Continuity of core family values and leaving behind a legacy in areas like health and education are driving forces behind the philanthropic activities of Asia’s older generation of rich, according to a joint study by UBS and Insead.
Last year, 36% of all charitable donations in Asia were to educational causes, followed by 10% to poverty alleviation and development, 9% to health and 5% to disaster relief. In contrast, the younger generation of rich support giving to the arts, civil rights and the environment. Not surprisingly, Asian families tend to donate most money to causes in their home countries, the countries they emigrated from or their own ethnic or socio-linguistic communities.
Religion is a motivator for families in Asia, but this does not directly translate into donations to religious institutions. Only 2% of contributions in 2010 were to religious institutions and causes, whereas in the US this number was 33% in 2009, translating to more than $100 billion. However, individual donors in Asia contribute generously to religious institutions, so such recipients are by no means deprived of funds.
UBS and Insead released the study's findings yesterday in an event at Insead's Singapore campus. It covers China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, Taiwan and Thailand. The Swiss bank and European business school surveyed 200 families and interviewed another 100 to draw conclusions about what motivates ultra-high-net-worth families in Asia to undertake charitable activities.
Asian families have only recently started formally putting in place structures and practices to undertake philanthropy. Philanthropy in Asia is less professionalised than elsewhere in the world, though this is changing and families have started hiring experts to run family foundations and projects. On the upside this means administrative costs among Asian charities are generally less than 10% of annual expenses, in contrast to the West where the Bill & Melinda Gates Foundation had administrative costs of around 11.5% of annual expenses in 2009, and at the Ford Foundation these were 17.5%. However, the low administrative costs also mirror the under-investment in professionalism and institutionalisation, the study highlighted.
Philanthropy in mainland China is a recent phenomenon, going back only around three decades, in tandem with the accumulation of private wealth. Around two-thirds of the China-based respondents to the survey had formalised the philanthropic activities they were undertaking after 2000. In 2008, almost 90% of charitable donations in China were directed to government-affiliated charities such as the Red Cross.
In India, the number of wealthy individuals grew faster than anywhere else in the world during the period between 2006 and 2007, but charitable donations stand at a miniscule 0.6% of the country’s GDP. However, the formalisation of philanthropic activities has accelerated since 2000. As is the case across Asia, causes within the country attracted the lion’s share of donations.
“It comes as no surprise that the growing awareness of the topic of philanthropy which we have seen globally is mirrored within Asia,” said Kathryn Shih, Asia-Pacific chief executive officer of wealth management for UBS. “Family philanthropy has had a long and distinguished history among Asia’s wealthy.”
