Asian Philanthropy Explained

Asian philanthropy is not well understood, says author Shapiro, head of the Center for Asian Philanthropy and Society. Although charity has existed for millennia, only recently has it developed as a systematic practice, and the “Asian Way” of giving has not become a duplicate of that in the West. Shapiro details its differences—the importance of working with government, the central role of relationships, the challenging “trust deficit” seen by potential donors—and illustrates her points with dozens of case studies. This, the first chapter of Pragmatic Philanthropy: Asian Charity Explained, offers a guide to the motives of philanthropists and business leaders, and to the progress made by the social delivery organizations they support.

Asian philanthropy is not well understood. Although charity has come through individual and family efforts in the region for millennia, only in recent years has philanthropy developed as a widespread, systematic practice. It is growing and becoming increasingly important to society. Studies on the topic are rare-there are more than ten times as many books on American philanthropy as on Asian philanthropy-despite the evidence of a new approach to giving in Asia. Asian philanthropic ventures are not following the path of their Western counterparts, but rather are advancing along their own lines. These uncharted waters need maps.
This book aims to show how Asian philanthropy works. The traits of Asian philanthropy differ from similar practices in the West. These traits are visible across national lines, under many kinds of government, and in a variety of disciplines. They are adaptations to the unique environment in which Asian giving takes place.
What makes Asian philanthropy different, and why has it been so little studied? The most obvious answer is that until relatively recently, Asia has been poor. Given the region's remarkable growth in recent years, it is hard to remember that only in the last generation have significant numbers of Asians approached the common living standards of the West. Korean development was slow following the "temporary" conclusion of the Korean War in 1953. It wasn't until 1978 that South Korea became a middle-income economy. 1 In India, almost a third of the population lives below the poverty line. Even China, which has moved more people out of extreme poverty in the past 30 years than any nation has done before, still struggles with its impoverished past; more than 200 million Chinese continue to live on less than $1.25 per day. 2 When lifting itself out of poverty, Asia naturally focused on economic development first. Without much perceived wealth in a given nation, less attention went to sharing it. But that has changed dramatically in recent years. Singapore, which at the time of its independence in 1965 lacked adequate sanitation and housing, now has a per-capita income of $56,700, the third highest in the world. China now has more billionaires than the United States. 3 It is difficult for those outside of Asia to see how rapid and transformative the growth in wealth has been. China went from having a per-capita income of $1100 in 1994 to $6300 in 2015. India went from $600 to $1800 in the same period. Indonesia's leap has been even greater, reducing the percentage of those living in poverty from 23.4 percent of the population in 1999 to 11.3 percent in 2014, an extraordinary achievement. 4 While the average per-capita income in many Asian countries might still not be high, the numbers reflect much more disposable income in general. Many people and many nations in Asia have moved firmly into middleincome status, and within them, there are high earners with incomes far above the mean.
There are many analyses of what Asian countries did right in order to bring about this dramatic shift. One of the most influential of these was The East Asian Miracle, published by the World Bank in 1993, which explained the rise in income of eight Asian economies from 1965 to 1990 due to two fundamentally important policies and programs: (1) sound fiscal policies creating overall macroeconomic stability, and (2) the development of human capital through the provision of universal primary education. 5 It makes sense that the poor are not philanthropists, nor is there a widespread tendency to create nonprofit organizations to help others when one is worried about food, shelter, and health care. Only with the availability of disposable income can philanthropy rise, alongside the creation of social delivery organizations (SDOs). Until recently, most philanthropy in Asia came from Western foundations and through development assistance. This is changing. Asia is the most dynamic and fast-growing economic region in the world, and philanthropy is rising as the economies grow.
A second reason for the sparse track record of Asian philanthropy is a dearth of information. Until now, Asia-based universities have focused their attention on other issues. Given the need to concentrate on economic development, this is not surprising. It is also not surprising that the situation is changing rapidly. University departments looking at philanthropy and civil society have come into existence in the past few years. In some of the region's top universities, departments dedicated to the study of philanthropy and/or nonprofit management are emblematic of this trend. The National University of Singapore (NUS) created a program in 2011, Hong Kong University in 2014, and Tsinghua University in Beijing in 2015.

The "AsiAn WAy"
To get an accurate picture of the charitable sector in any region, it helps to understand how society views philanthropy and social delivery organizations. The cultural propensity to give and receive charitable donations varies not only by place but also over time. In Chapter 2, we provide the historical overview by country. Here, we can note that while there is great variation throughout Asia, there is one clear strand throughout much of Asian history: the tendency to give first and foremost to family and clan.
Even in the West, philanthropists give partly out of self-interest. Certain wealthy donors like to have their gifts noted for the public, or even to have new buildings and developments named after them. Some gifts are made partly for tax purposes. Asian donors value these things, too, but they go a step further. In making philanthropic donations, Asians commonly donate as a function of personal contacts as well as to organizations that expand their business networks. Thus, donations typically enhance personal and business relationships while also providing support to some important work. Support for such efforts is influenced by each nation's legal and regulatory environment, which in turn stems from historical precedent. Laws encouraging or discouraging the giving and receiving of philanthropic donations change with time. In Asia, such laws are in flux to a greater degree than in the West. There is widespread ambiguity and confusion about what the sector can do. There are two major reasons for this.
One reason is that in Asia, people are still shaping their views about who is responsible for supporting the social sector. Isn't government supposed to be responsible for providing education, health care, jobs, and livelihood? Isn't government supposed to insure the health, well-being, safety, and security of its citizens? In short, of course, the answer is yes. But organizations and individuals can also help provide a social good. In a modern world, with decentralized information and ample digital tools, government might no longer be best suited to delivering all services and goods deemed necessary for the social contract. In the wake of the Asian and global financial crises, governments might also not be ideally positioned to promote all programs for the general good. Public and private outreach can work in tandem to keep a stronger social contract.
The second reason is that, in Asia, there is not widespread consensus on the value proposition of civil society and the role of private citizens. For a Western reader, this question may seem surprising as the establishment of nonprofit organizations, of think tanks, of private philanthropy does not, in the overwhelming majority of cases, pose any existential risk to the government. In a robust democratic society, multiple opinions, analyses, activities, and outcomes are not only tolerated but also lauded. In the West, a paramount role of civil society is to check the power of the government and of the private sector. Civil society is an integral component of a pluralist system. Even the term civil society is often used to mean the collective voices of the people as opposed to government and business. In Asia, many see democracy as a messy process with unclear benefits. In fact, democratic participation isn't as widely valued as economic growth, stability, and other measures of societal progress. In Asia, the term civic engagement might be more accurate than civil society.
If this sounds like modern China, such values are indeed in place. But questions about the costs of democracy come up in many places, with many people. Even in countries with strong democratic histories such as India and the Philippines, there is more than a little frustration expressed about the difficult nature of democratic decision-making processes and the role of civic actors further complicating the process. This frustration can help to explain why in both countries, "strong men" Narendra Modi and Rodrigo Duterte were recently elected as the heads of state. In countries with more authoritarian regimes, the question of what role private actors play in delivering a social good becomes a front-burner issue. In fact, in many Asian countries today, including India, China, Malaysia, Indonesia, and the Philippines, new laws and regulations for the creation and conduct of philanthropic and social delivery organizations are being proposed and enacted, some promoting the practice and others restricting it.
When governments implement restrictions, they are frequently aimed at advocacy groups. When Westerners read about governments limiting the reach of non-governmental organizations in Asia, they are typically reading about groups endeavoring to change the status quo in ways broader than addressing the specific societal challenge. A group seeking to improve eye care in rural China or Indonesia may well be accepted, but one aiming to strengthen citizen legal representation may not.
Though the discussion about the role that advocacy groups play in society is a worthwhile one, it is not the point of our study and of this book. We are confining our analysis to social delivery organizations (SDOs), those aiming to provide social benefits within the given political framework of each nation, and even among those, to groups working in areas associated with basic human needs such as education, health, poverty alleviation, and the environment. Advocacy organizations working in areas such as human rights, legal reform, and labor issues do important work, but it is also necessary to clarify the differences between these types of efforts and those that seek to address challenges lower on Maslow's hierarchy, which places food, shelter, and health among our basic needs.
The distinction between SDOs and advocacy organizations can be difficult to ascertain. Many SDOs also advocate for regulatory change around a specific set of issues. As we will see later in the book, a number of the organizations we studied were encouraged to provide input to the government. Bainian Vocational Services, for example, worked with the government to change the scope and availability of vocational training opportunities for children of migrant workers and the rural poor. Eden Social Welfare Foundation pushed government to create greater access for the disabled in Taiwan, and the Magic Bus was instrumental in getting the Indian government to change educational policies and programs around sports and athletic programs.
But when we talk about advocacy organizations and those that are encountering resistance in Asia, we are specifically referring to those organizations that combine two elements: (1) they do not have intervention programs and spend 100 percent of their time and financial resources on policy change; and (2) these changes are perceived by government as antagonistic rather than complementary. Throughout Asia, the largest donations to these types of organizations come from outside the region. For this reason, states such as India and China are reassessing the way that foreign funding comes into the country and the types of organizations it supports. Currently, in many countries around the world, the degrees of freedom for foreign-funded advocacy organizations are shrinking. This book does not make a judgment about these changes, but merely attempts to describe the phenomena and the possible ramifications on local philanthropy and SDOs.
In the chapter on changing government policies we will explain in greater detail why this is the case, but the simple answer is that within the Asian context, there is far less appetite to fund efforts that publicly criticize government. Although there has not been perfect harmony between the views of government and private businesses or individuals, they have often worked in tandem on aligned agendas related to economic growth. While that is true to an extent in other parts of the world, we will see throughout this book that there are important differences between Western civil society and Asian civic engagement.
What are the roles of philanthropic and non-governmental, SDOs in Asia?
The primary role is to help others in need because it is possible to do so. Helping others is an integral tenet of what it means to be human and has been promoted through the ages in civilizations around the world. The premise and intent are clear. More difficult to determine are the differences in definition and motivation between charity and philanthropy. Are they alike? Charity is the act of giving money, food, or other kinds of help to people who are poor, sick, or need other types of help. Philanthropy is an active effort to promote human welfare. In other words, philanthropy is a formalized and systematic process of being charitable. This book deals with organizations and organized, systematic approaches to helping those in need.
The context for such efforts necessarily includes government. Individual and corporate philanthropy is on the rise, but it is a small amount compared to public spending. In the United States, with the largest and most active philanthropic sector in the world, American foundations together spent about $375 billion on all programs and sectors, compared to $3.8 trillion in federal spending for 2015. Of that federal money, more than $1 trillion went to health and human services. Private donations remain much smaller. This means that even in the United States, with the largest and most robust philanthropic organizations, private funds equal only a small fraction of the financial resources spent by the government.
As a result, one effective use of philanthropic investment is in areas not ordinarily underwritten by government. This thinking results in pilot projects, basic research, riskier ventures in a variety of sectors, and much of the support for arts and humanities.
Our research shows that in Asia, there is an implicit social contract at work. As will be described in greater detail later in the book, Asian philanthropy tends not to go to advocacy organizations, but is in line with and often in partnership with governmental objectives. Though societal forces are driving a revision of this contract in many places, our study shows fundamental differences in how philanthropy and nonprofit organizations work alongside and with governments in the region. Much of this can be understood by looking back at the concept of the "Asian way." The concept of Asian values or the term Asian way came into popular use under Lee Kwan Yew of Singapore and Malaysia's Mahathir Mohamad in the 1990s. The term is used to describe a cultural predisposition toward harmony and collectivism rather than individualism. These preferences also entail greater acceptance of benevolent authoritarian regimes, those offering greater material wealth and a rule-based, but harmonious, society.
The term Asian way has been both embraced and condemned. The notion that there is a difference in how societies in Asia are structured and evolve, compared to their Western counterparts, has been disputed for years. Many scholars predicted that Asia would be like the West once given enough time as many Western nations had more similar conditions a generation or two ago. Indeed, the term Asian way has been out of favor for years, and the region's heterogeneity means the concept is probably too grand and sweeping to cast much light on its modern connotations. But as seems clear from our study, there is some truth to elements of an Asian way, an implicit social contract with government and the deeply rooted tendency to seek harmony.
With this concept, Lee and Mahathir strove to counter the view that Asia is remarkably diverse by saying that within their own multiethnic countries, there are common traits and behaviors that allow for a more collectivist mindset and agenda. It's a bold aim. How can one make statements about a region that covers 50 countries and more than 4.5 billion people? While it would be ridiculous to say that Asia is homogeneous, one can say that there are certain cultural tendencies and behaviors that can be seen across many countries, especially those in East, Southeast, and to a certain extent South Asia. Certain concepts that have emerged from our research-community, cooperation, collaboration-underpin societies across the region, and they provide useful hooks on which to place understanding about Asian philanthropy.
With the above points in mind, a number of Asian governments have begun to come to terms with the existence and benefits of encouraging private philanthropy and the organizations that receive these funds. This is not to say that there are not also rules as to how, when, and where the funds and their beneficiary organizations are to work.
The effect of these rules can easily be seen in Singapore, one of the leaders in recognizing the positive role of citizen engagement in the social sector. Since 2009, qualifying donations have been granted a 250 percent tax deduction including a period of time when it went up to 300%. Not surprisingly, charitable contributions have gone up significantly; 30 percent since the law took effect. 6 According to many donors, this move by the government was important not only because of the tax benefit, especially as the tax rate in Singapore is low, but also because it signals to the public that the government endorses this kind of giving. Such signals carry tremendous weight in other Asian nations as well. In Singapore's case, as in a number of other Asian countries, it is important to understand that only those organizations aligned with government policies are able to get the appropriate accreditations to qualify for receiving these donations.
Elsewhere in Asia, government policy has been less targetted. In India and China, there has been a seemingly mixed set of policies. On the one hand, both governments have endorsed rules to encourage increased giving, but on the other, they have enacted constraints on existing organizations and philanthropies. The policies result from wariness of advocacy groups alongside an increasingly positive view of less controversial philanthropy flowing to social delivery organizations.
India is the first country in the world to require the top companies by market share to provide 2 percent of their after-tax profits to corporate social responsibility activities. As with Singapore, the funds need to go to accredited organizations or government projects, which include programs to eradicate hunger, boost education, improve environmental practices, and to support the prime minister's relief fund. A company can implement these activities on its own, through its own nonprofit foundation, or through independently registered nonprofit organizations that have a record of at least three years in similar activities. Not surprisingly, the law has spurred a boom in the establishment of NGOs in India-as well as in the number of consultants to advise companies on how to spend the funds.
At the same time, India has put foreign organizations, such as the Ford Foundation, under increased scrutiny. Since coming into office, Prime Minister Narendra Modi has linked foreign funding received by some NGOs to the ongoing unrest in the country, and he has emphasized the importance of more tightly regulating the sector. 7 In April 2017, the Indian government revoked the licenses of nearly 9000 nonprofit organizations that had received donations from the West. This move was seen as retaliation-along with restrictions placed on the activities and funds of Greenpeace and the Ford Foundation-against groups that had taken anti-Modi stances. At first blush, the two policies of encouraging corporate giving and clamping down on foreign funding for NGOs seem schizophrenic. The reality is more nuanced. The Modi government encourages programs in line with its own development and social agenda. Whether or not it is fair, it has a utilitarian logic. Most organizations went along with the directive. One international foundation spokesperson said, "We believe that our role is to provide catalytic support in areas that are aligned with the priorities of the government of India." In China, the government has also been warming to the constructive possibilities of philanthropy and SDOs. That may be due to recognition of their benefits, or because the state realizes it cannot, alone, address the impending needs of an aging, more demanding populace. In either case, support of SDOs has received official endorsement. Chapter 39 of the 5-year plan (2011-2015) states that it seeks to "Strengthen the supervision and management of social organizations including cultivation, development, management and supervision of social organizations, promoting their healthy and orderly development…reflecting appeals of the citizenry and standardizing behavior." China is working out the extent to which NGOs can have latitude in crafting and implementing their own solutions. The recently enacted charity law followed 11 years of consultation and discussion with many in the sector worried it would concentrate primarily at curtailing foreign-funded advocacy organizations, those posing a risk to its "ideological security." 8 That does not appear to be its sole intent: the law addresses ways of making charitable donations and the use of funds more transparent and accountable, decreasing the likelihood of fraud. But the law does regulate the types of donations a tax-exempt organization can receive and how and how quickly the funds must be spent. The law also calls for local government agencies to get more involved in overseeing nonprofits, and it is unclear how supportive or open-minded local officials will be. Time will tell if the law will make civic engagement easier and more effective, or not.
Conflicting attitudes toward NGOs are apparent in other ways. In February of 2016, President Xi Jinping called on wealthy Chinese to help the poor through philanthropy-fitting timing when many high-networth individuals are seeking purpose with their wealth. Yet around the same time, Beijing began to modify the law allowing foreign nonprofit organizations to operate in China. The adjustment seemed to be aimed primarily at those organizations engaged in advocacy work. As Ma Jun, founder of the Institute of Public and Environmental Affairs (IPE) explains, "Nonprofit organizations in China must recognize the reality of our national condition." 9 Social work, in line with government policy, is encouraged. Advocacy work is more narrowly tolerated, if at all.
The trend is clear. Some governments in Asia will allow and even encourage increased activity from philanthropic and social delivery organizations, as long as their work suits the government's own agenda.

A "TrusT DeficiT"
Legal fluctuations have been an important factor contributing to a widespread "trust deficit" among SDOs, donors, government, and the public at large. SDOs are not viewed with the same confidence they inspire in the West, and many individuals curtail their giving as a result. In fact, in our interviews with dozens of high-net-worth individuals around Asia, lack of trust in local organizations was the number-one reason cited for the low degree of giving to Asia-based organizations.
Murky and fluctuating regulations and tax policies signal to the public that government is unsure about philanthropy and social delivery organizations. It is not surprising that with the Singaporean tax subsidy, philanthropic giving went up considerably. There are other reasons for the trust deficit, however.
The most damaging influence on public trust in SDOs has been the wide, varied, and highly public scandals that have affected the sector, most especially those that include fraud and the misuse of donated funds. Most Asian nations have had recent experiences with these types of public scandals causing quite a stir in their home economies. The growing role of social media and its freer flow of information has expanded awareness of many such incidents. In 2011, a woman claiming to be an employee of the Red Cross in China posted a picture of herself with her new Maserati, raising popular fury. The Red Cross denied that she was an employee, but an official investigation was never undertaken, and the public remained suspicious that funds had been misused.
In any case, official donations dropped more than 80 percent as a result. Even squeaky-clean Singapore had a very public scandal, when one of the nation's largest charities, the National Kidney Foundation, was found to have misappropriated funds in 2005.
Lack of transparency and disclosure by SDOs has not eased such wariness. In most Asian countries, SDOs are not required to be transparent.
In Korea, most large nonprofit organizations list some financial information on their websites; but because they are overseen by different ministries, each of which has different reporting requirements, the type and quality of the information they provide is varied and weak. In India, accountability expectations are low, and only 600 NGOs out of an estimated 500,000 have so far subscribed to the high standards of the Credibility Alliance, a watchdog aiming to improve trust through better governance.
In China, work by the China Foundation Center (CFC) has helped foundations become increasingly transparent. Because many foundations in China are actually operating organizations, the work of the CFC covers a number of SDOs. Those organizations choosing to be transparent, by providing their annual reports for public viewing and through other means, tend to find it easier to raise necessary funds. CFC now has data on 4000 foundations.
Social delivery organizations are often not required to be transparent, and many lack the expertise and skills to provide this information even if they want to. Any such inability adds to the perception of charities as lacking in skill, talent, and effectiveness. Some presume they need not learn such skills beyond showing cost savings. That perception is changing as impact and effectiveness become more important than measures of overhead and costs. The skill set of SDOs is also improving as more people choose to go into public service either out of college or as an "encore" career. Business engagement, especially through corporate social responsibility programs, is also improving the professional skills and understanding of SDO staff members. In Chapter 7 we will explore various ways that business is playing a role in influencing the sector and expectations for the SDO sector.
Much of this is new. University programs in this sector have not been around long, and they are still not widespread. Furthermore, there are few supplemental training programs outside of university. SDO staff might have hearts of gold, but they often have not been shown how to establish solid accounting systems, to evaluate their impact, or to tell stories of their programs in a professional manner.
Lastly, a factor that increases distrust is the question about how to define an NGO or a nonprofit organization. Currently, there is no Asian nation that legally differentiates advocacy organizations from social delivery organizations. This reality, coupled with a lack of transparency, means that it is often unclear what a given group aims to do and how well it will be tolerated. Although many SDOs do have an advocacy component to them, it might be useful to designate those with the sole aim of policy change from those that are carrying out programmatic initiatives.

An empiricAl AnAlysis
So what makes a successful SDO? What makes an effective philanthropist, and what constitutes good philanthropic practices?
With the increasing number of philanthropists in Asia, some funders and consultants have stepped up to offer guidance as they determine what and how they will fund, though the number of organizations in this space remains very small compared to the West. The Centre for Asian Philanthropy and Society (CAPS) is one of the few Asia-based organizations doing work in this space. We understand that just as in business, the most effective strategies may vary with the location. To determine which approaches worked best, we began our substantive, empirically based research on effective practices within the Asian context.
Asian economies have done very well in the past couple of decades, creating a growing middle-and high-income class in the region. Disposable income translates to the purchase of consumer goods such as phones, televisions, and cars, but it also means that many more have the ability to think about giving back to their communities, about addressing societal inequalities, and about improving education, health care, and the environment, among other issues. In Asia, the result is an increase in the number of SDOs, and also a rise in the activity of philanthropists.
Throughout this book, we will use the term social delivery organization (SDO). As will be explained in a subsequent chapter, the term NGO (nongovernmental organization) is not appropriate as many of these organizations are connected to the government. Nonprofit organization is also not appropriate given the rise of social enterprises and other profit-making income streams.
Asian philanthropists are making news. Take, for example, Ronnie Chan, CAPS' Hong Kong-based chairman. Mr. Chan and his brother Gerald donated US$350 million to Harvard University in 2015, at that time the largest contribution in Harvard's history. Or look at Azim Premji, who put US$2 billion into his foundation for innovative improvements to India's 1.3 million government-run schools. More and more individuals are joining this nascent field to deploy growing funds, create more programs, and bring positive changes to the quality of people's lives. Why cAse sTuDies?
We needed to understand if there are important differences in how ideas are formulated, coalitions built, and work undertaken in Asia. To do so, we sought out successful organizations to analyze the ingredients that enabled their success. We also studied their funders and other philanthropists in the region to see if there are shared characteristics involved with their giving. Subjects of the case studies as well as our partners in this project vary in type. Some are nonprofit organizations. Others are quasi-governmental groups, and yet others are corporate foundations. Several combine business enterprise with social good. Landwasher, a for-profit firm, has found a low-energy way to provide sanitation systems in China. The Eden Social Welfare Foundation in Taiwan provides services and generates 25 percent of its income from businesses involving the disabled. Our studies on other hybrids of profit/nonprofit and public/private partnerships help us see the different roles they play in their respective contexts.
Each of our chosen groups aligns with the priorities of the Sustainable Development Goals, a set of 17 global benchmark issues broadly seen as essential. We focused on four categories: education, health, poverty alleviation, and the environment. Another criterion was that each be free from scandal, not a simple requirement when many groups are stronger on passion and commitment than on record keeping and accounting. We wanted organizations with impeccable credentials.
All are local groups, not local branches affiliated with international organizations. Some of our donors questioned this criterion, as they have close relationships with global organizations. But international nonprofits come with established tool kits; they have governance systems, know how to fundraise, and conduct measurement and evaluation. We wanted to know how local conditions influenced all of those we studied from the start. We felt so strongly about this that we had to let one donor to walk away when she would not support this focus to our learning-a tough decision for a new organization operating on a shoestring! Finally, we wanted to find organizations that offered an opportunity to learn something new-those that had introduced an innovation, or scaled their impact, or had evolved in a meaningful way. We wanted each case study to offer useful lessons.
The case studies have allowed us to identify characteristics and strategies of successful Asia-based SDOs. Through them, we have been able to interact with a range of Asian philanthropists and business leaders to gain deeper awareness about what motivates them in their giving. These benefits together allow us to paint a picture of the state of the field today.