Wealthy Steadfast In Charitable Giving

The very wealthy have not followed the overall economy when it comes to charitable giving, have not significantly curbed their philanthropic impulses and are responsible for some two-thirds of all individual giving and about half of all charitable giving in the U.S., according to the most recent 2010 Bank of America Merrill Lynch Study of High Net Worth Philanthropy, a report conducted biannually since 2006 in conjunction with Indiana University.

The results indicate rich people are defying conventional wisdom. Logic dictates that charitable giving "follows the overall economy," said Una Osili, director of research for the Center on Philanthropy at Indiana University, and that when economic conditions improve, charitable giving improves as well. This explains the present downturn in giving-11% by some reports-nationwide.

But the current level of largess exhibited by high-net-worth households is not much different from what it was before the recession in 2005 and 2007, with 98% of wealthy households donating to charitable causes in 2009, according to the report. Giving as a percentage of income also remained fairly constant in 2009 compared to the 2008 study, with wealthy donors contributing just over 9% of their income to charitable causes last year, compared to about 11% in 2007.

If the very rich have been and continue to be a driving force behind charitable giving, what are the forces driving them? The 2010 study endeavors to provide key insights into the motives, methods, attitudes and behaviors of wealthy donors, while pointing out significant shifts and trends. The study examines new areas of research, such as donor investment risk tolerance in terms of philanthropic assets, and how charitable decisions are made within households. Donors may give to a particular charity because they are moved by how their gift can make a difference (72%), and they may cease giving due to overly frequent solicitation or being asked for an inappropriate amount (59%).

One notable trend was that high-net-worth donors have increased their reliance on accountants (up 68%) and financial advisors (up 39%). More than 90% of wealthy households were reported to initiate discussions about philanthropy with their advisors, and 85% were satisfied with the advice given, according to the report. For access to the full study go to mediaroom.bankofamerica.com.

In other news ...

As a peer-to-peer learning network for high-net-worth investors, TIGER 21 (The Investment Group for Enhanced Results in the 21st Century)-founded in 1999 and based in New York City-has some serious concerns about the future economic climate. According to a recent survey of the 140 or so entrepreneurs, inventors and top executives who comprise TIGER 21 and collectively manage over $10 billion in investable assets, 37% of respondents believe the U.S. is headed for a double-dip recession, while a full 70% believe there will be a significant market correction to the S&P 500 Index of between 10% and 30%-despite the government's pronouncement that the official end of the recession occurred in mid-2009.
When asked to rank the issues that concern them the most, survey respondents named political risk most often (13.5%), followed by credit risk on a global level (11.43%) and terrorist attack (11.2%). Nearly 37.9% believe an attack will occur on U.S. soil within one to three years. "Previously, investors looked at past volatility as the determining factor on how to allocate assets, when in fact the only risk that matters is future risk," said Michael Sonnenfeldt, founder and chairman of TIGER 21.
A majority of TIGER 21 members find troubling the lack of clarity-and government inaction-on whether the U.S. will experience inflation or deflation. Most members favor gold as a hedge for stability (though none has more than 21% of their assets in gold), and cash for liquidity. Market unpredictability and fears of further deflation have 63% of member-respondents holding more than 11% in cash. For more information about the group and its survey go to www.tiger21.com.

Empaxis Data Management, a provider of back-office services for independent investment advisors, announced the completion of its management-led buyout from Aspiriant. Empaxis administers over $20 billion in assets for multifamily offices, wealth managers and hedge funds. Stephen Van de Wetering, founder and CEO, and Doug Moromisato, COO, will continue to lead the company.

BNY Mellon has launched the BNY Mellon China "Xia Yi Dai" ADR Index (or "Next Generation" ADR Index), which is comprised of a select group of Chinese companies that chose their primary listing to be in the form of Depositary Receipts traded on a U.S. exchange. The index has 30 constituent companies with market capitalizations ranging from just under $300 million to more than $11 billion.

Half of all households with a net worth of $25 million or more, not including primary residence, are invested in hedge funds in 2010, according to The $25 Million Plus Investor, a new report released by Spectrem Group. This represents a 43% increase in hedge-fund ownership from 2007, when just 35% of the wealthiest households invested in the alternative asset class. More information can be found at www.spectrem.com.

Another report on hedge funds, Restoring the Balance, published this week by Ernst & Young with the consulting firm Greenwich Associates, showed that the hedge fund industry has largely rebounded from the financial downturn in 2008 and is responding readily to investor requests for greater transparency, which, along with government regulations, will reshape the industry's future, according to the report. For more information go to www.ey.com/GL/en/Industries/Asset-Management.

Wealth-X, a New York City-based wealth intelligence firm, has released an Asia online business development tool that provides insight and data on that region's ultra-wealthy. The prospecting information (which covers net worth, liquidity, income, hobbies, philanthropy, advisors and politics) has been collected from more than 8,000 ultra-high-net-worth individuals in mainland China, Hong Kong, Singapore and India, according to the company. For more information go to www.wealth-x.net.

WTP Advisors of White Plains, N.Y., has acquired Utah-based Interest and Penalty Advisors LLC, a tax consulting firm that specializes in tax interest recovery. IPA now will become WTP Interest and Penalty Advisors.

Early estimates indicate that hedge funds have extended their rally into October, as the Dow Jones Credit Suisse Hedge Fund Index ("Broad Index") rose an estimated 1.34% (based on 67.12% of assets in the index reporting). Nine out of the ten sectors posted a positive performance for October and the industry is up 7.41% for the year.

New York Private Bank & Trust FSB, which serves high-net-worth families, has changed its name to New York Private Trust Company to demonstrate its focus on fiduciary and trust services, according to the company, which is a subsidiary of Emigrant Bancorp.

Marshall & Swift/Boeckh has announced that MacDonald Dettwiler and Associates has signed definitive agreements to sell MSB to TPG Capital, a global investment firm with $47 billion in assets under management and with experience supporting companies in financial services. The transaction is slated to close late in 2010 or early 2011.

In addition to potential legal and reputation liability, the outside directors of companies that become involved in corporate misconduct lawsuits (e.g., the misrepresentation of information to investors) risk losing opportunities to serve on other boards, according to a recent report by The Conference Board titled Corporate Misconduct and the Market for Directorship. For more information go to www.conference-board.org.


NAREIT's REITWorld 2010 Annual Convention will be held in New York City November 15 to 17. For further information go to reit.com/Events/REITWorld2010.aspx.

The Bank of America Merrill Lynch 2010 Banking and Financial Services Conference will be held in New York City November 16 to 18. For information call 646-556-0880 or e-mail [email protected].

Sidoti's Emerging Growth Institutional Investor Forum
will be held November 16 in New York City. For further information go to www.sidoti.com.

The Brean Murray, Carret & Co. 2010 China Growth Conference will be held November 17 to 18 in New York City. For more information go to www.breanmurraycarret.com/conferences.asp.

The 16th Annual Wharton Asia Business Conference will be held November 19 in Philadelphia and will explore the theme, "Capitalizing on the Growth in the East." For more information go to www.whartonasiabusinessconference.com.

The FinanceAsia Brazil Investment Summit will be held in Hong Kong on November 30 and December 1, with a focus on Brazil's investment opportunities. Henrique Meirelles, governor of Banco Central do Brasil, will give the opening keynote address. For more information go to www.financeasia.com/brazil.

On The Move

Kilpatrick Stockton, Atlanta, and Townsend and Townsend and Crew, San Francisco, have merged to form Kilpatrick Townsend & Stockton LLP. Bill Dorris of Kilpatrick Stockton will serve as chair of Kilpatrick Townsend. Diane Prucino of Kilpatrick Stockton and Maureen Sheehy of Townsend will serve the new firm as co-managing partners.

Royal Bank of Canada has acquired the wealth management business of Fortis Wealth Management Hong Kong Limited, a wholly owned subsidiary of Fortis Bank S.A./N.V. The acquisition is said to be part of RBC Wealth Management's increasing focus on emerging, high-growth markets such as Asia.

Mark Pacchini has been appointed president of Draftfcb Asia Pacific (APAC). Based in Chicago, he will direct operations across the region while retaining his role as executive overseer of Draftfcb's largest global account, SC Johnson.

U.S.-based Squire, Sanders & Dempsey LLP and U.K.-based Hammonds LLP have approved a combination agreement, effective January 1. Squire Sanders Chairman James J. Maiwurm will be global chief executive officer and chairman. Hammonds managing partner Peter Crossley will be managing partner for Europe.

Equinoxe Alternative Investment Services Holdings Limited, Bermuda, has merged with MadisonGrey Holdings, U.S., creating a global hedge fund administrator with combined assets under administration of over $7 billion. The new U.S. entity will be called Equinoxe Alternative Investment Services (USA) Inc.

-Cort Smith