Pragmatic Philanthropy: Asian Charity Explained

Recent years have seen growing interest in and media coverage of Asian philanthropy. But the phenomenon remains under-analyzed and not well understood. In Pragmatic Philanthropy: Asian Charity Explained, authors Ruth A. Shapiro, Manisha Mirchandani, and Heesu Jang set out to examine how Asian philanthropy works, how it differs from philanthropy in the West, and what we are likely to see in the way of trends and developments in the coming years.

The book, which is available as a free download and is based on thirty case studies of successful service delivery organizations (SDOs) and social enterprises as well as interviews with high-net-worth individuals, consists of nine chapters — the majority written by Shapiro. Each is devoted to a specific topic, from the laws governing philanthropy in different countries, to the strategies employed by Asian philanthropists, to the role of impact investing. Together, they present a much-needed overview of the state of Asian philanthropy in the twenty-first century.

The book opens with a brief historical survey of how charity — the act of doing good — and philanthropy — the formalized and systematic process of doing good — have evolved in various Asian countries. Differences notwithstanding, the authors make clear that there's a long history of charitable giving in Asia that is rooted in a cultural predilection to help one's family and clan and a tradition of giving to service delivery organizations (SDOs) rather than public advocacy groups.

It makes sense, therefore, that the book would focus on SDOs. They may or may not be connected to government and may or may not be social enterprises, but, as the authors emphasize, they are distinct from public advocacy organizations whose aim is to influence public policy. It's a distinction that is reinforced in the United States by the tax code — 501(c)(3)s versus (c)(4)s, for example — but which no country in Asia has codified into law. Nevertheless, it's an important distinction in Asian countries, "where donors rarely wish to cross officials at odds with challenging advocacy."

What's more, the desire to support one's kin-related networks persists, says Shapiro, because of what she calls a nonprofit "trust deficit." As she explains: "For [Asian] philanthropists, relationships are often the only means by which one can conduct due diligence." In some countries, the low levels of trust may be due to changing regulations that are ambiguous and confusing for donors; to the absence of accountability mechanisms for nonprofits when it comes to spending; to a general confusion around the goals of many nonprofits; and, finally, to a perception that a country's "best and brightest" gravitate to the for-profit sector and that nonprofits are run by less qualified individuals.

Well aware of the situation, governments across Asia have started to reform their laws and tax codes to better distinguish advocacy groups from SDOs; strengthen nonprofit transparency mechanisms; and provide tax incentives for charitable giving, all with the aim of boosting local philanthropy. In India, for example, the government has instituted a law that requires companies with annual revenues of $150 million to give at least 2 percent of their after-tax or net profit to charity.

Such efforts by Asian governments to encourage philanthropic giving are relatively new. In the past, government officials, especially in China, often questioned the need for philanthropy, believing it to be the government's role to provide basic services such as education and health care. But more and more governments are coming to realize that, as Shapiro writes, "private money can help them achieve their goals and can also be channeled and controlled to a significant extent." Through various legal measures, countries such as India and China are both encouraging (while simultaneously monitoring) donors to contribute to society — a change in outlook that has resulted in domestic SDOs playing a more visible role in the delivery of public services and becoming partners with government, even in countries where that once seemed unthinkable.

Shapiro also spends some time discussing the state of corporate philanthropy in the region, explaining how the prevalence of large family-owned businesses often makes it hard to distinguish a family's philanthropy from a corporation's charitable giving. The tight connection between family and company often leads families to direct their philanthropic giving through the company, or a corporate foundation, rather than starting a family foundation.  "In this model," she writes, "the owner/CEO treats workers as extended family, particularly in companies in which the family plays a dominant role." As a result, the focus of corporate giving often is aligned with the personal interests of the family patriarch, and the corporate foundation is run by a close family member, typically a daughter, wife, or niece.

As for impact investing in Asia, Shapiro suggests it is very much in its nascent stages, due in part to the lack of viable deals. But that appears to be changing as the number of conferences devoted to the topic grows and governments start to create funds to support the creation of social enterprises.

That note of optimism sounds throughout Pragmatic Philanthropy. While most of the countries in the region are experiencing strong economic growth, they are also witnessing a growing gap between rich and poor, and governments that previously were hesitant about the role of private actors in the delivery of much-needed social services are now looking to philanthropy to help fill gaps. Indeed, there is new energy and enthusiasm in the sector, and it is manifesting itself in a number of ways — including governments actively seeking to change laws so as to "encourage" the sector to become more transparent. Those changes have been accompanied by improvements in technology that have resulted in online databases and watchdog tools designed to make the sector more accountable. Technology also has had a profound effect on fundraising, with nonprofits across Asia turning to crowdfunding platforms to help underwrite program expenses.

Most exciting of all, perhaps, are the growing numbers of young people who are choosing to launch social enterprises aimed at solving complex social challenges. If "the region retains its challenges," writes Shapiro "many will be met through the increased means and desire [of these young people] for doing good."

In this populist moment, Pragmatic Philanthropy is a much-needed reminder that we live in an increasingly connected world. Yes, countries have different traditions and ways of looking at things, but we are more alike than not — and more alike, perhaps, than we realize. As such, the book will be of interest not only to people who work in or around philanthropy, but to anyone looking for reasons to be hopeful about our future.

Supriya Kumar is a research analyst at Foundation Center.