How To Unlock Billions From Asia’s Philanthropists

If the right regulatory and tax policies were in place, Asian philanthropists could give over US$500 billion.

At a time when personal wealth in Asia is at an all-time high, with more billionaires in the region now than anywhere else in the world, the region’s philanthropists are capable of giving around 11 times more than they are currently, according to a new indexlaunched by the Centre for Asian Philanthropy and Society (CAPS).

If governments in Asia created the right incentives, regulations and tax policies, it would create a “magic recipe” for philanthropy in the region to “leap ahead” of its current status, says Dr Ruth Shapiro, chief executive of CAPS.

In recent years, Official Development Assistance for the entire Asia continent stands at US$45.5 billion, where it could be US$500 billion, if compared with their philanthropic peers in the West. US$500 billion is equivalent to 2 percent of Asia’s combined GDP, with 2 percent of GDP being the US giving benchmark.

The report examines 15 Asian economies’ tax incentives, regulatory regimes, procurement procedures, and cultural conditions. Based on these four areas, the index and accompanying report reveals how well the economies are catalysing philanthropic giving, if at all. The survey was filled out by social delivery organizations (such as NGOS), and there was a separate exercise with sector experts (80 across 15 economies) based on numerous interactions and previous work with philanthropists throughout the region.

Japan, Singapore and Taiwan score higher than the Asia average, according to the report, but all economies could improve. Hong Kong, Singapore, Malaysia, Philippines, Thailand, Vietnam and Sri Lanka are in the middle of the index.

India and China, although at a low base, are slowly improving as governments have introduced sweeping new laws in recent years focused on international and local private social investment. The FCRA legislation and International NGO law in China focus on international NGOs operating in and foreign funding coming into the country. The CSR legislation in India and the new Charity law in China are meant to increase domestic philanthropic and CSR spending.

Indonesia and Myanmar, at the bottom of the pile, have weaker institutions, laws and enforcement mechanisms to support formal charitable giving. Many economies in Asia are rethinking the policies affecting the sector including Indonesia, Cambodia, Myanmar, Thailand and Pakistan, said the report.

“The environment in which philanthropists operate in Asia is severely understudied,” said Dr Shapiro. “We developed this index to help philanthropists, researchers and, importantly, policymakers in Asia understand what exactly needs to be done to stimulate more investment into the social sector.”

The report also highlighted that a trust deficit impedes giving. “With a fluctuating regulatory environment; ambiguity around the goals of NGOs; front-page financial scandals; the inability of many organisations to be transparent and accountable; and a historical tendency for the best and the brightest to go to other sectors, it is easy to understand why this might exist among prospective philanthropists,” says the report.

“There is unprecedented space and opportunity for Asia to leapfrog ahead and be on par with donors in the West,” Dr Shapiro explained. “But for this to happen, Asian governments need to lay the right regulatory, institutional, and even cultural and social foundations for private social investments to thrive.”

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