Philanthropy is commonplace in family office portfolios. Being around hundreds of family offices, first from the philanthropic side and then the internal and impact side can give great insight into the context of philanthropy. While many families consider philanthropy to be an important duty, there is a difference between those who view it with purpose and those who view it as an obligation. Every family is different and there is no universal or “best practice” standard for how families decide how to give and where to take on leadership roles.
However, with there being no standard, there are also trends both in terms of intergenerational challenges and the practice itself. The world is also full of excuses such as: “The nonprofit sector is broken,” “It’s all corrupt” or “We give enough to what we care about”. At times, there can be a sense of despondency, but it shouldn’t deter you from giving, and ideally if one leans into being an activist philanthropist, you will find more value than the check alone.
Activist philanthropists are different
And to me, they are the truest of philanthropists because they actively engage and problem solve using their time and resources rather than just writing a check. They do more than sit on boards – they strategise, and they lead by example and know their philanthropic field as well as the professionals they support. They travel to where their resources are needed and look to understand the underlying problem. They often recognise that social issues are usually the result of a system or infrastructure failure related to their business, their government, or others, and they go beyond the role of sitting on a board by attempting to remedy the entire system.
While this proactive mindset is similar to how many high-net-worth individuals approach their business and their wealth, many business leaders who step into philanthropy approach giving differently than how they lean into business. Those who lead by example take risks in philanthropy, of their time, their friendships, and all their resources to engender true change.
There are a few key elements that differentiate this type of giving:
- The size of the gift is proportionate both to the family wealth and their engagement. In many cases, this gift could also refer to their time spent, not just the money donated. Meaning that activist philanthropy is the act of integrating one’s life into one’s giving.
- If a lead/significant gift, it is intended as a catalyst for others to join. A common issue with donating to individual charities is that it runs the risk of pitting organisations with similar focus areas against each other. Activist philanthropy means working to resolve the systemic problems that lead to issues by making a large gift, often a match or a lead capital gift, and then working hard to engage one’s network to match or support it.
- Strategic Planning/Engagement is a necessity for future engagement/giving. This type of philanthropy goes beyond the role of simply donating to a charity. With proper planning and combining the immense resources often available to FOs and HWNIs, and by taking the time to understand a problem, engaging strategically in it, and then putting in one’s own time, resources, and colleagues to join together to make meaningful change.
The challenges with traditional philanthropy
The philanthropic world is peppered with families who seem to be activists because they put their name on a concert hall or hospital, but they neglect to endow the building with enough to supply toilet paper or staff, or even maintain the building. This is also commonly seen in the case of the wealthy donating to universities they attended. Most charity setups are also often consumed by people who launch their own cause, in competition with other similar causes, generally putting up 20% of the capital needed and leveraging people for the rest. There’s no clear redistribution of wealth here. It’s leverage for one’s ego because the proper size of the gift solves the problem and invites others to add to the solution, rather than leverage a charity to find others to champion your cause, that your name is attached to and theirs is not.
In many cases, these well-meaning families with great resources often end up creating further challenges for those in need of their assistance. Big gifts dominate philanthropy, and they are often big gifts to big charities, which have proportionately less impact than a medium gift to a smaller charity, with a multi-year commitment. At the same time, the sector is also overwhelmed by extremely well-run, efficient charities and organisations that continue to be rejected or can’t find funding because they don’t fit the “social” world of UHNW circles of charitable giving.
One clear example of a brilliant structure is the Lippman Kanfer Philanthropies, whose family business became more known than ever in the past two years as GOJOinventors of PURELLⓇ Hand Sanitizer. They have accomplished incredible feats of manufacturing, supply, and safety to support hospitals and major groups fighting Covid-19 and as a family, truly embody what it means to be thoughtful with their activism.
On a panel several years ago with Mamie Kanfer Stewart, she spoke of their structure, and how they engage is key when you also have to join each other for family dinners after.
The structure focuses on three elements in combination:
- Individual philanthropy for each member: tied to a core value system and funded by both the individual and family wealth
- Foundation giving: tied to their family mission, legacy and goals, funded by an endowment
- Collective giving: studying a new area they haven’t supported and digging deep to give new attention to philanthropy as a family for 2-3 years each time, also funded by an endowment.
This structure helps brings the family together. Not just for mandatory meetings, as many feel obliged to do, but to learn together and take a long-term stance on giving, to support their current values, and celebrate their individual passions as well. It fosters the family’s commitment to building a culture of philanthropy by enabling multiple avenues for participation that honour the individual’s unique interests and the family’s shared vision.
This also alleviates the potential for “intergenerational strife” that many next-gens experiences when their parents make 95% of the commitments and they “wait and see” for decades. Or situations where they can give gifts, and sit on boards, but don’t have the certainty as to how long that can last because it isn’t their individual choice. In these cases, this passive involvement can breed indifference, which won’t ever truly benefit the cause they’re trying to support.
Collective responsibility and philanthropic activism are key. The more family offices that look first to innovate with existing philanthropy and learn from those who are rolling up their sleeves, the more the access and the success of a sector, in partnership with the public sector will come.