The idea of doing a public good with one's wealth is something most people find appealing, and has huge benefits for civil society. In Asia, the explosion of new wealth in recent years has increased the potential of the region to add to this pool, though charitable giving in the region has thus far been slower to materialize.
The good news is this appears to be changing, in part due to new generations embracing the notion of a more systematic approach to giving and taking advantage of an improving regulatory environment.
Indeed, new research suggests there isn't a shortage of desire in the region to turn wealth into good deeds.
Commissioned by RBC Wealth Management, The Economist Intelligence Unit (EIU) undertook a study of 1,051 high-net-worth individuals (HNWIs), including 220 respondents in parts of Asia (China, Hong Kong, and Singapore), from March to May, 2018. The survey explores how the meanings of legacy and wealth are being redefined across regions, genders and generations.
New wealth is driving giving
The new face of wealth and legacy study shows 81 percent of respondents in Asia believe they have more opportunity to tackle societal issues, specifically through investing, compared to 56 percent in the West.
Add to this the fact there is now more billionaires in Asia than any other area of the world, and it's clear the ingredients exist for an explosion of philanthropy - good news in a region with substantial environmental and social challenges.
“There are a lot of wealthy people in China and also in Hong Kong that became wealthy in a very short period of time because of technology or startups. And these people are basically looking at what they will do with the money," says Janice Park, director of client strategy and business development at RBC Wealth Management in Singapore.
The wealth explosion in the region has been staggering. According to research firm Wealth-X, the number of billionaires in Asia reached 784 last year, eclipsing the 727 in North America, with the bulk of the growth in mainland China and Hong Kong.
Perhaps naturally, there has been a bit of a lag between the explosion of wealth and the development of a culture of philanthropy, says Vivian Kiang, head of wealth planning for Asia at RBC Wealth Management in Hong Kong.
“In Europe you can easily have generations up to the third or fourth generation. In Hong Kong, I would say the second generation or the third generation is on the rise. Whereas in mainland China, it's still the first generation of wealth," she says.
The tradition of family
In China in particular, there is a traditional desire to focus resources on ensuring the continued prosperity of one's family. Charitable causes are not necessarily ignored, but the trend in the past has not been to make it a major part of one's estate plan.
In The EIU study, 82 percent of younger respondents in Asia say they have more opportunity to tackle societal issues that are personally important to them, compared to 70 percent of older generations.
“When I talk to clients, I would say the majority of them are focusing on how to structure the wealth to pass on to their kids or grandchildren. It's all the bloodline family that they want to benefit," says Kiang.
However, this traditional approach may be evolving to incorporate more outside giving as younger family members - many whom have spent time living in the West - inherit estates and feel less constrained by traditional habits.
“When the second generation comes in, basically they're … trying to make changes," says Park.
A shift to a more systematic approach to giving - long embraced in Europe and North America - is also part of the transition in giving happening in Asia. Traditional giving in mainland China, and to a lesser extent Hong Kong, was usually done through one-off donations, often to local schools or hospitals. The idea of more structured giving through foundations is being embraced by the new generation.
“A lot of first generation (wealthy) patriarchs have given cheques to the associations and organizations they want to help out. But it's changing," says Park.
Perhaps predictably, the younger generation takes a broader view of giving, with a larger focus on environmental or social issues that affect the entire region, according to Park. The younger generation is also less private about its giving than past generations, which can inspire others to follow suit.