How does philanthropy fit into financial advice?

Speaking with ifa, Shadforth principal private wealth adviser Phillip Gillard explained that the combined effect of Australian families gaining more wealth and the intergenerational wealth transfer is driving an increase in philanthropy among clients, meaning advisers need to be prepared to facilitate such endeavours.

“We are seeing a significant rise in philanthropic interest, driven by the increasing wealth of families – including from generational transfers – and a heightened awareness of global and local challenges. Many affluent individuals recognise the widening wealth gap and feel a responsibility to contribute meaningfully,” Gillard said.

“For many, giving is about more than just financial support, it’s about impact. They want to align their wealth with their values, whether by supporting grassroots initiatives, funding research, or leaving a legacy through structured giving.

“Our role is to help clients determine how philanthropy fits into their broader financial strategy, ensuring their contributions are both meaningful and sustainable.”

He said that once a client reaches the point where their investments can comfortably sustain their lifestyle and future needs, many choose to explore how they can make a positive impact with their excess wealth.

“At this stage, clients often reflect on their legacy. Some want to support their children or grandchildren, while others look beyond their family to make a broader societal impact,” Gillard said.

“Philanthropy becomes a natural part of the conversation, allowing clients to turn their success into something truly enduring.”

Ben James, Escala Partners head of advisory, told ifa that Millennials and Gen Z inheriting their parents’ wealth is a significant driver of this trend as the next generation looks for ways to “merge philanthropy with their investment strategies, supporting organisations that align with their ESG values”.

He further suggested that, as the wealth transfer takes place, philanthropy related to estate planning is expected to accelerate with the next generation.

However, the benefit is not only societal. Amanda Fong, an investment adviser at Escala Partners, pointed out that many charitable contributions are tax-deductible, “providing an added incentive for incorporating philanthropy into financial plans”.

Gillard suggested that engaging clients about philanthropic interests can also act as a connection point between advisers and clients.

“It strengthens our relationships by fostering a shared commitment to giving back. Beyond financial returns and asset values, philanthropy creates a meaningful and lasting impact for clients and their broader families,” the Shadforth principal said.

When it comes to implementing clients’ philanthropic wishes, Gillard said there are a number of routes they could take, whether that be through a private ancillary fund, a direct donation, or a contribution of their time and experience to causes close to them.

“Philanthropy is deeply personal, so our role is to facilitate informed and strategic giving. We first ensure that clients’ personal and family goals are fully secured – using conservative assumptions and factoring in potential financial shocks – before exploring opportunities for charitable giving,” he said.

“The key is to structure their philanthropy in a way that aligns with their long-term vision, financial objectives and values.”

To help facilitate such endeavours, the co-founder and chief investment officer of the Third Link Growth Fund, Chris Cuffe, said that investment options, such as the Third Link Growth Fund, give clients the ability to have a positive social impact while also providing them with strong financial returns.

“Investors are increasingly drawn to charitable and values-based investing. They rely on their professional advisers to guide them in structuring their giving while maintaining financial stability,” Cuffe said.

“Many investors want to incorporate responsible investment strategies but hesitate due to concerns about complexity.

“This model allows investors to benefit from high-quality professional investment management and competitive returns while simultaneously supporting charitable causes – without any reduction in their investment capital or returns.”

While the fund invests in a portfolio of Australian equities, according to Third Link, the unique fee structure is designed so that all underlying investment managers in the fund rebate their management and performance fees.

Although the fund does charge a management fee, all net proceeds after expenses are donated to Third Link’s nominated charities. According to Third Link, the fund has delivered a 10.3 per cent per annum return after fees since 2012.