While Hong Kong has been "doing good" in philanthropy, its Asian counterpart, Singapore has surpassed it by offering better tax incentives and efficient methods in setting up charities. Ruth Shapiro and Ronnie Chan address the lag in Hong Kong.
Hong Kong lags Singapore in facilitating philanthropy
Singapore has the leg up on Hong Kong in terms of facilitating philanthropy by offering larger tax incentives and better efficiency in setting up charities, according to the Centre for Asian Philanthropy and Society (CAPS). By offering a 250% tax deduction on charitable donations to both individuals and corporates, Singapore tops the table for the biggest charitable tax incentives, both in the region and around the world, spurring philanthropic sentiments in the city-state since 2009 when the incentive was first announced.
According to the Doing Good Index 2018 — a measure of a jurisdiction’s infrastructural ability to enable or impede philanthropic giving — published by CAPS, the majority of the 15 surveyed Asian jurisdictions offer individuals and corporations at least a 100% tax deduction for charitable donations, compared to the 35% offered by the Hong Kong government.
“This city is plenty wealthy enough to align incentives so that people are encouraged to support this sector. We would encourage the government to do so,” said Ruth Shapiro, founder and chief executive of CAPS, in a dialogue today with Ronnie Chan, a philanthropist and the chairman of Hang Lung Group. “People are not donating because of tax reductions, but whenever there are tax reductions offered in the jurisdiction, most likely donors will take it, which is not a bad thing at all,” Shapiro added.
CAPS research found that the tax and fiscal policy sub-index most closely mirrors the respective economy’s overall performance on the Doing Good Index, highlighting the significance of the factor’s influence on people’s willingness to give. According to Shapiro, tax reductions not only provide financial incentives to givers but also represent how committed the government is to philanthropy — an important feature for potential donors.
Hong Kong also lags its Asian counterparts in the time it takes to set up a charity. Although the regulations governing social delivery organizations (SDOs) are relatively straightforward, it takes 360 days for an SDO to receive charitable status — the longest of all jurisdictions in Asia.
“While it is not necessarily good to have the shortest time needed to set up a charity, 360 [days] is a bit extreme and we would like to see the duration move towards the regional average,” said Chan. Hong Kong makes up philanthropic ground when it comes to donating across borders — its government does not collect tax on charitable fund flows to other countries, while Singapore deducts tax on any funds that flow to another jurisdiction.
Despite its philanthropic shortcomings, Hong Kong fell into the Doing Good Index 2018’s second-tier — “doing better” — behind Japan, Singapore, and Taiwan, which sit in the top “doing well” tier. However, Chan said that the placement only reflects how well the region’s infrastructure supports charitable giving and does not take the generosity of locals into consideration.
“You may not necessarily want to score at the highest category, although it’s sort of nice,” said Ronnie Chan. “Having the infrastructure there doesn’t mean that people there are necessarily very philanthropic.” Chan listed multiple examples of Hong Kong tycoons giving back to society, including recently deceased philanthropist Tin Ka Ping, who donated hundreds of millions of dollars to educational institutions in Hong Kong and Mainland China.
Chan wrapped up the discussion by encouraging more tycoons and wealthy families to not just write cheques to charities but to be advocates for donating charitably. “We are looking for more rich people who are willing to donate, but we are also hoping to see a few more advocates who are willing to set an example for others in philanthropy,” he concluded.
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