GLOBAL PHILANTHROPY Trends in International Giving – An Opportunity for Professional Advisors STEP Bermuda February 2013

GLOBAL PHILANTHROPY TODAY Globalisation and increased international mobility lead to a rise in philanthropy Motivations to donating vary – driven by cultural influences Regulatory environment impacts scale of giving Tax incentives vary widely across nation states Growing internationalism means that donors face more responsibility to assess legitimacy and effectiveness of their philanthropy within the challenges of the global context

DONOR TRENDS Donor practices are shifting necessitating greater planning and advice: Giving while living and starting younger Younger generations of philanthropists depart from predecessors in where and how they give Giving as a family – teaching skills and responsibility to next generation From reactive cheque writing practices to pro-active result driven giving Importing business practices – social entrepreneurship Evaluating charities objectively – performance, accountability and transparency demands Diverging focus from aid relief to investment in systemic change

IMPACTFUL PHILANTHROPY Impact driven philanthropists integrate the following into their giving strategies: Accountability and transparency Capacity building and operational efficiency Cross-sector collaboration Public policy advocacy Evaluation and impact measurement

FAMILY PHILANTHROPY Family philanthropy returns: 1.Strengthen the cohesion of the family unit 2.Build capacity of individual members – Wealth management skills Governance skills Communication and dispute resolution skills Networking and collaboration skills 3.Impart values on the next-generation 4.Creating family legacy

CROSS-BORDER GIVING Cross-border giving carries restrictions, risks and complexities different than it’s domestic counterpart: In general, little tax incentive – gifts may trigger taxes Regulatory controls can impede foreign giving Efforts to facilitate cross-border giving (e.g. EU and US) Risks of misappropriation of funds Risk of inefficiency Pre-gift due diligence Post-gift monitoring and controls Giving via local intermediary organisations operating internationally

BEST PRACTICES: PRE-DONATION DUE DILIGENCE Deciding where to direct a social investment requires both reflection and research: Confirm the charity is valid and in good standing Conduct legal background checks on organisation, board and key personnel Assess financial, management and operational health Assess non-profit ‘business’ plan Does the non-profit measure performance? How transparent and accountable is the non-profit? Conduct a risk assessment Conduct impact opportunity assessment Agree monitoring and reporting outputs upfront – periodic review Note that some charities will require source of funds due diligence before accepting substantial gifts.

BEST PRACTICES: POST DONATION MONITORING AND REVIEW 1.Monitoring and reporting – Ensuring accountability and transparency – Agree on outputs upfront with the charity (i.e., reports, meetings) – Periodic site visits – Controlled release of funds – staggered payments 2.Assessment of programme impact – – Did the project achieve what it set out to do? – Would the outcome have occurred without the project? – Where can improvements be made?

FOREIGN JURISDICTIONS Offshore jurisdictions offer donors flexibility for their grant-making: 1.Accumulate assets without mandatory disbursement requirements 2.Invest flexibly – large shareholdings in one company 3.Confidentiality 4.Carry on innovative charitable programmes - related business for revenue generation Bermuda with its developed laws, regulation and stable economy is an attractive jurisdiction for international philanthropy.

ADVISORY NEEDS Donors are looking to their professional advisors to help: Balance giving with personal needs – how much can I afford to give? Incorporate philanthropy into overall wealth and estate plan Tax planning Structure charitable vehicles Administer charitable vehicles Philanthropy strategy and mission development Charity identification research and assessment Monitoring gifts Impact evaluation Develop family philanthropy governance regime Be mindful of generational differences in approach.

Gina M. Pereira, B.A. (Hons), LL.B., TEP Chief Executive Officer Dana Philanthropy CONCLUSION “To give away money is an easy matter and in any man’s power. But to decide to whom to give it, and how large and when, and for what purpose and how, is neither in every man’s power – nor an easy matter.” - Aristotle