Philanthropy's expanding role in family office strategy

As priorities evolve across generations, philanthropy is increasingly becoming entwined with governance, the stewardship of wealth and the deployment of capital. Antonio Risorto, Head of Wealth Planning for Europe at Deutsche Bank Private Bank, explains the implications for family offices.

Philanthropy used to be regarded as little more than “writing a cheque for a specific cause”, Risorto says. Today, family offices are taking a broader approach, focusing on long-term priorities and active involvement.

“Among our clients, we're seeing that an increasing number of the next generation regard their wealth as a source of responsibility as well as opportunity. The younger generation think globally and want to influence systemic change.”

Instead of asking "Which charities are we looking at?", a donor and their family office will now often start by asking "How do we solve problems in the world?", he says.  “And they’re looking to external advisers to help them research causes and conduct due diligence.”

From intent to evidence: measuring impact

Families are also placing greater emphasis on understanding the impact of donations, Risorto argues.

“There’s a lot more rigour around how much money is being committed to philanthropy and how it’s used,” he says. “Families are asking ‘Should we be doing more?’ But answering that question requires a deeper understanding of how charities deliver results.”

If a donor wishes to help tackle a complex global challenge such as climate change, a full understanding of the impact they generate may not always be possible, he points out. However, there are frameworks based on the the UN’s Sustainable Development Goals that can offer useful metrics, although a standardised approach to evaluating performance and against specific metrics is still lacking.

The Private Bank’s CIO and ESG Solutions teams are continually reviewing these developments and, Risorto says, “increasingly we're helping family offices to understand the impact frameworks they can apply to their philanthropic giving.”

How can family offices structure wealth around purpose?

While a private foundation or charitable trust may allow for greater control, it also brings significant regulatory and reporting obligations, alongside ongoing due diligence for supported causes. As a consequence, Risorto says, he is seeing a trend of family offices using an alternative called a donor-advised fund (DAF).

A DAF is a charitable giving account administered by a sponsoring charity, which handles many of the burdens of due diligence, regulatory requirements and administration on behalf of its donors. A donor can typically contribute a range of assets to a DAF, including cash, securities and real estate, and then recommend grants to favoured causes. Some DAFs may also be able to facilitate cross-border giving.

However, Risorto points out, DAFs are not available everywhere and the regulatory, tax and control implications of using one will vary by jurisdiction. Their features will also vary by provider. So, he says, it’s necessary to weigh the risks against the potential benefits as a part of a comprehensive wealth plan, in consultation with professional advisers.

Choosing an appropriate DAF will depend on the donor’s philanthropic objectives, personal and family circumstances, assets, desired level of involvement, governance preferences and the relevant legal and regulatory framework.

Philanthropy across generations: helping your purpose to persist

Effective governance helps family offices keep philanthropic activities aligned with long-term objectives as priorities evolve across generations. Establishing a family charter or mission statement can therefore provide clarity around values, priorities and decision-making, Risorto suggests.

“Communication is key to building consensus. There may be generational differences in beliefs, risk appetite and preferred causes. These frameworks may set out how much a family allocates to philanthropy and how their values will shape their giving.”

Governance documents should also define how decisions are made and implemented, with clear lines of responsibility. Younger family members can be introduced to the family office through involvement in identifying causes and assessing outcomes. Some families benefit from bringing in external specialists to support next-generation education, arbitrate conflicts and help develop a coherent philanthropic strategy.

How family offices can align philanthropy with capital allocation

“Families no longer view philanthropy as a standalone activity,” says Risorto. “It now informs the whole wealth management strategy.”

This shift is reflected in the rise of mission-aligned portfolios and the emergence of blended finance, he argues. Mission-aligned portfolios are gaining traction among multi-generational family offices seeking to ensure their investments support outcomes that reflect their values while remaining consistent with their financial objectives¹.

“Families may co-invest in social-impact enterprises with the aim of generating both positive outcomes and financial returns,” he adds. “Where loans are repaid, capital can be recycled into other organisations and projects.”

Some larger family offices are also turning to blended finance – combining different sources of capital, each with distinct risk and return expectations within a single structure. Through this, they can deploy philanthropic capital to help catalyse private-sector investment for development initiatives that may not attract sufficient support through traditional investment or grant-making.

While still an emerging approach, it could play a larger role as families develop an understanding of “how to mobilise their networks to bring in pools of capital”, Risorto suggests. 

However, it is important to note that such approaches may involve investment and liquidity risks, while impact measurement can be affected by the choice of metrics, data quality and methodology. There is also a possibility that intended outcomes may not be achieved, and financial returns may differ from expectations.

The complexities of cross‑border philanthropy

Cross-border philanthropy requires families to navigate different legal, tax and regulatory frameworks. Structures that work in one jurisdiction do not always translate smoothly to another.

Risorto gives the example of a family wishing to build a hospital or school in their country of origin. “You may want to do something great but trip up on regulatory and tax issues, including indirect taxes like VAT,” he says.

Families may also need to undertake additional due diligence and oversight of how funds are deployed, to ensure that sanctions screening, anti-corruption measures and other compliance concerns  are taken into account.

Building a coherent philanthropic strategy

“Philanthropy has become interwoven with investment decisions and succession planning,” Risorto concludes. “Many families are asking ‘how do we steward this wealth for the greatest good?’” 

As philanthropy becomes more closely tied to governance and stewardship, the challenge is no longer simply which causes to support, but how to align philanthropic activity with a family’s long-term priorities and purpose.

Philanthropy for family offices and UHNW families: frequently asked questions