The future of individual philanthropy in question: trends and changes
Global Head of Individual Philanthropy / BNP Paribas Wealth Management
How is digital accelerating this transformation?
N.S. I think that the major change at the start of the 21st century is the increasing awareness that “giving well” is not a simple matter. Drawing on your own values and motivations is a good first step when choosing where to focus your efforts. Serious planning and reflection are then essential before deciding which actions to take. This allows philanthropists to define a strategy and to establish expectations based on their motivations.
Placing emphasis on results is another major trend. Rather than helping people in extreme poverty by simply giving them money or food, people concerned about questions of social impact take what they consider to be a more instructive approach, by tackling the root causes of poverty and building bridges to help people find a way out of this situation. A frequently quoted Chinese proverb says: “If you give a man a fish, he will eat for a day. If you teach him to fish, he will eat for a lifetime.”
Philanthropy will also be shaped by the new hyperconnected generation, millennials, born between 1980 and 2000, for whom innovation, ethics and adventure are keywords. For them, the purpose of philanthropy is to:
- Use innovative digital tools,
- Create real social change,
- Promoting responsible investment *
- Making a real social and environmental impact on society in addition to the financial contribution.
In general, millennials are particularly likely to invest in FinTechs (companies that are reinventing finance with the help of technologies), EdTechs (those that use technology to promote access to education), the food and agricultural industries, and the energy sector (the objective, in the latter case, being to allow as many people as possible to access clean energy sources). They want to play an active role in the causes they care about and in the organisations they support. How? By developing social entrepreneurship that can generate positive change in the lives of communities around the world.
Unlike many of their parents, "Next Geners" take a hybrid approach to their action. Taking advantage of constant technological changes, their philanthropy is far more global and internationalised than that of their predecessors. They do not hesitate to use data analysis systems to promote their social and environmental goals. Moreover, they are often quick to combine their resources. They have also been known to create their own networks in order to defend the causes they believe in.
Finally, in a constantly changing world, the desire to act to make the world a better place will lead to the development of many different approaches and new goals for the private banking profession. Faced with these new demands, we want to be able to inform and support our clients on all aspects of their philanthropic activity. To this end, we are developing an integrated global approach to impact solutions, covering responsible investment offers, impact investing and philanthropy while promoting the creation of new digital tools (myImpact, a tool in development that allows users to define their investor and philanthropist profile).
How can banks support philanthropists with regard to these trends?
N.S. Private banking has integrated a philanthropy expertise service to provide a personalised response to customers who want to put their wealth to work for a cause that is useful to society. The advice that we offer combines flexibility, expertise and objectivity to support our customers in their philanthropic approach and to find the solution best suited to their situation and needs.
A range of tools are available for them to structure their action. The bank can help its customers to identify the most appropriate actions based on their wealth situation and objectives: committing time or skills, signing a cheque, donating stocks, designating a foundation to benefit from a life-insurance contract, making a bequest or a temporary donation of usufruct, creating their own structure…
Taking action that benefits an organisation can have various tax and wealth consequences depending on the country. It is important to understand these, as they are an integral part of our work as private bankers, supported by our wealth planners.
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How have philanthropists’ expectations changed over the past ten years?
N.S. The ways our customers take action have changed. Once focused on simple financial donations, or bequests - suggesting that they were mainly seeking advice in selecting a number of beneficiary organisations - philanthropists now want to have a more concrete understanding of the social impact of their actions and to make a personal commitment of time and skills. They have become more interested in identifying programmes within organisations they often select in advance, and in creating their own projects, with our assistance in terms of structuring (strategy, use of different wealth management tools such as temporary donations of usufruct and donations of shares before the sale of a company, impact assessment, etc.). The majority of customers integrate the use of their own philanthropic vehicle (foundations and other structures).