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How Covid-19 has changed the face of philanthropy
When country star Dolly Parton received her Covid-19 vaccination on 3 March this year, the moment received global attention – not just because she changed the words to her hit song ‘Jolene’ especially for the occasion, but also because she had donated $1 million to help create the Moderna vaccine she was being given.
arton may be a global star, but she is not alone when it comes to wealthy individuals giving to healthcare projects during the pandemic. According to the ‘Global private wealth and the future of philanthropy 2021’ report released by Vistra in early March, healthcare has been the biggest beneficiary of charitable giving in the past year, with 79% of those surveyed saying they had given to health-related causes, up from 56% in previous years.
Yet, this is just one trend that is part of a major shift in the way that high-net-worth individuals (HNWIs) and wealthy families are undertaking philanthropic endeavours.
What has been noticeable during the past year is how HNWIs and families moved quickly to respond to the pandemic – not only getting involved in healthcare, but also in environmental projects and those involving basic needs, such as food and water. While under normal circumstances it might be typical to take a longer time to commit to a philanthropic endeavour, Covid-19 understandably created a sense of urgency.
It’s likely as well, that with global lockdowns limiting movement, HNWIs and families have had more time to consider their philanthropy and, indeed, their broader succession planning. They may have been spending more time together, thinking about what their family values actually are, and certainly have had time to consider their mortality, with 90% in the Vistra survey saying the pandemic put that into greater perspective.
This may go some way to explaining why 36% of those surveyed said they increased their philanthropy during the pandemic, while only 19% reduced it.
In wanting to move quickly to support certain projects, there has been an increased reliance on the use of trusted advisers, such as private bankers, trustees and private wealth providers. Irrespective of how quickly HNWIs want to react, they still want to do so properly – ensuring the appropriate structure is in place and carrying out due diligence – to guarantee they are having the largest impact with their giving.
The only real change here is how that adviser relationship has, like the rest of the world, had to go virtual. In an industry where the personal experience is key and clients often want to stare their advisers in the eye, this has largely had to be done remotely for the time being.
By Chris Marquis, Managing Director, Global Head of Private Wealth, Vistra
What comes next?
The natural question now, of course, is whether the philanthropic momentum gained during 2020 and into early 2021 will continue as we begin to emerge from the pandemic. If the results of the survey are anything to go by, the answer would seem to be very clearly ‘yes’ – indeed interest in philanthropy may well accelerate, at least in the short to medium term.
The Vistra survey revealed that not only 40% of respondents intend to give more than they did pre-pandemic (compared with only 8% giving less), but a staggering 57% plan to be involved in running a foundation in the next 6-12 months on top of the 24% who already are.
Not only does this show a commitment to philanthropy, but a desire to retain a measure of control over how projects are run and where the investment goes. To a degree, this also indicates a desire for a family or individual to have their name associated with charitable activity, but also for there to be more measurable, tangible outcomes.
There will again, be a significant role for advisers to play – as the foundation will need to be created and administered. Putting the ‘hardware’ (the foundation or trust) in place and then engaging with the family as to collectively, what matters to them, will allow the individual or family to be more effective in their giving.
This shift will also see a flight to quality, not only through the use of highly regarded advisers, but to well-regulated jurisdictions that are stable and have a strong legal system. This provides HNWIs with more certainty in a time that has been largely uncertain.
The pandemic has clearly created a shift in philanthropic giving and it could be argued that the next generation of individuals or within wealthy families, who are likely to be more socially aware and engaged, will only drive this further. Indeed, a fascinating figure to come out of the Vistra survey was that 48% source their philanthropic projects through social media – something that truly reflects the world we currently live in.
Covid-19 has focused many people on the meaning or purpose of their lives – and for wealthy families and individuals, a critical part of that is the legacy they leave. Philanthropy can have a significant role to play in that legacy, as can the vital support provided by private wealth professionals.
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