Asia is home to one-third of all billionaires. A new report examines why so much of their philanthropy stays domestic and how to unlock more cross-border giving.
Over the past 30 years, Asia got rich. The Asia Pacific region is now home to nearly 10 million millionaires. That’s larger than the total population – both millionaires and not – of Paris, Rome, Madrid, and Barcelona combined.
Among the super-rich, Asia’s stats look even more impressive. China alone boasts over 1,100 billionaires. The region’s spectacular economic growth has been the primary driver for growing private wealth. China’s growth is particularly staggering, with per capita GDP moving from $317 in 1990 to $10,500 in 2020 according to the World Bank.
Yet despite the massive increase in wealth, relatively few Asians are giving abroad. While accurate figures are hard to come by, a 2020 Global Philanthropy Environment Index report showed a mere $20 million in private philanthropic outflows from China and $8.5 million from India – less than 0.0003 per cent of gross national income (GNI). By contrast, the United States sends 0.22 per cent of its GNI abroad via charitable giving.
Limited overseas giving stands in stark contrast to long-standing traditions of charity within many cultures in Asia. Asian philanthropists are famously generous with their wealth. Benefactors fund schools, hospitals, and places of worship – not to mention person-to-person charity and support to family members and community organizations in times of need.
As specialists in overseas giving, Give2Asia and our partners are exploring how to shift Asia-based donors’ attention and direct philanthropic capital to needs beyond their own borders. In collaboration with the Asia Philanthropy Circle, the King Baudouin Foundation, and the Bill & Melinda Gates Foundation, we began a research initiative to uncover the barriers to cross-border giving in 15 Asia-Pacific markets – and to identify ways to unlock more of the region’s philanthropic potential. The final report includes interviews with hundreds of donors, institutions, and leaders of charitable entities.
What’s stopping cross-border giving in Asia?
The first challenge we identified from this research is that cross-border giving is not well understood. Donors and charities alike simply lack information that allow them to find each other.
Trust is another significant barrier. Business relationships in Asia depend on trust, often built upon regular interactions over years or decades. Domestic charitable relationships are much easier to cultivate in this way. Without trusted networks to recommend overseas charities and foster relationships, many donors understandably prefer to keep their donations closer to home.
Wary of supporting overseas charities and projects, most donors only support overseas causes through big international brands. This practice tends to concentrate philanthropic capital in the pockets of a few large international NGOs. In Japan, for example, the local UNICEF and Red Cross organizations receive the lion’s share of charity for overseas causes. Each received approximately $200 million in donations in 2020 from private Japanese funders. While this does help build more cross-border giving, more can be done to build diverse trusted relationship between Asia-based donors and nonprofits operating locally within the region.
The first step is creating a trusted cross-border infrastructure for the region comprised of national-level institutions capable of engaging donors from inside their country, creating a steady flow of information and relationship opportunities, advocating for sensible regulations, and facilitating compliant grantmaking.
Finally, many funders think overseas giving is risky. Uncertainty over how to navigate charity rules and regulations at home and abroad causes many funders to throw up their hands and avoid overseas giving altogether. In many markets, government regulations disincentivize – or even outright prohibit – cross-border giving. Singapore offers a generous 250 per cent tax deduction for gifts to domestic charities. But 80 per cent of those dollars must remain in the country, and any funds that do leave the country lose any tax benefit.
Despite these hurdles, many wealthier Asian communities increasingly look beyond their own borders for impact. Some seasoned donors continue to expand their geographic scope of giving, and a next generation of donors are looking for philanthropic opportunities across borders to make their mark in the region. Who are these early pioneers of cross-border philanthropy within Asia, and why are they taking on these initiatives?
Ultra-high-net-worth individuals are one group making international headlines with significant gifts to colleges and universities in the US and Europe. These include Hong Kong property developer Ronnie Chan, Alibaba founder Jack Ma, and Vietnamese tycoon Nguyen Thi Phuong Thao.
Corporates and private foundations also look abroad, often driven by ESG (Environment Social Governance) goals. Singapore-based Quantedge Foundation, Australia’s Minderoo Foundation, and Kao Corporation in Japan are each funding environmental activities in the region.
Relationships are key to encouraging cross-border giving
What do these donors have in common? Several traits stood out from our research and interviews, and they all relate to Relationships.
The first is Family. Migration between Asian countries has occurred for millennia, and far-flung families often send wealth from one location to another. What is changing is a growing awareness among the younger generations that their wealth also can be moved to charitable organizations that align with their values and the kind of legacy they hope to leave behind.
The second form of relationship is Diaspora Communities. These donors give back to their homeland or their place of ancestry. For example, diaspora donors in Australia said they feel it is their duty to give back to their communities after living a prominent life abroad. Most recently, significant donations were made by a single Australian donor to organizations in Singapore and the Philippines, where the donor has kinship ties, to ‘help Asians help themselves.’
However, cross-border kinship is not limited to family and diaspora. Relationships also can form through a Shared Affinity developed in a single generation. For example, the Australian National Cricket Team promoted a United Nations relief campaign in response to the current economic crisis in Sri Lanka. The two countries share a love of the sport, and Australian cricket players stood in solidarity with their peers in the struggling island nation.
In addition to personal kinship, forging Positive Political Ties is particularly vital in Asia. Business leaders and philanthropists carefully read their government’s signals to the private sector to understand what behaviours are encouraged… and which are ill-advised.
Philanthropists from Japan and South Korea have shifted their focus to Africa as their governments pivot and increase their development funding to African countries. Chinese corporations and foundations, whose businesses may straddle Asia and Africa, are responding to China’s Belt and Road Initiative and the growing stature of the China International Development Cooperation Agency (CIDCA). Aligning one’s giving strategy with national and geopolitical priorities is essential and helps private donors stay in their respective governments’ ‘good books.’
Finally, Business Relationships can be a primary driver for cross-border giving. Several Asia-based multi-national corporations are making charitable donations from their headquarters to charities in locations where these corporations have business interests. Some also offer donation matching to support employee giving in communities where local subsidiaries are based. This practice mirrors similar practices by North American and European multinationals.
What else is getting funds across borders?
Corporations were the only donor group in the study that ranked tax incentives as an important factor in their giving. Unlike other regions of the world, transactional feasibility and tax incentives do not seem to play a significant role in the decision-making of many donors in the Asia Pacific – although certainly, donors admit they are nice to have.
Another primary driver of cross-border giving is Disaster Response. Asia experiences 70 per cent of the world’s natural disasters, making it the most disaster-prone region. Giving to relief efforts resonates with all individual and institutional donors. When a disaster strikes and causes devasting human and economic damage, philanthropic support flows in whatever direction it is needed.
The last driver we observed during our interviews is perhaps the most hopeful: Generational Priorities.
For example, after the devastating 2011 Tohoku Earthquake and Tsunami in Japan, support poured in from donors across Southeast and South Asia. During the Covid-19 pandemic, we also saw demand for cross-border giving skyrocket as new donors engaged with communities overseas even with the threat of the pandemic on their doorsteps. In one example out of many, Give2Asia facilitated a significant gift from mainland China to Covid-19 relief efforts in Nepal during the surge in cases in the spring and summer of 2021.
The last driver we observed during our interviews is perhaps the most hopeful: Generational Priorities. Younger Asian philanthropists, who grew up watching the world’s wealthy make their mark through charitable giving, are now making their philanthropy known. The next generation of wealthy Asians is more cognizant of social enterprises and their potential to transform lives. Perhaps unlike earlier generations that were primarily focused on accumulating wealth for themselves and their families, the next generation – already possessing quite a bit of wealth – looks more outward.
This younger generation within Asia’s wealthiest families offers promising examples of creative approaches and new overseas giving. Yet the reality remains that:
- Information is lacking,
- Regulations are unclear, and
- Professional philanthropic services are nascent.
Unlocking Asia’s philanthropic potential will require solving all three of these challenges.
Understanding the drivers for cross-border giving in Asia is just a starting point. The Asia-Pacific region is home to billions of people, and dramatic impact is possible with the right networks to build resources and trust. The dominance of trust and relationships as factors that trigger philanthropy present clear challenges. Yet they also offer a roadmap for unlocking Asia’s philanthropic potential.
We believe the first step is creating a trusted cross-border infrastructure for the region comprised of national-level institutions capable of engaging donors from inside their country, creating a steady flow of information and relationship opportunities, advocating for sensible regulations, and facilitating compliant grantmaking. We have already identified partners in six markets that expressed interest in creating such a network and invite other Asia-based organizations to reach out if they are interested in helping us build a path for unlocking Asia’s philanthropic potential.
Birger Stamperdahl is the President & CEO at Give2Asia.