The Hubbis Independent Wealth Forum in Singapore on April 17 was a huge success, bringing together over 300 industry professionals and experts to analyse the evolving landscape of Independent Wealth Management in Asia. A key panel discussion focused on the role of estate and legacy planning for wealthy and ultra-rich clients, highlighting the increasing thrust towards philanthropy for the top tier of family offices and uber-wealthy families. In an era where philanthropy is becoming an increasingly pivotal aspect of societal development, the discussion shed light on the significant role that Singapore is playing as an increasingly prominent hub for philanthropy, armed with its strategic government and regulatory initiatives and robust legal framework. This article distils the key insights from the discussion, focusing on the evolving dynamics of philanthropy globally, within Asia, and particularly in Singapore, and highlighting some of the challenges and opportunities this presents for wealth management, legal, advisory and other key specialists.
Chair
Zac Lucas
Partner – International Private Wealth
Spencer West
Panel Members
Anthonia Hui
Head of Singapore
AlTi Tiedemann Global
Tan Woon Hum
Partner, Head of Trust, Asset & Wealth Management Practice
Shook Lin & Bok
David Chee
Partner
Wong Partnership
Key Insights at a Glance:
Singapore as a Philanthropic Hub: Singapore is actively working to position itself as a global philanthropic hub, supported by government efforts and advantageous tax incentive schemes.
Philanthropy's Role in Asia: Philanthropy in Asia traditionally revolves around family and is country-specific, contrasting with the more structured Western approach.
Changing Dynamics in Philanthropy: Newer generations are shifting toward impactful giving with a focus on creating sustainable social impacts, moving away from transient charitable acts.
Regulatory Environment for Foreign Entities: The panel discussed whether Singapore’s current regulatory and legal frameworks sufficiently support foreign philanthropic organisations aiming to operate globally from Singapore.
Benefits of Registering as a Charity: Registering as a charity in Singapore offers significant tax advantages, although the necessity of registration for effective philanthropy was questioned, suggesting a more flexible approach could be beneficial.
Educational Needs: There's a need for greater education within the financial and legal sectors about the evolving opportunities and complexities in philanthropy to better serve ultra-high-net-worth clients.
Complexity of Modern Philanthropic Instruments: The discussion highlighted the shift towards structured, legacy-oriented contributions, such as non-grant financial instruments, which allow for the recycling of funds into new philanthropic projects.
Stewardship in Wealth Management: Wealth managers can adopt a stewardship role, encouraging clients to view philanthropy as a part of wealth management that enhances familial relationships and community contributions.
Philanthropic Structuring and Legal Challenges: As philanthropic strategies become more sophisticated, continuous engagement with regulators is necessary to ensure that the legal framework keeps pace with industry innovations.
The Discussion Review in More Detail
Singapore is steadily emerging as a premier hub for philanthropy, driven by its robust regulatory framework and strategic positioning in Asia. As the city-state enhances its offerings to attract global philanthropic activities, discussions around its evolving role continue to unfold among experts in wealth management, legal frameworks, and charitable foundations.
The panel session began with an expert outlining the focus on the evolving role of philanthropy within Singapore's growing family offices and high net worth sectors. The discussion was divided into two segments: one exploring the dynamics of the developing philanthropic market and the other addressing technical challenges in establishing a genuine philanthropy proposition.
Cultural Context and Philanthropic Evolution in Asia
A panel member emphasised the longstanding presence of philanthropy deep in Asian culture, contrasting it with the more formalised and professional approach typical of the Western world. They noted that philanthropy in Asia tends to centre around family and is specific to countries or communities. Despite a busy schedule attending multiple conferences, the panellist highlighted Singapore's attractiveness for setting up philanthropic organisations, particularly to foreigners.
The Emerging Role of Singapore as a Philanthropic Hub
A panellist shared their perspective, noting that while philanthropy was not a constant in their field of asset and wealth management, it now plays an increasingly significant role. They described the typical use of Singapore as a structuring hub for private funds, often involving single sponsors like family trusts or corporate foundations backed by bank guarantees. They illustrated the shift towards more responsible and impactful giving, contrasting traditional, fleeting acts of charity with more sustainable and transformative approaches. They mentioned a trend among newer generations to focus on creating lasting social impacts, such as improving education. This approach aligned with the broader goals of philanthropy, as practised in Singapore, to enable rather than merely give.
Governmental Support and Regulatory Frameworks
A specialist commented on the efforts to establish Singapore as a philanthropic hub, emphasising the whole-of-government approach. They mentioned entities like Temasek working to create an ecosystem supportive of philanthropy and noted how the charity sector is keen to tap into the wealth influx. They discussed the influence of philanthropic tax incentive schemes on local business lending and charitable donations, highlighting the rise of donor-advised funds and platforms like the Community Foundation of Singapore, which facilitate active giving.
They also detailed the philanthropic tax incentive scheme’s role in expanding the philanthropic advisory space, noting that meeting specific requirements, including employing philanthropy advisors, is essential for accessing these incentives. The specialist expressed enthusiasm about the developments, portraying Singapore as an exciting place for philanthropic engagement due to these strategic efforts.
Addressing Global Philanthropy Needs
A panellist raised a key question regarding Singapore's suitability as a base for foreign philanthropic organisations, questioning whether Singapore provides the appropriate regulatory and legal environment to support foreign founders not primarily focused on aiding Singaporeans but on supporting overseas charitable causes. They acknowledged Singapore's reputation as a stable and regulated platform, thanks to entities like the Singapore Charities Commission. However, they highlighted the need to assess if current regulations adequately allow foreign entities to establish Singapore as a global philanthropic hub and effectively manage their charitable activities from this base.
Another speaker said that he believes that Singapore does provide the right environment for foreign philanthropic organisations, drawing on their personal involvement with the Asia Philanthropy Circle (APC). This members-only group comprises prominent business families from Asia, particularly ASEAN, who join forces to enhance their philanthropic efforts through collaboration, due diligence, and effective management of outcomes.
They highlighted that APC, founded by Singaporeans with government backgrounds, serves as a prime example of how Singapore can serve as a base for impactful philanthropy. They noted that APC educates its members on what philanthropic activities are permissible within Singapore's regulatory framework. They added that several members have established philanthropic foundations in Singapore, attracting major international organisations like the Bill Gates Foundation and the Rockefeller Foundation to set up offices there.
A specialist highlighted a crucial aspect of Singapore's philanthropic landscape, pointing out that registered charities must allocate the majority of their funds to Singaporean causes. They also mentioned the category of qualified grant-making organisations, which are subject to new guidelines requiring at least 20% of their funds to be dedicated to Singapore. They questioned whether these stipulations might deter some international philanthropy exponents who may prefer to spend the majority of their assets outside of Singapore. Although they did note that the 20% requirement does not apply universally, it is mostly relevant for the larger entities, and there is flexibility in discussing plans with authorities.
Addressing Local Needs and Regulatory Flexibility
A panel member elaborated on the regulatory expectations for large charitable organisations in Singapore, which include registration with authorities, submission of audit papers, and undergoing due diligence. They mentioned that while these regulations apply mostly to entities raising public funds and seeking tax credits for donors, there are exemptions for private donors such as families or groups of friends who manage their philanthropy privately through family offices or private grants.
They argued against viewing Singapore merely as a booking centre for philanthropy and highlighted the ongoing local needs, despite Singapore's general wealth, underscoring that there are still underprivileged groups within the country.
Rethinking Charity Registration and Benefits
Another panellist agreed, noting that from a regulatory perspective, registered charities in Singapore must predominantly benefit the Singapore community, with limited funds allocated to overseas causes. They noted that this is changing incrementally to allow more overseas participation, but the process is slow, and the allowances are small. The panellist, therefore, questioned the necessity of registering as a charity, pointing out that many wealthy individuals and families seek to use their wealth for good without the constraints of formal registration.
They did, however, elaborate on some benefits of being a registered charity in Singapore, mainly the exemption from income tax and the specific conditions under which donors can receive tax deductions—only donations to institutions of public character are tax-deductible. A panellist argued that the primary advantage of charity registration is the tax exemption on income generated through investments. However, they noted that for many clients, especially in the wealth management sector, the tax benefits are not a primary concern; rather, they are looking for a flexible vehicle to facilitate their philanthropy. The panellist encouraged a re-evaluation of the emphasis on charity registration, suggesting that the focus should be on the underlying purpose of philanthropic activities rather than on the regulatory framework itself.
Governance and Ethical Management in Philanthropy
An expert stressed the high standards of governance and regulation that make Singapore an attractive hub for philanthropy. They highlighted that Singapore offers a robust framework for accountability and proper fund management within the charity sector, including a corporate governance guide for charities. The panellist pointed out that while founders can manage their donations independently, the broader challenge in private wealth management—whether in philanthropy or intergenerational wealth transfer—is establishing governance structures that maintain integrity and transparency over time.
They suggested that the desire for good corporate governance is a reason why some families choose to list their companies. The trust in Singapore's regulatory system and the effectiveness of the Charity Commission are significant factors that contribute to its appeal. This panellist acknowledged that while philanthropy activities don't need to be regulated, having a broad-reaching regulatory environment can benefit the continuity and ethical management of philanthropic endeavours across generations.
The Value of Structured Philanthropy
A panellist concurred with both previous comments, acknowledging the merits of registering philanthropic activities, despite this not being mandatory for clients. They reiterated the reasons why Singapore is attractive as a wealth management centre, noting that these factors also make it appealing for setting up philanthropic structures. The panellist highlighted the benefits of having a registered charity in terms of governance and compliance, especially in the context of anti-money laundering regulations like KYC (Know Your Customer) and STRs (Suspicious Transaction Reports). They pointed out that registered charities face less scrutiny for large monetary transactions, making it easier to manage funds transparently.
The panellist also emphasised the importance of structured governance for future generations. They explained that having a formal process and audit mechanism in place educates the next generation about responsible giving. They mentioned the involvement of various advisors—uncles, lawyers, bankers, and philanthropy specialists—who sit on boards to guide decision-making. This structure ensures that decisions about donations are made responsibly, following a clear process that supports accountability and enhances the effectiveness of philanthropic efforts.
Alleviating Regulatory Burdens in Philanthropy
A panellist then shared their perspective on philanthropic giving, emphasising that for many donors, tax savings are not the primary motivation. They discussed the challenges of complying with anti-money laundering (AML) and Know Your Customer (KYC) regulations in the private banking sector, contrasting it with the lighter requirements of retail banking. The speaker recounted their own experience of donating a significant amount through online platforms without facing any inquiries, whereas private banking required extensive documentation and scrutiny.
To alleviate these challenges, the guest suggested using intermediaries that are qualified to handle the complexities associated with large donations, including AML and due diligence on recipients. They highlighted the Asia Community Foundation, launched in September 2023, as a new platform that supports philanthropies with these tasks and integrates the necessary banking structure for smooth transactions. Additionally, they mentioned local options like the community foundation in Singapore or other viable platforms for facilitating philanthropic activities. These intermediaries, the panellist explained, can significantly reduce the burden and complexity for individuals engaging in philanthropy, making it easier to focus on the causes they care about without getting bogged down by regulatory requirements.
Education and Market Development
A panellist raised a key point about the evolving philanthropy sector in Singapore and compared it to Hong Kong, which is also positioning itself as a philanthropic hub but lacks a similar regulatory framework and infrastructure such as Singapore's Charity Commission.
The speaker questioned whether there is sufficient education within the market to inform practitioners—including bankers and lawyers—about the philanthropic options available and the benefits they offer to clients. They emphasised the importance of this education, especially given the interest from UHNW clients in using Singapore for their philanthropic activities. The panellist suggested that more could be done to enhance understanding and engagement in this sector, posing a broad question to the panel about whether current efforts are adequate and what additional steps could be taken to better educate the market on the opportunities and regulations in philanthropy.
Addressing Concerns in the Private Wealth Sector
An expert addressed concerns within the private banking sector regarding philanthropy, particularly some resistance from relationship managers (RMs) who fear losing assets under management (AUM) and, consequently, business revenue. They clarified a common misconception that philanthropic giving equates to a loss of AUM. This expert argued that recommending philanthropic strategies to clients can actually help secure their assets under management by integrating philanthropy into a client’s broader wealth management plan.
The panellist suggested that advising clients to allocate a portion of their wealth to a managed philanthropic portfolio not only preserves the capital but also allows the profits from these investments to be used for charitable purposes, thus creating a sustainable legacy of giving. This approach doesn't just preserve the principal amount but also engages clients in meaningful activities that enhance their relationships with their families and communities, reflecting many Asian cultural values.
They emphasised that this strategy allows wealth managers to transform their approach, viewing themselves not as merely managing money but also as stewards of their clients' broader aspirations, including their charitable intentions. By doing so, wealth managers can use philanthropy as a tool to train the next generation in both wealth management and responsible giving, thereby aligning more closely with their clients’ long-term interests and values.
Robust Stewardship in Wealth Management
A speaker agreed with previous remarks, emphasising their role as independent advisors whose guidance remains consistent regardless of changes in a client's assets under management (AUM). They highlighted the philosophical approach to wealth management, using the phrase, "We are all stewards of time, talent, and treasure," to underline the transient nature of stewardship in managing wealth.
The panellist conveyed that discussions with wealthy clients often reach a point where they realise the sufficiency of their wealth relative to their needs, echoing a sentiment expressed by Jack Ma about the excesses of wealth. They advocated for advising clients to embrace their role as stewards not just of their wealth but also in contributing positively to society—encouraging them to establish legacies that impact not just individuals but entire communities.
They described how they use these insights in conversations with clients at different stages of wealth accumulation, encouraging them to think beyond personal gain. The speaker said they appreciate these discussions as they align with the values of philanthropy and stewardship, which are supported by Singapore’s robust governance and structural frameworks, making it an ideal location for clients to manage their philanthropic activities effectively.
The Future of Philanthropic Structuring and Legal Challenges
A panellist highlighted the evolving complexity of the philanthropic sector and the increasing role professionals would play as it matures. They noted a shift from simple donations to structured, legacy-oriented contributions that manage funds on an endowment basis, which allows for long-term asset management without losing AUM. This panellist discussed the emerging use of non-grant financial instruments in philanthropy, such as structuring contributions as securities rather than straightforward donations. This approach involves considering investments that could potentially be recouped and reused for further philanthropic activities and possibly structured as equity.
They also pointed out the challenges associated with these sophisticated financial instruments, specifically the regulatory hurdles when such contributions are treated as securities offerings. They mentioned the difficulties under the Securities and Futures Act (SFA), particularly when dealing with accredited investors and compliance with security offerings, highlighting the need for legal and financial advisors to keep pace with these innovations.
Furthermore, they underscored the need for continuous engagement with regulators to address and adapt to the rapid developments and complexities within the philanthropic sector. They emphasised the importance of raising advisor competence and adjusting regulatory frameworks to support the growth of Singapore as a leading philanthropic hub. And they said they recognise that the law often lags behind industry innovations, creating a landscape filled with uncertainties that require proactive management and adaptation.
The Final Word
Singapore's evolution as a philanthropy hub is marked by its strategic regulatory adaptations, robust governance, and dynamic market engagement. As the city-state continues to refine its frameworks to better cater to both local and international philanthropic needs, it stands as a model of how structured governance and regulatory flexibility can coalesce to foster a thriving philanthropic ecosystem. This approach not only attracts global philanthropists but also ensures that philanthropy remains a key pillar of Singapore's social and economic landscape, benefitting generations to come.
Expert Opinions from the Panel
Zac Lucas
"As we continue to position Singapore as a premier hub for global philanthropy, it's imperative that we not only maintain but enhance our regulatory frameworks to meet international standards. This involves ensuring that our legal structures are robust, yet flexible enough to cater to the unique requirements of foreign philanthropic organizations looking to operate globally from our base."
"The true challenge lies not just in attracting international foundations but in maintaining their operations efficiently. We need to continuously innovate and adapt our regulatory environment to ensure it supports these organisations in not only fund management but also in executing cross-border philanthropic activities effectively."
"Given our strategic position in Asia, coupled with our commitment to governance and compliance, Singapore has the potential to act not just as a safe harbour but as a leading beacon for philanthropy worldwide. However, this will require ongoing dialogue between our regulators and the global philanthropic community to ensure our policies remain conducive to international philanthropic objectives."
Anthonia Hui
"Philanthropy in Asia, especially within ASEAN, is rooted deeply in our cultural heritage, where giving is not merely transactional but a part of our social fabric. In Singapore, we have the unique opportunity to bridge traditional philanthropic values with modern governance practices, thus providing a compelling case for international philanthropists looking for a base that offers both stability and a deep understanding of regional philanthropic landscapes."
"The Asia Philanthropy Circle, a testament to Singapore's role as a catalyst in regional philanthropy, showcases how collaboration and strategic partnerships can enhance the impact of philanthropy. By fostering a network where Asian philanthropists can collaborate, we are not only strengthening the impact of individual contributions but also setting a new standard for philanthropy in the region."
"Our strategic approach in Singapore goes beyond attracting foreign investment in philanthropy. We aim to create an ecosystem that supports sustainable and impactful philanthropy through education, policy-making, and fostering a community of practice that ensures philanthropic efforts are both meaningful and measurable."
David Chee
"We're seeing a significant shift in the way philanthropy is conducted, moving from direct donations to utilising complex financial instruments that offer both returns and social impact. This shift necessitates a corresponding evolution in our legal frameworks to accommodate and regulate these innovative philanthropic approaches effectively."
"As Singapore positions itself as a hub for advanced philanthropic activities, we must address the gaps in our legal framework to accommodate emerging practices such as impact investing and social venture funding. This will involve crafting policies that recognise and regulate these practices, ensuring they align with both our economic objectives and our social responsibilities."
"The future of philanthropy in Singapore hinges on our ability to integrate new financial practices into our philanthropic framework. This integration will require ongoing engagement with legal experts, financial advisors, and international philanthropic entities to ensure that our regulatory environment is not only robust but also innovative and adaptable to the changing landscape of global philanthropy."
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