This month’s interview is with David Stead. David Stead is a Senior Private Banker at Weatherbys Private Bank. Joining from Investec Private Bank in 2019, he specialises in providing structuring, lending and investment advice to high-net-worth entrepreneurs.

How has the pandemic redefined traditional ways of charitable giving?

David: Given the current landscape and the emergence of impact investing, more and more philanthropic clients are now looking to be directly involved in the organisations and causes that they donate to.

Gone are the days that charities can rely on blind donations; engagement is now key for many donors wanting to see the difference they are making.

Is traditional philanthropy evolving more towards impact investing?

David: Yes, we are seeing a drift towards alternatives. Historically, charitable HNW families would often make regular donations to the causes close to their heart — with large charitable organisations often being the benefactors of these donations.

More frequently, these large charities are widely seen to be inefficient in distributing the capital they have and, as such, donors are looking at how they can deploy their capital directly.

Why is impact investing becoming a bigger part of a family’s charitable portfolios?

David: Ownership and sustainability are the key drivers, in my opinion. As more HNWIs structure their wealth with multiple generations in mind, there is a focus on investing not just for profit but also to deliver a positive economic and social outcome.

Private clients are now more focused on the principles behind their investments rather than making one-off donations to charitable organisations that can seem like a black hole.

Maintaining control over capital is often seen as the way to make a real difference over multiple generations.

Is there an inter-generational conflict about how to structure family philanthropy?

David: If you had asked me this question 5 years ago, I would have said no. But times have changed. 

With the rise in popularity of ESG investing, the availability of information on underlying investments and technological advancements — particularly in the medical field — has meant that younger generations are now driving the family’s impact investment.

This of course can lead to inter-generational conflict when deciding how to structure the family’s charitable activities as older generations are more drawn to traditional forms of philanthropy.

What are the positives and negatives of being open about charitable activities?

David: At its core, it comes down to privacy. Most clients prefer to keep their charitable activities private, not only for security but also since modesty is such an integral part of British values.

Although, increasingly many families also recognise that philanthropy must have some elements of publicity in order to encourage the wider population to become more philanthropic.

What other reputational considerations should families keep in mind when structuring philanthropy?

David: Unfortunately, we live in a world where our actions are not only judged through the lens of the present but are also likely to be judged against the yardstick of the future.

In this kind of environment, transparency is key when considering how to structure a family’s charitable activity. For me, the most important work is due diligence.

One only needs to look at the past to find a plethora of HMRC cases against high-profile families relating to investments that they thought to be above board.

That’s why it’s important to do research, keep abreast of issues and bring in trusted advisers.

About David Stead

David Stead is a Senior Private Banker at Weatherbys Private Bank. Joining from Investec Private Bank in 2019, he specialises in providing structuring, lending and investment advice to high-net-worth entrepreneurs.

About The Lede

This article was originally published in The Lede, Transmission Private’s monthly newsletter that tracks the future of reputation management. Featuring interviews with leading private client advisers from the worlds of law, finance, and accountancy, sign up today to receive the newsletter in your inbox every month.