The State of Philanthropy in Asia
Philanthropy and other types of private social investment have not only become de rigueur in Asia; they are being embraced. New trends, some global and some idiosyncratic to the region, show material changes to the way three parts of society—people, government and companies—work on their own and together to address shared concerns and challenges.
Across Asia, giving is in. Although the millionaires and billionaires make the news, many more people are donating, aided in great part by social media and the ease of electronic payments. Take a look at these headlines:
March 14, The Times of India: “Azim Premji Commits Rs 53,000 crore (US$7.4 billion) More to Philanthropy, Taking the Endowment to Rs 145,000 crore (US$21 billion)”
May 8, Esquire Philippines: “Aboitiz Group Gives Half a Billion Pesos (US$9.7 million) to Asian Institute of Management”
September 9, China Development Brief: “Fifth Tencent 9/9 Charity Day Raises Over 2.4 Billion Yuan, Smashing Last Year’s Record”
There are many more. While it’s impossible to know for certain how much capital is being deployed, there is no question that it is a growing number with tangible results.
And, like the rest of the world, the region is using that social investment capital in new ways. Private sector entities now speak not only of their return, but also of their impact, blurring lines between profit and purpose. Businesses weigh their environmental and social effects alongside traditional costs. Individuals and companies are changing the way they think and operate to better harness their expertise and efficacy towards meeting the needs of the planet and its inhabitants.
Making an impact
Swelling numbers of impact investors reflect this new thinking. Tim Crockford, manager of the Hermes Impact Opportunities fund, defines an impact investment as “an investment into a company creating products or services that are addressing the unmet needs of the world.”
Although Asia still only accounts for 15 per cent of global capital going towards impact investing, there is a great deal of buzz and new investors putting their toes into the impact waters. Social impact bonds, hybrid financing and inclusive business have burst onto the scene, with new announcements daily. Companies are broadening the notion of corporate social responsibility (CSR) away from corporate philanthropy to finding win-win solutions for communities and the corporate bottom line.
Many firms and investors direct their efforts through social enterprises, organisations that follow business principles to meet social or environmental needs through products, services or distribution of profits. According to a soon-to-be-released study by our Centre for Asian Philanthropy and Society, there are more than 1.2 million social enterprises in the economies in which we collected data (South Korea, Japan, Hong Kong, Pakistan, Thailand and Indonesia).
Now that the genie of using business tools to address social challenges has been let out of the bottle, new thinking and ideas have blossomed. Take, for example, TCL in China, which uses advanced AI technology to find educational solutions for children in rural areas. Or Gunung Sewa in Indonesia, deploying agribusiness expertise to help smallholding farmers develop products with higher margins and get them into international markets.
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There is a great deal of buzz and new investors putting their toes into the impact waters
— Ruth Shapiro
On the capital side, investors and stock exchanges seek firms committed to investing with the environment, social and governance (ESG) goals as an integral part of corporate strategy. When the CEO of Blackrock calls for “profit with purpose,” you know that taking social and environmental impact into account is the new normal. Watch this space as Tatler runs articles on new models and ideas being tried and gaining traction in Asia.
There are also new trends specific to Asia—two of particular interest. The first is in public-private partnerships, which for the past 20 years were applied to large infrastructure projects, like ports or toll roads. Increasingly, the private sector partners with government to address social challenges as well. In Thailand, the Pracharat Initiative asks large companies to lead efforts in education, small business development and internet accessibility.
In China, Alibaba—the company and its foundation—work alongside government to create new businesses for its Taobao platform aligned with president Xi Jinping’s poverty alleviation goals. The Indonesian government has established an online platform, SDG Indonesia One, to facilitate channeling public and private funds into infrastructure and social projects. Private foundations and companies realise that complex problems call for integrated solutions. Such new efforts are proliferating in Asia, and in a forthcoming report, our centre will categorise their efforts and showcase best practices.
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Lastly, the role of government in the sector is changing with the emergence of new wealth. For example, over the past few years, governments around Asia have set up funds to assist startup social enterprises and early stage companies. In the six economies we studied, more than US$100 million has been deployed for social enterprises, with another US$900 million for startups and small-to-medium-sized enterprises more broadly.
From the bottom up
While governments do spend financial resources far outstripping philanthropy and CSR, it is their policies that can dramatically alter the social landscape. Here the story is somewhat mixed. India and China present two illustrative examples. In the past few years, governments in both countries have put in place laws that both encourage domestic giving and push back on international funding. China’s new charity law, passed in late 2016 and put into effect in 2017, is meant to regulate the social sector to a much greater extent, allowing for increased accountability and transparency and building much-needed trust.
Across Asia, giving is in. Many more People are donating, aided in great part by social media
— Ruth Shapiro
Thus far, it is too early to tell how this will boost the social sector as foundations and non-profit organisations attempt to navigate new laws which have not been completely ironed out. At the same time, China also enacted the International NGO law which also seeks to provide additional oversight into foreign funding organisations working within China. Here the result is clearer—the number of organisations and amount of funding going into China from abroad is falling in response.
India has enacted surprisingly similar laws. While the Foreign Contribution (Regulation) Act has been on the books since 2006, it has recently been strengthened and more stringently enforced. According to the Times of India, in 2017 more than 20,000 NGOs lost their licences to operate. This year, the more difficult restrictions have been eased while the government endeavours to find the right balance between oversight and support.
To promote charitable giving, in 2014, India required large companies to spend 2 per cent of their net profits on certified CSR activities or organisations. According to KPMG, compliance has become near universal, with 99 per cent of the top 100 companies following the new CSR guidelines, up from 55 per cent before the law.
Asia, like the rest of the world, recognises that no single actor can solve the complex societal problems of the day. The region’s newfound wealth enables us to apply practices growing in favour around the world, including impact investing and support for social enterprises.
At the same time, philanthropy in the region has unique qualities reflecting its context, including the shift to broader public-private partnerships and expanded domestic giving encouraged by government policy. Many of these trends are still in their early days, but they already show the increased impact of collaborative efforts among the individuals, companies and governments of Asia.
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Ruth Shapiro is the founder and chief executive of the Hong Kong-based Centre for Asian Philanthropy and Society (CAPS), who also known as a global expert on philanthropy in Asia. With her team at CAPS, Shapiro identifies and disseminates best practices, models, policies and strategies that can contribute to positive system change in the social investment sector across Asia.
She is also the author of multiple books and has contributed to leading publications around the region, including Asia Tatler titles. Shapiro is the primary author of Pragmatic Philanthropy: Asian Charity Explained, which was published in 2018, and co-authored the book Building Energy Efficiency: Why Green Buildings are Key to Asia’s Future.