From funding projects using artificial intelligence for detecting early-stage cancer to preserving the Palace of Versailles, philanthropic advisors have to wrap their heads around myriad topics. At the same time, there’s lots of innovation happening, Lombard Odier’s global head of philanthropy Maximilian Martin, told finews.asia in an interview.
In the past, philanthropic engagement sat firmly within private banking. Now that investors are learning more about impact, and non-profit organizations are discovering finance beyond fundraising, Maximilian Martin sees a key role for philanthropy as these sectors converge.
«It is exciting that there is more of a continuum. Previously, there were classical investments and philanthropy, then came ‘Investments + ’ with ESG. Now with impact investing, the space is becoming more blended,» he told finews.asia in an interview ahead of the 15th anniversary of the private bank’s Fondation Philanthropia.
Seeing public, private, and voluntary sectors come together is not only exciting for someone having to keep the bank’s high net worth families up to date on discussions at international organizations on humanitarian, health, and climate change issues, «it is also the only way that change can be brought about,» Martin said.
Seed Financing
In contrast to governments, which are often reluctant to finance anything untested or unproven, Martin likes to see philanthropists as a «free electron in the system,» funding areas that public monies might take years to reach.
Still, making a first donation can be daunting. «If you are a person of wealth, once you have announced that you are engaging philanthropically, you will inevitably be flooded with all sorts of projects and ideas,» he said. That’s where the philanthropic advisor steps in, helping the client define what they’re passionate about and establish a strategy, similar to defining a client’s investment profile.
Guarding Anonymity
Beyond the technicalities of setting timelines, understanding the resources available, and deciding how often the philanthropist wants to visit a project, a good advisor will consider the psychology of the individual and try to quickly understand their way of doing things. After all, «the best way to sustain commitment is to design the project in a way that is aligned with who you are,» Martin said.
Giving up one’s anonymity is an individual preference, and although it can make a «huge difference for the cause.» it isn’t always necessary. Martin also sees a difference between Anglo-Saxon cultures where people are generally far more comfortable being identified as philanthropists than in continental Europe.
Bring out the Best
«I think it would be a shame to force people to be visible or vocal about something and to rupture with these traditions,» Martin said. At the same time, some causes might require someone to take a stand and say «I commit to this so others can manifest themselves.» Either way, philanthropy is a good way of opening up because «it tends to bring out the best in people,» he added.
It can also be a «fantastic way to bring the family together,» while he acknowledged it cannot repair a bad family dynamic. In such cases, there are limitations on what an advisor can do, and the client needs to understand this, he said.
For Martin, it’s also clear: «Philanthropy is certainly not simply a tool to buy yourself a position in society.» Industry associations play a key role in demonstrating the business of giving money away works only with a certain level of quality, scrutiny, and transparency.
Spectrum of Capital
As the industry evolves, it’s becoming less segregated. «What has really developed over the past years is the idea that you need to look at the whole spectrum of capital.» Non-profit and international organizations are looking for innovative financing to fund long-lasting and scalable solutions to the problems they’re tackling.
Bringing about innovation often requires collaboration, which was the case when The International Committee of the Red Cross (ICRC) worked with Lombard Odier to set up a humanitarian impact bond to benefit its physical rehabilitation program providing disabled people with prostheses, orthoses, wheelchairs, and walking aids. Beyond that, ICRC could benefit from learning how to scale the manufacturing and distribution of medical equipment, Martin said.
Children’s Rights
By looking at the entire value chain, the ICRC is dealing with both venture and structuring issues. This way, it can identify where the innovation in prosthetics lies, ask what can be produced locally, and take over the procurement of those devices, while finding ways to access reserve funds and ultimately deploy them faster.
UNICEF also recognizes a new approach to finance could be a game-changer for scaling its projects. The child protection agency is in discussion with Lombard Odier and other members of the financial industry to explore ways to do this.
Conversely, financial institutions in search of ways to ensure they don’t invest in companies engaged in child labor can benefit from methodologies developed by UNICEF.
The financial sector’s role in getting us to achieve our global sustainability goals is growing. Knowing about finance and having philanthropic money and other capital available coupled with connections to international organizations, «is where we can achieve high impact,» Martin said.
Maximilian Martin is Lombard Odier’s global head of Philanthropy and lectures on social entrepreneurship and impact investing at the University of Geneva and the University of St. Gallen. Martin is also a Senior Fellow at IMD Business School. He created Europe’s first university course on social entrepreneurship in 2003 and led the philanthropic services and impact investing offering for UBS between 2004-2009. In 2016, Springer published his book «Building the Impact Economy: Our Future, Yea or Nay.» Martin holds an MA in anthropology from Indiana University, an MPA from Harvard University, as well as a Ph.D. in (economic) anthropology from the University of Hamburg.
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