Philanthropy takes off in Asia: roundtable
Leading private-banking experts discuss the drivers of venture philanthropy in Asia and the opportunities for banks to intermediate such flows.
BR Traditionally the patriarchs of wealthy families have tended to give a lot during their lifetime to things like supporting the towns their families come from – building hospitals and schools etc. Now we are seeing more interest in deriving measurable outputs from their giving.
LL It means that wealthy philanthropists, especially the next gen, are looking for more structure around their giving.
BR Yes, the families we work with are increasingly focused on what they want to achieve and to put a formal governance process around it rather than just handing money over to family and community.
NQ Our findings are among Arab, Chinese and Indian wealthy older generation businessmen – as they realize they are blessed to have this wealth and they want to notch up points in heaven – they give often. Especially in Asia, they give often but it is done in a very humble way and seldom spoken of. They are not interested in the tax benefits at all. Now that has been somewhat formalized, but the next generation now wants to get involved. And the families want the children involved to show them the realities of the world.
BR Yes, the big difference between Asia as compared with much of the west is that in much of Asia is it has not traditionally been tax driven. It is really is about giving and achieving impact.
BN Increasingly, the current generation and next gen are becoming more strategic in how they give and are looking at social-impact measurements – how do we get the most of this dollar? And now the buzz word is venture philanthropy – giving not just money but also your talents and your network to help growing ventures or businesses. For example, they may want to help a social enterprise in Cambodia to scale up, and they ask how can I help this grow? Could we use our network? Or perhaps it is as simple as helping get a website done. There are more options out there now than writing a cheque to a charity – although I must say there is still a place to provide much-needed funding for charities via the traditional method as well.
LL Broadly I see three segments here: one is the old rich who really don’t have structure and really don’t bother with the tax benefits at all. I know of people who donate $2 million to $3 million to villages in China. They trust the guy who asks for the money and don’t require structure around outcome. They just know that they will see a school or a hospital from their contributions. And then you have the second generation, who are also noble but they do measure outcome, and are starting to look at tax benefits. Then there is the new wealth who are still generous but who will look first at what is in this for me, tax-wise.
BN And for those where tax incentives matters, they love to donate to educational institutions as they get 2.5 times tax deduction incentive for these institutions in Singapore.
LL Yes, and they get their names on it.
GM It’s actually a great way of giving the next generation the chance to develop entrepreneurial skills without letting them loose on your company. You give them the chance to follow their passion and learn. And by doing this you also decrease the internal competition between generations. There is a lot of comparison that happens in the wealthy families and this gives the youngest a chance to build his own experience without comparison that would be drawn in the family business. It builds self confidence.
BR It is also really useful in preparation for discussions around succession planning, as it provides an opportunity for the children to not only be working together as a family but also working with the family’s investment advisers and other advisers in a framework where the wealth cannot be squandered.
BN Traditionally the families gave the business to the boys and foundations to the girls and now we seem to be seeing a rising trend of women leaders in philanthropy.
BR We have a women’s forum here in Singapore which we hold for women from wealthy client families, and philanthropy is a very important topic alongside other topics we cover there.
GM It’s important not to reinforce this bias though of women doing the touchy feely work and men preferring to do business. It can take away opportunities for both genders.
NQ Women used to just take charge of the charity, but now their leadership skills have showed they are making their way into boardrooms which would never have happened had they not had the opportunity on the philanthropic side of the family wealth.
LL We run the second-generation programme and philanthropy becomes a topic within that in addition to investments. We try to find specialists to come and speak with them. Clients’ children go to good schools and have the opportunity to go off and give their time at charities. It is now part of their educative journey which is great. And banks in their own little way can be a part of that conversation.
BR One mistake private banks make is to look at philanthropy as an opportunity to gather AUM. But in our trust business we are less concerned who manages the funds. We charge a fee for advising you, so we can hire people who are specialists and people with expertise in social enterprise, strategic philanthropy advisory and so on. We have teams in Hong Kong and Singapore that specialize in this area. One woman in Hong Kong wanted to help homeless women so we helped her do that by conducting research and seeing what she could achieve – that is where you can add value as a bank through specialist help.
BN Apart from hiring, one can collaborate with people in the space to add value and there are a lot of worthy partners. For example, DBS is teaming up with NUS [the National University of Singapore] for an upcoming Social Venture Challenge. This is also acting in the ethos of the social space where collaboration is valued, and in collaborating it can lead to greater social impact.