Giving while living
Irish billionaire Chuck Feeney is one of a growing number of philanthropists who want to make a difference now not tomorrow and a leading advocate for ‘giving while living’.
The trend for giving in one’s lifetime and over a shorter time, rather than in perpetuity, is fuelled by a new breed of ‘entrepreneurial philanthropist’ who want to apply their skills and knowledge along with their funds in their ambition to make a difference. The realisation that ‘you don’t have to die to give’ can be a eureka moment for wealthy individuals who want to be active participants..
‘Giving while living’ has been termed the ‘new Golden Age of Philanthropy’ by Atlantic Philanthropies, founded by Feeney. Entrepreneurs and financiers who amassed enormous fortunes in technology and finance at the end of the 20th century, as well as people who inherited large sums of money, are turning their attention to the world’s problems, seeking to make headway in solving them during their lifetimes.
In Atlantic Philanthropies’ report Turning Passion into Action Melissa Berman, President and CEO of Rockefeller Philanthropy Advisors, an independent, non-profit firm that advises donors, sees ‘giving while living’ as a powerful trend today. “People have a sense that philanthropy has the potential to make progress on difficult issues,” she says. “That sense of optimism encourages people to say that it makes sense to do more funding in the shorter term rather than in the longer term.
“We see, increasingly, an unwritten but broadly shared expectation among families of wealth that philanthropy is supposed to be part of life, and that the family should be productively engaged in it,” Berman says. “It doesn’t start at retirement. People in their 40s and 50s want their children to be involved in philanthropy with them. Because they think of it as an integral part of their lives, it’s more than just writing a series of checks.”
The 2010 World Wealth Report 2010 from Merrill Lynch-Capgemini also recorded that more of the world's rich are opting for ‘giving while living’ strategies, saying philanthropists are incorporating their giving strategies into their ongoing wealth accumulation and capital-preservation plans.
It is a trend that puts increasing pressure on wealth management firms and advisors to understand a wide array of issues related to philanthropy in order to provide relevant solutions, says the report, as charitable giving considerations are pushed “farther into the purview of wealth managers and potentially away from estate planners that typically manage bequests.”
Bill Gates, Microsoft billionaire is one of the world’s greatest living philanthropist With wife Melinda and financier Warren Buffett they are actively promoting ‘giving while living’ with the ‘Giving Pledge’. Launched in 2010, it invites the wealthiest individuals and families in America to commit to giving the majority of their wealth to the philanthropic causes and charitable organisations of their choice either during their lifetime or after their death.
A total of 92 families have now committed to give half of their wealth to philanthropy by taking the Giving Pledge, initiated in 2010. The pledge is a long-term initiative that aims to inspire conversations about philanthropy and increase charitable giving in the United States, but the effort may eventually extend worldwide.
In the UK, Dame Stephanie Shirley, philanthropist and the world’s first ever government appointed Ambassador for Philanthropy, whose role was to inspire more philanthropy, commenting on the ‘giving while living trend’ told Philanthropy UK: “I've always said that there is an obscenity to money sitting on the sidelines. And I say it now. If you have the means to do something today, be a game changer and do it. Solve a problem, animate your passion while you can still know it, feel it. It's like no other pleasure on earth."
Private bank Coutts has also produced a guide Perpetuity or limited lifespan: How do charitable foundations decide their longevity? that explores the trend for giving institutions .
Coutts director of philanthropy Lenka Setkova says: “In recent years, philanthropy leaders have engaged in an increasing number of discussions about the advantages and disadvantages of charitable foundations that exist in perpetuity and of those that exist for a limited lifespan. This debate has been heightened by the visibility of philanthropists such as Chuck Feeney, Sir David Sainsbury and Bill Gates, all of whom have committed to either ‘giving while living’ or to disbursing their philanthropic assets during a specific time period.”
The Coutts guide gives many reasons for setting up time limited foundations including:
- Fear of mission drift after the founder’s death
- Wish to have greater impact during the founder’s lifetime
- A belief that the foundation’s issue area lends itself to a spend down model, for example, medical research to achieve a breakthrough cure
- Not being a burden to future generations
- Ability to strategically focus and achieve greater impact
There is a specific focus on family foundations and why they may benefit from time-limited funding. The report says: “As family foundations mature and move to the second or third generation, their philanthropy can become more complicated due to factors such as varying funding interests, geographic dispersion of the family, or lack of interest on the part of the next generations.”
The guide was launched at a Coutts Forum for Philanthropy hosted in association with The Diana Princess of Wales Memorial Fund, which will be closing its doors at the end of this year. The Fund has distributed over £100m to charitable causes since 1997. It believes that a strategy of focusing capital on a targeted programme of work over a limited number of years can help engender greater ambition and focus in philanthropy and lead to significant social change.
Lady Sarah McCorquodale, President of The Diana, Princess of Wales Memorial Fund, said at the launch of the Coutts report: “The Diana, Princess of Wales Memorial Fund was set up to continue the humanitarian work of my sister. We felt that by adopting a targeted, time-limited approach, the Fund would be in the best position to maximise its impact as a funder and as a champion of charitable causes. Shifting to spend-out also provided a fresh perspective for us, and a pressing incentive to achieve major social change in selected areas of work.
“I believe that becoming a limited life organisation has allowed the Fund to take more risks, and work in ways that might not otherwise have been possible. I also think the targeted work undertaken by the Fund has been a powerful catalyst for long-term change. That might not have been the case had we sought to extend our existence over a longer time period. Whatever the longevity of a charitable foundation, the key challenge is to ensure that all philanthropic resources are leveraged to maximum effect.”
There is a growing body of evidence and experience of giving over a set life-span as these ‘spend-down’ trusts come to an end.
The Tubney Trust has produced a report on its strategy of spending out over a 10-year period during which time it made grants of nearly £65m. Giving our all: reflections of a spend out charity, is an honest account of the Trust’s experience, including its “mistakes and detours”. Chair of the Trust René Olivieri says: “Knowing you are not going to be around forever forces grant-makers not to micro-manage their grant recipients but rather to try to understand how those organisations work and think.”
The sense of urgency for giving money away now is also emphasised by Declan Ryan — heir of the Ryanair fortune. His One Foundation was created under the guideline that it operate for only 10 years (the foundation will close its doors in 2013).
Turning Passion into action: http://www.atlanticphilanthropies.org/learning/atlantic-report/giving-wh...