Multi-generational planning critical for charity giving - Boodle Hatfield

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24 Oct 2022

Multi-generational planning critical for charity giving

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Multi-generational wealth planning has become increasingly important for charity giving by high-net-worth individuals (HNWIs).

Over the last 10 years, HNWIs have shown a greater interest for charities and philanthropy.

According to private wealth law firm Boodle Hatfield, HNWIs have established 170 charitable family foundations in the UK by HNWs since 2012.

“That’s a consequence of levels of wealth increasing exponentially in the UK over the past decade,” said Boodle Hatfield partner Clare Stirzaker.

“Many families are looking at their wealth critically and trying to work through what they want to achieve with their wealth.

“There’s a greater focus on allocating a proportion of the wealth to philanthropic causes rather than just passing everything on to the next generation.

“The US has definitely helped to inspire many families in this in this regard with famous philanthropists such as Warren Buffett or Bill Gates.

“They are influencers and people do look at what they’re doing. That has had a trickle-down effect.”

A motivation for HNWIs to venture into charities and philanthropy is to leave a legacy.

Stirzaker said: “What I have seen in practice is that it often is about legacy.

“Where the wealth has reached a significant sum, they [HNWIs] feel they want to find a purpose to this wealth and how to deploy it for something that goes beyond passing wealth throughout the family.

“For many families, the idea of philanthropy is that it contributes to a sense of a legacy and provides them with a sense of purpose around what they want their wealth to achieve.”

Donating to charities also give access to certain tax reliefs, such as the gift aid.

As a result of this trend among HNWIs, their need for multi-generation wealth planning has become more important.

Stirzaker said: “It’s enormously beneficial from a family perspective, because you can involve different generations.

“It can provide a great platform for the next generation to learn about the family’s wealth, its values around this wealth and how it can be managed sensibly.

“We do see family foundations often being an important part of the succession planning strategy for a family, because they think it helps that next generation to prepare for the future.”

The number of HNWIs has grown to 22.5m according to the Capgemini’s 2022 World Wealth Report. In 2021, there were 609,400 HNWIs in the UK.

Capgemini also found that 55% of HNWIs see environmental, social, and governance as a critical investment objective.

This article first appeared in Money Marketing on 21 October 2022.

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