An Emerging Generation Seeks To Establish Its Own Legacy While Learning From The Experiences Of Other Charitable Families
For many of ultra-wealthy inheritors (net worth = US$100 million or more), philanthropy isn’t an ancillary benefit of extreme wealth – it’s a defining characteristic. Research suggests they are not just interested in “doing good.” They are committed to making a significant positive impact on society and the world. With that in mind, it’s a little surprising that about half the ultra-wealthy inheritors recently surveyed report only “directional philanthropic goals.”
While they are making concerted efforts to be philanthropic, the study of 114 ultra-wealthy inheritors reveals that 65 percent believe they can do a better job. They recognize opportunities to be more strategic and more effective. Part of the problem may be that only about a quarter of these ultra-wealthy inheritors have clearly defined philanthropic goals. Roughly 20 percent of them are somewhat more in the dark and haven’t yet identified a cause that they’re truly excited about supporting.
“The philanthropic interests and needs of an emerging generation of ultra-wealthy inheritors are shaping the way the family office sector does business. These clients are not looking to write a check for a tax credit. They are more frequently taking an active role and integrating charitable initiatives with entrepreneurial efforts,” said Robert Levin, a partner at Flynn Family Office. “Most importantly, they want to learn from the experiences of other exceptionally wealthy families, driving demand for multi-family offices that provide real opportunities for clients to share these resources.”
This overall strong interest in how other ultra-wealthy families are approaching philanthropy is characteristic of ultra-wealthy inheritors in general. Nearly three-quarters of them are interested in how other wealthy families and individuals are approaching philanthropy. By and large, they’re highly motivated to understand what their peers are doing across a spectrum of activities and endeavors. By sharing with their peers, ultra-wealthy inheritors are able to expeditiously move up the learning curve.
Paralleling this perspective, about seven out of ten ultra-wealthy inheritors are highly interested in being introduced to likeminded individuals. Goals include:
- Accessing resources and expertise.
- Learning about interesting opportunities and possibilities.
- Learning about best practices in various functional areas.
Those with such goals know just what they want to accomplish and are attuned to the ways they can meet these expectations. Very often this incorporates the structures they employ such as foundations and trusts to achieve their charitable agendas.
“Over time, the charitable foundation became almost the philanthropic standard for the ultra-wealthy community. Many of these structures have had a profoundly positive impact on society over the span of generations. Despite the advantages, setting up a family foundation may not be the best option for some clients. How to best structure the charitable vehicle depends on factors ranging from operational costs to the level of personal involvement,” said Levin.
