Family Philanthropy Management: A European Perspective
amily Wealth Management and Philanthropy Services "Giving back" is as important as wealth preservation and value generation for most European business families. The expansion of philanthropy services within single family offices - non-bank wealth management service providers for business families - demonstrates this importance. A 2008 survey of European single family offices found that over 62 percent of the participating European family offices offered philanthropy services and that another 14 percent were planning to add these services within the next three years. Figure 1 illustrates this trend. Note that in most cases, family office philanthropy services have nothing to do with the business's corporate social responsibility activities and are only involved with the private philanthropy of the business family.
The rationale for including philanthropy services in the service portfolio of a family office flows directly from the primary functions of the single family office.
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Single family offices are the most cost-effective and appropriate form of wealth management for families with assets of over at least USD 200 million. They offer holistic, tailor-made, comprehensive services for business families. The inclusion of philanthropy services in the family office service portfolio only reflects the importance of philanthropy and its professional management for the client family. The framework of a family office ensures that philanthropy management occurs at the same high level of trust and confidentiality as asset management. Moreover, consistent information flow and consultation between the family and the family office professionals helps to harmonise the philanthropic and economic interests of the family.
Professionalisation of Philanthropy: Yes, but... In order to bring individual philanthropic objectives into practice, more than one pair of hands is needed, and therefore there is definitely great scope for professional support. However, too much of the dose can make for poison. In his great 2006 account of intelligent philanthropy, Strategic Giving, the American researcher Peter Frumkin warns of an over-professionalisation of philanthropy. For Frumkin, philanthropy is the transformation of private values into public purposes, and it thrives on freshness, authenticity, passion and sometimes also unpredictability. At the centre of philanthropy are people ¬ both on the donor and the recipient side.
These critical features of family philanthropy must be acknowledged and preserved in order to maintain philanthropy's power to bring about change. Family offices ¬ which are usually small and where a longterm working relationship between employer and employees is the norm - offer a very conducive environment in which the philanthropists' ideas and values are understood, respected and furthered.
Philanthropy Trends in Europe Like foundation-led philanthropy, family philanthropy has seen a number of interesting trends in recent years. Two such trends in ways of doing philanthropy are especially significant - creative philanthropy and venture philanthropy. Another strong current in European philanthropy is the rise of philanthropy governance.
Creative Philanthropy A heated debate in European philanthropy concerns the balance of the new and the old in philanthropic activities. Foundations are free from most of the constraints that limit business and politics. This means they have the breathing space to test unorthodox solutions for existing problems. Indeed foundations' potential for creativity can make up for the relative lack in the funds they command in comparison to the state. Should foundations use this unique strength to probe the new, or should they stay true to their traditional role of distributing money, i.e. do "more of the same"?
In Europe, unlike in the U.S., there is a strong tradition of so-called operating foundations, i.e.
foundations which do not simply distribute money but implement their own programmes. Operating foundations are effective vehicles for testing new solutions for social or other problems since they can define issues and possible solutions themselves without having to wait for that elusive "good project" to appear at the horizon.
In the case of the Thomas Schmidheiny philanthropy, the "business weeks" initiative for high-school students could be a good example for what creative philanthropy can achieve. The businessweeks are an unconventional, innovative and highly successful answer to the observed lack of basic economic knowledge among high school students.
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