Ruth A. Shapiro says that governments in the region must send strong signals that they value philanthropy through tax incentives and other policies. This could encourage a more systematic approach to giving and spark innovation in the social sector.
The Centre for Asian Philanthropy and Society has just released its inaugural Doing Good Index, which looks at the factors that both enable and hinder philanthropy and other kinds of private social investment in Asia. We found that Asia has enormous potential to do good. If Asia were to donate the equivalent of 2 percent of its GDP, the same as the United States, it would unleash US$507 billion (HK$3.9 trillion) annually. This is more than 11 times the foreign aid flowing into the region every year and one-third of the annual amount needed globally to meet the sustainable development goals by 2030.
We did this study after understanding several important dichotomies affecting Asia and its social sector. First, there is enormous wealth being created in Asia but still incredible and at times tragic need. Second, while there is a long history of charity in Asia, philanthropy, or the systematic approach to doing good, is relatively new. Third, while many on the ground are carrying out extraordinary efforts to help relieve suffering and need, there is often a debilitating lack of trust towards the sector. Last, many Asian governments realize that philanthropy is growing and are reacting by crafting new policies and regulations that both encourage and control its flow.
The Doing Good Index is an ambitious initiative. Supported by donors in Asia, the team worked with 34 partners from 15 economies to survey 1,516 social delivery organizations and 80 experts. They answered questions about a range of factors that influence philanthropic capital. The questions fell into four categories – regulations, tax and fiscal policies, procurement and ecosystem. The first three are government-driven, while ecosystem looks at the role that people, communities, companies and universities are playing in addressing social challenges and nurturing the social sector.
We find that people are ahead of government: on average, Asian economies perform better in the ecosystem category than in the other three. Society is rewarding philanthropists and organizations in the social sector. Public recognition and awards are becoming more prevalent in most economies we studied. Many are volunteering both through their companies and on their own, people are serving on boards, and universities are offering classes in philanthropy and non-profit management.
Our study also shows that the right policies and incentives do matter. Tax subsidies contribute a great deal towards the propensity to give across income levels and have an important signaling effect. Asian philanthropists are pragmatic. People want to help their communities but also want to do this in ways that are aligned with their own government’s goals. When a government signals that philanthropy is appreciated, it has a positive influence on giving.
The right policies can address the trust deficit and mitigate the deleterious effect on philanthropy. Many social delivery organizations in Asia are endeavoring to become more transparent and accountable. In our study, 75 percent of those surveyed have a website and 86 percent have a board of trustees with nearly all reporting regular board meetings. Organisations in 13 of 15 economies are required to submit an annual report. The right regulations create a culture of accountability and facilitate the ability of organizations to report.
However, regulations need to be calibrated to reduce friction in the social sector and facilitate its growth. In some economies, organizations need to work with many government agencies, with one country having 15 different ministries all with different reporting requirements. This puts a burden on non-profit organizations and encourages underreporting.
Last, the social sector is vastly understudied. There is very little reliable data. For the Doing Good Index, we had to create the data from scratch. More information about philanthropy can help address the trust deficit and showcase which practices, models and policies are best in class. There is no dearth of humanity, creativity and commitment in Asia.
The key is to put systems and practices in place that allow us to learn from each other, contribute to our communities and help Asia become a global philanthropic leader and a center for social innovation.
Ruth A. Shapiro is the founder and chief executive of the Centre for Asian Philanthropy and Society.
This article appeared in the South China Morning Post print edition as: Right policies can boost Asian philanthropy.
This article ran originally in the South China Morning Post.