Banking Asia's rising philanthropy

Charitable giving is on the rise in Asia and private banks are helping rich clients accomplish their plans.
Siem Reap
Siem Reap

When Rebekah Lin, the director of the Singapore-based Jia Foundation, went to Cambodia two years ago, she fell in love with a little school in Siem Reap and wanted to do more to help the impoverished place. “A lot of people misunderstand that Siem Reap is a tourist city, so they don’t need help, but it’s actually a very poor city,” Lin told FinanceAsia.

However, she wasn’t familiar with the lay of the land in Cambodia and also found it tricky setting up her family’s foundation around that time. “We were looking around for a year-and-a half for the best structure to set up our foundation and were hunting for the best way to do it but it was complicated,” she said.

Rebekah Lin

To help her to structure the foundation and identify worthy charitable causes, she turned to Credit Suisse Private Bank’s philanthropy desk. The Jia Foundation was set up under Credit Suisse’s SymAsia Foundation, which provides administrative and governance support for clients.

The administrative costs are borne by Credit Suisse and participating foundations have access to governance through an independent board of governors that includes Tommy Koh, Singapore’s ambassador at large at the Ministry of Foreign Affairs.

Today the Jia Foundation, which supports Singapore charities such as KK Hospital Health Endowment Fund and the Yellow Ribbon Fund as well as projects in Cambodia, is one of about 30 foundations under SymAsia’s wing.

Young fledgling foundations often face start-up challenges and some of them are turning to private banks for advice on how to operate their charitable giving efficiently. “As a family, we were already giving the past couple of years but it was ad-hoc giving. For us, we wanted to structure it because we felt that it’ll be easier for everyone to keep track,” Lin said.

As wealth grows in Asia and rich private banking clients step up their philanthropic efforts, private banks such as Credit Suisse are looking to play a role by helping to combat some of the obstacles their clients face. The Swiss bank set up a dedicated philanthropy advisory team in 2011.

Bernard Fung

“If you were to set up your own foundation, you will very quickly run into a number of things you will need to sort out, things such as administration, [like] how am I going to keep track of all my giving [and] how am I going to monitor it and do due diligence?” said Bernard Fung, head of family office services and philanthropy advisory, Asia Pacific, Credit Suisse Private Banking & Wealth Management.

“By providing governance and solutions, we enable clients to focus on what they ought to be focusing on, which is where my money should be going and how I would like to give it away,” said Fung, who heads up a team of six in Asia, three of whom are dedicated to philanthropy.  

Not every bank has a dedicated philanthropy desk and those that do still have lean teams. Fees can be waived for some services such as initial advice and disbursement of donations, though banks may charge for specific projects.

Even if they don’t earn a fee, providing advice can benefit private banks in other ways.
“Some banks do position a fee-based approach, others use it as an opportunity to get much closer to their clients and because there is a big emphasis and linkage to the client’s value and belief system...if you keep the clients closer, potentially you have the ability to gather other assets eventually,” Nam Soon Liew, EY Managing Partner, Financial Services, Asean, told FinanceAsia.

Christina Tung

But with wealth burgeoning in Asia, private bankers say they have seen only rising demand for their services. “I have been here for nine years and have seen only growing demand from clients,” said Christina Tung, who heads up philanthropy and values-based investing for Asia Pacific at UBS Wealth Management, leading a team of eight people who are dedicated to philanthropy in Asia. “There is so much new wealth being created, particularly in countries like China.” Swiss private bank UBS set up a philanthropy desk in Asia about 10 years ago.

Jean Sung, head of The Philanthropy Centre at JP Morgan Private Bank Asia Pacific, previously headed JP Morgan’s corporate giving across 13 Asian countries, before assuming her current role two years ago.

She too has seen only rising demand for philanthropic services. “More than 75% of Asian businesses are owned by individuals or their families,” Sung told FinanceAsia. “Whether it is the private individual giving or [their] companies giving, there is a strong rise in corporate social responsibility [and] there is a strong rise in foundations,” she said.

Sung heads a team of two in Asia that is dedicated to philanthropy, though she has broader support within the bank. She is looking to expand her headcount in line with rising demand. Globally, JP Morgan has 10-11 people dedicated to philanthropy.

Although many of Asia’s wealthy families already have well-established foundations, these still collaborate occasionally with private banks. One example of this is the Hong Kong-based “We R Family Foundation” which provides after-school support for children in poor regions in Hong Kong.

The foundation’s benefactors include the Li Ka-shing Foundation, Wiseknit & Wella Factory, and Chan Kwan Biu Memorial Foundation Limited. “They were able to leverage our expertise as [the] UBS Optimus Foundation focuses on [child] education issues including education, health and protection,” UBS’s Tung told FinanceAsia. The Swiss bank had a partnership with the foundation between 2011 and 2013 and provided a total of about Sfr900,000 ($940,507) in funding.

Thanks to the amount of wealth being created out of China, Chinese entrepreneurs are becoming a rising force in philanthropy. According to a UBS and PwC report, China produced a new billionaire almost every week in the first quarter of 2015. Across Asia, billionaire wealth is predicted to surpass US levels in the next five to 10 years, the report said.

Given the relatively newfound wealth in China, many philanthropists are starting young. “The China clients have the fastest growing demand [for philanthropy] among all the Asian clients. In Hong Kong or Southeast Asia countries, traditionally clients start getting more involved in philanthropy when they are older,” UBS’s Tung said. “For the China philanthropists, a lot of them are very successful in their 30s and 40s and are already actively involved in philanthropy.”

Examples of big Chinese donors are entrepreneurs who have recently gained wealth such Alibaba’s Jack Ma, who floated his e-commerce company in 2014 in a $25 billion initial public offering – the biggest in the world.

Jean Sung

According to the Hurun Rich List 2015, Ma and his family were the biggest donors in mainland China in 2015, with a donation of $2.4 billion. Other prominent businessmen that feature on the list included Wang Jianlin from the Dalian Wanda group, who donated $51 million, making him the third-largest donor, and Xu Rongmao, the billionaire founder of Shimao Property, who donated $32 million, making him the seventh-biggest donor.

Perhaps unsurprisingly, given the emphasis on academic learning in Asian culture and the belief that it is the best way to break the poverty cycle, Asian philanthropists have heavily supported education as a cause.

A joint study by Insead and UBS showed that education was the top sector for philanthropic support in Asia in 2011, accounting for 35% of projected giving. It was followed by poverty and development, health, and disaster relief, which accounted for 12%, 9% and 5% of the total, respectively.

“Education is [ranked] very high in Asia, the majority of the money goes there,” JP Morgan’s Sung said.

Given the lack of wealth in Asia, many Asian philanthropists tend to focus on their own country rather than global issues. However, it is also difficult to track the amount of charitable giving in Asia, where much of it goes unreported. In the US, in contrast, foundations often report their donations for tax deductions and charitable giving is more transparent.

“US is leading the world in terms of philanthropy and professionalism,” UBS’s Tung told FinanceAsia. “In terms of professionalism we are behind the West but we have seen the trend that many Asian clients start to see the need to run philanthropy like a business.

Nam Soon Liew

As wealth gets passed on to younger generations, the new generation is more focused on where the money is going and whether their contributions are generating change. Young philanthropists also tend to be more engaged in their charitable giving.

"The younger high net worth individuals are now also stressing more the importance of trying to link philanthropic activities with measurement, measuring the impact and the value and return on that investment, not necessarily financially but also from a social standpoint," EY’s Liew told FinanceAsia.

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