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Family Office – Philanthropy (1) (Gates Foundation)

Family philanthropy is quite extensive the world over. It is often a reflection of the values of the enterprising family. These values may have been made explicit in a family constitution or may have been transmitted via the oral history of the family. It is also a great catalyst for a family’s dream of continuity, and a great elixir for the prevention of affluenza and the development of an entitlement culture in the wealthy family. In the United States, more than 50% of all foundations and more than 56% of all philanthropic giving comes from family foundations, resulting in more than $18.5 billion in charitable grants each year. Some analysts argue that the United States is unusual in this respect. However, many wealthy families, e.g. in Latin America, Switzerland and Europe are as every bit as engaged in this mission as are traditional religious or charitable organizations.

According to a yearly research paper (published by Centre of Philanthropy Studies University Basel, University Zurich and Swiss Foundations), the positive trend in creating new charitable foundations is catching up in Switzerland. Regarding to the hurdles of transnational giving, the European Union is envisaging of creating a European Foundation (Fundación Européa) which will allow in the future the philanthropic activities within various European countries without losing the tax privileges of the donor’s country.

The comparatively high levels of charitable giving by family foundations in the United States are attributed to a generous national culture and one that prefers direct giving to giving through a third party, such as the government, in the form of taxes. It is also likely the result of tax laws that, in the U.S., make contributions to family foundations by family members tax deductible. This form of independent philanthropy represents a large social investment in the development of ideas, the discovery of new medical treatments, the support of music and the arts, and improvements in health care, education, housing and the environment.

There is much anecdotal evidence that family foundations are much more focused in their giving, and more intent on significant and measurable impact, than non-family foundations. This parallels research showing that entrepreneurial and family businesses, in general, are more focused in their business strategies, aiming for niches and more differentiated market segments, while their management-controlled counterparts deploy more diversified strategies. In fact, the latest thinking in philanthropy is referred to as impact philanthropy, defined as a belief that a focused, targeted deployment of higher levels of philanthropic dollars for shorter periods of time will have a greater impact than fewer dollars over a longer time horizon. This high impact philanthropic model forces donors to behave like social entrepreneurs; philanthropists want their gifts to make meaningful contributions short term, while the high dollar infusion gives recipients the incentive to more quickly become self-sustaining. A good example of high impact philanthropy is the Bill and Melinda Gates Foundation, which, intentionally or not, is clearly a family company. The foundation has an enormous endowment but maintains a laser-like philanthropic focus on global health issues, with an expectation of quickly seeing dramatic reductions in childhood diseases responsible for early death in many parts of the world.

For further information please contact us directly via LNKD or follow us on TWTR Swiss Family Office.

 

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