Tee Fong Seng, vice chairman and head of ultra high net worth, private banking, Asia Pacific at Credit Suisse explains how you can understand and maximise opportunities in relation to philanthropy.
Date: June 2011
What are some of the main ways philanthropy differs between Asia and the West?
Philanthropy has gained particular prominence in Asia over the past two decades due to the enormous increase in economic power and wealth in the region. But there is a stark difference in Asian views on philanthropy compared with those in the US or Western Europe – for example in terms of how it translates into more than signing a cheque.
Until recently, philanthropy was – and largely still is – seen as a private matter in the Asian context. We seldom hear of the region’s philanthropic equivalents to the likes of Bill Gates and Warren Buffett, yet that does not mean they do not exist. In fact, Asia’s ultra high net worth individuals (UHNWIs) are among the most generous. According to the 2010 Hurun Philanthropy list in China, for example, the top 100 philanthropists have given an average of 6% of their wealth, or USD3.3 billion, to charity over the last five years.
There has also been a rise in philanthropists coming out publicly, following "The Giving Pledge" campaign by Gates and Buffett. We have recently seen some examples of UHNWIs in Asia who have pledged to donate a significant portion of their wealth to charity.
In the West, family offices tend to approach philanthropy as part of their corporate social responsibility. Giving back to society tends to be treated like a business. It’s also sometimes done for estate planning purposes. In Asia, the concept of institutionalising charity-giving is still very new. So while there are many wealthy families in the region, few foundations exist. With the second and third generation having studied in the West and observing what is happening there in relation to giving, wealthy individuals and families in Asia are starting to formalise their giving to charity. In China, for example, there were 643 private foundations by the end of 2008, according to one report, and that number is growing at a rate of 30% to 40% each year.
Geographical beneficiaries of Asian philanthropy are also shifting, and are now often global. It's not just Chinese people giving only to China, but a lot of the Asians are giving to global causes.
When considering the question of to whom you give and for what purpose, in the West there is an emphasis on giving towards the arts, education and health, for example medical research. In Asia, the focus tends to be on poverty alleviation, although education and health-related causes are gaining interest.
How much demand is there for more structured giving?
More and more donors in Asia are seeking professional advice from charitable advisers, demanding transparency and follow-up information from organisations to which they give, and using technology to keep tabs on their projects.
We are also seeing a move from the traditional transactional approach that involves writing a cheque, to an entrepreneurial approach where venture capital principles are applied.
As our clients in Asia increasingly tell us that they want to become involved in philanthropic activities, it is with the intention of tackling issues relating to inter-generational transfer of wealth or wanting to create a philanthropic legacy – something the family founders will be remembered by, or to continue their lifetime charitable interests.
Generally, the next generation is more willing to lead the charitable organisation and be actively involved. It’s not that the older generation doesn’t want to be as engaged, but perhaps they have been more focused on building the wealth and have not had as much time. The next generation is prepared to sit on the board and provide leadership and support to a foundation or trust, or maybe even a charitable foundation that is not even related to the family, but where they can use their influence and their family’s wealth to help such organisations achieve their objectives.
Is Asia developing philanthropic hubs?
Given that the region continues to have significant needs in poverty alleviation, environmental protection and improving healthcare standards, more and more international non-governmental organisations (NGOs) are looking closely at Asia as an ideal location in which to set up their regional headquarters.
In addition, new legal and regulatory frameworks are also boosting giving, by incentivising donors with tax breaks. Such reforms are in the works across the region, particularly in Singapore, China and India.
Further examples of government initiatives include China recently launching the China Foundation Centre to promote greater transparency and accountability among foundations, and Singapore’s National Volunteer and Philanthropy Centre introducing an independent charity analysis system.
What are some examples of appropriate philanthropic structures?
Making direct donations from a purely charitable aspect is one of the key channels for our clients to realise their philanthropic goals.
We recently launched the SymAsia Foundation, Credit Suisse's first charitable client foundation in Asia that is focused on helping regional donors and beneficiaries. The geographical coverage is global, and donors can establish and name their own foundations within the framework of SymAsia and choose to make donations to charitable causes and projects in any part of the world. Moreover, Credit Suisse absorbs all administrative costs and donors can focus on their giving without having to bear start-up or running costs.
On a day-to-day basis, our philanthropy advisory team in Singapore – which also runs the SymAsia Foundation – helps identify the right philanthropic cause and project through the expertise of its client foundations.
Donors can opt to set up their foundation as a Donor Advised Fund, enabling them to give to a charity according to their specific philanthropic preferences. Or they can choose from a wide range of philanthropic causes through SymAsia’s selection of projects and institutions supported, specifically in the areas of humanitarian and social development, protection of nature and the environment, education, culture and the arts, health and sports.
How can wealthy individuals get the most out of their philanthropic initiatives, and ensure they are measurable?
As an example of how to achieve this, we have created a “Sustainable Impact Philanthropy” model to help clients choose the best means to meet their philanthropic goals and make a lasting social impact.
In line with this, we assist clients in identifying the right philanthropic cause and project through the expertise of its client foundations, such as the SymAsia Foundation. We then execute and monitor the results of the charity projects.
At the same time, we leverage our integrated bank platform to help clients optimise the financial vehicles for their social projects, such as investments into socially responsible companies and products, or even setting up their own microfinance or social businesses, to ensure sustainable and impactful philanthropy.