Adaptation and digital innovation key to the evolution of philanthropy
Philanthropic endeavours are becoming increasingly global and highly sophisticated, with investors and advisors having to adapt to work in line with this upward trend. In particular, High Net Worth family business affairs are more often centred around charitable giving these days, and so family offices are having to adapt and focus on professionalising at a faster rate than ever before.
Family offices are becoming much more ambitious in their activities, with the Global Family Office Report 2017 suggesting that they are moving into more diverse areas, with more than a quarter (28%) of family offices currently engaged in impact investing. The average family office gave $5.7 million to philanthropy over the course of 2017 and over 40% of family offices are expecting to increase their allocations towards impact and Environmental, Social and Governance (ESG) investments in the near future.
But these office dynamics are changing. The traditional multi-generational model, living and working together under one patriarch, is being replaced by nuclear families, with the younger generation carving out its own entrepreneurial path in different ways and across multiple jurisdictions. This often means embracing the digital age and managing their investments and philanthropic activity in a much more personalised and efficient manner.
Indeed, technology is beginning to play a large part in a family’s investment plans, with young, wealthy entrepreneurs tending to regard themselves as active "social engineers" rather than passive "benefactors" or "donors". This cohort is making the most of modern technology and social media, in addition to their cash, in order to shape public opinion and advance their chosen cause. With flexibility being a key consideration to allow for such requirements, trusts and foundations are a popular choice in Jersey: they can be technically charitable, or more broadly philanthropic, in order to pursue a particular chosen cause.
Jersey, as an International Finance Centre with clear credentials for innovation, has stayed close to this uptick in philanthropic activity around the globe, and has adapted its regulatory environment and product offering accordingly – in particular through the introduction of the Charities (Jersey) Law 2014.
The new Law includes the appointment of a Charity Commissioner who has been working on the creation of Jersey’s first charities register, as well as a ‘charity test’ which will define what does, and does not, count as a charity.
It is clear that attitudes in relation to the public profile attached to philanthropy vary from one family to the next, with some being keen to publicise their giving initiatives and others preferring to remain anonymous. This is recognised by the Charities Law, which sets itself apart by offering a restricted section of registration, which is not available in the UK: this will be for entities that do not solicit donations from the public and will provide for a reduced level of information to be accessible on the public register. The updated legislation is a clear sign that Jersey is a forward-thinking jurisdiction, ready to embrace this evolutionary period of philanthropy and investment.