Philanthropy In An Anti-Wealth Climate
The need for authentic vision and purpose
In an anti-wealth climate it is vital to engage in results-oriented philanthropy with measurable impact.
Anti-wealth sentiment is on the rise. A 2021 poll commissioned by the Institute for Economic Affairs showed that among nearly 2,000 Britons surveyed aged 16-34, nearly 80% blame capitalism for the housing crisis and 67% want “a socialist economic system”. They associate the term capitalism with words such as “exploitative”, “the rich” and “unfair”.
The words of Dutch political philosopher Ingrid Robeyns, who authored Limitarianism: The Case Against Extreme Wealth, are becoming popular. She suggests that personal income and assets worth more than €10m should be considered by Governments and by society to be “too much”.
UHNWIs face a heightened risk velocity in an anti-wealth climate.
Legacy media titles in particular expect a higher standard from wealth holders in all aspects of their lives. Legacy media titles are also highly inclined to write negative stories about wealth holders.
More often than not, these stories occur with a risk velocity that often catches UHNWI and Single Family Offices off guard. This doesn't only apply in crisis situations, but in day-to-day life.
In this climate, with increased scrutiny on the actions of UHNWI families and Single Family Offices, proactive reputation management as a risk management exercise becomes crucial.
Families and Single Family Offices who do not engage in proactive reputation management often do not realise the unmanaged risk beta they are allowing to occur in their private, commercial and philanthropic projects. Unmanaged stories can escalate quickly when there has been no proactive reputation management strategy in place.
In extremis, a single story can come to shape an entire legacy or reputation, and can frustrate the ability for a family or Single Family Office to transact their affairs and interests globally without friction.
Given all of this…where does philanthropy fit in?
Merely holding wealth is not a virtue by itself, especially in the Western world. With wealth comes a societal expectation of social responsibility. And that includes an explanation of the purpose behind it. But that purpose cannot be presented in any manner that feels like “reputation-washing”. But rather, philanthropy needs to engender an authentic desire to drive positive change.
Philanthropy should not be about giving money away. Giving money away is perceived as something that one can too easily do when holding a certain level of wealth. Philanthropy needs to be authentic, it needs to have purpose, and wealth holders need to channel both financial and intellectual capital into projects where their resources and expertise can be directly deployed.
This is something that is deeply understood by the current cohort of second and third generation wealth holders. Millennials and Gen Z wealth holders have a more hands-on approach to philanthropy than older generations, according to a recent article by FT Wealth Management.
Frank Aalderinks at ABN Amro MeesPierson told the publication that “Where older generations, Boomers and Gen X, typically solely contribute through financial donations, younger generations are driven to utilise their time, knowledge, and network in addition to financial donations”.
Aalderinks adds that Millennials and Gen Z wealth holders want to engage with philanthropic activities “in an entrepreneurial and results-oriented manner with measurable impact”.
Given this desire among the next generation of wealth holders to perform philanthropy in a more meaningful way, it is important that UHNWI families and Single Family Offices set up a sustainable pathway for them to do this. Given the global media and digital landscape, “reputation” is a key vector for being able to get things done. A philanthropic mission must by synthesised into a media and online reputation, because it supports efficacy and ultimately enables a greater impact.
Across our strategies built around profile attribute diversification, Michael Macfarlane Associates has extensive experience delivering creating and sustainable solutions for the synthesis of philanthropic endeavours and philanthropic outcomes back into the reputation of a UHNWI principal or a family or Single Family Office.
We continue to support outcomes that build a “circle of virtue” for our clients, whereby the synthesis of a philanthropic cause of mission into reputation in an authentic manner invites support, not cynicism, and ultimately allows for more effective philanthropy.