Naina Subberwal Batra, Chairperson and CEO of AVPN, writes about the growth of social investing in the region and its unique characteristics.
I grew up in India in the 1970s and 1980s, a time when conspicuous consumption was frowned upon, spiritual values admired, and the West was seen as a glittering bazaar of fancy brands that Indians could only admire from afar.
Few would have predicted that less than a generation later, my hometown of Bangalore would be a global high-tech hub known for its pulsing nightlife; India would have more billionaires than any other country in the world, besides China and the United States; and the Mumbai skyline would include the world’s most expensive private residence, a 27-story mansion with three helipads, 50-seat movie theater, and garage parking for more than 100 cars.
This Cinderella story has played out again and again across much of Asia. In 2017, Asia’s ultra-wealthy population grew by 18.5% and its total wealth shot up by 26.7%, twice the rate seen in the United States. In China alone, there are 799 billionaires, with four out of every 10 new billionaires created coming from this nation.
As Asia’s wealth has increased, so too has its philanthropy sector.
Indian tech tycoon and philanthropist Azim Premji leads the way with his donation of US$ 21 billion to his Azim Premji Foundation — making it one of the largest foundations in the world. But Premji isn’t alone. We’ve witnessed a continent-wide transformation — from a deep tradition of “charity,” given privately to needy family and friends, we have seen a shift to more strategic and institutional philanthropy that is leveraging hundreds of billions of dollars in wealth to do great good in the world.
Charitable giving in China has more than doubled in just seven years, from US$ 10.5 billion in 2010 to US$ 23.4 billion in 2017. Philanthropy in India is on a similar, exponential trajectory, growing from US$ 1.66 billion in 2010 to US$ 7.3 billion in 2018.
As the philanthropy sector in Asia swells and matures, it is worth pausing to consider what is its secret sauce — what makes it special, and what makes it effective?
Unlike in the West, where the history of philanthropic giving through foundations stretches back more than a century (the Ford Foundation was established in 1936, The Rockefeller Foundation in 1913, the Carnegie Foundation in 1906), this is a relatively new concept in Asia. With few local role models, philanthropists in Asia are forging their own paths, following innovative and flexible strategies.
Consider the Yidan Prize. Established seemingly overnight by Charles Chen, founder of Tencent, the prize of US$ 3.9m is a vehicle for seeding meaningful cross-sector global discussions and research on improving education globally. The prize is like no other, and, in fact, mirrors Tencent’s own business model in many ways — incorporating funded research, events, and multimedia content.
Asian philanthropists tend to work across sectors and their investments often follow the priorities laid out by governments. To achieve impact at scale, they often seek to partner with governments. As a result, we see less funding for advocacy organizations, which tend to focus on changing government policies and priorities, and more funding directly to support and improve government services and programs.
Indonesian entrepreneurs Sukanto Tanoto and his wife Tinah Bingei Tanoto have taken this approach with their foundation, which works closely with governments in Indonesia, Singapore, and China to improve public schools and promote good nutrition.
Asian philanthropists generally value moving quickly.
We saw the remarkable benefits of this in the early days of the COVID-19 pandemic. In January 2020, just weeks after the first reports of the virus surfaced, Chinese billionaire and Alibaba founder Jack Ma pledged US$ 14.5m to support the development of a COVID-19 vaccine. As the pandemic spread, Alibaba’s corporate foundation moved quickly to establish the Global MediXchange to help doctors across the world share best practices during the pandemic. Likewise, in the space of a week, the Narada Foundation, which focuses on education and support for migrant children in China, pivoted to establish, along with about one dozen other partners, the China NGO Consortium for COVID-19. The consortium quickly began the herculean task of coordinating the deployment of tons of disinfectant, millions of masks, and thousands of walkie-talkies and protective gloves to healthcare providers in the most affected areas of China.
COVID-19 demonstrated the critical role Asia’s philanthropists are playing as nimble partners to governments across Asia.
While many philanthropists in the West responded to COVID-19 with donations of masks, ventilators, or financial support to their local hospital or favorite local community organization, many of India’s leading philanthropists focused on contributions to the Indian Prime Minister’s COVID-19 fund. They included Savitri Jindal & family, owner of India’s leading producer of steel (pledged US$ 13.3m); Uday Kotak, the founder of Kotak Mahindra Bank (US$ 3.3m); and ports tycoon Gautam Adani (US$ 13.3m). On top of donating US$ 67m, oil and gas magnate Mukesh Ambani established India’s first COVID-19 center with 100 beds, while tech magnate Azim Premji announced that his foundation’s 1,600 employees would collaborate with government and healthcare workers, on top of a US$ 134m commitment.Over at Tata Group, Ratan Tata pledged US$ 66.7m alongside the launch of an initiative by the group to manufacture ventilators for use in government and private hospitals. Others, such as the Harish and Bina Shah Foundation, have donated to their state’s Chief Minister’s COVID-19 fund.
Across Asia, philanthropists have likewise stepped forward to assist and strengthen governments’ response to the pandemic. In Thailand, Dhanin Chearavanont’s Charoen Pokphand Group, a leading producer of animal feed and livestock, built a US$ 3m factory in Bangkok to produce 100,000 surgical masks per day for healthcare workers. It is also delivering free meals to patients and staff in more than 40 public hospitals across Thailand.
At the time of my writing, the most generous response to the pandemic has come from Chen’s Tencent Holdings, which pledged US$ 216.3m, both directly and through its foundation.
The growth of Asian philanthropy shows no sign of slowing. As governments around the region recognize that philanthropists’ investments often align with governments’ goals, they are creating and expanding tax benefits to endorse and promote such activity. These new and more favorable government policies are encouraging ever greater numbers of ultra-high-net-worth Asians to launch their own philanthropic initiatives.
In 2009, Singapore granted a 250% tax deduction for qualifying donations. In 2014, India became the first country in the world to require the largest companies to invest 2% of their after-tax profits to corporate social responsibility activities. In 2016, China adopted a corporate tax deduction for donations to approved charities of up to 12%, higher than the deduction available in the US, which currently stands at 10%. Each of these unlocked greater philanthropic engagement and resources.
What will Asian philanthropy look like in another generation? I have a few predictions: it will be even larger, more impactful, and — in continued partnership with governments — it will help to transform Asia and the planet in ways we can’t even imagine today.