Philanthropy - Making a difference with your money

What do Bill Gates, Warren Buffet, Sir Tom Hunter and Duncan Bannatyne all have in common? The answer, apart from considerable success, is that they're all committed philanthropists, who have pledged to give away the bulk of their fortunes to good causes. And they're not alone as with every month that passes, more and more of the world's wealthy announce their intention to devote their time and their money to making the world a better place.

So, what's driving them? Though there are many reasons for giving, the most often cited is that it's an enjoyable and rewarding experience. Victor Hugo once said that "as the purse is emptied, so the heart is filled", and for many, philanthropy does just that. It gives people pleasure and life enrichment by knowing that they're making a difference. It also allows them to achieve a spend/give balance. For instance, while he has had no problem in amassing his fortune, the hedge fund manager Arpad Busson said in a recent Guardian interview that his decision to embrace philanthropy was because he found it impossible to enjoy his wealth, knowing there are people out there who were much less fortunate than himself.

For others, philanthropy can be the ideal way of instilling family values and educating their children, as showing the next generation what a difference wealth can make to others can help prepare them for the responsibilities of inheritance. When asked what he would leave his children, Warren Buffet famously remarked: "A very rich person would leave his kids enough to do anything, but not enough to do nothing." Worried about stifling their offsprings' ambitions by giving them everything on a plate, entrepreneurs in particular are increasingly leaving the majority of their wealth to good causes or charitable foundations that they have created.

Dragon's Den star Peter Jones has established a trust fund to reward his children for the good they do, their yearly allowance dictated by their choice of future career. He hopes it will encourage them to consider professions that make a difference to others, such as nursing or teaching, rather than focusing purely on those jobs with the best salaries. Likewise, his co-star, Duncan Bannatyne intends to leave his entire fortune to his Bannatyne Foundation. He fears that leaving his children hundreds of millions of pounds would rob their lives of any purpose.

But as well as allowing children to follow their own path, we have found amongst our clients that philanthropy can also bring families closer together. If you own a successful family business, setting up a charitable foundation can allow those relatives not involved in the day-to-day running of the company to work together for a common goal or purpose.

For those that have sold their business or are beginning to take a step back from their profession, but are not quite ready to sit back totally, philanthropy is an opportunity to apply both financial capital and life experience in order to solve social problems. Rather than simply writing out a cheque, creating your own dedicated fund or taking a hands-on approach to the causes you support can ensure that your money and expertise are having the greatest impact. This can often become a career in itself, with similar rewards and the same sense of achievement. When the late Anita Roddick sold The Body Shop, it wasn't so that she could sit back and enjoy the fruits of her labours, it was so she could devote the rest of her life to her charity foundation. 

In addition to making an impact during your lifetime, philanthropy is also a way of supporting a cause for the long term and creating a lasting legacy. Setting up a trust that will fund organisations or charities in perpetuity will ensure that your work will always make a difference and will remind others of how strongly you felt about a particular cause. For an example look no further than Bill Gates. At the moment he's famous for founding Microsoft, but he hopes that after he's gone, he'll be remembered for his commitment to eradicating disease and ending social inequality in Africa through the Bill & Melinda Gates Foundation.

But whatever your initial motivation to start giving, knowing how, where and when can prove challenging. With so many deserving causes, choosing the right one is always going to be a tough decision. And once that choice is made there are further difficulties. How much to give; whether to make a single donation or regular payments; how to gauge a specific charity's performance before supporting it and how to monitor the impact your support is having.
So if you feel that philanthropy could be the key to enriching your life, then Coutts can help you develop your perfect giving strategy. From simple advice and researching potential beneficiaries, to setting up a charitable trust, our dedicated philanthropy team will guide you every step of the way, making it simple for individuals, families and business clients alike to start making a difference.

For more information on Coutts Philanthropy services, visit www.coutts.com/philanthropy