The emergence of philanthrocapitalism means advisers need to be catalysts in the philanthropy space, reports Krystine Lumanta.
In the 21st century, certain people have been fortunate enough to encounter unprecedented opportunities in wealth creation and, in turn, are sparking a new age of philanthropy.
The emergence of philanthrocapitalists – defined as “the new gen of givers” – has occurred through a realisation that it makes sense to use business acumen and wealth to contribute to the creation of new and innovative solutions to solve the world’s problems.
An independent economist from London and co-author of Philanthrocapitalism: How giving can save the world, Michael Green, recently presented a Sydney forum about social and corporate responsibility.
He says more and more Australian entrepreneurs will be looking towards philanthropy as a way of finding fulfillment in their lives, so financial advisers need to embrace their catalytic role.
Green says their respective responsibilities are to “get into the mindset that philanthropy can be really strategic, that philanthropy can work with governments or in partnership with others to have a really big impact; and to help clients pick something [worthwhile], rather than just throwing money at a problem”.
“Philanthrocapitalism is about a whole new generation of entrepreneurial people who have made money and are now turning those skills to philanthropy.”
It’s an area that will boom significantly within the Australian philanthropy space, according to Green.
“The characteristic of a philanthrocapitalist is that they’re not looking to do charity as an expression of guilt, they’re doing philanthropy to solve problems,” he says.
“The question has shifted from ‘How much are you going to spend?’ to ‘How are you going to solve the problem?’
“For advisers, it’s how can they actually add value to that. How can you actually help philanthropists achieve their goals? It’s about really thinking through a strategic approach to giving, rather than, here’s a few causes I like.”
Andrew Thomas, general manager of philanthropy at Perpetual, agrees that there is a clear responsibility for advisers to have the holistic conversation with their clients.
“If you talk about inter-generational wealth transfer and you talk about utilising wealth in areas that are important to people … then philanthropy should be part of that conversation,” Thomas says.
He says doing this will deliver better outcomes for the adviser, the client and the community.
“Once you engage with people at a level like this, it’s not about the amount of dollars, it’s about the influence you can have on other people’s lives,” he says.
“There’s some very simple ways for advisers to engage in philanthropy and there’s a lot of information freely available on the Internet for them to look at. Philanthropy is featuring in a number of advice-based education streams at conferences. And there are now philanthropy conferences and forums.
“So there’s certainly the ability for financial advisers to get more engaged. There are very simple tools available to allow their clients to set up small endowed funds with their own name attached, in 48 hours and no additional fees.”
Thomas says advisers who are not experts in this area should make the disclaimer upfront to their clients.
“You may know other clients who are very engaged in philanthropy, so it’s something that can be brought up [in order] to still be able to interact with your clients.”
According to the World Giving Index, conducted by The Charities Aid Foundation, Australians are the most generous people in the world (ranked equal with New Zealand), holding the highest percentage of population who have given money, given time and helped a stranger. The study also concluded that being happy is more of an influence than being affluent when giving money to charity.
“There’s a culture, the ‘fair go’ culture, which makes the successful people here feel an obligation and a need to give back,” says Green.
“So there’s a real opportunity in Australia. All the characteristics are here, which is really about successful entrepreneurs, for philanthrocapitalists to emerge.”
Green says philanthrocapitalists have reinvigorated philanthropy, finding solutions that are faster and cheaper than governments alone can achieve.
“In the 20th century we saw governments as being the resolution to all the problems. And governments do have an important role to play; but governments have a couple of problems: they’re really bad at innovating, taking risks and thinking long term. So what philanthrocapitalists do is come up with risky, innovative, long-term thinking about problems that governments can’t.”
“This is a really exciting new trend around the world. There is something really profound happening in how the world is solving its problems, so advisers who can help do that are going to find a ready market.”
