Let's unpack the world of philanthropy, its key structures, its roles, and the importance of engaging future generations.
You'll learn the difference between charity and philanthropy, discover the advantages of foundations and purpose trusts, and understand the crucial roles of trustees, protectors and foundation members.
We'll also explore the significance of involving the next generation, and the valuable support third-party service providers offer in maximising your philanthropic impact.
What do we mean by philanthropy?
In the realm of philanthropy, it's crucial to discern between charity and philanthropy. While charity involves supporting existing charitable causes, philanthropy extends beyond by investing in development and research. The Bill and Melinda Gates Foundation exemplifies this, focusing on ambitious goals like vaccine development that transcend traditional charitable boundaries.
What are some of the key philanthropic considerations within the UK?
Navigating philanthropy in the UK is complex and the appropriate structure might not always be obvious. Traditionally, trusts have been used, but they are generally limited to charitable purposes. UK trusts are more limited as a vehicle for wider social change. UK companies have their own challenges when the liability of directors are considered, together with the need to account to shareholders for the overall performance.
Why pursue philanthropy within a foundation and purpose structure?
To pursue broader philanthropic endeavours, utilising a non-UK structure like a foundation or a purpose trust proves essential due to its flexibility, contrasting with the restrictions within UK structures. Foundations, operating more like companies than trusts, are better understood in civil law jurisdictions. Purpose trusts are specifically designed to be for the benefit of a specific purpose, for example, research into more sustainable electric batteries for cars. The flexibility of these structures grant a broader scope for pursuing philanthropic aims compared to UK-based structures.
What are the key roles within philanthropic structures?
Trustee:
A trustee manages and legally owns the assets on behalf of beneficiaries or a specific purpose.
Protector:
A protector acts as a check and balance on trustees, often separate from the trustee role.
Enforcer:
An enforcer ensures the foundation board fulfils its duties, similar to the protector role.
Foundation member:
A foundation member is part of the foundation board, combining features of a trust and a company.
How important is engaging with the next generation when it comes to philanthropy?
Family philanthropic endeavours can be a great introduction to the family wealth for the next generation and can help to ease future conflicts around the wealth. Typically, younger generations have an increased focus on making a positive long-term impact on the world than their predecessors. They can also be concerned around the existing wealth structuring arrangements for the family, largely as a result of overly simplistic media reporting. The use of funds for philanthropic purposes is not only good from a moral and social standpoint, but also helps to familiarise the next generation with the benefits of well-advised wealth structuring.
How important is the role of a third-party service provider?
Third-party service providers play a crucial role, guiding philanthropists through efficient and well-managed processes. They serve as gatekeepers, ensuring proper due diligence on investments and maintaining discretion for those who prefer philanthropy under the radar.
How can Ocorian support in philanthropy?
The landscape of philanthropy, its structures and roles are underpinned by the vital involvement of third-party service providers. Navigating these elements ensures that philanthropic efforts make a lasting, positive impact on society. Ocorian offers expertise from a team of ex-private client lawyers and accountants. Our proactive approach allows us to anticipate issues and simplify structures when necessary. With a focus on understanding advice and staying ahead of regulations, Ocorian assists in making philanthropic endeavours more effective and relevant.
Get in touch with the team today to find out more.