Building a legacy through philanthropy

According to the latest research from Altrata, philanthropy ranks as one of the most popular passions for ultra-high net worth individuals. But what actually is philanthropy? And why is it so important?

In this article, we explore the different types of philanthropy, how you can benefit from giving, as well as some practical steps on building your own lasting legacy.

What is philanthropy?

Philanthropy is the act of giving and contributing to the betterment of society, or the wellbeing of others. It's a powerful force for positive change, driven by individuals and organisations.

Take Sir Richard Branson, for example. He's given away a lot of his money to different charities, including Virgin Unite, a foundation tackling some of the world’s toughest challenges.

Another example of philanthropy in action is the support in response to the COVID-19 pandemic. Tech companies donating money to fund research, to help combat the virus. Organisations donating personal protective equipment and free meals to healthcare workers. Individuals donating to food banks to help fight food insecurity for those in need. The list goes on.

Why is philanthropy important?

Philanthropy gives people and organisations the power to make a difference. It addresses social issues, supports vulnerable groups, and aids causes that may otherwise go unfunded.

By investing in education, healthcare, poverty reduction, and countless other causes, philanthropy helps build stronger, more equal communities. It's about recognising our shared humanity and using our resources to make the world a better place.

Common types of philanthropy

Venture philanthropy uses venture capital and business principles to support not-for-profit (NFP) organisations. It's not just about donating money. It focuses on giving strategic advice and resources to NFPs, helping them grow and scale their impact over time.

Impact philanthropy is a strategic approach to charitable giving that focuses on applying business principles to philanthropic investments. It's about using data-driven methods to get the most out of donations, and putting money where it's needed to make a real difference.

Strategic philanthropy is the intentional and strategic planning of charitable giving. Donors have specific goals and objectives in mind, and they divide their resources to achieve them. This approach aims to create lasting solutions by following a well-thought-out strategy.

Family philanthropy involves families working together to support causes they’re passionate about. This work is then passed on to future generations to continue, creating a lasting impact. It can build strong family values around money and helping those less fortunate.

Five key benefits of philanthropy

1. Personal fulfilment

Many people find personal fulfilment and satisfaction in giving back to causes they’re passionate about. Philanthropy allows you to make a meaningful difference in the world and contribute to positive change.

2. Legacy building

Philanthropy provides an opportunity for you to create a lasting legacy. By creating a foundation or charitable trust, you can ensure that your values will continue to have an impact on society for decades to come.

3. Tax benefits

Philanthropic donations often come with significant tax advantages. You can receive deductions on your income or estate taxes, depending on the structure of your charitable giving. These tax incentives can help to optimise your wider financial strategy.

4. Reputation enhancement

Philanthropy can enhance an individual's or a family's reputation. By associating with charitable organisations and actively supporting them, you can create a positive public image.

5. Family values

Philanthropy can be a powerful tool for passing on family values and promoting unity among generations. When family members get involved in philanthropy, it can create a sense of shared purpose, instilling values around giving, compassion, and responsibility.

What’s the difference between philanthropy and charity?

Philanthropy and charity both play crucial roles in helping those in need and improving the world. But they differ in their methods and objectives.

Charity tends to be immediate and focuses on alleviating suffering. Philanthropy takes a more strategic and long-term approach to address the root causes of societal problems.

For example, a charity may give money to a homeless shelter or provide emergency relief following a natural disaster. Whereas a philanthropist might set up a foundation to help fund education or support climate change initiatives.

Examples of philanthropy

People often find inspiration in the philanthropic efforts of others who share their values and interests. Below are a few notable examples of philanthropy figures across various sectors.

Education: Dame Stephanie Shirley

A pioneering businesswoman, Dame Stephanie Shirley established the Shirley Foundation in 1996. It’s since funded projects related to autism research and educational technology. Her work includes supporting programs that encourage women to pursue careers in technology and computing.

Arts and culture: David Hockney

The renowned English artist David Hockney is not only celebrated for his contributions to the art world but also for his philanthropic efforts in support of the arts. He’s donated artworks and funds to art schools, institutions and auctions.

Social services: Dame Esther Rantzen

A prominent English broadcaster and journalist, Dame Esther Rantzen is known for her dedication to social services. She founded ChildLine, a helpline for children in distress. In 2021, she received the Women of the Year Lifetime Achievement Award for her philanthropy.

Healthcare and medical: Sir Ian McKellen

English actor Sir Ian McKellen is an advocate for healthcare and medical causes. He’s been involved with organisations like Stonewall and the Terrence Higgins Trust. Both focus on issues related to HIV/AIDS awareness, LGBTQ+ rights, and healthcare access.

How to get involved in philanthropy

Here are seven steps to consider if you're looking to engage in philanthropic activities.

1. Define your philanthropic goals

Start by identifying the causes and issues that resonate with you the most. Determine what you’re passionate about, whether it's education, healthcare, environmental conservation, or social justice. Your philanthropic efforts will likely be more impactful if they align with your values and interests.

2. Research and educate yourself

Take the time to research the organisations and initiatives that are addressing the issues you care about. Learn about their impact, financial transparency, and effectiveness. Due diligence is crucial to ensure your donations have a meaningful impact.

3. Develop a philanthropic strategy

Consider whether you want to focus on short-term interventions or work toward long-term solutions. You can choose from various philanthropic models, such as the ones we listed out earlier in this article. Developing a clear strategy will help you achieve your philanthropic objectives.

4. Collaborate and network

Connect with like-minded individuals, philanthropic organisations, and experts in your chosen field. Collaborative efforts often amplify the impact of philanthropy. Joining networks and attending events related to your cause can be beneficial.

5. Establish a giving structure

Decide whether you want to create a private foundation, establish a donor-advised fund, or use other charitable vehicles. Each option has its advantages and regulatory requirements. Consulting with financial and legal advisers can help you make the right decisions.

6. Measure and evaluate impact

Regularly assess the impact of your philanthropic investments. Ensure that your resources are making a positive difference and adjust your approach as needed. Transparency and accountability are key principles in effective philanthropy.

7. Inspire others

Share your philanthropic journey and encourage others to get involved. Philanthropy has the potential to create a ripple effect, inspiring more individuals and organisations to contribute to positive social change.

Grow your philanthropic fund

If you’re interested in making a meaningful impact on the causes you’re passionate about, consider speaking to a philanthropy adviser. They can help you navigate what projects to take on, and guide you on how to reach your philanthropic goals.

If you’re saving to leave a legacy and want to maximise the return on your cash, a high interest savings account may suit you. With Flagstone, you get access to exclusive and market-leading rates from hundreds of accounts, and over 30 banks, ensuring your charity is earning the best possible interest.

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