High-net-worth individuals and families in Europe are a diverse group and approach philanthropy in many different ways. Foundations, most of which bear the family name, have been the primary vehicle, not only to engage in charitable giving but to preserve family values and culture from one generation to the next, explains Cathy Pharaoh, co-director of the Centre for Charitable Giving and Philanthropy Research at Cass Business School, City University London. “Carrying on the family name is very important.”

In this way, philanthropy can become very personal. The 2015 report published by the Association of Charitable Foundations (ACF), Family Foundation Giving Trends, found that of the 150 foundations analysed, nearly three-quarters had at least one family member on the foundation’s board, with multiple family members in some cases. Often, they coalesce around a primary cause. In Germany, the Robert Bosch Stiftung maintains its founder’s vision of entrepreneurship, and in Italy the Giovanni Agnelli Foundation funds academic research. In other instances, family fortunes are divided and family members set up separate foundations. The Sainsbury Foundation in the UK is split into 18 grant-making trusts, reflecting the varied interests of three generations of Sainsbury family members.

Foundations are about long-term giving. Funds are added as they become available, but are spent over an extended period of time. As Professor Pharaoh explains, it allows high-net-worth individuals and families to “make a long-term commitment to a project” and gives a sense of “making a real difference to something that matters to you”. This is often the case with foundations’ support of medical research related to an illness experienced by a close family member.

Other wealthy individuals and families move away from establishing foundations, choosing vehicles that mirror private-sector investment. Stephen Dawson, founder of Impetus, a private-equity foundation that pioneered venture philanthropy in the UK, draws on the expertise he honed during a career in finance. When he set up Impetus, he says, “I was in the fortunate position of being able to give my time as well as my money. I was looking for something where I could actually add value, and when I came across venture philanthropy, that fitted very well. It needed some adaptation to work in the social sector, but 90% of my experience was absolutely relevant.” In this instance, the opportunity to utilise his investing acumen created an additional personal link for Mr Dawson. But it is often reflected in an organisation’s international presence as well. Mr Dawson co-founded Jacana Venture Partnership to develop the venture-capital industry across Africa, having spent two years in Madagascar after university: “There’s always been a trigger of that sort, not necessarily a particular cause.”

Europe’s philanthropic landscape presents a very different picture to that in the United States, where new tools such as venture philanthropy are more established. “In Europe you have more old money, it’s inherited money... So they are very cautious in the way that they invest the money,” says François de Borchgrave, a member of the extended de Borchgrave d’Altena family and co-founder of Kois Invest, a specialist impact investing asset management firm. In Europe, he says, younger generations are reluctant to experiment with modes of giving that could put a fortune they did not create at risk.  

However, the concept of legacy can be much more abstract and unrelated to family name. For Mr de Borchgrave, it would be enough to prove that investing can be a way to both manage money responsibly and support social causes—and to persuade other wealthy people to do the same. He explains his motivation: “What inspired us is very much the realisation that there are still a lot of problems around us—social, environmental—that have been around for years and haven’t been solved. And so we went on a journey to show private capital that it was absolutely reasonable to think that you could invest in companies that solve social problems or environmental problems and still make a return.” Mr de Borchgrave’s focus on developing investment options with broader social benefits goes a way towards redefining the concept of legacy: “The legacy that we certainly want to create over the long term is convincing investors to stop investing their money in companies that are totally foreign to their values.” Similarly, Mr Dawson is focused on spending his money during his lifetime on tackling social programmes, something he finds “enormously satisfying”.

The goal of many of these activities is to make the investments self-sustaining. Mr Dawson advocates using valuable philanthropic funds to experiment with innovative models, such as social impact bonds: “If they need philanthropic funding to get them off the ground, then that’s a very good use of philanthropy.”

But the thought of leaving something for the next generation is not entirely absent. In Belgium, Mr de Borchgrave has supported housing for fragile and homeless populations and has provided financing for a sustainable energy park based in Ghent. When he drives from Belgium to Luxembourg, he passes right by it. “I see where I put my money and it becomes very concrete and very visual,” he says. It becomes something to point to, the chance to say to his children: “Look, this is something daddy financed.”

This article, written by Frieda Klotz, is part of a content programme sponsored by BNP Paribas: 
http://sustainablegiving.economist.com/europes-philanthropists-building-a-self-sustaining-legacy/