Philanthropy: a vital succession planning toolPublished on 22 Jun 2020
Strategy helps define purpose and unlock broader potential for families
Defining a philanthropic strategy is one of the best ways for a family to outline a purpose for their wealth, according to Johan Van Zyl, Chairman of Stonehage Fleming South Africa.
Drawing on his own experiences of working with clients, Johan shared key insights from our Stonehage Fleming research paper on intergenerational wealth management (Four Pillars of Capital – the Next Chapter, 2018) during a ‘Wealth Strategies for Intergenerational Success’ webinar, held in association with STEP Cape Town.
“The four pillars of wealth – financial, intellectual, cultural and social - stand on the foundation stone of purpose”, Johan told guests. “Defining that purpose is one of the things families find most difficult”, he explained. “It may sound trivial, but deciding what your money - made or inherited - is actually for, is surprisingly difficult for families to define”.
“When a family is struggling, we often make the decision to start with philanthropy. In and of itself, discussion around philanthropy reflects a family’s values”, said Johan. “It really helps the process of deciding a purpose”.
The Four Pillars research highlighted the increasing importance families put on a strategy for philanthropy. Engaging a broader cohort of family members, said Johan, is another advantage of philanthropy. “Not only is it relevant for engaging the next generation, but also those family members who are not necessarily financially oriented”.
In the past, traditional leadership roles have tended to go to those with the strongest financial acumen, explained Johan, while a philanthropy strategy unlocks new potential within a family. “It enables you to access different perspectives and engage people focused on the other three pillars of capital.”
The Covid-19 pandemic has prompted some high profile charitable activity in the local market in South Africa, inspiring many of Johan’s client families to see what good they can do in their local communities. Having a plan ready, he said, is a huge advantage. “In order to be agile and have the impact you want as quickly as you want, families really need a philanthropy strategy already in place,” said Johan. “It is amazing to see families working together on their giving strategies”.