Wealthy Asian dynasties are redefining the way they share their gains with the communities that helped them prosper. A new study by INSEAD and UBS reveals for the first time shifting trends in Asian philanthropy, from obscure donations to progressive strategies.
In 1955, Singaporean magnate Lien Ying Chow co-founded Nanyang University (now Nanyang Technical University) to provide access to then-scarce tertiary education among ethnic Chinese students. An ardent advocate of education without the opportunity to receive a formal one himself, he remained committed to educational initiatives and went on to donate nearly half of his wealth toward setting up the Lien Foundation several years later.
Today, his grandson and chairman of the Foundation, Laurence Lien, is making bold moves, shifting away from traditional armchair giving to one that is grounded in designing and developing high-impact projects. The Foundation’s strategy has also evolved in its initial exclusive focus on education - its core areas now are water and sanitation, care for the elderly and preschool education. More fittingly, he calls it “radical philanthropy”.
“Our style is much more strategic now, we want to make a new impact, a new difference and we are always looking for areas which are underserved or where there are gaps or where a new way of doing things will help,” says Lien in an interview with INSEAD Knowledge. “We felt education was fairly limited, especially in Singapore where the government already sponsors a lot of educational initiatives.” Apart from taking on unconventional and even taboo subjects, such as death and dying, Lien’s action items involve institutional capacity building, forging progressive partnerships with organisations and investing with a long-term view. The traditional way was much more passive, he reminds, writing cheques with minimal follow-up.
What Lien describes - a traditional Asian focus on educational giving and a new generational shift toward impact investing - reflects two key trends in Asian family philanthropy, as documented in a study by INSEAD in collaboration with UBS. Building on surveys and interviews conducted in ten Asian countries, the study sheds light on the aspirations, trends and challenges for Asian family philanthropies.
Given the sector’s low profile and no Andrew Carnegie, John Rockefeller or a modern-day Bill Gates equivalent, the nature of Asian philanthropy has been hard to define. Opportunities to make a transformational impact exist, but philanthropies need to make concerted efforts to professionalise and execute – only then will they match the level of scale demonstrated by their prolific Western counterparts.
The Asian way of giving
Regardless of its modest profile, Asia possesses an age-old tradition of philanthropic giving with nearly half the respondents (42 percent) citing continuity of family values and creating a legacy as their main motivator. Much of it is directed toward educational causes - 36 percent in 2010 - the study revealed, reflecting a strong Asian ethic of treating education as a vital foundational activity. This was followed by poverty alleviation, health and disaster relief to a much lesser degree. Meanwhile, an overwhelming majority of families - about 70 percent - were also found to be extremely loyal in giving within their countries, or to issues affecting their communities.
Also documented were shifts among younger generation leaders, people like Laurence Lien, who are rethinking traditional priority areas and styles of giving. For instance, the Lien Foundation’s elderly care initiatives include an integrated care programme that offers personalised services such as monitoring for degenerative diseases and medical management, while another supports the improvement of administrative facilities by introducing the latest IT, database and new technologies.
“The greatest strength in the region is that you find lots of enterprising people with a lot of social commitment,” says Mahboob Mahmood, INSEAD Adjunct Professor of Entrepreneurship and a co-author of the report. “Channelling that enterprise back into social causes is the greatest opportunity.”
More profoundly or even radically, the foundation has ventured into less-addressed quality-of-life issues for those suffering from terminal illnesses. This includes raising awareness about the importance of end-of-life care, training medical staff appropriately and making people more comfortable with the idea of death. One project cheekily titled Happy Coffins sought to transform the image of the coffin from a symbol of grief into an expression of art and appreciation of life. “What’s important for impact is when philanthropies look at issues in a systematic deep way, ask questions that have not been asked and find innovative solutions,” says Mahmood.
But large-scale development of the sector is lagging despite massive wealth creation in the region. Structured philanthropy is still a relatively new phenomenon, the study shows, and of the 200 initiatives surveyed, more than 75 percent were set up as formal philanthropies after 1980. In a 2010 Bain and Company report, philanthropic donations in China and India amounted to 0.1 percent and 0.6 percent of their respective GDPs - relatively low figures when compared with the United States’ 2.2 percent, roughly US$300 billion. The report also stated that individual and corporate donations in India and China make up only 10 and 9 percent respectively of charitable giving, while in the United States, they are responsible for 75 percent.
Undeniably, a mature and developed civil society and professionally managed non-profit organisations in the United States are significant contributing factors to the sector’s success, says Lien of the conspicuous gap in giving. “In Asia, civil society organisations are immature – they have not been allowed to develop due to strong or dominant governments.” Asia has to evolve its own model of philanthropy, and begin building and investing in new organisations.
But it’s not simply a lack of organisations that is concerning - it’s their ability to have a deep impact. “The most important shift that needs to take place is from incremental giving to transformation giving,” observes Mahmood. “You can either try to solve existing problems through existing channels or you can look at problems in a new way and try to come up with transformational strategies.” Asian philanthropies are already doing the former but not the latter, he notes. To be able to solve intractable issues, philanthropies must adopt a much more focused approach – they need to strategise and then implement that strategy in a sustainable, scalable manner.
Can governments help? Mahmood is not optimistic given the extent to which many Asian governments are already struggling to deal with political and economic challenges. “In most of Asia, the work of governments and the work of philanthropists are by and large at odds, or not in sync at the moment,” he remarks. Needs are so vast that everyone needs to pitch in and the more pressing question is not how much government can do but whether philanthropies are willing to invest in advocacy, thought leadership and creating a productive role for them to play in the field.
A philanthropist’s checklist
So what’s required to push the sector forward in a sustainable manner?
For one, philanthropies need to professionalise, assert Lien and Mahmood. They need to hire well, they need competent people to manage and execute large-scale projects. “If you are talking about simply writing a cheque and income redistribution, it’s very easy to do,” says Lien, “but if you want to make social change, you have to professionalise and you have to be able to work with other people.” In particular, you need to collaborate with a wide range of players who are also trying to serve the same needs, he adds.
Just as essential is a strategic mission. “Focus is very important,” explains Lien, “as problems are so complex that if you don’t focus, you cannot go deep.” But it is vital for priority areas to resonate with the families’ passions and personal interests, otherwise it risks disengagement and families can start to bicker when interests diverge. “You need to understand your theory of change, whether it’s advocacy, building capacity in a sector, which level you are working at, and stick to it,” says Lien. Family members also need to be on the board driving initiatives forward and one way to develop interest and cultivate future leadership is to involve family members from an early age, allowing them to handle small grants and projects.
Finally, acknowledges Lien, many wealthy individuals wait to start their philanthropy much too late in their lives when they are retired. There is a huge role for philanthropy to play in Asia because on the one hand there’s massive wealth creation taking place but also a huge amount of problems and challenges. “The thing about philanthropy and foundations is that you can take a very long-term view,” counsels Lien. “You can take risks and you have entrepreneurial skills - use these because these are the assets and strengths of private business people who have made a lot of money. They are not the assets of governments typically. Use these assets to help solve problems.”