Transcription

• Julien Menegalli

  Good morning everyone, I'm Julien Menegalli and you're listening to Banking Insider, a podcast boosted by Indosuez Wealth Management, broadcasted on paperjam.lu and delano.lu. Banking Insider tells you everything you need to know about investments and today we will talk about philanthropy in a wealth planning perspective. In order to do so, I'm pleased to welcome Noémie Ohayon and Christophe Muller-Becker, who are both wealth planners at Indosuez, Noémie in Switzerland and Christophe Muller-Becker here in Luxembourg. Good morning, thanks to be here today.

• Noémie Ohayon

  Hello Julien.

• Julien Menegalli

  To make things clear for our listeners, I would like to start with a definition. Noemie, how could you define the philanthropic commitment in a wealth and succession planning perspective?

• Noémie Ohayon

  Thanks for your question, Julien. In one sentence, philanthropy can be defined as all private voluntary actions aimed at public utility, characterized by the important factor that the philanthropist is disinterested. The pure desire to contribute to a positive action for the society is the center of the philanthropy. In particular, philanthropy fits naturally into a wealth and planning and inheritance strategy. Wealthy individuals think about their immediate and future needs and those of their families. They think about investments and they also think about how they wish to allocate to a cause dear to them. When it comes to organizing their wealth after their disease, they wish to provide for their relatives, spouse, family, descendants. But they also think about how they want to leave their legacy behind them by giving substance to their values and personal ethics. To conclude, Julien, philanthropy goes above one's personal goal. Participate to organizing, structuring, and the transmission of wealth. And it builds also the family cohesion around projects that the family members can identify themselves.

• Julien Menegalli

  Sure, it's a way to leave a trace on the planet. By the way, Christophe, what could you add about that?

• Christophe Muller-Becker

  It would be more... An expression of philosophy is altruism. So, solidarity. And in the meantime, what we can define as philanthropy is the necessity of the legal framework to be used in this goal to have the main impact. What is the theme you want to achieve within your philanthropy objective? So, we have the... the philosophy aspect and the concrete aspect regarding the legal framework that we need to take into consideration. And I think we will discuss about that later.

• Julien Menegalli

  Philanthropy is a way where the philosophical aspect and the legal aspect crossed and merged.

• Christophe Muller-Becker

  Exactly.

• Julien Menegalli

  Thank you, Christophe. My second question is, I really would like to understand what's going in the head of your customer, what decides them to... launch some kind of a philanthropic initiative. So, Noemi, what can you say about that? What will your customers say when they come to you?

• Noémie Ohayon

  You know, Julien, there are as many motivations for philanthropic action as there are philanthropists. So many different motivations. But philanthropy gives meaning to one's assets, adds substance to one's value. In a world facing societal and environment challenges, Having the opportunity to influence the world through your wealth is a great motivation of the philanthropists we meet. A second motivation is that by giving back to the society, you give back what you have received. Obviously. It's a very important motivation for the philanthropists. Another driving force behind philanthropy is the strong personal feeling for a cause. I give to a foundation active in medical research against cancer because, for example, I was personally affected by this disease.

• Julien Menegalli

  You talk about the fact that giving back to what society gives us. Can you say more about maybe, I think Patagonia did something in that way?

• Noémie Ohayon

  Absolutely Julien. Patagonia is a very interesting example. His founder, Yvon Chouinard, has donated its entire company to a trust. And the Trust's goal is to donate all the profits to an association fighting the environment crisis and nature protection. It gives sense to the wealth of his founder.

• Julien Menegalli

  Sure, makes sense. Christophe?

• Christophe Muller-Becker

  Yes, what we see in our day-to-day job with the client, we discuss philanthropy, but also within the scope of family governance. What we see is the necessity to go through the generation with the same value and commitment to the goal that is set by the patriarch or the young generation. So we have to... to see that in a concrete way, how it works with the family governance, how we do our philanthropy, what is the goal. And so we see that it's like glue between the member of the family, also having a lasting positive impact in the way after the death of the founder, as Noemi mentioned before. So that's very... A concrete way to do that and to... build a relationship with the client and the family members on a long way.

• Julien Menegalli

  Yeah, for sure. When we were listening to you, we heard some big values like humanity and the fact that living a trace, like we said before, living a trace on the planet. So it's some big subject, big topic where a lot of people are involved. So do you remark that this notion, philanthropic, that you're trying to do something about it? is more and more bigger in the sense a lot of people are more concerned by this notion right now.

• Noémie Ohayon

  Yes, definitely. Philanthropy is currently a fast-growing sector with significant financial resources. There are several signs of this trend. The number of charitable foundations around the world has multiplied in recent years, and the amount of donations has risen sharply. But there are significant differences, particularly in terms of geography and generations. There were major differences between Anglo-Saxon and European countries. Anglo-Saxon countries are based on the principle of state subsidiarity, leaving a great deal to private initiatives. So there is a deeply rooted tradition since decades in these countries. In continental Europe, which are traditionally statists, the role of charitable foundation is not as preeminent. However, philanthropy has been emerging more visibly in Europe over the last 10 years.

• Julien Menegalli

  It's a political aspect. Absolutely. Makes the difference.

• Noémie Ohayon

  A huge difference. Yeah. But there are also generational differences. For example, millennials and Generation Z are reshaping philanthropy and ushering in a new era of giving. younger generations of philanthropists are quick to mobilize themselves for causes they believe in. They are sharing their cause on social medias and raising funds through crowdfunding. So this is giving a new momentum to philanthropy nowadays, which is constantly reinventing itself, which is a big, big...

• Julien Menegalli

  For sure, it's true that it's really easy today to donate thanks to my smartphone. I can send money and have action in that way. Thank you, Noemi. Maybe, Christophe, you want to add something?

• Christophe Muller-Becker

  Yes, yes. And if you see the contrast between the In the past century with all the philanthropists like Carnegie or Getty, you see that now it's moving faster. Even if we focus more today with big philanthropists like Oprah Winfrey making a school in South Africa or empowerment women, for example. But what we see also in our practice is that our client with the COVID crisis and the conflicts in Ukraine, for example, is not as active as we were before. They understood that it was an awareness of the end of the life and end of the business. The business can collapse and it's the end. So what is after, what I left for my legacy, so philanthropy is now also considered more and more. I share what Noemi said before.

• Julien Menegalli

  Thanks both of you for your answer. Now let's play a little bit. Let's have some fun. I would like to say some misconceptions from the people and I would like you to tell me if it's right or wrong. The first misconception is the fact that philanthropy only concerns wealthy people. Noemi, what do you think about that?

• Noémie Ohayon

  This is false misconception. Philanthropic commitment of Melida and Bill Gates, as Christophe said, through their foundation is everywhere in the media today. This brings to the idea that philanthropy is only for wealthy people, which absolutely doesn't reflect the reality. Very large donors are just one aspect of the philanthropy. A lot of charitable foundations would not exist with the small donors giving 100 francs every year, which is the case for very large foundations. And philanthropy is often reduced to giving money, which is absolutely not the case as well, because philanthropy also includes voluntary work in small communities.

• Julien Menegalli

  Giving my time.

• Noémie Ohayon

  Giving your time, exactly, instead of giving money. Could be both, actually.

• Julien Menegalli

  So true.

• Noémie Ohayon

  So it brings us to the idea that philanthropy is not just made up of large rivers, but also of small streams.

• Julien Menegalli

  Well, all right. Misconception number two, cliche number two. After a gift, it's impossible to know how and for what my donation will be used. Is it right? Is it wrong still, Noemi?

• Noémie Ohayon

  It's both true and false, actually. It is often difficult to determine how a donation, a gift of 100 euros to an NGO is really used without raising it. Donors are indirectly contributing to the high administrative and operating costs that NGO has to face. But donors first concern is my donation should have a direct impact on the field, which is very important for them. So as you can see, charitable foundations need to be transparent, to raise funds, to maintain the trust of donors and to continue their activities. That's why the big NGOs have to publish details, data to know where the gifts are going.

• Julien Menegalli

  They have to be transparent.

• Noémie Ohayon

  To be transparent, to make also quality controls throughout the implementation of their projects. So it gives more transparency to the philanthropy nowadays, which is very important.

• Julien Menegalli

  Great. Thanks for this answer, Noemi. Cliché number three for you, Christophe. Philanthropic commitment is not a bank business. What do you think about that?

• Christophe Muller-Becker

  False, false, false. Indeed, as I mentioned before, when we are talking to clients and involving, when we are involved in family governance and so on, At the end of the day, philanthropy is one of the topics we have to deal with, because it is a request of our clients, as we mentioned before, especially for the young generation, or because of the Covid crisis, because an event showed up and we understand that philanthropy can be also used. That's very, very important. And I think it's also a... within the global trend of ESG and social responsibility of our client and on the top of that of our bank, of our group, in order to be involved in this type of concrete topics.

• Julien Menegalli

  So philanthropic is really in the DNA of a bank if I understand.

• Christophe Muller-Becker

  Yes, yes, we can say that.

• Julien Menegalli

  always with you Christophe cliche number four misconception number four philanthropy is a disguised way and method to get tax benefits right wrong it's

• Christophe Muller-Becker

  False.

• Julien Menegalli

  We can hear that in a lot of countries. Yeah,

• Christophe Muller-Becker

  for sure. Tax benefit, tax incentive is just a consequence of the philanthropy. It's not the principal aim because the philanthropist's aim is altruist. So the cash he gives is in a way lost for him. And the tax consequences were decided by the tax authority or legal authority. just not to be a blocker to the people who want to give to a philanthropist object. That's quite clear.

• Julien Menegalli

  Thanks for your answer. We're going to start right now the third part of our podcast. It's a more pragmatic part in a way. I would like to know, Noemi, if I want to start a philanthropic initiative, where do I start? How can I do? Let me know how to start this, please.

• Noémie Ohayon

  You want to know what is the first step when you want to create a charitable vehicle? It's to choose a theme, actually. Social and humanitarian aid, education, medical research, culture, environment. The purpose of the foundation is the central point in setting up a foundation and should be easy to identify, clear to formulate. and serve as a working basis of the foundation. The purpose of the foundation should also be general enough so that the foundation does not lose its relevance over the years. And to define the purpose of the foundation, it may be useful to seek advice from a specialist. Which is what our wealth planning team do actually. We are helping and combining the clients wanting to set up a philanthropy vehicle. So as a team, we help and provide guidance to the philanthropist and his or her family to identify a purpose that is satisfactory to all family members involved.

• Julien Menegalli

  All right. Christophe, what are the concrete modalities of what Noemi just said?

• Christophe Muller-Becker

  In a nutshell, we can divide in three parts. The first one is the most common, to give money to an NGO you have in mind. And that's quite easy. The second part is using a philanthropy platform. For example, in Belgium, Fondation Roi Baudouin, in France, Fondation de France, in Luxembourg, Fondation de Luxembourg. So these platforms allow you to use their resources, for example, choosing which project you want to help and so on. And the last one, the more complicated and time-consuming, is having its own philanthropic vehicles. So you do it from A to Z and it takes time and needs an important commitment and involvement of the fundator because you do everything by yourself even if you are for sure helped by a lawyer, accountant and a wealth planner as we do it. So we can summarize it within these three. Three ways to do it,

• Julien Menegalli

  yeah. You talked about Belgium, France or whatever, Brazil, I don't know. It seems that location is important.

• Christophe Muller-Becker

  Exactly.

• Julien Menegalli

  What can we say about that?

• Christophe Muller-Becker

  As Noemi mentioned before, when we discuss with the client, we try to help him regarding the location, how to do it. For sure, when you have just a philanthropic project in France, you are French, it makes sense that your philanthropic vehicle is based in France. So that's what we do on a day-to-day basis with our colleagues in France, Brussels, Switzerland, in order to help our clients in a better way.

• Julien Menegalli

  Great. Noemi, in your day-to-day business, how do you help and support your customers to integrate philanthropic aspects to their wealth planning?

• Noémie Ohayon

  As you already mentioned, I work in Geneva in Switzerland in the wealth planning team. Philanthropy in Switzerland has a historic tradition. It has a very liberal legal and regulatory framework that facilitates philanthropic activities. And the foundations in Switzerland are highly international network. Many foreigners, donors live in Switzerland. and a lot of people are donating internationally and Switzerland is the domicile of major international foundation A charitable foundation created under Swiss law means that you can pursue your goals not only in Switzerland but also abroad.

• Julien Menegalli

  I heard by the way that Indosuez participates to the creation of the Fondation Climat here in Luxembourg.

• Christophe Muller-Becker

  Yes, exactly. End of April we just joined as a pioneering founder of the Fondation Climat created by the Fondation Luxembourg. Yes, exactly. It's not the same as for sure the philanthropy project of our client, it's a philanthropy project of the bank, but it's very important for us to do that because we are more legitimate to do our business regarding philanthropy if our own group.

• Julien Menegalli

  support such a such a philanthropy subject yeah let's precise that this initiative is really different from the day-to-day business you do for your customers exactly exactly alright Rémi Christophe thanks a lot for your clear explanation dear auditor we'll see you soon for a new episode of the podcast Banking Insider available on paperjam.lu delano.lu and all your favorite streaming platforms have a nice one everyone This podcast is for general information purposes only and does not constitute an investment recommendation. Before making any decision, it is your responsibility to ensure that the product or service corresponds to your personal and financial situation. Any investment decision involves risks, including a loss of capital. Seek advice for professionals.