GIBRALTAR PHILANTHROPY FORUM CONFERENCE SUMMARY
18th & 19th November 2013
The inaugural Conference of the Gibraltar Philanthropy Forum was held in November 2013. The launch dinner was attended by over 80 conference participants on the 18th November and was held at the Wessex Lounge of Gibraltar’s International Airport. Gibraltar’s Chief Minister, The Hon Fabian Picardo, officially launched the Gibraltar Philanthropy Forum’s Conference. This was followed by a speech by former British Prime Minister, Sir John Major.
At the Conference, which took place in The Ballroom of The Convent (His Excellency The Governor’s residence), our guest speakers shared with the audience their insight into issues which are key to the success of philanthropy. We were taken through a number of cases studies which helped us better understand the need for appropriate organizational structures for giving, the importance of collaboration and partnership, the sharing of best practices, the measuring of impact & success, as well as the value of participating in philanthropy networks. At its core, we appreciated that philanthropy is driven by passion and conviction.
Following the very positive experience of our inaugural Conference, we thought it would be useful to provide brief summaries of the various presentations. We thank all of the speakers for their inspiring and informative addresses at the first edition of the annual Gibraltar Philanthropy Forum Conference. All speakers have graciously and generously made their presentations available for publication on our website.
Sir John Major
The role of private philanthropy in the 21st century
Sir John set the scene for the conference with an inspiring reflection on the power of private philanthropy. He reminded us that the world today is richer than it has ever been, and that we should bear this in mind when considering how many worthy causes are seeking help and creating a need for philanthropy. Philanthropy relies on economic success, and can differ from charity in the sense that it is strategic giving. Global philanthropy is experiencing growth but is not keeping apace with the acute need for it.
Philanthropy is about taking risks and filling gaps where the government is not currently providing, e.g. government may choose to focus on specific areas such as health and education, applying the limited resource of government to those key policy areas it assesses as necessary or desirable. The natural consequence of applying a government’s finite resources to chosen areas is that other, perhaps no less important policy areas are necessarily, inadequately funded, if at all.
Philanthropists wishing to focus on such areas are taking a risk, as it is necessary to carry out research before problems such as cancer and Parkinson’s disease are cured, when there is no guarantee that it will, in fact, be cured. A particular cause that is close to Sir John’s heart is the Queen Elizabeth Diamond Jubilee Trust, which fundraises in the UK with the objective of ending avoidable blindness across the Commonwealth. Although risky, (they may fail to meet the charity’s ambitious objective), Sir John stressed the importance of trying to make a difference and the significance of the act of giving. Philanthropy is more than just handing over “a stash of cash”. Although governments welcome philanthropy, one must understand the difference between trying to help where help is needed, and the idea of taking over from governments during an economic crisis. Sir John stresses that this can therefore sometimes be a tricky relationship, as it is not about taking over. Governments can assist in defining a problem that philanthropists seek to resolve.
There is huge scope to spread philanthropy to all cultures all over the world, and to entice new people to give generously to causes in great need. Sir John concluded with a few strategies in pursuit of greater philanthropy;
Publicising good role models and practice
Promoting education for potential givers in the future
Promoting partnerships to facilitate giving
Expanding the pool of people that will give, both corporate and individuals
Forums should be encouraged, such as conferences and institutes where people can share ideas and experiences
Michael Strobaek, Global CIO of Credit Suisse
Investing responsibly for the long term
Michael Strobaek presented options for responsible investing in the long term. He defined responsible investments as those which recognise the relevance of environmental, social or governance-related issues and contribute to sustainable development, both economically as well as ecologically.
Given the limited scope for private investment in developed countries, investors are increasingly targeting the least developed countries; the potential for investment in Africa was particularly emphasised. Skepticism among investors with regard to corruption in Africa was also addressed. Although the graphs and statistics provided indicated a low level of project failure and distress, Mr Strobaeck stressed the importance of finding the right partner to safely guide capital through in developing countries. With regard to Africa, agriculture was acknowledged as the paramount driver of long-term economic growth despite the fact that productivity is currently far below its potential and the lack of infrastructure impairs access to markets. Responsible long-term investment strategies, such as in agricultural land and resource rights, ensuring food security and ensuring transparency and good governance, were identified as the most effective methods of mitigating the political and socioeconomic risks which at present represent major obstacles to investment in Africa.
John Rhodes, Stonehage Law
The family office perspective : defining a philanthropic vision
John Rhodes addressed the forum on the family office perspective. He defined a single family office as one that supports a family that has created wealth, and a multi-family office as those firms that specialize in servicing the demands of multiple families.
There are several reasons why he believes that wealthy families engage in philanthropy. Firstly, there are those religions that encourage giving, and therefore support philanthropy. There is also the need for a humanitarian approach, where witnessing human suffering awakens something within us that makes us want to help and address the suffering, wherever it is found. “He who is rich has enough”, a quote by Lao Tzu highlights the importance of giving to others, especially when in a situation where you are able to support your family comfortably and have funds that you are not using. Secondly, Mr Rhodes mentioned the social contract, and the need for people to give back. The Sunday Times Giving List demonstrates the range of people’s generosity. Thirdly, he states that wealthy entrepreneurs wish to bring business efficiencies to the charitable sector. They do this by structuring things within to ensure that funds are well spent to ensure further giving in the future. This includes efficient investment of resources, benchmarking and researching projects, and focusing on sustainability and the potential for scaling up. Fourthly, Mr Rhodes stressed the importance of introducing the management of money and investments to the younger generation, and to create awareness of the real world, as they are the next generation of philanthropists and should be trained and encouraged to be successful. Fifthly, Mr Rhodes is of the belief that complex tax systems usually encourage philanthropy via tax deductions. Finally, Mr Rhodes informed us that although this is not a charitable purpose per se, it is important family businesses to prolong their success as this will ensure that you are successful in giving as a philanthropist.
To conclude, Mr Rhodes discussed issues that need to be considered before a family philanthropic entity is established, including decisions on funding, the jurisdiction to be chosen, who will control it and its objectives and strategy.
Owen Clutton, Macfarlanes
Tax and legal issues relating to international giving
Owen Clutton’s presentation focused on tax and legal issues relating to international donors. He discussed different structures for tax-based systems, such as the Pan–European system, the civil law jurisdictions and offshore jurisdictions. He explained how the Transnational Giving Europe Network had been designed to further philanthropic objectives, in that it is a collaborative exercise between several charitable organisations that co-ordinate to give donations. Mr Clutton explained that although positive in some respects, this exercise is cumbersome and expensive.
Statutory law in Gibraltar mirrors the UK definition of charity, but is subject to the jurisdiction of the Gibraltar Supreme Court. There is tax relief for donations to charities in Gibraltar. Charities in any country are public bodies, and therefore it is important to ensure that charities are properly administered and that the courts watch over and monitor activities. In the UK, charities are structured as trusts, corporations and unincorporated associations. There are restrictions on charities in that they cannot trade as a major part of their activity and they must not become involved in political activities. Conflicts of interest may arise where families have links to major corporations. It is important that these are recognised at the outset so that independence of conflict can be managed.
Successive governments have devised various financial incentives to make giving to charity more compelling, such as Gift Aid and inheritance tax relief. EU law ensures that EU member states do not discriminate against other EU nationals and charities, and the free movement of capital is permitted. It is Mr Clutton’s view that if the UK were to donate money to a Gibraltar charity however, there would be no tax relief, as strictly speaking Gibraltar is not classified as a member state, and is only so under the guise of the UK.
The UK has amended its legislation in order to comply with EU law with the Finance Act 2010. This ensures that organisations established outside the UK are entitled to the same tax reliefs as UK charities if they satisfy four requirements. In order to fulfil the charitable purposes requirement, the organisation’s purposes must be exclusively charitable as a matter of English charity law. To satisfy the jurisdiction condition, the organisation must be subject to the jurisdiction of a court exercising a corresponding jurisdiction under the laws of a relevant territory (EU member state, Iceland and Norway) to that exercised by the English courts in relation to charities. The registration condition must also be fulfilled in that the organisation must have complied with any requirement under the law of the territory to be registered in a register corresponding to the English register of charities. Finally, the management condition must be satisfied in that the trustees of the charity must be fit and proper persons to be managers of the body or trust, and must be defined as having general control and management of the body in order to have control of expenditure.
Gillian Lofts, EY
How is the asset management industry catering for people seeking sustainable returns from ethical investments
Gillian Lofts explored how the asset management industry is catering for investors who are seeking sustainable returns from ethical investments. The asset management industry is currently facing upheaval and change; in the US, ethical investments now represent approximately $1 in every $9 invested. She introduced some of the driving forces behind the increase in these forms of investments from a commercial perspective. For example, ethical investments avoid the possibility of business scandals, such as the horse-meat scandal or the uncovering of sweatshops, which may risk the health of a portfolio. In addition, many ethical investments offer the chance for a substantial return on investments due to the enormous potential of emerging markets.
Mrs Lofts introduced the United Nations Principles for Responsible Investments (UNPRI) which has been developed by an international network of institutional investors and to which approximately 50% of asset managers have signed up. The principles reflect the increasing relevance of environmental, social and corporate governance issues to investment practices. She also raised other ethical investment opportunities such as the microfinance organisation KIVA and the UK Crowdfunding Association. Despite acknowledging that more remains to be done, Mrs Lofts noted a shift towards more asset managers contributing to ethical investments; attitudes are shifting from one of “we contribute to society because we are successful” to one of “we are successful because we contribute to society”.
Heiko Specking, Credit Suisse
The Forbes Report: Alleviating global poverty –key findings
Heiko Specking presented the key findings from the report entitled ‘Forbes Insights: Alleviating Global Poverty – Catalysts for Change’. Drawing upon the lessons learnt from the Forbes 400 Summit on Philanthropy held in New York in June 2013, Credit Suisse and Forbes Insight conducted a global survey of 317 philanthropists regarding personal philanthropic practices and their views on alleviating global poverty.
With regard to the report’s findings, he explained that it is possible to view philanthropy as an investment portfolio, highlighting the benefits of diversifying philanthropic activities through support of both local and global initiatives. Mr Specking also recognised that tackling global poverty is a long term undertaking; philanthropists must therefore understand the root causes of poverty before implementing a method and take time to figure out exactly what they want to achieve from a project.
The need for cooperation and consolidation of effort among philanthropists was also addressed; collaboration was singled out as an important factor in tackling the inefficiency created by the existence of too many overlapping organisations. The report further established that ambitions run high among top philanthropists; the majority of those surveyed by Credit Suisse and Forbes highlighted their support for a top-down approach, hoping to influence decisions and policy makers at high levels nationally and internationally.
Investment in women’s health and empowerment was also established as a potent philanthropic lever. Mr Specking stressed the importance of the role of women in serving as effective stewards of family capital. Finally, he explained that, at its core, philanthropy is a matter of the heart. The report highlights how personal engagement with a community will increase a philanthropist’s motivation to give.
Balwant Singh, CEO, Kusuma Trust UK
Balwant Singh shared his experiences as CEO of the Kusuma Trust UK with regards to implementing philanthropic initiatives. He focused on a recent program to partner the Kusuma Trust to various schools in India. The objectives of the program in India were to increase enrolment in secondary schools, promote a higher standard of teaching, encourage community engagement with schools and, ultimately, to ensure more young people found employment. The project involved the Trust partnering with 50 schools in 2 districts of India.
Dr Singh emphasised the importance of maintaining a partnership relationship between the schools and the Trust, allowing the schools to retain ownership and accountability. The Trust’s involvement consisted of providing funding, skills development and equipment ranging from toilet facilities to computers. Dr Singh highlighted the value of working closely with local groups and authorities to add local knowledge and influence; complex local issues and challenges can only be understood through collaboration with groups on the ground. Furthermore, he encouraged philanthropists to document, share and discuss results to ensure that mistakes are not repeated.
The conference ended with a panel discussion between Balwant Singh, Heiko Specking, Joey Garcia and Peter Montegriffo. The discussion took the form of a question and answer session. The Speakers were asked about the various platforms which accommodate discussion on how to progress philanthropic projects. Gibraltar’s position in the world of philanthropy was also raised; the Panel considered Gibraltar’s proximity to Africa as an important factor which should encourage generosity among local philanthropists.
The importance of collaboration was once again raised. Dr Singh set out that, in his experience, collaboration should take the form of a broad understanding between the interested parties rather than a legal relationship through contracts. Furthermore, he explained that there is no need for philanthropists to create a blueprint to be followed, it is best to simply share results.
We are very grateful to Alexandra Carauana and David Montegriffo for having provided the Gibraltar Philanthropy Forum with their notes of the Conference. Presentations from the conference can be viewed here