Rich seeking bankers' advice for philanthropy

Philanthropy is no longer a mere exercise for ultra high net worth individuals and households to create a family name and maintain social status. Rich individuals are now seeking guidance from wealth managers to ensure their charity reaches the right people.

Wealth management firms and banks, sensing a business opportunity, have already included recommendations on philanthropic decisions in their service offerings. “Our clients are keen on exploring alternate investment options in the philanthropy space. We have, through a partnership with GiveIndia Foundation, enabled our clients to make a difference to society by helping them contribute to credible non-governmental organisations across India,” said Pankaj Narain, head, private clients (banking and investment), Deutsche Bank, India.

Private banking clients of Deutsche Bank can make charitable contributions to non-governmental organisations through the GiveIndia portal. The service supports around 10 causes, ranging from women and children welfare to care for the elderly and disabled.

Some wealth management firms are also offering guidance to their clients on setting up trusts that would invest in social causes. The nature of investments is also changing, with high net worth individuals now willing to support a wide range of issues.

“Earlier, driven by an urge to create a family name, people set up a school in their native villages or donate money for religious purposes. But now, they are willing to support other socially relevant issues like welfare of the girl child, prevention of child labour and healthcare for the elderly,” said an official, in charge of wealth management operations at a foreign bank in India.

Wealth managers said high net worth households were also increasingly looking at investing in businesses like solar lighting and mobile healthcare, which benefit the lower strata of society. According to Richa Kapre, director (investments), Altamount Capital Management, with the new generation taking charge of their family businesses, they want more accountability, even in their charitable investments. Hence, they rely on recommendations from wealth management firms for philanthropic decisions.

“In India, philanthropic investments have been fairly unstructured. But that trend is changing. So far, there was no formal feedback mechanism to allow individuals to track their investments in philanthropic causes and measure the success of these investments,” she said. “The new generation wants more accountability and minimum leakage. We are advising our clients how to structure their philanthropic investments, what are the best options available, whether to start from scratch or invest in a non-governmental organisation,” she added.

Ambit Capital, which currently advises clients on philanthropic decisions for free, expects this service to gain more popularity among high net worth households in the near future. “We started this service one year ago. It has not become a formal part of our service yet. We expect it would become an important part of the service suite, as very little has been done so far and a lot of interest has been seen from our clients in this space,” said Sutapa Banerjee, chief executive (private wealth), Ambit Capital.