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WealthMatters Hong Kong - Philanthropy And "Social Enterprise" - Where To Draw The Line?

Liane Lau

21 April 2014

Attendees at the recent WealthMatters conference in Hong Kong, organised by the publisher of this news organisation, explored issues of philanthropy among industry clients, and whether charitable donations and social enterprises can be, and should be lumped into the same category.

Chairing the panel was Bruce Weatherill, chairman of ClearView Financial Media, along with Ignatius Chong, chairman of Coutts Institute in Asia; Michelle Chow, a consultant at Withers; Cynthia D'Anjou-Brown, head of philanthropy advisory, north Asia and family governance advisor, and private wealth solutions at HSBC; Philippe Legrand, chief executive at London & Capital Asia; and Richard Norridge, head of Asia private wealth practice at Herbert Smith Freehills.

The headline sponsor for the conference was Coutts; other sponsors included HK IFA; smartKYC; Association of Private Bankers in Greater China Region, Offshore Red, and Compliance Matters.
D'Anjou-Brown highlighted the difference between philanthropy and charity and said the stark reality is that industry clients wanted to see measurable social change, and sustainability of the work in part to counter being asked for recurring donations.

"Philanthropy is thought of as strategic, high engagement, and scalable interventions with impact, and usually attacks the structural causes .

Sharing Coutts' philanthropic history, Chong noted that it was a family business owned by Angela Burdette Coutts, who became the wealthiest woman in England following her inheritance. She gave away most of her fortune to the poor and funded facilities for the working poor, bringing clean and safe drinking water to parts of London and collaborating with Charles Dickens in one of the first social enterprises, in line with D'Anjou-Brown's sustainability argument.

Philippe Legrand, of London & Capital Asia, said: "Philippe Legrand, of London & Capital Asia, said: "Philanthropy in Asia is at a nascent stage. Some people want to do philanthropy but don’t know how they want to approach the subject. They start by meeting the philanthropic teams set up within their private bank but from then on, the pace of the process might not be the one the individual or the family is ready or willing to follow. To avoid that situation, they sometimes opt for a less structured approach, providing more flexibility and commitment as they discover and get familiar with the overall process."

Structured Collaboration Audience member Helene Li, managing director, head of strategic planning and brand and communications for Asia Pacific at BNP Paribas Wealth Management, offered an observation.

"Philanthropy is part of the overall toolkit in order for the next generation to carry forward this meaningful cause, but we do need to have more cross-sector collaboration. It's more than what lawyers, investment bankers and experts can do on their own. Perhaps more research around index rankings will give more than what pure data can," Li said.  

While wealth is passed on from one generation to the next, there is a staggering amount of money locked in funds as second or third generations struggle to select a foundation of their choice.
Chow, a consultant at Withers, said people give for different motives and when people give, they want an impact.

"In Asia, the first generation businessmen in China made their fortune in the 50s, 60s and 70s, later setting up their own foundation putting in a lot of their money to give back to their villages in China or Hong Kong. As they educate the second and third generations, most likely abroad, they come back and want to do a bit more as they are more business-minded in their philanthropy," Chow said.

"The Million Dollar Donors report by Coutts, which includes Hong Kong in the latest edition, says that apparently younger donors seem to be more interested in measuring the impact of their giving and there appears to be a shift towards high impact philanthropy as they are most likely to see an immediate change,” Chow said.

Chong, of Coutts Institute in Asia, said at the most sophisticated level, big donors want to ensure the work they do is not just for the short term or restricted to  immediate impact, but also sustainable and scalable.

"The next generation is getting much more sophisticated and wants to do it systematically. An example is the Sun Hing Foundation which won the 2013 Coutts Prize for Family Business, in the category of Philanthropy. They focus both on the young and the elderly. For example, one specific area is Alzheimer's and degenerative memory problems. At a relatively low collaboration cost with universities forming a specific programme of mental exercises, you can measure and improve memory, which is philanthropy at the most systematic and advanced level," said Chong.