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The wealthy are not tax dodgers; they’re a positive force in society



Working with hundreds of financial institutions across 35 countries to interview thousands of millionaires and high net-worth individuals, Scorpio Partnership has an almost unparalleled understanding of what makes the wealthy tick. Managing director Cath Tillotson describes how philanthropy and responsible investment keep cropping up as key issues in its research.

This piece originally featured in Blue & Green Tomorrow’s Guide to Philanthropy & Giving 2013.

Explain a bit more about Scorpio Partnership.

We’re a strategy firm, which means most of our clients in financial services, we’re telling them how to expand their business, find new markets and change the way they interact with their existing customers.

A few years ago, we noticed a lot of wealth management institutions were starting to talk about philanthropy as an area of business practice. We got involved in a number of different strategy projects, around understanding the process of philanthropy and where wealth management firms fitted in alongside lawyers and accountants.

Click here to read The Guide to Philanthropy & Giving 2013

We’ve also done a lot of research with major donors of different levels of wealth. So from major donors at the high net-worth level who are perhaps part of a giving circle, up to major donors who have billion dollar foundations.

We’re trying to understand what motivates them, and what they see as the future of philanthropy and philanthropic advice.

We’ve interviewed probably about 10,000 millionaires and multi-millionaires face-to-face, and we’ve done quantitative research with probably another 20,000-30,000 on top of that. So we’ve got a very good insight into what makes the global wealthy tick, and philanthropy keeps coming up.

You’ve also done research into responsible investment and wealth creation. What are the main trends that you identified?

That work was spurred really by the fact that there was a lot of pressure a year ago. It perhaps came to a head with the Give it Back George campaign, which appeared to be casting wealthy individuals who gave money as being motivated by dodging taxes. We, in all of our research with thousands of high net-worth individuals, just couldn’t see that as a profile that we regularly came across.

Most of the wealth creators we spend time with, and most of the wealth creators who respond to our quantitative work, are very interested in wealth creation as a concept not just for themselves, but for the businesses that they run and the organisations they work with. We just couldn’t see how this profile of tax dodging fitted against that.

If you talk to a wealth adviser, they will tell you that a wealthy person is only interested in securing their wealth for their family. If you talk to the government, there’s more of a slant on making them pay the appropriate levels of tax. If you talk to charities, they characterise wealthy people as those who put restrictions on the way that they give and can be quite awkward to deal with in terms of information flows.

None of this added up, so we did some specific research looking at what responsible wealth creation meant. We call it a Responsibility Index, which basically asks wealth creators to rank how important things like securing wealth for their families, paying taxes, charitable activity, obeying international laws, the environment and a whole range of different factors.

What we found was that people that we deal with everyday regard all of those factors important. And in fact, securing wealth for the family and paying taxes were broadly on a level. Now obviously, they put slightly more emphasis on family than they do on tax, but actually you’re looking at somewhere between six and eight out of 10 for all of these factors

If you then go to advisers and ask the same questions, you find that advisers significantly overweight the importance of family and significantly underweight the importance of responsible investing or the environment or giving money to charity. What that said to us is that there’s an imbalance about the way that society perceives wealthy individuals, and if we had a better understanding of the person in front of us, we would actually see that they’re quite a positive force in society and not the stereotypes that sometimes get put forward.

Why and how do you think this perceptions and stereotypes have been created?

I think it’s because inevitably, any individual, when they are interacting with one authority or one adviser, is focusing on a particular issue.

When you go to see your financial adviser, you are going to be talking to them about pensions and school fees and so on. It is about your family; it is about that particular aspect of your life. When you’re interacting with the authorities, it’s probably around tax returns.

People focus on the thing that they see, and they forget the individual in front of them is actually much more rounded. And if we understood that person in a much more rounded way, then we could balance products and services accordingly. At the moment, the individual has to go out and interact separately on all of these issues.

Your research says, “Responsibility is far more important to wealth creators than the wealth management industry gives credence today.” Why do you think this is?

I think it’s because wealth advisers will focus on one aspect, and that is the most important thing. And if that is just one out of 10 or 20 or however many factors, they’re kind of missing the point. They could just as easily have a conversation with that person about philanthropy and social investment. And those would be equally interesting topics.

If you want to deliver a holistic wealth solution, you should be comfortable having those conversations, because the person in front of you is interested. If we look at our work that we’ve done in the philanthropic space – particularly with very major donors – they are much more in tune with the concepts of venture philanthropy, social investment and impact investment, however you wish to define those terms, because they understand that if you can put some kind of profit motivation into the equation, it brings more efficiency into the model.

When you’re giving money away, you want to maximise the efficiency. You want to make sure that everybody’s on the same page with the same motivations, so it’s a natural step for many major donors to say that there are some problems that are best solved with charity, and there are some problems that would be better solved with an equation that has profit motivation in there.

Is there a difference currently between ethical, sustainable or responsible investment and philanthropy?

They’re two very different activities, but they are certainly related. Philanthropy, at its purist, is about alleviating suffering. That’s fundamentally what it is, but there are many different types of problems and those problems are usually complex, so if you want to scale up philanthropic activity you need to motivate a wide group of people – and that is a very difficult challenge.

One philanthropist’s interests are not the same as another philanthropist’s interest. However, if you can introduce a common motivation – and profit is a very good one, and has worked for many thousands of years – then you can align people’s interests. But in order to get the process started, you need seed capital. That seed capital will almost certainly have a philanthropic goal and initially will probably be philanthropic capital, but that capital has an investment motivation – by which I mean that its purpose is to prove a concept and engage others in the investment.

So the philanthropist says, “We can help to make this work, and we can prove it, test it, and then move it across into the mainstream.”

Further reading:

Philanthropists urged to take more risks and ‘talk about failure’

Impact investment and philanthropy: we need to ‘redefine how we all think about returns’

Ben Goldsmith on fixing the environmental crisis through philanthropy

The Guide to Philanthropy & Giving 2013


How to Build An Eco-Friendly Home Pool



eco-friendly pool for home owners
Licensed Image from Shutterstock - By alexandre zveiger

Swimming pools are undoubtedly one of the most luxurious features that any home can have. But environmentally-conscious homeowners who are interested in having a pool installed may feel that the potential issues surrounding wasted water, chemical use and energy utilized in heating the water makes having a home swimming pool difficult to justify.

But there is good news, because modern technologies are helping to make pools far less environmentally harmful than ever before. If you are interested in having a pool built but you want to make sure that it is as eco-friendly as possible, you can follow the advice below. From natural pools to solar panel heating systems, there are many steps that you can take.

Choose a natural pool to go chemical free

For those homeowners interested in an eco-friendly pool, the first thing to consider is a natural pool. Natural swimming pools utilise reed bed technology or moss-filtration to naturally filter out dirt from the water. These can be combined with eco-pumps to allow you to have a pool that is completely free from chemicals.

Not only are traditional pool chemicals potentially harmful to the skin, they also mean that you can contaminate the area around the pool if chemical-filled water leaks or is splashed around. This can be bad for your garden and the environment general.

It will be necessary to work with an expert pool builder to ensure that you have the expertise to get your natural pool installed properly. But the results with definitely be worth the effort and planning that you have to put in.

Avoid concrete if possible

The vast majority of home pools are built using concrete but this is far from ideal in terms of an eco-friendly pool for a large number of reasons. Concrete pools are typically built and then lined to stop keep out any bacteria. This is theoretically fine, except that concrete is porous and the lining can be liable to erode or break which can allow bacteria to enter the pool.

It is much better to use a non-porous material such as fibreglass or carbon ceramic composite for your pool. Typically, these swimming pools are supplied in a one-piece shell rather than having to be built from scratch, ensuring a bacteria-free environment. These non-porous materials make it impossible for the water to become contaminated through bacteria seeping into the pool by osmosis.

The further problem that can arise from having a concrete pool is that once this bacteria begins to get into the pool it can be more difficult for a natural filtration system to be effective. This can lead to you having to resort to using chemicals to get the pool clean.

Add solar panels

It is surprising how many will go to extreme lengths to ensure that their pool is as eco-friendly as possible in terms of building and maintaining it but then fall down on something extremely obvious. No matter what steps you take with the rest of your pool, it won’t really be worth the hassle if you are going to be conventionally heating your pool up, using serious amounts of energy to do so.

Thankfully there are plenty of steps you can take to ensure that your pool is heated to a pleasant temperature while causing minimal damage to the environment. Firstly, gathering energy using solar panels has become a very popular way to reduce consumption of electricity as well as decreasing utility bills. Many businesses offer solar panels specifically for swimming pools.

Additionally, installing an energy efficient heat pump or boiler to work in conjunction with your solar panels can be hugely beneficial.

Cover it!

Finally, it is worth remembering that there are many benefits to investing in a pool cover. When you cover your pool you increase its heat retention which stops you from having to power a pump or boiler to keep it warm. This works in conjunction with the solar panels and eco-friendly heating system that you have already had installed.

Additionally, you cover helps to keep out dirt and other detritus that can enter the pool, bringing in bacteria. Anything that you can do to keep bacteria out will be helpful in terms of keeping it clean.

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4 Ways To Get a Green House in 2018




green house and homes
Featured Image From Shutterstock - By

Demand for green houses is surging. In 2020, almost 20% of all homes on the market will be green.

If you would like to buy a green home, this is a great time to look into it. Prices are still pretty low and there are a lot more financing options available than there were right after the recession.

If you’re thinking about buying a house, now could be a very good time to make the move! A number of factors in the housing market right now mean that you might be able to afford your dream home. Although in many parts of the country house prices are still rising, if you do your research and plan wisely, there are lots of good schemes to help you get your foot on the property ladder, or trade up to the house you’ve always wanted.

Interest Rates and Stamp Duty

Although the Bank of England raised interest rates by 0.25% recently, they remain very low, which is good news if you’re thinking of taking out a mortgage. However, rates may not stay low and it’s predicted that there’ll be a further rate rise during 2018, so don’t wait too long. Another factor that’s going to help first time buyers in particular is the Chancellor’s decision to abolish stamp duty for first timers purchasing properties for under £300,000.

Different options

For many people looking to buy a green home, raising a deposit of between 5% and 20% may not be a realistic option, in which case there are a growing number of schemes to help. Increasingly popular are shared ownership schemes, through which the buyer pays a percentage of the full value of the property (typically between 25% and 75%) and the local council or a housing association pays the rest, and takes part ownership. This is suitable for buyers who may struggle to meet the up-front costs of buying outright. There will often be a service charge or management fees to pay in addition to the mortgage. The Government’s Help To Buy scheme is a good place to start looking if you’re interested in this option. This scheme is now available to people looking to buy green homes too.

ISA Options

If you’re still saving for a deposit, another scheme is the Help to Buy ISA. You can get a 25% boost to your savings on amounts up to £200 per month with this scheme. It’s only open to first time buyers and you can claim a maximum of £3000.

Other costs

Green home buyers are going to run into a number of other ancillary costs, most of which are common to other homebuyers.

When calculating how much you can afford, it’s vitally important to remember that buying a house comes with a whole host of other costs. Depending on the cost of the property that you’re buying, you may have to pay stamp duty of anywhere between 1% and 5%. There’ll be estate agents fee if you’re also selling a property, although there are a wide range of online estate agents operating such as Purple Bricks or Right Move that have lower fees than traditional high street companies. Conveyancing costs to a solicitor can add another £1000-£3000 and you may need to take out life insurance and hire a moving firm.

There are other initial costs such as, fixing parts of the home that aren’t upto your taste. Getting new furniture to fill up all the new-found space in your new home. If you are moving away from the city, you need to consider the cost of transportation as well, as it can take up quite a lot over time. Take your time, do your homework and shop around and soon you could be getting the keys to your perfect home.

I hope this article was useful for you to learn more about the basics that you need to be aware of before you start the process of buying your first home. If you have any doubts with regards to this, let us know through the comments and we will be glad to help you out. If you have any suggestions regarding how we can improve the article, let us know them through the comments as well for us to improve.

Do you have any other reservations against buying your first home? Do you see your house as an asset or a liability? Do you think it is important for everyone to get themselves a new home? Let us know through the comments.

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