Leaving a legacy through philanthropy
The challenge of passing on wealth
For many, the idea of leaving a philanthropic legacy seems straightforward in principle, but can be complex in practice. Driven not only by a desire to make a positive impact on the world but also by a thoughtful consideration of how wealth can best serve future generations, more than two-thirds of high net worth individuals worry that too large of an inheritance could actually harm their loved ones. Waren Buffet famously said: “I want to leave my children enough so that they can do anything, but not so much that they do nothing.”
This concern leads many to consider philanthropy as an alternative to leaving all their wealth to their immediate heirs, and indeed many do not have heirs at all. Over the next two decades, it is estimated that up to USD 12 trillion will shift towards philanthropic causes as part of the great wealth transfer. However, leaving wealth to philanthropy requires careful planning.
We understand that leaving your wealth to philanthropic causes is more than a financial decision – it is a deeply personal one that requires careful planning.
Strategies for effective wealth and philanthropy planning
Today, we are seeing clients taking a more active approach to planning their philanthropic legacy and seeking advice from a range of experts to ensure their plan fits their aspirations. For those with heirs, involving them early on and agreeing to shared goals can be a core part of the process.
- Engaging heirs: a couple created donor-advised funds for each child, empowering them to pursue their own charitable interests.
- Endowing a charitable organisation: a philanthropist helped two small charities establish endowments, ensuring their financial independence.
- Leaving real estate: a donor created a refuge for women escaping abuse, along with a fund for its upkeep.
- Providing scholarships: an entrepreneur funded scholarships at their alma mater for low-income students, ensuring long-term support.
- Investing in a prize: a donor funded an annual prize for environmental solutions through a trusted social entrepreneurship organisation.
- Funding research and innovation: a philanthropist provided grants to a medical institution to support research on rare diseases.
What unites these examples is a common desire to plan for the future with clear objectives and the seeking of advice to help philanthropists translate their aspirations into a strategy. With careful planning, leaving wealth to philanthropy does not have to be overly challenging.
At Pictet Philanthropy Services, our specialists help clients translate values into lasting impact. We understand that leaving your wealth to philanthropic causes is more than a financial decision, it is a deeply personal one that requires careful planning.
