As with wealth planning, a one-size-fits-all approach does not work when it comes to philanthropy within APAC. Different taxation and regulatory regimes, combined with differences in religion, culture and local issues, mean that advisers need to provide bespoke advice and planning to fit in with a client’s unique values and causes.
What can be said, however, is that the overall traditional method for giving has, in the past, been focused on local communities and, particularly, around religion. At the top end, philanthropy often engages the younger generation and introduces members to a family foundation. With this generational change comes a change in expectations too. Rather than just giving, younger generations want to be more active in their approach and be able to evaluate the impact of their giving.
The impact of the younger generation’s change in focus will obviously come to the fore as they inherit and create wealth. The younger generation has different causes and ways of doing things. There is also an economic dynamic, too - with an upwardly mobile population making for an opportunity-based society and a change in attitude towards solving problems for the long-term rather than just giving to a cause without any long-term impact.
A third element is that younger generations are technology-enabled and can easily access it, giving to causes out of the locality. They are better aware of what is happening locally, regionally, and internationally. Accordingly, wealthy philanthropists and investors are looking out to the wider world to see what has worked and been successful in terms of the target and the structure.
Impact investing
These elements have combined and brought about an increased interest in impact investing. As opposed to simply giving, impact investing means that their money is still working for them and creating tangible results for the cause or recipient of the investment. The approach is more about enabling innovation and solving the root cause of an issue.
The adviser opportunity
For advisers, the opportunity is to provide their clients with the information and access to the expertise they need to make those decisions and invest or give accordingly. They can look at the client mandate and the risk profile and then at the value in a given investment from a cause or whether a gift or offering programme would be of value and where.
Something that can also be challenging to overcome is that, unlike conventional investments, there is also the need to consider vested interests, conflicts of interests and how success should be measured. This could be a huge potential area for advisers to add value. If they get the links to the right organisations, methodology and people able to give wealthy clients the information they need to make decisions and the correct structures to take action with.
Access to giving structures that are prevalent in the West often comes with tax incentives and are now readily available in APAC. There are several impact investing funds, such as India-based Social Alpha Architecture, which is built around a not-for-profit platform: Foundation for Innovation and Social Entrepreneurship.
Other organisations that provide a structure and process for giving also exist. For instance, the Narada Foundation’s purpose is to build an ecosystem for the philanthropy sector, promote cross-sector collaboration and innovation, and encourage everyone to be a change-maker for a better society. The Asian Venture Philanthropy Network, meanwhile, is another ecosystem builder that is increasing the flow of financial, human, and intellectual capital from Asia and around the world into the social sector in Asia.
The Asian Philanthropy Circle is a platform for Asian philanthropists to jointly grow the impact of their philanthropy and to catalyse Asian philanthropy. There are also social impact bonds and the Women’s Endowment Fund, which aims to inspire women about effecting positive change through philanthropy.
What next?
The expectation is that there will be increased uptake of impact investing in favour of broader philanthropy. Organisations and mechanisms that are currently at an early stage will develop. There will also be better links to community development schemes that create a project like solar power or access to clean water and where direct investment or giving and support could help. Some of the more significant thematic issues relevant to the region will also receive attention as the region’s next generation starts to look outwards. For example, there is a big dependency throughout the whole area on the marine ecosystem. So, schemes to protect it are large and small, international and local, and the likelihood of them growing in number will increase as the concept gains traction. All in all, the direction of travel is for impact investing to become a significant part of asset allocation. The structures and solutions that come into place to protect it will be formalised and become well-known.
This article is from The Wealth Mosaic’s APAC WealthTech Landscape Report 2023. Access the full report here.
