How Covid-19 hastens seven key trends in philanthropy

Christoph Courth, Angie Han September 29, 2021 08:56

The Covid-19 global crisis has impacted every facet of our lives, creating new and amplifying existing social challenges and environmental issues.

Many philanthropists have been forced to confront their own giving and re-evaluate their roles as philanthropists. Were they supporting the right causes? Were the systems and requirements they had in place fit for purpose? Were they agile enough? Were the expectations, timelines and parameters they attached to their support suitable? Were they really leveraging all the ways they could to mobilise their wealth?

Through this reassessment, those assets were forced to become more flexible, less directive and granted with fewer restrictions, resulting in record-breaking levels of donations, globally. In Singapore, a record $102 million was donated on the online donation platform Giving.sg in a year amid the Covid-19 pandemic.
In many respects, Covid-19 has hastened the arrival of a new era in philanthropy, one that is defined by a sense of immediacy and responsible participation within our fast-changing and interconnected world.

A NEW ERA IN PHILANTHROPY

For many years now, there has been a steady trend towards a more strategic and collaborative approach to philanthropy, a general professionalisation of the sector across Asia, with new laws and policies in Singapore, China and India among others.

A younger, more tech-savvy, globally-active, risk-friendly generation is also taking over the reins of Asia’s, and indeed the world’s wealth, who are more focused on the impact of their giving, how their investments are applied and increasingly allow their ‘businesses’ and ‘charities’ to overlap.

As a direct result of the world’s Covid-induced shake up, there are seven trends that will further define the future of philanthropy in Asia.

1. GREATER COLLABORATIONS AND COLLECTIVES

With the rise of next-generation wealth holders and philanthropists, today’s collaborations range from big, bold funding initiatives such as the China Environmental Grantmakers Alliance, to networks that seek to create safe spaces for philanthropists to share, learn and partner, like Asia Philanthropy Circle or the Community Foundation of Singapore.
There has also been a growing acceptance that as Asia faces a formidable decade ahead due to population growth, Covid-19 and the impacts of climate change, only through public private partnerships can these needs be tackled. 88 per cent of top Asian business leaders believe these partnerships will become more common in the next five years.

2. GREATER INTEREST IN ADDRESSING SUSTAINABLE AGRICULTURE AND OUR FOOD SYSTEMS

The growing concern about the food we eat and how it is sourced has only been heightened by the pandemic, giving birth to movements such as the 2020: Singapore Food Story. Even though roughly one-third of all food produced for human consumption every year goes to waste, an estimated 3 billion people around the world suffer from poor nutrition with the largest proportion of these being in Asia.

Producing food is also the single biggest contributor to climate change, accounting for roughly 21% of greenhouse gas emissions and the leading cause of deforestation and biodiversity loss.
With projected global population growth expected to increase by 2 billion people in the next 30 years, all the above challenges will only intensify. We can expect to see an increase in philanthropy directed towards this space.

3. INCREASED SCRUTINY OF BIG PHILANTHROPY AND REPROACH OF THOSE NOT DOING ENOUGHT

In today’s transparent, internet-driven, social-media-influenced world, the philanthropic actions and inactions of the wealthiest are under constant scrutiny.

Given that an additional 88 million people were plunged into extreme poverty in 2020 while at the same time the number of centimillionaires and billionaires multiplied, this scrutiny of the philanthropic actions, and inactions of wealthy individuals will only increase.

4. BIGGER GIFTS

Over the past few years, we have seen a rise in so-called ‘mega’ donations and pledges across Asia and a steady growth in time-limited foundations; charitable entities, such as foundations, trusts, or Donor Advised Funds, that are set up with a specific timeline, within which its assets will be fully spent. Philanthropists are shifting their priorities to create impact now in their lifetimes, not further down the road.

There are varied reasons behind this trend. It is certainly supported by an ever-growing global billionaire population (rising by 8.5% from 2018) bolstered by an increased desire among wealthy families to avoid burdening heirs with too much wealth and further encouraged by more favourable state regulations and indeed pressure. But there is also a growing sense of immediate need, evidenced by the multifaceted global impact of the pandemic.

5. INCREASED INTEREST IN COMBATING CLIMATE CHANGE, PROTECTING THE OCEANS, SAFEGUARDING BIODIVERSITY AND LOOKING AFTER OUR SHARED ENVIRONMENT

The topic of climate change was rarely absent from our headlines these days. Yet despite this, less than 2% of the estimated US$730 billion in global philanthropic giving was spent fighting climate change in 2019. In China that figure was estimated to be as little of 1% in 2018.

As the pandemic took hold, the realisation that it was a direct result of our unbalanced relationship with our natural environment became clear. The SG Eco Fund, which supports the Singapore Green Plan 2030, a national road map to chart a more sustainable path forward for the country, was launched in November last year.

Going forward we expect to see more a steady growth in philanthropic capital directed towards combating climate change, protecting our oceans and investing in the protection of the environment.

6. MORE EQUITABLE, FLEXIBLE PARTNERSHIPS

The speed at which the pandemic took hold forced private foundations and philanthropists to react and adapt quickly, to rethink and re-evaluate their relationships with the non-profit world.

The pandemic has forced a shift in this relationship from ‘benefactor’ and ‘beneficiary’, to more equitable partnerships built on a shared vision and common goal, with more focus on funding outcomes, a drift towards more unrestricted giving and an acceleration of application and grant-giving processes.

7. GREATER FOCUS ON INVESTMENTS

Historically, the process of investing one’s assets and the process of ‘giving it away’ were two distinct activities. But it is becoming more generally accepted that when interlinked and aligned, the two activities become a more powerful tool in advancing one’s mission.

For example, in Switzerland there is an estimated CHF100 billion of assets in charitable foundations and in 2020, around CHF2 billion or 2% was made in donations. But what is happening with the remaining 98%? When these funds are not invested in line with their foundations’ missions, they are having no impact in the best-case scenario. In the worst case, they may be in direct competition with their missions.

While responsible investing is now mainstream, it is still not yet universally adopted. Going forward, we expect more wealth and asset managers to offer their clients ever more opportunities to invest in line with their values.

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Christoph Courth, Angie Han

Christoph Courth is Head of Philanthropy Services, Pictet Wealth Management and Angie Han is Head of Wealth Planning South Asia, Pictet Wealth Management.