Bridging the Philanthropic Knowledge Gap for High-Net-Worth Individuals
Our high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients encounter distinct challenges when navigating the multitude of philanthropic opportunities, particularly amidst constant advertisements and donation requests.
The motivation for giving is deeply personal. A majority of "super givers" choose causes that resonate with personal experiences or are influenced by friends and family. Understanding these drivers is essential in tailoring our advice.
Trends
In the UK, religious organisations, children & young people, and animal welfare topped the donation charts in 2023. Disability charities are also gaining momentum quickly.
Geographical trends in giving have emerged, with the South East and West & East Midlands showing higher levels of philanthropic giving. In Scotland, Edinburgh stands out, suggesting there are certain ‘hot spots’ where people are giving more, or where there’s a higher concentration of HNW and UHNW people.
Education, healthcare & medical research, and arts & culture are the primary interests of UHNW individuals. However, there's a noted downturn in giving among HNW individuals, with only 32% planning to continue or initiate charitable giving. This decline is echoed by The Sunday Times Giving List, which reports a £200m reduction in donations from the wealthy. While overall giving has reached nearly £14bn, the average donation hasn't kept pace with inflation, with overseas & disaster aid seeing a significant drop.
Amy Blackwell, a Philanthropy and impact specialist who works with families to make a difference to their wealth, said: “We have to be careful when we see this statistic and think people have stopped trying to make a difference. Many families have begun to embed impact investing and social lending into their impact strategies, so their overall “spend” for impact may be the same or higher, but it may have a lower portion attributed to philanthropy.”
Indeed, UHNW and HNW individuals have contributed to a 29% increase in giving in Europe over the past four years, with the UK accounting for a substantial portion. Philanthropic organisations are diversifying donor portfolios, emphasising personal engagement and global impact. UHNW women are particularly philanthropic, and many UNHW individuals opt to establish private foundations; a trend that grows with wealth and is more common among those with inherited affluence.
Amy, who will be speaking at a private dining event around the theme of international philanthropy hosted by Family Office experts from Irwin Mitchell next week, continues: “Predictions are that 60% of UK wealth will be in the hands of women by 2030, so the trends we see about how women engage with their wealth will only grow in importance. This bodes well for charities, as well as impact investments.”
The government's proposal for a National Philanthropy Strategy and Charitable Action Zones may also help bring about positive change by connecting local HNWI with philanthropic opportunities.
Philanthropic Knowledge Gap
The charity, Pro Bono Economics, has highlighted what it calls a ‘philanthropic knowledge gap’, where financial advisers lack the expertise to counsel clients on giving. Recommendations include adding philanthropy to financial planning curricula and continuing professional development (CPD) to ensure advisors are equipped to meet client needs.
The evolving philanthropic landscape requires a strategic approach. By becoming experts in the motivations, trends and demographics of giving, we can bridge the knowledge gap and empower our U/HNW clients to make meaningful contributions to the causes they care about and in a way that makes the best financial sense. This is not just an opportunity for growth within this sector; it’s a chance to make a real difference through informed and impactful philanthropy.
Amy concludes: “There is a need for collaboration between legal, wealth, and impact advisors in order to deliver best in class advice for clients. Each discipline has a role to play in ensuring that the families have the right structures and investment strategies in place to deliver the impact goals they define for themselves.”
