For many, philanthropy is about more than giving wealth away. It often involves committing to a purpose and supporting causes that create a positive impact on society. And, as the world grapples with the economic fallout caused by a global pandemic, pressing social and environmental issues have come to the forefront.
In addition, the landscape of wealth is also shifting. As wealth changes hands to the next generation, a larger proportion of Gen X and Millennial investors will be in control of their family's wealth and legacy by 2030.1 In Asia specifically, the number of high-net-worth individuals (HNWIs) is set to outnumber that of Europe, the Middle East and Africa.2 By 2023, Asia is projected to be home to more than a third of the world's billionaire population.3
The COVID-19 pandemic has led HNWIs to shift the focus of their philanthropic efforts4 while the changing landscape of wealth in the region could further amplify this trend of charitable giving.
Philanthropy with a purpose
Philanthropy has traditionally encompassed private initiatives for the public good. Recently, this definition has started to evolve. “Rather than the term philanthropy, we like to use the term 'social capital' because it encompasses a broader vision of what philanthropy is and what it could be in the future," explains Dr. Paula Murphy Ives, managing director, Social Capital & Impact, Enterprise Strategic Client Group at RBC in Toronto.
Murphy Ives explains the idea of social capital can go beyond writing a check. “It's about thinking long-term and being more strategic about how as an individual—or families and communities—think about impact and the kind of world they want to build." She says it could be working together or within a new family foundation or social enterprise to benefit society. Murphy Ives stresses the importance of having a lasting vision and centering it on the legacy one might want to create to make the world a better place.
Accumulating wealth is not the only focus for HNWIs in Asia. Jerry Zhao, head of Trust Administration at RBC Wealth Management in Asia, highlights that philanthropy in the region is certainly undergoing a lot of changes. “Doing good and giving back to society is ingrained in Asian cultures. And COVID-19 gave people an opportunity to slow down and rethink. In the face of the pandemic, more conversations have arisen around public health and giving back to society."
According to research conducted by the Economist Intelligence Unit, commissioned by RBC Wealth Management, 72 percent of HNWIs in Asia think it's increasingly important to consider environmental, social and governance (ESG) factors when investing, compared with 43 percent of those in the west.5 And when it comes to philanthropy in the region, Vivian Kiang, head of Wealth Planning at RBC Wealth Management in Asia, has observed a wave of interest in social giving in recent years.
The next generation of giving
The rise of the next generation of HNWIs also played a part in contributing to the surge in philanthropic activity. Zhao affirms this as he noticed “the trend of a generational wealth transfer happening with a huge part of the second generation more open to the idea of philanthropy."
“The second generation of HNWIs in Asia are increasingly engaged in different formats of giving," Kiang adds. Part of this generation also belongs to the broad network of Asia's global families. They may have crossed borders for education, employment or property acquisition. As most of this generation is educated abroad, they're more exposed to western values and increasingly aware of global issues. “They have that knowledge and they do not want to blindly donate," she explains. This generation is now approaching investment in a new light, seeing it as a way to create a lasting, positive impact.
Networking also plays an important role in Asia's philanthropy landscape by sparking conversations. “For the second generation, they have the social circle, they have their friends and they have the network," says Kiang. “They are very outspoken about donations and if they keep talking about it, they will impact other people to make a difference. And I think we are starting to see that kind of ripple effect in Asia."
Strategies to give back
When it comes to giving back to the community, Murphy Ives sees many different strategies to do so. These can range from supporting a charitable cause, which doesn't take much time or effort, to setting up a long-term fund with the potential to grow many decades into the future. “An established fund can be used to invigorate the next generation," she adds. "And spur them to take up the baton to run a social enterprise that can help to further those causes that were identified."
Murphy Ives invites families or groups to sit down together and think about their individual and collective passions for social change, what's missing and what needs to grow and build on that.
Kiang also thinks having a common purpose can bring a family closer together. “Every family is structured in a different way but adding a donation-giving project within the family to manage together will pull everyone together for one good cause."
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