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Global Family Office Report reveals impact investing has 'come of age?

By James Beech

A remarkable 62% of family offices are now active or expect to be active in impact investing, the new Global Family Office Report by Campden Wealth in partnership with UBS reveals.

Even the 30% of family office principals surveyed who were not active now said this was likely to change in the future.

The study found Millennials were a key catalyst with two-thirds of participants agreeing families with children born after 1980 will see an increase in requests to participate in impact investing.

However, the change was not solely generational. A significant 47% of family offices believed that impact investing was a more efficient use of funds to achieve social impact than philanthropy.

Supporting charitable causes continued to be a priority for many family offices. The average level of philanthropic giving by family office respondents in 2016 was 2.5% of their assets under management (AUM) - equivalent to almost $19 million.

One-third of participants were likely to increase their philanthropic allocations while another two-thirds said they would remain the same. 

Education was the biggest beneficiary of family office philanthropy this year, replacing Children & Youth at the top of the table.

Stuart Rutherford, director of research at Campden Wealth, said the levels of active and intended impact investing uncovered by the report was “a coming of age story” and very significant in terms of tangible progress within the family office community.

“The drivers of it are Millennials, but not just Millennials. There's something more deliberate or calculated going on with just about half of family offices believing that impact investing is a more efficient use of funds to achieve social impact than philanthropy, which we've seen in other studies that we've conducted.

“That is obviously going to be a longer-term player than just a generation coming through. So I think this is a fairly fundamental finding with some really powerful drivers behind it.”

Rutherford said part of the rationale behind the view of family offices, that impact investing was a more efficient use of funds to achieve social impact than philanthropy, was because having a somewhat commercial venture would generate its own revenue.

“It won't just take cash, it will generate its own cash. And obviously that gives it the ability to do more or be more sustainable. So I think that is part of the headspace that people answering that way are thinking or feeling.”

Philip Higson, vice chairman, UBS Global Family Office Group, noted that impact investing still made up a small percentage in portfolios.

“It may be that some of these activities are more directly being managed by the family office in the same way that their philanthropic activities are. We might know of the activity but we don't often know about the scale. So we've seen a lot of talk about it, but we haven't seen as much in, on the monthly statement. It is a much smaller line item.”

The data quoted in the Global Family Office Report 2016 comes from a quantitative, online survey of 242 family offices conducted by Campden Wealth between February and May 2016. The average assets under management of participating family offices was $759 million, and the regional split was as follows: North America (32% of respondents), Europe (40%), Asia-Pacific (19%) and Emerging Markets (9%). The majority (75%) of respondents were single family offices.