In Asia, a Different ‘Art of Asking’

The Asia-Pacific region currently has the third-largest concentration of wealthy individuals in the world.

The number of

people with $1-million or more in assets grew 8.6 percent from 2005 to 2006, according to a study by Capgemini and Merrill Lynch. At the same time, the total wealth of those individuals grew 10.5 percent. At its present rate of growth, Asia will, within the next six or seven years, overtake Europe as the second-richest region on earth.

This is remarkable, since virtually all of the wealth in Asia is less than 60 years old. World War II and the Cultural Revolution in China meant the destruction of wealth for most families in Asia. Thousands were displaced or fled from war and revolution to safe havens like Hong Kong, where they started over from scratch.

In the past few decades, as the number of wealthy people in Asia has skyrocketed, the first generation of philanthropists has emerged.

Universities and other nonprofit groups in the West have taken notice, and have learned — mainly by trial and error — that raising money in Asia is fundamentally different from fund raising in North America and Europe.

So much is known about wealth and giving in the West, and such a paucity of research exists about Asia, it is no wonder that prevailing ideas about philanthropy are based entirely on Western ideas and practices. Yet, there is a lot Western organizations can gain from understanding philanthropy’s unique history and role within Asia’s diverse collectivist traditions.

Among its many diverse cultures, the “art of asking” in Asia has evolved over thousands of years and is imbued with many cultural and traditional complexities.

East Asians tend to be more circumspect about their motivations and decision-making processes than their Western counterparts. What goes on behind the scenes leading up to major public donations is characteristically opaque.

Due to the hierarchical social structure of East Asia, public gifts are often statements of the donor’s status in society. Relative to North America, where philanthropy is often used as a tool to bring about major, sometimes radical, social changes, in Asia it has historically been associated with maintaining social harmony and stability. Thus there is a stronger proclivity for causes like education and health care. During 2005 and 2006, an estimated $422-million was given to Hong Kong universities, according to the Hong Kong government and Global Philanthropic, the consulting company where I work.

Private family foundations, which are much more loosely regulated than their American counterparts, are often seen by foreigners as black boxes, because they have no clear points of entry. Giving decisions are typically made by one or two individuals within the family, and a personal connection to the family may be required in order for an appeal to be considered. Conducting research or preparing grant proposals can be daunting, since there are often no statutory requirements for such foundations to publish guidelines or to disclose the source or size of their assets. It may be impossible to tell where the money is coming from or the real reasons behind a specific charitable decision.

Charity in India, by comparison, is more broad-based than in Confucian East Asia and is practiced quite differently. A recent study by Participatory Research in Asia, a democracy advocacy group in New Delhi, shows that most giving decisions in India are made jointly by the whole family, rather than by a few individuals. Close to 41 percent (more than 75 million) of all Indian households nationwide donate annually, whether cash or goods or services.

Interestingly, two-thirds of all donors in India live in rural areas, and 87 percent of donations come from people who make about $180 a month. The Indian diaspora provides a major source of philanthropic activity, and Indians are particularly keen to see their gifts benefit people in their native country, no matter where they live now.

In all Asian cultures, there are common factors that influence personal decisions to give: altruism, business interests, legacy, vintage of wealth, luck, education, guilt. The relative strength and combinations of these factors are unique to each individual.

The single most important factor in Asia is education. A very high percentage of first-generation, high-net-worth individuals in Asia did not have the opportunity to study beyond secondary school before going to work to support their families. This served to accentuate the importance of education in their minds. As their businesses succeeded, they sent their children off to the best Western schools they could afford. As their sons and daughters have returned to take the reins of the family businesses and philanthropy, the influence of Western ideas has been profound.

Another important factor is a donor’s personal bias, toward either traditional values or progressive values. This is unique to each person and may be independent of his or her education.

Crucially, because the vintage of wealth in Asia is so recent, the decision makers are often older and have more traditional views.

Asians typically stay actively involved in daily business operations far longer than their Western counterparts. It is commonplace for patriarchs to keep a firm grip on the company well into their 80s and 90s. For a few, retirement means handing over control of the company to their children and spending more time on philanthropic activities. Knowing who controls the bulk of a family’s or company’s charitable assets is clearly important.

So how does the future of philanthropy in Asia look? The whole region is undergoing immense social and economic changes. While great personal wealth is being amassed, it will be more concentrated among a disproportionately small percentage of the population. Philanthropy could play a key role in bridging that disparity, as it has in the West — or not.

The outcome hinges on the generational succession of wealth. The current generation of wealth builders is only now handing over the family assets to the second generation. Ultimately it will be these young, well-educated, and affluent people who determine Asia’s philanthropic legacy.

John Peralta is managing director and senior strategy adviser at Global Philanthropic, a nonprofit fund-raising and management consulting firm. An American citizen, he is based in Hong Kong and has spent the past six years researching and working with Asian donors and the organizations they support. His e-mail address is j.p@globalphilanthropic.com.