Banks uniquely positioned to harness philanthropic spirit

Karin Jestin, head of philanthropy at Swiss bank Lombard Odier, has a vision of society where the poor and disenfranchised gain some ground against the wealthy.

Swiss banks, fuelled by the billions of dollars held by rich clients, can be the perfect vehicles to help achieve this.

“Philanthropy has the opportunity to be a driving force in society, provided we can re-invent our social contract,” says Ms Jestin, clearly comfortable in her role as the bank’s official head of largesse and charitable giving, which she has held since 2008. “There are so many inequalities and needs out there and we can’t close our eyes to that.”

Increasingly, among private banking clients, “people with means” are looking to do their share, and they need banks to help them carry this out as effectively as possible.

Even though many private clients lost big chunks of their portfolios after market crashes and hedge fund frauds soon after 2008, the crisis did actually spark a philanthropic surge.

“I was meeting wealthy individuals who would say: ‘Even if my portfolio takes a hit, I now have an extra responsibility to help the poor, because more people are falling  below the poverty line than in easier times’,” she says, praising increasing media coverage of philanthropy.

“But I welcome it more when the media covers the impact of philanthropic endeavour, rather than the sheer size of the cheque,” ventures Ms Jestin, who served her time as a McKinsey consultant before acting as a special adviser to the Red Cross and Red Crescent and eventually working with humanitarian relief efforts in the Middle East and Iraq.

Also crucial to the change of image of philanthropy from a do-gooders’ hobby to a must-have and fashionable activity for wealthy families was The Giving Pledge, made public by Bill Gates and Warren Buffet in 2010, in a bid to persuade the world’s wealthiest to donate at least half their assets to charities.

Wealthy people were very much at ease with this concept in the US, where donations were plentiful, recalls Ms Jestin. “But when they went to Asia, the pledge was not received with the same enthusiasm. This has a lot do to with different cultures.”

With these observations in mind, Lombard Odier worked recently with the University of Singapore to establish the Innovation in Asian Philanthropy project in 2012, building on traditional networks including temples, church associations and working in the family’s home villages, with education the key focus.

In Geneva, however, with its Protestant history, giving tends to be a more discreet activity, she says, with one in four Swiss people doing regular charity work, caring for people in the community or helping at sports clubs. “Traditionally, you give it and you don’t talk about it, though this is changing slightly as philanthropists want to be role models and inspire others.”

She would like to see private banks, unconstrained by regulations restricting public authorities, to try more innovative solutions to help alleviate effects of poverty, poor health and natural disasters. “As philanthropists, we can dare,” says Ms Jestin, while stressing the bank’s role guiding enthusiastic clients through due diligence procedures before investing in radical projects.

Clients who want to make an impact need to first ask themselves whether their goal is local or global, she advises. “Do they want to deal with the symptoms of an issue, like disaster, drought or famine or go to the root causes of the issue?”

After a discussion with clients, a decision is often made to opt for the related solution of social impact investing. Here the return of the investment, as well as its impact on society, are both key considerations in the project’s selection. “First we find out which social issues concern the client,” reveals Ms Jestin. “Is it animal testing, corruption or climate change? We find out which controversies pre-occupy you and which ones you can have a genuine impact against.”

Every wealthy client, family and business interest is encouraged to get involved. “We need to stop seeing business and society as opposing forces and build on their interdependence,” she says. “Businesses can, should and will contribute to society. It is up to us as citizens to hold them accountable.”

But private banks have an equal responsibility, which they must not shun. “When I worked in humanitarian aid, we had what we called ‘sexy disasters’, which everybody was queuing up to give money to,” she remembers. “But you also have the forgotten, ‘unsexy’ disasters, which nobody notices. As an intermediary, it’s our job to help attract attention to some of the not so prominent causes.”