Jersey already has strong links with the GCC through individual clients and institutions, families, businesses and family offices.
With excellent professional infrastructure and skills, and expert governance, Jersey is an ideal jurisdiction for the formation and administration of philanthropic structures for clients in the GCC and elsewhere. It has the technical means and experience for excellence in this sector and special opportunities enhanced by recent statutory developments.
The climate for philanthropy
Though philanthropic donation is not confined to the rich, it is becoming an increasingly important issue for wealthy individuals and families. Many see the creation and maintenance of philanthropic structures as part of a wider process of engaging the next generation in the responsibilities of wealth management. Often they want structures that will endure for the future and possibly are self-financing. Good governance and management is required for these mechanisms within which funds can be built up for good causes and from which well-organised distribution channels can be provided.
Corporate giving is becoming increasingly significant in the GCC region. It is interesting to note that 68% of the total value of philanthropic donations in 2014 was given by corporations and corporate foundations (amounting to $605m)1. Businesses and business owners are incorporating the altruistic focus of Islam into their corporate agenda.
We are seeing growing interest in social entrepreneurship and in venture philanthropy including by younger individuals who wish to apply their business skills and the fruits of their success to helping others. Young entrepreneurs often want to make a social impact and this is clearly a growth area. Philanthropic activity is increasing within the funds sector in which sustainable investments seem to be developing as an asset class. Philanthropists are looking to the financial services sector in Jersey for greater engagement in the provision of relevant services.
Jersey already has an established role when it comes to providing trusts, foundations, expertise and management, through which much philanthropic activity is structured. Jersey is ideally placed to develop this role, aided perhaps by high levels of familiarity with clients from the Middle East and their preferred structures.
Jersey's skills and services are now reinforced by the passing, in 2014, of a Charities Law as part of a coherent programme for developing Jersey as a philanthropic centre of excellence. Trusts and foundations have an option to register as charities but they are not obliged to do so, the choice depending on the specifics of the individual case. Exemption from Jersey Income Tax may be available and, irrespective of registration or not, there is no Jersey Income Tax for structures having no beneficiaries in Jersey and with no income from land or buildings in the Island.
Jersey has breadth and depth of expertise in the provision of fiduciary services. It is also economically and politically stable, has a first class judicial system and a highly regarded regulatory regime, so that funds can be invested and managed safely, under expert governance.
As well as its professional infrastructure and skills, Jersey has an immediate opportunity to assist in philanthropy and to develop as a leading jurisdiction, through the wealth already held and administered here. Vehicles can be structured for these purposes more flexibly than is usually possible elsewhere. Further, these structures can often be managed in parallel with those for personal or commercial purposes so, for many people with existing links to Jersey, convenience and accessibility are additional attractions.
Jersey is a preeminent jurisdiction in the use of trusts and also offers foundations - two key structures used for philanthropy. Both can be highly flexible and tailor-made to meet the needs of the client concerned. Jersey's trust legislation allows for both charitable and non-charitable purpose trusts and for trusts that can be set up for purposes that are partly personal and partly philanthropic. Non-charitable purpose trusts are often used for good causes. The flexibility of trusts allows for a range of structures that can be adapted to suit specific philanthropic objectives such that a charitable trust is an attractive option, but it is not the only solution.
Jersey foundations are increasingly used by philanthropists as an alternative to trusts. Again they can be charitable or non-charitable or they can be primarily philanthropic but also capable of providing personal benefits. About one third of the foundations set up in Jersey since their launch in 2009 are used for philanthropic purposes. Their attractions include the clarity of registration whilst they offer a choice between confidentiality and publicity. They are capable of infinite duration. Further, the system of having a council of members and a guardian to ensure the council pursues the foundation's objectives, provides both flexibility and safeguards are provided, along with the ability for the economic founder to have a continuing role.
Jersey has several key strategic advantages as a jurisdiction and it has the means and purpose to become recognised as a leading global centre for philanthropic wealth planning.
1. Million Dollar Donors Report 2015, Middle East (GCC), Coutts
The GCC has become one of the most important philanthropic regions of the world. Most philanthropy is private, frequently informal and anonymous. Increasingly, however, philanthropists are choosing to speak publicly about their endeavours in an effort to inspire others to follow.
In 2015, Sheikh Mohammed Bin Rashid Al Maktoum launched Mohammed Bin Rashid Al Maktoum Global Initiatives. With an annual budget of DH1 billion, the foundation combines several organisations under one umbrella, focusing on four key areas: combating poverty; disseminating knowledge; empowering communities and driving innovation. This follows a US$10 billion endowment to the Mohammed Bin Rashid Al Maktoum foundation in 2007 and the launch of other significant charitable initiatives, including Dubai Cares.
Also in 2015, Abdullah al-Ghurair committed US$1.1 billion to a new education-focused charity. The donation, which amounts to about a third of the family's wealth, is being made over a 10-year period to an eponymous foundation to help underprivileged young people from across the Arab world.
Saudi Arabia's Prince al-Waleed bin Talal pledged his entire US$32-billion fortune to charitable projects in 2015. is foundation, Alwaleed Philanthropies, focuses on empowering women and youths, providing disaster relief, eradicating disease and bridging cultures. The foundation has already given away about US$3.5 billion in the past 35 years.
Sources: Gulf News (January 2016); Philanthropy.com (July 2015)
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