offices use trusts and foundations as a way of raising the next generation’s involvement in philanthropic projects. This can include getting their children to see what happens practically in the process, as well as understanding decision-making when it comes to investment and seeing the successful consequences. 

One of the main concerns private clients shared, was, “the sense of responsibility and sometimes burden that great wealth brings, we see philanthropic work as not only something that’s good, but something for our children to be involved in, they are not interested in the family business but share our philanthropic values.” In this way, the next-generation is involved in managing family assets, and, still very much part of the family ethos, involved in what’s going on. Wealthy Jersey families are spending a great deal of time dedicated to philanthropy: 

“I’ve worked in situations where the whole trust that we were administering was set up for philanthropic purposes and the family was making bequests in some of the poorest countries in the world, to make sure that children and families were educated.” 

Philanthropic structures

Private clients and family offices based in Jersey and globally use a number of different structures to facilitate their philanthropic strategy: 

As a Jersey private wealth provider reinforced, “Jersey trusts and foundations can be set up on a bespoke basis for global philanthropists tailored to the philanthropic cause they are passionate about.” 

Furthermore, as one respondent quoted, “The introduction of the Charities Register in May 2018 under the Charities (Jersey) Law 2014 will help Jersey as a centre of philanthropic structures.” Jersey provides a stable, independent judicial system and robust regulatory jurisdiction, as an island of specialist private wealth professionals, with many years of experience of setting up complex structures, in helping wealthy families with their philanthropic strategies. 

Social and environmental impact investing 

The study found that a third of Jersey private clients and family offices interviewed are involved in social and environmental impact investing either directly or through funds. They want to invest in solutions that provide a positive impact on environmental or social issues, but also investing efficiently and effectively, receiving in some circumstances no financial return. Jersey private clients and family offices interviewed confirmed that “this trend will certainly remain, if not increase in the future, as part of our philanthropic strategy.” 

“You can get involved in impact funds now, rather than having to find ￡50 million to do it yourself. You see it percolating down through the value chain and we have clients of ￡2-5 million saying, ‘I want to make a difference, how can I do it? Can you align my portfolio in companies? I want to cure cancer!’ or ‘Glaxo-Smith-Kline are having a really good go at that, or the Welcome Foundation.’ ‘Can you buy those in my portfolio, so I know that some of my money is working to have an impact on my objectives?’” 

Global philanthropists and Jersey 

Jersey private wealth professionals have been successful in setting up and managing philanthropic structures for global philanthropists. As part of the British Crown Dependency, Jersey is a stable, tax-neutral and highly-regulated jurisdiction. In addition, the Jersey’s Trusts Law and Foundations Law are flexible and can be tailored to the particular philanthropic requirements of the wealthy individual/family. 

Jersey philanthropic advisers help develop a philanthropic strategy for the private clients and family offices. They help to engage with the next-generation, establishing efficient and effective vehicles for global private clients and family offices, providing advice and good governance. 

Read the full Jersey Private Wealth Report – 

https://gibsonstrategy.com/content/docs/Gibson_Strategy_Jersey_Private_Wealth_Report_2018.pdf

For details of sponsorship opportunities for the Guernsey, Isle of Man and UK Private Wealth Reports please email [email protected]