Making your mark – what is philanthropic investing?

Perhaps you want to create a legacy – a positive mark on the world that will last generations. This can mean putting not just money, but also time, into defining a personal philanthropic journey that embraces your values.

Philanthropy can be considered under the umbrella term of responsible wealth management – going further than responsible, sustainable, or impact investing. While ‘responsible’ and ‘sustainable’ instruments can be core elements of a diversified portfolio, ‘impact’ instruments are considered satellites. Meanwhile, philanthropy is a service for the common good, and not a strategy for financial returns.

As an investment approach, it is aligned with an investor’s hopes for a more just society and improved welfare for specific communities or social groups. It involves supporting causes that will make these goals a reality.

Why is philanthropic investing relevant?

Our Head of Sustainability Yvonne Suter told our that philanthropic investing is “for those investors who want to create a legacy for generations to come, for those who want to donate to charitable projects and want to support charitable foundations”.

And as explained by Charles Gothard writing for Julius Baer, many high-net-worth individuals “spend a lifetime building up their legacy for future generations.”

“Towards the end of that journey, they often develop a heightened sense of social and environmental awareness and wish to find ways to give back to society. They recognise that they have the financial resources, and often the skills and experience, to have an impact on societal problems. Philanthropy is a way to achieve this.”

How can you begin to make a mark with philanthropic investing?

The journey to making your mark can start with looking inward and evaluating your own capacity to enact change.

As our Head of Philanthropy Caroline Piraud explains, it can be helpful to assess your ‘4Ts’ – time, talent, treasure and ties – to define your desired philanthropic engagement.

• Time: “Giving time is just as important as giving money,” Caroline explains. “Firstly, there is the gift of your presence, which is not to be underestimated in a world where loneliness is often referred to as an epidemic with real social, health and economic impacts. And secondly, there’s no shortage of tasks that need volunteers, such as shopping for those in a risk group.”
• Talent: Your combination of talent is unique to you. While accounting, board experience and fundraising are skills frequently associated with philanthropy, it pays to cast the net much wider. Aged-care often welcomes guest entertainers, parents of newborns appreciate meals trains, and mentorship programmes seek diverse and knowledgeable mentors.
• Treasure: Perhaps your philanthropic budget stretches into the hundreds of thousands or maybe your child has the sum total of this week’s pocket money to give. It’s about maximising the positive effect of what you can afford to spend, even if that’s simply aligning existing outflows with your cause, such as shopping small or local. Another tip from Caroline is to think broadly: “Would time-sensitive, one-off donations be more impactful abroad due to currency conversion rates? Get researching and get clever about what you’ve got to give and the causes you’re passionate about.”
• Ties: There’s a reason the saying ‘It’s not what you know but who you know’ exists. Caroline suggests screening your personal network of family, sports teammates, friends and work colleagues to see who you can join forces with. “Leveraging one another’s skillsets and networks can amplify your impact,” she explains. “Or perhaps your role is to be the catalyst, to connect people who together can bring about great change.”

With the knowledge of your desired cause and your ‘4Ts’, you can then begin to create a philanthropic investment plan: “A clear strategy defines investment amounts and timelines. See if it makes sense to set up your own charitable structure, consider your preference for short- or long-term engagements, know how to stop emotions overwhelming decisions, and identify who’ll keep an eye on your financial safety,” says Caroline.

“Also, be as well-versed as possible on how to find the right partner or charity organisation, the pros and cons of local versus global engagement, how to effectively measure your impact and any tax implications,” concludes Caroline.