In a global economy characterised by major national economies flat-lining, increasing unemployment and social unrest there have been a number of instances of politicians citing the need for ‘those with the broadest shoulders to carry the greatest burden.’ While Warren Buffett has famously lambasted the fact he pays relatively less tax than his secretary, where does philanthropy sit in the priorities of wealthy families?
Looking to the example of some of the world’s wealthiest people gives us different examples. Bill Gates is well known for the extent of his philanthropic activities, whereas others see greater benefit in ‘teaching a man to fish’ rather than ‘giving him a fish.’ What’s clear is that for many wealthy families, philanthropy is an important cornerstone of their financial planning and encapsulates their emotional and sometimes moral intentions with their personal desires to make a difference and contribute to their legacy.
How are these issues being handled by family offices in Britain? Boston Group is
an independent, privately owned financial services group offering bespoke family office and fiduciary solutions to high net worth individuals, families and corporate clients. It was established in 2002 with a view to coordinating and enhancing the founding family’s affairs. Its Charitable Foundation, formed in 2008, works with charities to provide not just financial support and volunteers but more importantly, in today’s economic environment, helps them to be more effective which includes identifying opportunities for collaboration.
The Boston Charitable Foundation was established specifically to donate funds
to good causes and community projects. The trustees of the Charitable Foundation select causes and projects from the applications received during the year and also independently research and identify specific objectives where they wish to direct assistance. The type of grants made can vary quite widely from one year to another and care is taken to maintain a rough parity among the various fields covered so that one sphere of activity does not benefit unduly at the expense of another. Areas which are not or cannot be covered by official sources are favoured.
The parameters under which the Foundation operates do not provide for assistance to individuals, courses of study, expeditions, overseas travel, holidays or for purposes outside the Isle of Man. Appeals by UK charities will be considered so long as they have a division in the Isle of Man and the funds are guaranteed to be used specifically for the Island based branch.
The family office team is heavily involved with the philanthropic activities and since 2008 it has provided personal development for the group’s staff.
Our industry often discusses the topic of philanthropy and how it is used to educate the next generation in becoming responsible owners of wealth. We have found that the benefits are far more reaching then just educating the next generation and that the social capital activities of the family have a significant impact on the staff that it employs. It has provided invaluable development of leadership skills and engagement within the local community. Staff have also provided innovative ways to support charities, which are not just of a financial nature. This staff involvement builds not only real commitment to the business but sends out a strong message about the organisational culture and gives a very visible demonstration of Boston’s values. In turn, staff commitment is high and turnover is low.
Funding is usually made by either one of two ways – a one-off donation in support
of a particular event/requirement or by commitment over a number of years to provide support. The Foundation has also found that the match funding concept works very well for both charities and staff. This is where the Foundation will match an agreed amount that the organisation or staff member(s) raise through their own fundraising. We have found this has worked for not only the family office staff members but also our trust company, Boston Limited. Over the years, staff within the trust company have raised funds for local charities by running marathons, baking cakes and even taking part in gruelling adventure challenges.
Since the establishment of the Boston Charitable Foundation in 2008 we have noticed an increase in these charitable activities, which we believe has been influenced by the founding family’s encouragement and support. The extent of donations is wide and nothing is too small for consideration. Causes that have been supported range from providing fencing equipment for children with dyspraxia to supporting the Isle of Man’s Commonwealth Youth Games and sponsoring The Royal British Legion Isle of Man Branch 90th Anniversary Remembrance concert at the Island’s Villa Marina.
The fencing equipment for children with dyspraxia provided two brand new sets, including 20 rubber foils and helmets. This was first used on the island to provide a free fencing taster session by a Northern Ireland Fencing Coach but the equipment will provide many years of benefit. With the Isle of Man’s Commonwealth Youth Games, not only did the Boston Foundation provide sponsorship, but staff from the family office and the trust company gave up their personal time to volunteer during the games.
Boston’s chairman has always encouraged staff involvement in supporting local community charities on both an individual and a group basis. Those charities which are favoured are those where employees are active during their free time (not always in monetary form). Volunteering, publicity and fundraising events are ways in which staff raise awareness of charities close to their hearts. From cake bakes to sponsored walks, growing moustaches to competing in marathons and mountain bike rides, the ripple effect of encouraging people to volunteer or be involved in raising funds for charity has considerable emotional and economic benefits.
The current economic downturn will clearly have an impact on some charities. Others may see little or no change. The key to surviving such difficult economic times is to look closely at strategy with regards to risk and opportunity, financial health and making the best use of resources. Smaller charities will need to adapt to ensure that their fund raising efforts are sufficiently ingenious to compete with larger operations.
Risks to be considered are whether there is likely to be a decrease or increase in
the demand for services (ie homelessness, debt counselling etc). Some charities may experience uncertainty in their funding and may have to contemplate whether they are able to continue operating. A clear vision of the charity’s core activity is essential, as is protecting current and future income, identifying costs which may be cut and looking closely at its fundraising strategy.
Charities need to ensure that they have the right mix of skills and experience and that they are attracting volunteers who can assist them in becoming more effective. It may be that collaboration with other charities would lead to mutual benefits (use of property, equipment sharing, back office services, joint working etc).
Our experience is that there are mutual benefits to be gained from creating collaborations and partnerships with charities. The shared sense of purpose can be the catalyst of change to make a difference. Such associations are a way of gaining support in the form of volunteerism, publicity, influence and donations through fundraising while aligning with the desires of the company and its employees to fulfil their social strategies and interests at the same time as creating a sense of pride in its employees and improving their development.
