The Changing Face Of Philanthropy In Asia
The pandemic has led many HNWI to re-consider the focus of their philanthropic efforts.
For many, philanthropy is about more than giving wealth away. It often involves committing to a purpose and supporting causes that create a positive impact on society. And, as the world grapples with the economic fallout caused by the global pandemic, pressing social and environmental issues have come to the fore.
Indeed, the COVID-19 pandemic has led HNWIs to consider the focus of their philanthropic efforts, and the changing landscape of wealth in the region could further amplify the trend of charitable giving. As wealth changes hands to the next generation, a larger proportion of Gen X and Millennial investors will be in control of their family's wealth and legacy by 2030¹, and this generation can often think very differently about wealth and the world.
Philanthropy with a purpose
Philanthropy has traditionally encompassed private initiatives for the public good. Recently, this definition has started to evolve towards being more strategic about how individuals—or families and communities—consider the kind of world they want to live in. It could be working together or within a new family foundation or social enterprise to benefit society, but it should be centred around a lasting vision of the legacy one might want to create to make the world a better place.
For example, we are seeing a number of Asian families choosing to create charitable trusts or foundations to fund philanthropic projects while maintaining confidentiality. One such client recently discussed the family’s desire to plan a large contribution to a foundation – with the goal being to support causes that are meaningful to their legacy.
Accumulating wealth is not the only focus for HNWIs in Asia. Doing good and giving back to society is ingrained in Asian cultures. And COVID-19 gave people an opportunity to slow down and rethink. In the face of the pandemic, more conversations have arisen around public health and giving back to society.
According to research conducted by the Economist Intelligence Unit, commissioned by RBC Wealth Management, 72 percent of HNWIs in Asia think it's increasingly important to consider environmental, social and governance (ESG) factors when investing, compared with 43 percent of those in the west².
The next generation of giving
The rise of the next generation of HNWIs has also played a part in contributing to the surge in philanthropic activity.
The second generation of HNWIs in Asia is increasingly engaged in different forms of giving. Part of this generation also belongs to the broad network of Asia's global families whose lives and connections are much more international than those of prior generations. They may have crossed borders for education, employment or property acquisition and they're more exposed to western values and increasingly aware of global issues. This generation does not want to blindly donate, and is approaching investment in a new light, seeing it as a way to create a lasting, positive impact.
Networking also plays an important role in Asia's philanthropy landscape. The second generation have social circles, friends and networks in which people are very outspoken about donations. If they keep talking about it in such a public manner, they will impact other people to make a difference. And we are starting to see that kind of ripple effect in Asia.
Strategies to give back
There are many different strategies for giving back to society. These can range from supporting a charitable cause, which doesn't take much time or effort, to setting up a long-term fund with the potential to grow many decades into the future. An established fund can be used to invigorate the next generation and spur them to take up the baton to run a social enterprise that can help to further those causes that were identified.
We encourage families or groups to sit down together and think about their individual and collective passions for social change, what's missing and what needs to grow and then to build on that. Having a common purpose can bring a family closer together. Every family is structured differently, but a philanthropic project can pull everyone together for one cause.
Vivian Kiang is Head of Wealth Planning at RBC Wealth Management in Asia.
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