Philanthropy in Asia: The power of next gens
Isabelle Hayhoe, Senior Philanthropy Adviser, Barclays Private Bank
Please note: The article does not constitute advice or any form of recommendation. Barclays Private Bank does not offer tax advice, and professional advice should always be sought.
Whatever your chosen cause, there has arguably never been a more exciting time to be involved in philanthropy. As the world wakes up to the urgency of issues such as racial and health inequality, the possibilities for positive change are seemingly endless.
This momentum is perhaps nowhere more apparent than in the Asian philanthropy space. At present, the continent sits on the precipice of an unprecedented transformation, primarily driven by a surge in wealth inheritance and creation among the next generation of donors.
In this article, we explore some of the trends and characteristics of Asian philanthropy, and discuss the potential implications for the continent.
A surge in wealth creation
Asia’s surge in wealth creation and the upcoming wealth transfer to younger generations is transforming the face of philanthropy.
According to some forecasters, Asia’s mass affluent segment will hold $4.7 trillion in wealth by 2026, which is an increase from $2.7 trillion in 20211. Likewise, self-made ultra-high-net-worth individuals under the age of 40 now make up 26% of Asia’s super-wealthy2.
These individuals are in a unique position to truly engage with others from their generation and to understand the issues that may shape the future of our planet.
Inevitably, younger donors may also have different giving priorities and approaches from their parents or other older members of their family.
Having grown up in the shadow of the climate crisis debate, these individuals dedicate more focus to social and environmental issues. Younger generations, or so-called digital natives, may also be more willing to embrace revolutions in tech and consider ways in which these can impact their giving. (If you’re interested in finding out more, you can listen to our recent podcast: Philanthropy and impactful investing).
With many of these young wealth holders educated internationally and particularly in the West, we may reasonably come to expect a shift away from the more traditional values in Asian giving over time.
For example, historically one of the most striking differences between the Asian and Western philanthropy models is that Asian giving is typically discreet. With modesty often regarded as an important virtue, many donors have sought privacy for their philanthropy, rather than public recognition.
The younger generation of Asian donors, however, are increasingly comfortable with their philanthropy being public and transparent, and use this exposure to leverage collaboration with other donors.
The ‘traditional’ model of philanthropy
Before we can understand the characteristics unique to Asian philanthropy, it’s helpful to take a step back and consider the ‘Western’ approach to giving. For many both inside and outside of the sector, this is often regarded as the traditional model of giving.
Philanthropy in the West tends to be high profile and receives a great deal of public recognition, particularly in the US. In Europe and America, donors often also plug gaps in public sector funding.
Issues such as education, healthcare and international aid typically receive significant funding. Well-known examples include the building of schools, libraries and hospitals, many of which carry the name of their benefactor. Likewise, providing support for communities amid conflicts or natural disasters, backing social reforms, and animal welfare have generally been key priorities.
Within Western philanthropy, large personal donations are often also made through charitable foundations, while businesses have placed more emphasis on their community, social and responsibility (CSR) initiatives in recent years.
What makes Asian philanthropy unique?
One of the key traits of Asian philanthropy is that giving is shaped by the donor’s cultural heritage, and grants are often directed to their home community.
The concepts of origin and homeland are an important focus for many donors, which is particularly true for the large numbers of wealthy diaspora now living in financial hubs, such as Singapore and Hong Kong. We call this ‘affiliation-based’ philanthropy. Many Asian philanthropists also favour local causes above giving further afield.
Similarly, philanthropy in the region has had strong ties with family, clan and religion. Islam, Hinduism, Buddhism, Catholicism and Confucianism have all influenced attitudes and approaches to giving.
There is also a strong focus on education, the advancement of women and girls, nutrition, and poverty alleviation. All of these are considered cornerstones of economic and individual growth on the continent.
At present, statistics reveal a huge disparity in access to education across Asia-Pacific territories. Although East Asia and the Pacific have the second lowest illiteracy levels worldwide, South Asia, in fact, has the second highest3.
For many philanthropists within the region, narrowing this gap is seen as the key to achieving long-term economic growth and promoting social cohesion.
A more formalised approach to giving
Crucially, it is not only the demographic of Asian donors that is undergoing a transformation, but the region’s entire approach to philanthropy.
Despite huge levels of recently accumulated wealth and being the world’s largest continent, many Asian economies have lagged behind the development witnessed in other parts of the world. As a result, there has traditionally been less structure to giving and donations tend to be ad hoc.
In recent years, however, there has been a shift towards more formalised giving, demonstrated by the increase in donor-advised funds and foundations. These structured giving vehicles are bringing a greater sense of organisation and direction to the region’s philanthropy.
Governments have also taken measures to encourage philanthropy. In July 2023, the Monetary Authority of Singapore (MAS)4 announced a Philanthropy Tax Incentive Scheme for family offices. This will allow qualified applicants to receive a tax deduction of up to 100 percent for overseas donations, limited to 40 percent of the donor’s income.
MAS will also recognise donations to local charities as part of normal business spending, further encouraging local philanthropy. For those philanthropists who believe that donors can play a positive role in society, the central bank’s policies are a welcome incentive to keep supporting local causes.
Recognising and embracing change
While philanthropy has been done in diverse ways across the world for thousands of years, the most impactful giving has one thing in common: it does not stand still but recognises, and embraces, change.
Within Asia, the rate and scale of this change is impossible to deny. Only by keeping pace with these trends can philanthropists ensure their efforts meet the needs and priorities of the communities they serve.
And with Asia’s status as the world’s largest continent, time will tell if this philanthropic revolution will reverberate across the global giving community.
This communication is general in nature and provided for information/educational purposes only. It does not take into account any specific investment objectives, the financial situation or particular needs of any particular person. It not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful for them to access.
This communication has been prepared by Barclays Private Bank (Barclays) and references to Barclays includes any entity within the Barclays group of companies.
(i) is not research nor a product of the Barclays Research department. Any views expressed in these materials may differ from those of the Barclays Research department. All opinions and estimates are given as of the date of the materials and are subject to change. Barclays is not obliged to inform recipients of these materials of any change to such opinions or estimates;
(ii) is not an offer, an invitation or a recommendation to enter into any product or service and does not constitute a solicitation to buy or sell securities, investment advice or a personal recommendation;
(iii) is confidential and no part may be reproduced, distributed or transmitted without the prior written permission of Barclays; and
(iv) has not been reviewed or approved by any regulatory authority.
Any past or simulated past performance including back-testing, modelling or scenario analysis, or future projections contained in this communication is no indication as to future performance. No representation is made as to the accuracy of the assumptions made in this communication, or completeness of, any modelling, scenario analysis or back-testing. The value of any investment may also fluctuate as a result of market changes.
Where information in this communication has been obtained from third party sources, we believe those sources to be reliable but we do not guarantee the information’s accuracy and you should note that it may be incomplete or condensed.
Neither Barclays nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation.