give back, pay forward

7/25/2019 Give Back, Pay Forward

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Give Back, Pay Forward

by David Drake


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Growing need for professional philanthropic assistance

Many family offices now offer professional assistance to their clients on the best course for their

philanthropic endeavors, in addition to their wealth management services.

Philanthropic assistance to wealthy families is fast becoming a top service provided by family offices

today. The explosion in the number of ultra-wealthy individuals in the world, with many arising from

emerging economies, is greatly altering the family office landscape. Traditionally set up to provide

wealth management services for affluent individuals and families, family offices have changed their

business strategies to provide other professional services to meet the growing demands of the

wealthy. Many family offices now offer professional assistance to their clients on the best course for

their philanthropic endeavors, in addition to their wealth management services.


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Rise of philanthropic foundations and family offices

The motivation to give has prompted wealthy individuals and families to set aside a percentage of

their net worth for philanthropic causes.

ealthy families have always been known to give to philanthropic causes in their communities and

around the world, for a variety reasons. hile some have a family history of generosity, others are

driven by the desire for societal change and helping those less fortunate. The motivation to give has

prompted wealthy individuals and families to set aside a percentage of their net worth for

philanthropic causes.

Philanthropic investment used to be carried out by institutional investors and wealth managers on

behalf of wealthy families! however, the trend is changing as many families have decided to take a

hands-on approach by establishing their own foundations. "amilies are deeply and emotionally

attached to their philanthropic endeavors, so trust is paramount. Professionally- managed

philanthropic foundations provide structure and governance for their activities and often work hand-in-

hand with family offices to ensure effective use of their funds.


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Motivations for philanthropic endeavors

As most families expand their charitable activities beyond their home base, there is a greater focus on

creating projects with lasting impact.

The desire to leave behind a legacy is one of the strongest motivations for philanthropic activities of

wealthy families. #s most families expand their charitable activities beyond their home base, there is a

greater focus on creating pro$ects with lasting impact. "amily offices can help clients discover

philanthropic pro$ects, monitor, and implement them in the most professional way.


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How family offices are helping make the most of philanthropicinitiatives

Assisting in the monitoring and execution of philanthropic projects.

Most wealthy individuals and families, especially those new to philanthropy, face the challenge of

recruiting the right personnel for their foundations. "amily offices bring a wealth of experience and

speciali%ed networks to play in helping families source highly &ualified and experienced staff for their

foundations, but are not directly involved in the funding or implementation process of pro$ects. This

way, families can retain full control over the funding and execution of their pro$ects without external

interference, as well as guard against fraud and ensure &uality delivery and proper execution.

#nother strategy adopted by some family offices is assisting in the monitoring and execution of

philanthropic pro$ects. Most family foundations do not possess the expertise re&uired to handle the

increasing complexities of charitable pro$ects! hence, the need for professional advice. 'lients who

use family offices as advisors can be assured their pro$ects are implemented in accordance with the

family(s uni&ue needs and ob$ectives.

The oversight provided by a professional family office also ensures greater transparency as pro$ects

are executed according to plan and on time.


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Rise of Social mpact nvestments

Social impact has become an emerging field in the philanthropy arena

Traditionally, philanthropic activities were carried out on behalf of the ultra-wealthy by foundations and

family offices to ensure effective asset allocation. Most families simply wanted to ensure their social

and financial goals did not conflict. )n recent years, however, the trend is changing, and the line

between philanthropy and financial effectiveness has been erased.

Today, social impact has become an emerging field in the philanthropy arena. "amilies want to meet

the needs of humanity while also pursuing their own financial goals. The *lobal )mpact )nvesting

+etwork *))+ defines impact investments as investments made into companies, organi%ations, and

funds with the intention to generate social and environmental impact alongside a financial return./

#ccording to the Monitor )nstitute )mpact )nvesting report released in 0112, the impact investment

market will grow to 3411 billion by 0101 or 56 of 341 trillion in total assets. 7owever, according to

the 0150 orld 8conomic "orum presentation on the mainstreaming impact investing initiative, less

than 9: 3;1 billion of capital has been committed to impact investments out of tens of trillions in

global capital./

Moreover, the reports of the 'ouncil on "oundations and "amily ealth #lliance shows that wealth held

by families presents a fertile ground for the growth of impact investment. "amily foundations hold an

estimated 30;4 billion in assets, while single and multi-family offices hold 35.< trillion in assets.
http://www.weforum.org/issues/impact-investinghttp://www.weforum.org/issues/impact-investing


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Through impact investment, families have been able to tackle social and environmental problems

including improving agricultural systems, countering negative impacts of climate change, providing

affordable housing and improving health care. #lthough profit is not the ma$or motivation, most

impact investments are still expected to yield returns that at least cover the initial investment.

How family values come into play in impact investment

Familys core values will determine nature and character of the investment.

)mpact investment is driven by the desire to address social and environmental problems. #s a result,

a family(s core values will determine nature and character of the investment. They might choose to

improve agricultural practices, provide housing or access to &uality education for the less-privileged,

depending on the governing philosophy of the particular family. :ome families have a tradition of

supporting particular causes and will almost always channel their investments to bring about a positive

impact in that area.

)mpact investment occurs across diverse asset classes, including angel investment, venture capital,

and private e&uity. )mpact venture capital investment has become a favorite asset class among

wealthy families. )t helps them focus their investment on particular areas of interest, pro$ects, and

regions of the world along with greater returns and lower risks.


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David Drake is the 'hairman of =D> 'apital, a multi-family office! ?ictoria Partners, a

@11 family office network! =D> Aeal 8state *roupand Drake 7ospitality *roup!

and The :oho =oft Media *roupwith divisions ?ictoria *lobal 'ommunications,Times

)mpact Publications, and The :oho =oft 'onferences. Aeach him directly

at DavidB=D>'apital.com.
http://www.ldjcapital.com/http://www.victoriapartners.co/http://ldjcapital.com/ldj-real-estate-grouphttp://ldjcapital.com/drake-hospitality-group/http://www.thesoholoft.com/http://www.victoriaglobal.co/http://ldjcapital.com/times-impact-publications/http://ldjcapital.com/times-impact-publications/http://www.thesoholoft.com/upcoming-conferencesmailto:[email protected]://www.ldjcapital.com/http://www.victoriapartners.co/http://ldjcapital.com/ldj-real-estate-grouphttp://ldjcapital.com/drake-hospitality-group/http://www.thesoholoft.com/http://www.victoriaglobal.co/http://ldjcapital.com/times-impact-publications/http://ldjcapital.com/times-impact-publications/http://www.thesoholoft.com/upcoming-conferencesmailto:[email protected]

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