Covid-19 hastens a new era in philanthropy: Seven key trends

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 benefactors. 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 S$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 in a fast-changing and interconnected world.

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 and 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.

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Given 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, these needs can only be tackled through public-private partnerships. Some 88 per cent of top Asian business leaders believe these partnerships will become more common in the next five years.

2. Addressing sustainable food systems

The growing concern about how the food we eat 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, some 3 billion people around the world suffer from poor nutrition, most of them being in Asia.

Producing this food is also the single biggest contributor to climate change, accounting for roughly 21 per cent of greenhouse gas emissions, and the leading cause of deforestation and biodiversity loss.

With the global population projected 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

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 deeds (or lack of) 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, with philanthropists shifting their priorities to create impact now in their lifetimes, not further down the road. Time-limited foundations are essentially charitable entities (such as foundations, trusts, or donor-advised funds) that are set up with a specific timeline, within which their assets will be fully spent.

There are varied reasons behind this trend. It is certainly supported by an ever-growing global billionaire population (rising by 8.5 per cent 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. Combating climate change

Climate change is rarely out of the headlines these days. Despite this, less than 2 per cent of the estimated US$730 billion in global philanthropic giving was spent fighting climate change in 2019. In China, that figure is estimated to be even lower at around 1 per cent in 2018.

As the pandemic took hold, it became apparent that it was a direct result of our unbalanced relationship with the natural environment. 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.

We expect to see 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, and 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 goals, 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 100 billion Swiss francs (S$145.7 billion) of assets in charitable foundations, but in 2020, donations amounted to only around 2 billion Swiss francs, or 2 per cent. What about the remaining 98 per cent? When the 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. However, this past year we have seen an exponential growth in interest in environmental investment strategies, which could be a powerful indicator of things to come. We expect more wealth and asset managers to offer their clients ever more opportunities to invest in line with their values.

• The writers are from Pictet Wealth Management. Christoph Courth is head of philanthropy services; Angie Han, head of wealth planning, South Asia.