Family offices are private organizations established to manage the financial and personal affairs of wealthy families and individuals. While a family office is by no means necessary to carry out philanthropic activities, these operations can deploy various kinds of philanthropic investments on behalf of their clients. Given financial capital’s versatility in philanthropy, a family office can facilitate an array of philanthropic directives, including outright gifts, grant making, advocacy, and impact investing, among other activities. All of these activities can make up an individual’s “philanthropic portfolio.”

Some Context: Family Foundations and Philanthropy

By design, family offices are very private and diverse, in order to meet the individualized needs of their clients. Single family offices serve a sole individual or family with assets upward of $100 million, and these offices provide their clients with full operational control, tailored services, and privacy. Multifamily offices support numerous families with assets of $20 million or more, and they provide less customized support, with lower operational costs. There are approximately 3,000 single family offices worldwide, which collectively control more than $2 trillion in assets.

A majority of family offices engage in philanthropy, despite the fact that these offices often rank philanthropy as its lowest operational priority. Across the globe, 71 percent of family offices are engaged in philanthropy, but just 41 percent of them have a philanthropic strategy in place. Philanthropy is particularly popular among family offices in the US. On average, family offices in North America donate $7.5 million annually, whereas European and Asian-Pacific family offices contribute $6 million and $2.7 million, respectively.

Family offices facilitate philanthropic investments directly or through other, related mechanisms, such as a family foundation or donor advised fund. The average family office portfolio allocates 19 percent to sustainability investments and 14 percent to impact investing. Over the next five years, family office executives expect to allocate 32 percent of their investment portfolio to sustainable investing and 25 percent to impact investing.

Most family offices engage in philanthropy for three reasons:

• Educate the next generation to build a lasting legacy. Succession planning and legacy building are among the main responsibilities of family offices. Philanthropy provides a good opportunity to engage and educate the next generation of the family and prepare them for the responsibility of wealth.

• Use the tax advantage associated with philanthropy. Philanthropic giving often carries tax preferences that can be advantageous in financial management.

• Fulfill responsibility to advance social change. According a UBS survey, a majority (65 percent) of family offices across the globe believe that they have a role to play in alleviating economic inequality. This sense of responsibility also motivates philanthropic engagement.

What Philanthropic Services Are Offered by Family Offices?

Many individuals with single-family offices often rely on them to advise on and manage the operations of separate, related entities such as private foundations or trusts. These offices can help set holistic strategic goals across entities and vehicles, educate family members, implement philanthropic strategies, and monitor and measure impact. In contrast, few multifamily offices have in-house expertise in philanthropy, so those entities simply facilitate the deployment of philanthropic capital. Philanthropic strategy support is therefore outsourced to philanthropic support organizations or consultancies.

The Bottom Line: Philanthropy and Family Offices

Philanthropy can be established as a new function within existing family office structures, and doing so can enhance donor engagement in these activities. If you already have a family office, incorporating philanthropy into this operation can lower barriers to entry since there is no need to establish a standalone infrastructure dedicated solely toward charitable ends.

Since a family office can incorporate the full spectrum of impact-driven and conventional investment activities, this structure may be appealing for individuals who want to manage all of their financial interests under one operation. A family office also affords philanthropists a greater degree of control over their philanthropic activities, as opposed to outsourcing this work to a donor advised fund (DAF) manager, for instance. Consult with your family office or legal advisor for guidance on how to best put your philanthropic priorities into practice.

Additional Resources

• The World Economic Forum has developed a primer on structuring a single-family investment office to achieve both family objectives and societal value.

• This EY Family Office Guide shares recommendations for all family office operations, including philanthropic activities.

• The Walton Personal Philanthropy Group conducted research on how families and founders can integrate their philanthropy and impact work into existing structures, including family offices.

• For a deeper study, read The Complete Family Office Handbook: A Guide for Affluent Families and the Advisors Who Serve Them.