Philanthropy planning for UHNW families: turning intention into action

As ultra-high-net-worth families plan for succession and generational wealth transfer, philanthropy can provide a practical way to connect purpose, governance and long-term wealth planning.

Philanthropy planning may help wealthy individuals and families consider how charitable giving fits alongside succession planning, family governance and their wider financial circumstances. It can support focused discussions about what to give, when to give, which structures may be effective, who should make decisions and how giving may be reviewed over time.

A simple donation could be enough for some clients. As wealth and family arrangements become more complex, however, giving charitably may benefit from additional structure. A founder may want to support causes after a business sale. A family may want the next generation to take part in decisions. A client may want to donate internationally, use non-cash assets, or make grants over many years. These choices can raise implementation and governance questions, so it can be helpful to consider the right support before decisions are made.

What is philanthropy planning?

Philanthropy planning is the process of turning charitable intentions into a workable plan. For UHNW individuals and families, that plan may include direct gifts, a donor-advised fund, a private foundation, a charitable trust or a mix of structures. Finding a suitable approach depends on the donor’s objectives, personal and family circumstances, assets, governance preferences and the rules that apply in the relevant jurisdiction.

A useful philanthropy plan starts by considering a series of questions. Which causes matter to the donor? Is the aim to fund current needs, support research, build an institution, influence a field, or involve others in shared decisions? Does the donor want public visibility, privacy, or a mix of both? Is the gift intended to be made during life, upon death, or through a longer-term vehicle? Once those questions have been addressed, the philanthropy structure may be considered.

“The structure should follow the intention,” highlights New York-based Jacqui Valouch, Head of Wealth Planning, Trust, Custody and Global Philanthropy at Deutsche Bank Wealth Management. “A client may begin by asking which vehicle to use, but the better first question is what they want their giving to do, for whom, and over what period of time.”

In practice, this means starting with the client’s own objectives and circumstances rather than applying a standard structure at the outset.

How might philanthropy fit into succession planning?

Philanthropy may affect how wealth passes between generations or to chosen beneficiaries. Some individuals and families consider charitable giving as part of estate and succession planning. Others use it to discuss what wealth is for, especially where substantial assets may pass to heirs or other beneficiaries. In either case, the giving plan should be reviewed alongside the wider estate plan and with appropriate professional input.

“Philanthropy can help individuals and families talk about wealth in practical terms. It gives them a way to discuss values, decision-making and responsibility before those questions arise in more difficult circumstances,” explains Valouch.

For business owners, the timing can be very significant. A liquidity event may create the means for a larger charitable contribution, depending on the client’s situation. For internationally mobile UHNW individuals and families, the analysis could be more complex because residence, citizenship, the location of assets and the location of charitable beneficiaries may all affect the available options.

A wealth plan should also consider control and continuity. Who will make decisions if the donor is no longer involved? Should family members, trustees or other representatives have formal roles? How will the donor or family review whether a grant has met its intended purpose? These are governance questions as much as philanthropic ones.

These questions may be addressed through a documented decision-making process, defined roles and responsibilities, and periodic reviews that keep the giving plan aligned with the donor’s aims and broader wealth plan.

Choosing a suitable structure for philanthropy

There is no single charitable giving structure that will be suitable for every donor Depending on where they are based – and the provider –  a donor-advised fund may permit an irrevocable charitable contribution followed by recommendations about grants over time, subject to the fund’s terms. A private foundation may involve more formal governance and donor participation, together with additional administration, reporting and cost. A charitable trust may place assets within a legal structure for defined charitable purposes and oversight arrangements, where permitted. A direct gift may avoid an ongoing vehicle where the donor has identified a recipient. These examples are illustrative rather than recommendations, and their availability, treatment and suitability depend on the donor’s circumstances, applicable rules and independent professional advice.

The asset being given also matters. Cash may be relatively straightforward, while publicly traded securities, private company shares, real estate, art and other non-cash assets can involve additional questions, including valuation, due diligence, liquidity and governance. Where assets are held through companies, trusts or other entities, donors may need to consider the appropriate support before making a gift.

“It is easy to talk about philanthropy as a single decision, but the details of implementation matter,” Valouch outlines. “The vehicle, the asset, the role of the family and the intended recipients all need to be considered together.”

Before making a gift, donors should consider that a donation or transfer to a charitable vehicle may be irrevocable and may reduce the assets and liquidity available to them and their beneficiaries. A gift may also have succession, legal and tax consequences that vary by jurisdiction. These matters should be assessed separately from investment decisions and with independent professional advice.

How can philanthropy support governance?

For some donors, philanthropy is a personal expression of values. For others, it is also a way to involve family members in financial discussions. Grant-making decisions are often more accessible than investment policy or trust administration. A younger family member can research a cause, assess a proposal, visit an organisation or present a recommendation to the family.

“When families involve the next generation, the aim should not be to force agreement on every cause. The aim is to create a process where different views can be heard and decisions can still be made,” Valouch suggests.

Individual donors and family members may care about different causes. Some may want public engagement, while others prefer privacy. Some may see giving as a moral duty; others may see it as one part of a larger balance sheet. A written mission, grant-making criteria and agreed decision process may help reduce uncertainty.

Regular reviews may also help. A donor or family can ask whether giving still reflects their priorities, whether grants are reaching the intended organisations, and whether the administrative burden is proportionate. The review does not need to turn giving into an investment exercise, but it can bring more structure to decision-making.

What should cross-border donors consider?

UHNW individuals and families may have assets, homes, citizenships and charitable interests in more than one country. A donor based in one jurisdiction may want to support a university, museum, hospital or social enterprise elsewhere. The giving may still be possible, depending on location, but reporting duties, anti-money laundering checks, local charity rules and recognition of the recipient organisation can vary by country.

Early coordination with independent specialists may help identify any relevant issues before a gift is made. A gift accepted in one country may not be recognised or receive the same treatment in another, and a structure that works for one donor or branch of a family may not be available or suitable for others based elsewhere.

These matters should be assessed before assets are transferred. Cross-border and complex gifts may also require checks relating to sanctions, anti-money laundering and counter-terrorist financing requirements, source of funds and source of wealth, politically exposed persons, high-risk jurisdictions, and the proposed recipient and any intermediaries. Due diligence may also consider the risk of diversion of funds, bribery or improper private benefit. The nature and extent of these checks depend on the circumstances and applicable requirements.

For Valouch, cross-border philanthropy is often about identifying the relevant requirements before assets are transferred. “Involving the appropriate independent specialists early may help a family understand the available options and constraints,” she says.

When should a philanthropy plan be revisited?

A philanthropy plan is not fixed, and family circumstances can evolve. A donor’s own interests may also change over time. Periodic review may help assess whether the plan still reflects the donor’s aims and whether the administration remains proportionate.

This review can sit alongside wider discussions about succession, liquidity, governance and the arrangements needed to support giving over time. It may also help identify whether any specialist support is needed before any material changes are made.

 “At the end of the day, a good philanthropy plan should be practical,” argues Valouch. “It should help the client act on their intentions while remaining connected to the rest of their wealth plan.”

How might a wealth manager help with philanthropy planning?

Depending on the client’s location and services available, a wealth manager may support the philanthropy process for UHNW individuals and families by helping clients bring related considerations together, alongside appropriate specialist input where needed.

“A wealth manager can help ensure that relevant philanthropic considerations are discussed alongside investment strategy, succession and family governance,” says Valouch. “Good planning gives intention a clearer route into action.”

Frequently asked questions about philanthropy and wealth planning: