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Few wealthy families employ a philanthropic strategy

bit2Big > Africa News > Few wealthy families employ a philanthropic strategy

Years of working with clients and families in financial services has taught us that defining a philanthropic strategy is one of the best ways for a family or a family business to outline a purpose for their wealth. Yet, while 2018 research highlighted the increasing importance more affluent families are putting on philanthropy, most are still not implementing one, two years on.

Our most recent research survey shows that despite the groundswell of interest in supporting causes associated with the Covid-19 pandemic, of those who gave, only 20% of families have a formal process for doing so. Why are so many families still neglecting philanthropy as a strategic planning tool?

While 31% of survey respondents said they are actively contributing more to the community and wider society, overall the picture shows that philanthropy is often ad hoc and not considered as part of a central strategy. 

“Making a contribution to the community is certainly on our philosophical check-list but has to date been undertaken at an individual rather than group level,” commented one respondent.

Perhaps the reason for not formalising philanthropy is to do with the perception that many families believe they are too small for it to be of relevance to them. Certainly, when you think of philanthropy in the 2020s, you tend to think of the vast charitable foundations such as the Bill and Melinda Gates Foundation, focused on tackling the great global challenges of our time. But philanthropy takes many forms, including local giving.

The pandemic has been effective in turning many families’ attention to the inequalities closer to home, prompting an uptick in local giving initiatives. Throughout our global office network, families have come in for help in setting up charitable trusts. There is every reason for these initiatives to form part of a formal strategy.

In the South African market, the pandemic has prompted much philanthropic activity. What is notable across the board is that those families with a plan already in place were at a huge advantage. In order to be agile and have the desired effect as quickly as possible, an existing philanthropy strategy proved to be essential.

It is not only this ability to move quickly and deftly when a crisis strikes that makes a strategy so important. It is also an effective succession-planning tool. Our research has emphasised that all four pillars of capital – financial, intellectual, cultural and social – stand on the foundation stone of purpose. Defining a common purpose that can be built around a family’s values is the starting point of any succession plan. It is also, in our experience, one of the things families find most difficult.

By putting philanthropy at the centre of any discussion about purpose, a family automatically engages a broader cohort of people – not only the next generation, but also those family members who are not necessarily financially oriented and who may not have played a role in the past. In this way, defining a philanthropy strategy can unlock new potential within a family, enabling different perspectives to be considered and engaging people focused on the other three pillars of capital.

In the survey, 43% of respondents said that the Covid-19 pandemic had not altered the way their family thinks about or acts when it comes to contributing to the community and wider society, although they say they have always been aware of their social capital. This seems strange given how much people have learned about each other and how others live since the pandemic broke out. Now is the time to harness the practical wisdom garnered over the last year or so to seriously consider the part that a philanthropy strategy can play in uniting a family and helping them find a purpose for wealth.

The views expressed are those of the author and do not reflect the official policy or position of the Mail & Guardian.

Bit2Big

Bit2big offers global digital finance solutions based on blockchain, cryptocurrency investments and blockchain services.

With a presence in Switzerland, Nigeria, Rwanda and Uganda we are driving the adoption of blockchain technologies in the east and west Africa.

Transformative, empowering, progressive and integral. At Bit2big we believe in ownership, financial stability and having control over your future.

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