Senior private bankers,
lawyers and philanthropy professionals are joining forces to speed
the development of the market for philanthropic advice. Many
private banks have an offering in this area, but opinion remains
divided on the best way to provide the service.


UK Philanthropy Steering Committee: Private wealth membersWealth management
professionals from Barclays Wealth, Coutts, Hoare & Co, HSBC,
JP Morgan and Sand Aire have been named on a high-level UK steering
group for delivering philanthropy services.

The group, chaired by Dame Stephanie Shirley,
the UK government’s ambassador for philanthropy, will attempt to
develop the market for philanthropy advice through quarterly
meetings and the sharing of best practice. It also includes high
profile lawyers, accountants and family offices.

The steering group has been assembled by New
Philanthropy Capital (NPC), a consultancy which offers training
services and gives advice on effective donations. It was set up
after research conducted by NPC’s Plum Lomax, a former Merrill
Lynch private banker, which showed collaboration, leadership and
government involvement were required to develop the market for
philanthropy advice in the UK.

“There is a fantastic opportunity being missed
by many banks, law firms and family offices,” says Lomax.

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“Clients are now coming to expect their
advisers to help them with their philanthropy, yet very few
advisers have worked out how to do it well. Those who are
supporting their clients’ giving are beginning to reap the
benefits, increasing their revenue and deepening client


Asking for advice

Research from wealth consultancy
Scorpio Partnership showed a marked increase in the use of wealth
managers for advice in philanthropy between 2005 and 2007. Private
banks responded to this by improving their propositions, in
particular through establishing in-house teams which specialised in
advising clients on charitable donations and setting up

Most wealth managers continue to use
third-party providers for part of the process, particularly for due
diligence and analysis on charities clients are interested in.
While philanthropic donations have not been significantly affected
by the global recession – £2.6bn ($4bn) was donated in 2009 in the
UK, compared to £2.4bn in 2008 – the NPC report says it had forced
some private banks to reduce investment in the area in recent

Philanthropy: HNWI - types of person consulted on charitable givingCommenting
inPBI’srecent philanthropy report (see PBI 256),
UBS head of philanthropy Mario Marconi said he saw a “clear and
positive trend of increasing money coming into the philanthropy
sector in general”. UBS was one of the first to establish an
in-house service in 2004.

“The way we see 2009 is that it is a short-term
stop, if at all, but I expect it to continue growing in the coming
year and beyond,” he added.

The main benefits private banks gain from
offering the services are improved client servicing, the deepening
of client relationships and improved client retention.

However, because of the difficulty of measuring
these concepts, it can be hard to establish a business case for
investment in the service, and part of the steering group’s remit
is to address these barriers to the provision of advice.

Most private banks do not charge clients for
philanthropy services, so there is no direct revenue gain for them.
Lawyers, who also advise clients on philanthropy but have a
business model based around charging fees, have a clearer revenue
stream and are also likely to benefit from working with clients on
areas such as setting up foundations.

The report gives the example of UK-based Coutts
& Co, which is acknowledged as one of the leaders in providing
philanthropy services. It appointed an independent consultant to
measure the impact of its offering on improving client trust and
loyalty, differentiation from other private banks and increasing
its share of client assets.

This helped quantify the effectiveness of its
service, and established a stronger case for it within the

There may be lessons private banks can take
from family offices, according to a case study in the report. It
shows how an unnamed multi-family office managed to convert 16 of
24 client enquiries about philanthropic services into fee-paying

A dedicated philanthropy expert at the business
collaborated with relationship managers across the business,
helping them become more confident in talking to clients about the

“The relationship managers have become more
knowledgeable at screening their clients’ requests, so those with
the greatest need, and therefore the likelihood of conversion to
fee-paying work, are introduced to the philanthropy team,” says the

The NPC also stressed that no information that
would compromise any elements of client confidentiality, or weaken
the competitive advantage of the different businesses, was involved
in the committee.