Give Back, Pay Forward
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Transcript of Give Back, Pay Forward
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Give Back, Pay Forward
by David Drake
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Growing need for professional philanthropic assistance
Many family offices now offer professional assistance to their clients on the best course for their
philanthropic endeavors, in addition to their wealth management services.
Philanthropic assistance to wealthy families is fast becoming a top service provided by family offices
today. The explosion in the number of ultra-wealthy individuals in the world, with many arising from
emerging economies, is greatly altering the family office landscape. Traditionally set up to provide
wealth management services for affluent individuals and families, family offices have changed their
business strategies to provide other professional services to meet the growing demands of the
wealthy. Many family offices now offer professional assistance to their clients on the best course for
their philanthropic endeavors, in addition to their wealth management services.
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Rise of philanthropic foundations and family offices
The motivation to give has prompted wealthy individuals and families to set aside a percentage of
their net worth for philanthropic causes.
ealthy families have always been known to give to philanthropic causes in their communities and
around the world, for a variety reasons. hile some have a family history of generosity, others are
driven by the desire for societal change and helping those less fortunate. The motivation to give has
prompted wealthy individuals and families to set aside a percentage of their net worth for
philanthropic causes.
Philanthropic investment used to be carried out by institutional investors and wealth managers on
behalf of wealthy families! however, the trend is changing as many families have decided to take a
hands-on approach by establishing their own foundations. "amilies are deeply and emotionally
attached to their philanthropic endeavors, so trust is paramount. Professionally- managed
philanthropic foundations provide structure and governance for their activities and often work hand-in-
hand with family offices to ensure effective use of their funds.
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Motivations for philanthropic endeavors
As most families expand their charitable activities beyond their home base, there is a greater focus on
creating projects with lasting impact.
The desire to leave behind a legacy is one of the strongest motivations for philanthropic activities of
wealthy families. #s most families expand their charitable activities beyond their home base, there is a
greater focus on creating pro$ects with lasting impact. "amily offices can help clients discover
philanthropic pro$ects, monitor, and implement them in the most professional way.
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How family offices are helping make the most of philanthropicinitiatives
Assisting in the monitoring and execution of philanthropic projects.
Most wealthy individuals and families, especially those new to philanthropy, face the challenge of
recruiting the right personnel for their foundations. "amily offices bring a wealth of experience and
speciali%ed networks to play in helping families source highly &ualified and experienced staff for their
foundations, but are not directly involved in the funding or implementation process of pro$ects. This
way, families can retain full control over the funding and execution of their pro$ects without external
interference, as well as guard against fraud and ensure &uality delivery and proper execution.
#nother strategy adopted by some family offices is assisting in the monitoring and execution of
philanthropic pro$ects. Most family foundations do not possess the expertise re&uired to handle the
increasing complexities of charitable pro$ects! hence, the need for professional advice. 'lients who
use family offices as advisors can be assured their pro$ects are implemented in accordance with the
family(s uni&ue needs and ob$ectives.
The oversight provided by a professional family office also ensures greater transparency as pro$ects
are executed according to plan and on time.
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Rise of Social mpact nvestments
Social impact has become an emerging field in the philanthropy arena
Traditionally, philanthropic activities were carried out on behalf of the ultra-wealthy by foundations and
family offices to ensure effective asset allocation. Most families simply wanted to ensure their social
and financial goals did not conflict. )n recent years, however, the trend is changing, and the line
between philanthropy and financial effectiveness has been erased.
Today, social impact has become an emerging field in the philanthropy arena. "amilies want to meet
the needs of humanity while also pursuing their own financial goals. The *lobal )mpact )nvesting
+etwork *))+ defines impact investments as investments made into companies, organi%ations, and
funds with the intention to generate social and environmental impact alongside a financial return./
#ccording to the Monitor )nstitute )mpact )nvesting report released in 0112, the impact investment
market will grow to 3411 billion by 0101 or 56 of 341 trillion in total assets. 7owever, according to
the 0150 orld 8conomic "orum presentation on the mainstreaming impact investing initiative, less
than 9: 3;1 billion of capital has been committed to impact investments out of tens of trillions in
global capital./
Moreover, the reports of the 'ouncil on "oundations and "amily ealth #lliance shows that wealth held
by families presents a fertile ground for the growth of impact investment. "amily foundations hold an
estimated 30;4 billion in assets, while single and multi-family offices hold 35.< trillion in assets.
http://www.weforum.org/issues/impact-investinghttp://www.weforum.org/issues/impact-investing -
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Through impact investment, families have been able to tackle social and environmental problems
including improving agricultural systems, countering negative impacts of climate change, providing
affordable housing and improving health care. #lthough profit is not the ma$or motivation, most
impact investments are still expected to yield returns that at least cover the initial investment.
How family values come into play in impact investment
Familys core values will determine nature and character of the investment.
)mpact investment is driven by the desire to address social and environmental problems. #s a result,
a family(s core values will determine nature and character of the investment. They might choose to
improve agricultural practices, provide housing or access to &uality education for the less-privileged,
depending on the governing philosophy of the particular family. :ome families have a tradition of
supporting particular causes and will almost always channel their investments to bring about a positive
impact in that area.
)mpact investment occurs across diverse asset classes, including angel investment, venture capital,
and private e&uity. )mpact venture capital investment has become a favorite asset class among
wealthy families. )t helps them focus their investment on particular areas of interest, pro$ects, and
regions of the world along with greater returns and lower risks.
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David Drake is the 'hairman of =D> 'apital, a multi-family office! ?ictoria Partners, a
@11 family office network! =D> Aeal 8state *roupand Drake 7ospitality *roup!
and The :oho =oft Media *roupwith divisions ?ictoria *lobal 'ommunications,Times
)mpact Publications, and The :oho =oft 'onferences. Aeach him directly
at DavidB=D>'apital.com.
http://www.ldjcapital.com/http://www.victoriapartners.co/http://ldjcapital.com/ldj-real-estate-grouphttp://ldjcapital.com/drake-hospitality-group/http://www.thesoholoft.com/http://www.victoriaglobal.co/http://ldjcapital.com/times-impact-publications/http://ldjcapital.com/times-impact-publications/http://www.thesoholoft.com/upcoming-conferencesmailto:[email protected]://www.ldjcapital.com/http://www.victoriapartners.co/http://ldjcapital.com/ldj-real-estate-grouphttp://ldjcapital.com/drake-hospitality-group/http://www.thesoholoft.com/http://www.victoriaglobal.co/http://ldjcapital.com/times-impact-publications/http://ldjcapital.com/times-impact-publications/http://www.thesoholoft.com/upcoming-conferencesmailto:[email protected]