When we think philanthropist, the name Chuck Feeney probably springs to mind, an Irish-American renowned for giving away his $7.5 billion (€6.6 billion) fortune.
Philanthropy has been big in the United States but in Ireland, although people have a reputation of giving generously to charity, they have not done so in a structured way, up until now.
But that is all changing, according to Deirdre Lyons, tax and financial planning specialist at Davy, who says post-recession there is more of a move towards long-term endowment funds.“For the first time there is a generation of individuals in Ireland in their 60s and 70s with significant self-created wealth. These individuals are beginning to think about if, when and how they will pass on their wealth and for some, these succession plans will involve the creation of a charitable legacy. The fund could outlast them.”
Educate their children
Philanthropy is also seen as a way for very wealthy individuals to educate their children in social and financial matters, without fully passing over the reigns of the family business. “It’s a way of bringing them on board without giving them a load of cash to do what they want with. If the family establish their own foundation the kids can help to run it, ” Lyons says.
She says a lot of the conversations she has with private clients revolve around the wish to give something back.
“For some, it’s to have a legacy that outlives them and some people are concerned with their own mortality. A lot of the scandals that have revolved around the charity sector have also made people more receptive to having their own charitable foundations because they see it as a way of ensuring controls; it’s easier to monitor and they can have maximum involvement.”
In terms of making the most of their wealth and ensuring more bang for the charity’s buck, Lyons says: “In 2013, the rules changed. If an individual made a donation prior to 2013 it used to be that they would get a tax write-off. Now the charity gets the benefit of an income-tax credit, and can claim back some of the income tax that’s being paid by the donor. About €1 million becomes €1.4 million in the hands of the charity. If they’re making the donation from their own company, then the company will get a write-off against trading profits, so that can be appealing for very successful companies. It has another benefit of sheltering trading profits.”
Establishing a charity on an individual basis isn’t easy, however, and involves approval from the Revenue Commissioners, registering with the charities regulatory authority, obligations to the Companies Office, as well as a lot of administration.
“That’s a good thing,” Lyons says. “Even for very wealthy clients, setting up a charitable organisation is very difficult.”
In order to facilitate clients that were in this boat, The Davy Charitable Foundation Service (DCFS) was established.
“This provides a charitable foundation platform for clients who wish to create their own giving strategy and monitor the impact of their donations over time. The DCFS platform enables our clients to have the user experience of having their own charitable foundation without the upfront costs,” Lyons says.
The Community Foundation offers a similar service. It connects donors with non-profit organisations that can make the best use of their cash. They work with professional advisers to find the best charitable solutions for their clients and have working relationships with more than 3,000 non-profit organisations in Ireland.