Levelling up: Shattering myths about philanthropy in Asia

When legendary Hong Kong actor Chow Yun-Fat—of Crouching Tiger, Hidden Dragon and Pirates of the Caribbean: At World’s End fame—announced plans in late 2018 to give away his entire $715 million fortune to charity after his death, the country’s media went into overdrive.

One Hong Kong newspaper called the announcement one of the biggest events in philanthropy to date. Another declared Chow, 63, the most selfless actor in the world and demanded other ultra-high net worth individuals in the region follow suit.

Commentators waded in, pointing out the need for philanthropic giving at a time when the country’s wealth gap has been at its widest for nearly half a century. Some questioned why, with the number of Asian billionaires exploding in the past few years, were there not more ultra-wealthy people in the region helping the less fortunate.

However, this episode wasn’t the first time the generosity of the region’s wealthy had been called into question.

In 2010, when US billionaires Bill Gates and Warren Buffett held a banquet in China to urge fellow tycoons to donate their fortunes to charity, many of their targets didn’t turn up. The incident sparked a fierce debate on social media: were China’s super rich really so stingy?

By some measures, they had been. The World Giving Index 2015, which ranked countries according to their charitable giving, named (and shamed) China and India as two of the least generous countries in the region across all segments of society, even though they had the second and third highest number of billionaires respectively. 

China was ranked 144 out of the 145 countries, with only 8% of the nation-wide sample donating to charities, while India ranked 106, with only 20% donating to charities. Consultancy Bain calculated donations of 10 crore rupees ($1.5 million) and above have declined 4% in India since 2014 even as the proportion of the ultra-rich — those with a net worth of over $50 million — grew by 12%. The Global Family Office Report 2018 by Campden Research and UBS found the average Asian family office gave an average of only $1.3 million to philanthropic causes—almost five times less than Europe’s average of $6.4 million.

But with a lack of widespread data available, and no institutional means to collect it, have the accusations levelled at the region been fair?

Numbers game

The numbers don’t tell the full story, according to Johnny Hon, Hong Kong-based philanthropist and chairman of international venture capital company the Global Group. Since establishing Global Group in 1997, Hon has donated to more than 180 charities worldwide and served in senior management and advisory positions on 30 major charities.

“It’s a misunderstanding that Asian people have not been philanthropic up to now,” Hon says.

“Such a sense of obligation is deeply rooted in traditional Chinese culture and in Islam also, zakat—essentially charitable giving—is one of the pillars of the religion.

“The issues have been that, from the beginning of the 19th century until relatively recently, the region has been poor compared to the west and also, Eastern philanthropy has been more focused on one’s extended family, clansmen, village, or hometown.”

It is a view many ultra-wealthy tycoons agree with. At the height of the Gates and Buffett’s dinner criticism, one invitee, Zong Qinghou retorted that giving should be a private choice and objected to being shamed by the West into “giving for the sake of publicity”.

Data gathering in the space is difficult due to the desire to be more private, coupled with a lack of government regulations  in the sector, says Ruth Shapiro, chief executive  of Hong Kong-based non-profit Centre for Asian Philanthropy and Society (CAPS).

CAPS chose to rely on non-governmental organisations (NGOs) and social enterprises, rather than philanthropists to fill out the surveys for their inaugural Doing Good Index (DGI) in 2018. These limitations, she says, have made it difficult to chart the exact scale and scope of philanthropy in the region.

“Any report that tells you actual numbers coming from this part of the world, really needs to be questioned,” Shapiro says.

“Most giving has been low-key and done through companies of donors so it is hard to pin down real numbers about the sector.

“However, it is starting to change because people are more aware that they themselves can be influential in changing the marketplace—you’ve got Jack Ma at Alibaba and Pony Ma at Tencent retiring to become full-time philanthropists, saying, ‘We’re engaged in philanthropy in a big way, and so can you’.”

Indeed, such is the appetite for philanthropic giving among Asia’s wealthy, that Shapiro’s research into the region’s charitable giving is being funded by a handful of leading philanthropists, including Ronnie Chan, Daniel Tsai, and Ratan Tata, keen to improve the quality and quantity of philanthropy in the region.

Pick your battles

Unsurprisingly, philanthropy in the 15 economies included in the DGI differed greatly. Noor Quek, founder and chief executive of Singapore-based multi family office NQ International says the differences tend to be based on the economic development of the country in question.

“In India, for example, there is poor sanitation in rural areas so philanthropists wanting to donate in that country will tend to lean towards basic needs. In more developed countries such as Singapore, Japan, and Korea, giving is more towards education, advanced health, the arts, and environment,” Quek says.

“You would not get someone flying in to treat cataracts in those countries because it is not necessary, but you would find that in Vietnam or Laos.”

One overarching trend CAPS’ DGI found, however, is many traditional donors in the region—tycoons giving away tens or even hundreds of millions of US dollars—are working with local NGOs to tackle poverty and inequality in the region.

Peter Bennett, founder of the Hong Kong-based Peter Bennett Foundation, says growing up in Hong Kong in the 1950s and 1960s made him acutely aware of the disparity of wealth around him. Like other wealth holders in the region, he was taught to “give back” to the less fortunate.

“Going to a local school I was taught that we all need to be aware that we are part of a community and we need to take care of everyone in the community—it’s a lesson I believe all children from this region are exposed to and we carry that with us into adulthood,” Bennett says.

After a successful career in banking and hedge fund management, he founded his family foundation to reduce poverty. Bennett’s foundation supports 10 charity organisations in Hong Kong and six in South-East Asia, who all pitched themselves to the foundation and he personally reviewed. 

“We do not go out looking for funding applications—people come to us from time to time and we will have a look and see if it is worthwhile to visit,” Bennett says.

“The small number we think, ‘Wow, these guys are genuine in what they are trying to do and they are doing it in a way that is intelligent, thoughtful and cost efficient’—those are the ones we support.”

Christopher Lavender, director of a Hong Kong-based family foundation, says like Bennett, his foundation prefers to support local NGOs because they can be relied upon to put their fund to best use at the point of need.

“We found international NGOs to be bureaucratic, wasteful and sometimes rather inefficient. All the major funding problems we have had in the last 22 years have all been with NGOs because they have been somewhat distant from the actual implementation on the ground and things have gone wrong,” Lavender says.

His foundation now focuses on working with small domestic NGOs on about 100 community projects in rural areas in developing countries in South-East Asia, Nepal, Burma, India, Bangladesh, China, and Hong Kong.

When finding NGOs to work with, Lavender says rather than wading through funding applications, his foundation prefers to use personal networks and recommendations.

“We do things a bit differently—we decided early on not to have a foundation website because we did not want people ‘hitting’ on us, we wanted to be proactive and target the ones whose goals we shared,” Lavender says.

“Now so many people know us, and know what we like, and the standards we like, they refer possible partner NGOs to us.”

And Lavender is not alone. Relying on personal networks and family connections to find local charities to work with is the go-to approach in the region, Quek says.

“For [Asian] philanthropists, relationships are often the only means by which one can conduct due diligence,” she says.

“There are a lot of trust issues so using personal networks and family connections is what most donors fall back on.”

A fine balance

The biggest issue preventing many philanthropists from giving more  is a lack of trust in the social sector,  says Shapiro.

Out of the 15 economies in the DGI,  10 of them said they had front page scandals in the last two years, which had significantly affected giving. 

“The problem with the region is that there are not really any formal mechanisms to do due diligence on the supply or demand side of philanthropy and both are very opaque,” she says.

But Lavender says, most dangers can  be largely avoided by using a hands-on approach to control the progress of  a project.

“The problem in all the countries we fund in is that there are varying degrees  of corruption so we spend a lot of time making sure we are working with good partners—checking their references, making regular field visits, encouraging frequent communication and building confidence, to ensure that the agreed project objectives are being met,” Lavender says.

Lavender says his foundation uses customised application forms that seek clear objectives and milestones they can use to evaluate progress.

“My view is that the hallmark of better philanthropy is bringing business practice into the process, our bottom lines are social rather than financial but they are clearly identified and measurable by milestones built into the proposal.

“We distribute funding on a six-month basis and our partner NGOs are required to put in a financial and narrative report before we release the next set of funds,” he says.

Well aware of the potential pitfalls in the sector, governments across Asia have also started to reform  their laws and tax codes, strengthen non-profit transparency mechanisms, and provide more tax incentives for charitable giving, all with the aim of boosting local philanthropy.

China’s recent NGO Law placed foreign donor’s activities under close state supervision and created additional layers of regulations to navigate. At the same time the government put in place a new Charity Law, which focuses on domestic philanthropy and charities. It was largely welcomed by local NGOs for making the previously opaque rules more transparent.

Meanwhile, Hong Kong has given less tax subsidies, but gives philanthropists the freedom to donate to any cause they want. This has led to many top universities in the US and UK benefitting from donations, but has been criticised for not encouraging local causes.

Stacey Choe, director of the Asia Philanthropy Circle, says the stark differences in approach show Asian governments have been “doing a dance” with philanthropy and the social sector to find the right balance between too much and too little regulation.

“Regulation is like cholesterol—there is good regulation and there is bad regulation,” Choe says.

“Governments tightening regulation will help the sector become more transparent, but they also have to be careful they do not make things so difficult that donors decide to go elsewhere.

“On the other hand, letting philanthropists do whatever they want could lead to foreign firms funding terrorism and money being laundered all under the guise of charitable giving.” 

Working together

Such efforts by Asian governments to encourage philanthropic giving are relatively new. In the past, government officials, especially in China, often questioned the need for philanthropy, believing it to be the government’s role to provide basic services to the people.

But now governments are coming to realise that  private money can help them achieve their public service goals and have started working with philanthropists on certain projects. 

In India, the government enacted the Indian Companies Act 2013 requiring companies with annual revenues of more than $150 million to give at least 2% of their net profits to specific charities.

Leena Dandekar, founder of India-based Raintree Family Foundation, says while there were initial criticisms over the law, six years later it is now seen as a positive tool that has encouraged a culture of giving.

“Since the law came into effect, there has been over $7 billion raised for charitable projects and long-term initiatives have been set up,” Dandekar says.

“This law is purely a corporate endeavour to give back to society rather than traditional philanthropy, but the government championing it has given [philanthropists] encouragement.”

Bennett agrees that governments play a big  role in encouraging philanthropists to continue their work, but believes the relationship can develop further.

“Informally the government already encourages us to contribute by giving  a tax deduction—that’s their way of saying, ‘Yes, we want you to be doing this’,” says Bennett.

“But beyond that, our work can  be mutually beneficial because [philanthropists] have the chance to take risks with our giving and support new models of change that government cannot.

“So we can take those risks for them,  put up the initial costs to get a project  up and running and, if it goes well, the government can then step in and match funding or take it over themselves.”

And this is where the role of philanthropists now lies, says Shapiro.   As the region witnesses a growing gap between rich and poor, governments previously hesitant about the role of  private players in the delivery of much-needed social services, are now looking to philanthropy to help fill the gaps.

“There is an enormous potential to  do more in the region and, as we can see,  there is new energy and enthusiasm in  the sector among governments and philanthropists wanting to make meaningful change,” she says.

“With both sides looking to improve  the space together, and more wealth in  the region than ever, Asia can definitely  be a world leader in philanthropy.”