We continue our series on philanthropy and wealth management, talking to Wilmington Trust.
As part of our continuing examination of trends in philanthropy, this publication has interviewed Carol G Kroch, who is national director of philanthropic planning at Wilmington Trust. The organization is prominent in addressing wealth planning, and argues that philanthropy is a core function, not an add-on.
In the jurisdictions that you operate in, what sort of trends do you see in terms of what causes people want to support and why? What causes/objectives seem to be gaining ground, staying the same, or losing some momentum?
I tend to see the planning of the philanthropic structure or outright gift, not the selection of the charities. There’s a lot of data from Giving USA that shows changes over time in US charitable giving.
Are you noticing differences in philanthropic goals/objectives depending on which countries people come from, their life experiences, whether they are self-made, inheritors, etc?
Again, I tend to focus more on the structure rather than the charities ultimately supported. And my experience has been almost entirely US charitable giving focused. Life experiences often seem to impact charitable giving; for example, many people support the college or university they attended, and many people donate to healthcare institutions that have provided services to them or family members.
Self-made individuals, particularly those who have created and sold closely held businesses, sometimes look to philanthropy to provide a different vehicle for the family to gather around. Inheritors may have a desire to promote the legacy of the family member who created the wealth they inherited, but there are also generational differences in giving, and the next generation does not always follow the charitable giving preferences of the senior generation.
When you talk to clients, in your experience is it the client or advisor who brings up philanthropy first? Is this changing? If it is the client, what do they often say? If it is the advisor, what does the advisor say?
I tend to be brought in to the conversation after the interest is identified by an advisor on the client team or a relationship manager. In talking to advisors, philanthropy often comes up as part of a discussion about the client’s short- and long-term goals. This may be initiated either by the client or the advisor.
Philanthropy can be a "good coalescing vehicle for a family", referring to how the subject can draw family members together and create reasons to gather, often an issue when a parent passes away and families are geographically dispersed. We find that this is also of benefit after a family sells a family business and needs another vehicle to bring the family together.
In your view what are the main added-value offerings that you can give to a client in helping their philanthropy goals? How has your organization developed these in recent years (types of expertise, reporting, due diligence checks on charities, access, connections with the beneficiaries of the philanthropy, engagement of children, others)? Have you recruited more people to handle this work, invested in resources, etc?
We view helping clients to achieve their philanthropic goals as central to our overall work with them as a wealth manager. We have and maintain a strong commitment of staff and resources to this space. In addition, we have staff dedicated to ESG investing, philanthropic support and education, providing administrative services to private foundations and charitable trusts, providing family office services, and engagement with the next generation.
To what extent is philanthropy now sitting inside a broader field of “environmental, social and governance (ESG)-focused activity, rather than as a standalone advisory line?
We see ESG investing as an investment tool that both philanthropies and private individuals may use. ESG investing is an investment discipline that considers environmental, social and governance criteria to achieve financial objectives. It is certainly of increasing interest to both our charitable and non-charitable clients. Philanthropy in our view is broader, as it goes to the structure and support of charitable causes, not merely the investment of the assets located in a philanthropic vehicle.
How do you think firms should position the philanthropy offering? Should it be a core offering, or an add-on? Should firms charge separately for philanthropy advice and support, or include it in an overall fee?
We regard philanthropy as part of our core offering, because philanthropy is so important to many of our clients. Through our comprehensive advice, we educate clients and help them to plan, structure, and implement appropriate charitable vehicles. There is generally no additional charge for our philanthropic guidance - it is an integral part of who we are and what we do. We do also offer extensive back-office administrative capabilities for charitable vehicles, which can be offered a la carte, with a customized fee.
In what ways can private banks, wealth managers and other advisors to HNW individuals use philanthropy expertise and support as a business differentiator?
Our differentiator is that we can provide high level consultative advice and implementation to our clients. (Carol Kroch served as the American Bar Association Advisor on the Uniform Prudent Management of Institutional Funds Act, which governs endowment investment and spending in almost every state.) Across the firm, we have sophisticated and knowledgeable staff who can bring new philanthropic ideas to clients, help them implement those ideas, and then administer the vehicles created.