With wealthy Asian families increasingly taking an interest in the area, Lombard Odier’s head of philanthropy Karin Jestin looks at the strengthening philanthropic culture in Asia, and how it compares to the US and Europe.
Anyone seeking to work with philanthropists, those wealthy individuals looking to make a difference in the world, had better do their homework; philanthropy is an intensely personal endeavour.
Two philanthropists wishing to help child welfare in the emerging world may go about it in quite different ways.
But they are always determined to have their funds used to maximum beneficial effect. While philanthropy is still quite different in Asia than in Europe or the US, make no mistake, it is catching up at pace.
Recent research conducted by the National University of Singapore gives an insight into the way philanthropy is developing in Asia.
Philanthropy in Asia is even more private than in Europe; and much more so than in the US where it is something publicly discussed.
This explains, in part, the relatively subdued reaction when Bill Gates and Warren Buffet launched the Pledge initiative in Asia, which is reported to have led 92 US billionaires to give most of their wealth to philanthropy.
In Asia, wealthy people are reluctant to step into the limelight and talk about their giving.
They are anxious to avoid the ‘wrong signals’ that philanthropy can give in many Asian countries: attracting the attention of the public and authorities to the wealth they have accumulated.
Keeping it close
Beyond local cultures and beliefs, the way philanthropy develops in different countries reflects nuances in the way entrepreneurs operate.
The Asian market retains much of the local and family firm flavour of wealth development in the region. Giving tends to be entwined with a wealthy individual’s business, creating overlaps between corporate and family philanthropy.
In countries where an overwhelming majority of businesses are family-owned, this blurring of the distinction between personal and corporate giving by company owners is an additional challenge to anyone wanting to understand philanthropy in Asia.
Indeed – much like Europe – Asia is suffering from a lack of reliable data on philanthropy which limits the understanding of the dynamics at play.
Nevertheless, early findings of the National University of Singapore’s research, undertaken mainly through qualitative interviews, suggests that the burgeoning development of social entrepreneurship in the region has spurred innovation in charitable giving in Asia, ranging from venture philanthropy to impact investing.
Venture philanthropy is a form of grant-making inspired by venture capitalism, in order to help scale up social enterprises. Similarly impact investing supports the development of market-based solutions to social issues, with the expectation of some financial return to the investor.
It is notable that in its first year since launching, the Asian Venture Philanthropy Network can already count on 111 members from 18 countries.
Growth of giving circles
Collaborative giving is also gaining ground through the development of ‘giving circles’ which facilitate the exchange of experiences and enhancement of donors’ approaches.
The strengthening of a philanthropy ‘ecosystem’ with supportive regulatory frameworks, which also includes supporting infrastructure services such as peer networks, advisory services or community foundations; will be essential for the continued evolution of the sector.
Through discussions with donors based in the region, the research highlights cases of philanthropic leadership emerging: strategic approaches to giving focused on the long-term and the creation of sustainable change.
No doubt these examples will inspire others.There are powerful drivers in favour of philanthropy in Asia: wealth creation is stronger in the region than elsewhere in the world, and growth in philanthropy tends to mirror economic growth.
The mounting tension between widespread poverty and surging wealth creation spurs action from high net worth families.
The Asian philanthropic culture is strengthening. This is driving more wealthy Asian families to take part. These factors may see Asian philanthropic activity catching up fast with more mature philanthropic markets.
Karin Jestin is head of philanthropy at Lombard Odier.