Rising affluence highlights philanthropy's potential in Asia

The benevolence of Asia's wealthy could be directed to improve economic and social conditions, but the entrepreneurial source of their fortune may lead to a different approach and limited impact, writes Scorpio Partnership.
Rising affluence highlights philanthropy's potential in Asia

Efforts to create a bailout fund to alleviate the debt crisis in Europe shows that philanthropy is not always conventional.

This state-to-state transfer of financial assistance has been driven by desperation to stabilise financial markets rather than goodwill toward the Greeks.

It is a brand of philanthropy that seems a far cry from the relatively simple strategy of giving by the affluent, but recent reports highlight interesting regional differences in philanthropic approaches which vary strongly in structure and motivation.

HSBC’s report, Something’s gotta give: The state of philanthropy in Asia indicates that charity in this region remains low and inhibited by cultural factors.

Many believe public displays of wealth, inherent in philanthropic giving, are distasteful or dangerous to personal security. The report noted that the wealthiest 10% of China’s population may be retaining almost $870 billion in undeclared wealth.

Rising affluence in Asia means that philanthropy could have great potential and, if refined and directed, could significantly improve social and economic conditions in the region.

However, there is also concern that, because of the entrepreneurial source of much of Asia’s wealth, the newly rich in the region will ‘go it alone’ in their charitable giving. Without collaborating with other contributors, the impact of their donations will be limited.

Despite these concerns, HSBC’s report contends that this nature of strategic philanthropy, in which measurable results, scale and innovation are all essential, is starting to increase among high-net-worth Asians.

In the United States, the publication of the Million Dollar List (MDL), a record of gifts of more than $1 million made in America since 2000, highlights the contrast in attitudes to giving on the other side of the Pacific.

Not only is the MDL exhibitionist in that it identifies who has given (and how much), it also shows an evolution in strategic philanthropy. The founders hope philanthropists will use the resource to identify trends, funding gaps and partners for collaboration.

Since 2000, individuals have donated 6,780 gifts with a mean average of $23.1 million – a statistic that shows the extent to which affluent Americans have embraced benevolence.

Arguably, the success of American philanthropy is not necessarily its structured approach, but the old adage of “charity begins at home”. The MDL reveals that 99% of gifts from individuals went to non-profits within the US and over 63% of these were located within the donor’s home state. It is this aspect of American philanthropy that has attracted the British.

Within the past months, Coutts and Barclays Wealth UK have both published reports which advocate giving to local causes. As government funding shifts according to economic conditions, private funders are to be increasingly relied upon to tackle social issues.

Barclays Wealth claims this approach may have long-term economic benefits; 140,000 families with unemployment and substance abuse problems cost UK society £12 billion ($19 billion) a year in health, social services and benefits.

Donating to alleviate such issues would simultaneously reduce future government costs. By focusing donations closer to home, individuals can make a difference within their own societies.

The question for the European bailout debates is clear: is state-to-state charity appropriate or should governments learn from success in individual giving and focus funds internally?

The answer will become apparent as eurozone events unfold. In the meantime, we can all reflect on the irony of the fact that the word “philanthropy” originated in Greece.

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