05 October 2017

Guernsey sees growth in business from a new generation of philanthropists

A sizeable new stream of business for the legal sector and other professional service providers is emerging as Guernsey becomes recognised as a centre of excellence for the founding of charitable and philanthropic structures.

Carey Olsen was involved in setting up a substantial philanthropic foundation holding shares in a client family’s multi-billion dollar, multinational business and is now working on a similar structure for a Chinese ultra high net worth individual.

Partner Natasha Kapp, speaking at the firm’s autumn trusts conference, said: “Guernsey was chosen for the establishment of the foundation following a long and thorough review of various jurisdictions. The founder had a clearly-formulated vision and we were able to entrench the core values and principles on which he had established the foundation within its constitution and governance structure”.

“He also envisioned that successive generations of the family should play a role within the foundation if they wished to do so and we included provision for the establishment of a family council and the family’s role within the governance structure of the foundation in the future.”

The Chinese client is to transfer a substantial sum for charitable and philanthropic purposes into a Guernsey foundation with the intention that it will receive the balance of his business and personal estate on his death.

Advocate Kapp highlighted the escalation in the commitment among ultra high net worth families to philanthropy. 170 billionaires, including Bill and Melinda Gates, Mark Zuckerberg and Priscilla Chan, have signed up to the Giving Pledge, a commitment by the world’s wealthiest individuals and families to dedicate the majority of their wealth to ‘giving back’.

Many modern philanthropists are relatively young and often innovators, the so-called Y-Givers and Tech Philanthropists, who are committing to philanthropy early in their careers or lifetimes rather than waiting to give back.

Advocate Kapp said: “Modern philanthropy starts with the hypothesis that business and capital markets can be a tremendous force for positive social change. It recognises that every enterprise impacts society in the course of its business and that philanthropies can make capital available to both non-profit and for-profit entities in a way that furthers philanthropic objectives. Another trend is that entrepreneurs are donating the equity in their businesses to serve as permanent philanthropic capital.”

She said that increasingly wealthy families and individuals are demanding resources and expertise to be applied to their philanthropy and this “fourth leg of the wealth planning table” was providing new business opportunities for Guernsey.

“Guernsey is highly experienced in administering high-value and complex structures. This same wealth of experience and regulatory framework can be applied in administering charitable and philanthropic structures in line with trends and make the island a centre of excellence for charity and philanthropy.”

Other areas covered at the conference were the pros and cons of reserving powers, disclosure of information, trustee remuneration and a British Virgin Islands and Cayman Islands update.