In a world of successful tycoons and investors exists a generosity that knows no bounds. Dustyn Molver, Client Services Director at Equiom Guernsey, examines those who put their accumulated riches to good use through philanthropic giving and outlines the options available to help them protect their wealth ensuring it reaches the charitable purpose for which it was intended.
Coordinated philanthropy exists for those in our society who have accumulated an excess of wealth during their lifetime. We’ve seen some of the largest philanthropic donations from tycoons like Bill Gates who has given to the Bill and Melinda Gates Foundation and global investor, Li Ka-shing, who has donated to his own foundation. These are two examples of hundreds of other wealthy individuals who have done the same.
Over the past decade, UK philanthropists have given £15 billion to charities and the figure has steadily risen year on year, according to statistics from Coutts Million Pound Donors Report 2017. In the Channel Islands, we are well-equipped to address the complex structuring needs of these individuals and there are several solutions available which I will outline below.
One option is to set up a charity. In Guernsey, there is no limit on the funding that charities can receive, but charities which have gross assets and funds of under £10k or annual gross incomes of less than £5k are exempt from registering with the Office of the Registrar under The Charities & Non-Profit Organisation (Registration) (Guernsey) Law, 2008. There are currently 13 descriptions or purposes which define a charity in the UK, whereas Guernsey has a more widely drafted charitable purposes definition.
A charitable purpose means for the benefit of society, or any class or part of society and, without limitation includes any organisation established solely or principally for social, fraternal, educational, cultural or religious purposes. Such entities may take a variety of forms, for example:
- A Charitable Trust – A charitable trust is a tax efficient way to pass on your wealth for the intended purposes.
- A Limited by Guarantee Company – This is a corporate entity that restricts the liability of its members to the amount of their guarantee. If used for charitable purposes, the articles of incorporation will prohibit dividends being paid to members, which enables all funds raised to go to the charitable cause for which it was created.
- A Guernsey Foundation - A foundation is an entity with a separate legal status, which has long been associated with philanthropy. With characteristics akin to trusts and companies without the differentiation between beneficial and legal ownership, it provides a very flexible option for a variety of structuring needs.
Modern philanthropists wish to achieve real impact and not be passive bystanders, while still maintaining anonymity. Often philanthropic entities are run in conjunction with other estate planning so that structuring brings together different parts of wealthy families for a combined purpose. This can assist in preparing the future generations for their avocation and provide the opportunity to pass on family values. Often these represent the families’ passion and tradition for doing good.
Guernsey is well regulated and held in high regard by wealth advisors worldwide, who require robust, structuring options from a stable jurisdiction. At Equiom, we are finding that clients and their advisors increasingly have structuring needs that go beyond tax, asset protection, security and estate planning. Guernsey’s dedication to transparency along with its expertise in a range of industries make it a global leader in wealth management and we are proud to be a local business that is at the forefront of such an offering.
Please contact Dustyn Molver about structuring options for capital to be put to work for philanthropic purposes.
This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this [article/publication] or for any decision based on it.