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Global Philanthropy, Part 4: Corporate Philanthropies Emerge in the East

By Tom Watson on May 1, 2008No Comment

 Corporate Philanthropies Emerge in the East by Susan Raymond
It is, one hopes, forgivable to hesitate in making generalizations about a part of the world that encompasses billions of people of innumerable cultures, languages and traditions.  “Asia” does not lend itself easily to 800 words about philanthropy. A keener focus is needed.

Let us turn, therefore, to trends in the corporate philanthropy of companies within Asia.  Moreover, because the literature on China and India is more robust, let us examine corporate philanthropic growth in other areas of the region. 

The emergence of corporate social responsibility programs and organizations within Asia is evidence of the degree to which philanthropy in Asia is growing hand-in-hand with local private investment.  But, as in all things, perspective is important on two counts.  First, of course, there is nothing new about philanthropy in Asia.  Individual contributions to social welfare are embedded in Confucian teachings and in Buddhism, and philanthropy toward the poor and sick is ancient.  Second, however, the emergence of formal corporate philanthropy is more recent, its pace accelerating with the rise of private investment of local entrepreneurs and businesses that accompanied the opening of economies in the region in the 1980s and 1990s.  Between 2000 and 2006, the market capitalization of listed companies in East Asia and the Pacific nearly doubled as a percent of GDP1 , from 47.2% to 85.1%.  The equivalent growth in South Asia was even more startling, from 26.1% to 77.2%.  This growth is not just a function of China and India.  The measure rose in the Philippines from 34.2% to 58.9%, in Thailand from 24% to 68.4% and in Indonesia from 16.3% to 38.1%.

Putting aside multinational corporate roles, has philanthropy followed corporate growth in Asia?  The admittedly limited data available indicate that local corporate philanthropy, while still informal, is growing.  A survey of 226 companies in 10 cities in Indonesia in 2002 found that 93% of companies had engaged in charitable giving in the past three years, but only 13% had a special internal organization to handle donations and only 18% had a written policy on donations.  Education, environment and religion were the key sectors supported.

In the Philippines, the nonprofit Philippine Business for Social Progress has 227 corporate members as of 2007.  This is ten times the number at its creation in 1970.  The PBSP is the largest grantmaking organization in the Philippines, funded through a contribution of 1% of pretax net profits from its members of which 60% goes to the PBSP and 40% is allocated by the company to its own philanthropy.  The PBSP uses this resource base to leverage additional contributions from private and bilateral agencies.  A decade ago, the PBSP created the Center for Corporate Citizenship, which provides a forum for local CEOs to discuss societal issues such as the environment and education that are critical to their operating environment.  Other networks have followed, including the League of Corporate Foundations, which now boasts over 70 corporate foundation members.

In Asia, however, it is difficult to separate corporate from individual philanthropy.  Many companies remain very much creatures of their founding families, whether or not they have evolved into publicly traded corporations.  Indeed, some 80% of larger or stock-exchange listed companies are family-owned and controlled.  Capgemini/Merrill Lynch has found that high-net-worth individuals, nearly all of whom are business founders, allocated more of their portfolios to philanthropy than anywhere else in the world, 12% compared to 8% in North America and the Middle East, 5% in Europe, and 3% in Latin America.

Following in the shoes of the Tata family of India and Li Ka-shing in Hong Kong, major business leaders in less well-covered economies in Asia are carving out significant portions of their corporate holdings into foundations.  John Gokongwei in the Philippines, founder of one of the country’s largest business groups, is allocating 25% of his interests in JH Summit Holdings into a new foundation.  Syed Mokhtar Al-Bukary in Malaysia has established the Al-Bukary Foundation with his entrepreneurial gains, and focused on mosques, schools and hospitals.

Despite the growth of formal, traditional philanthropy, Asian executives have recently been pressed to respond to broader problems of social responsibility, involving more proactive overall business engagement with issues and nonprofit organizations than the narrower transfer of grant resources.  A survey by CSR Asia of 500 stakeholder groups found that corporate philanthropy was ranked well below human resources issues, the environment, and corporate governance in the list of important corporate-community relationships.

As Asia grows, so will grow philanthropy it its own cultural ways and, at least in the near term, closely tied to family.  Peers to the world’s leading Western corporate philanthropies are emerging rapidly in the East.  They will become the keys to sustained social and economic progress, with local resources dedicated to local priorities and local problems.

 

 


1 Share price multiplied by number of shares of domestic companies on the local stock exchange divided by gross domestic product.

 

Sources

World Development Indicators, 2007.

G Velasco. Corporate Philanthropy in Asia: The Philippine Case.  Nd.

Getting Down to the Business of Giving.  South China Morning Post. November 27, 2007.

Rising to Meet the Challenge.  South China Morning Post.  July 26, 2007.

Workshop Summary.  Workshop on Corporate Social Responsibility and Public Roles of Private Corporations.  Centre on Asia and Globalisation.  April 17-18, 2007.

M Beckman. Asian Philanthropists Breed Good Governance.  Business Day, September 21, 2007.

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