Why are Hong Kong’s philanthropists so blinkered?

The Hong Kong skyline is testament to the generosity of the city’s philanthropists, but why are their enormous donations focused on so few causes when a changing world has created many that are more pressing, asks Stuart Heaver.

 

No sooner had Mark Zuckerberg announced he would be giving away 99 per cent of his equity in Facebook, to “advance human potential”, than a barrage of criticism began, many people dismissing his gesture as “ego-nomics” or “philanthro-me”.

In Hong Kong, though, where philanthropy has long been a major part of the social fabric and is responsible for some of the city’s most famous buildings and institutions, it’s harder to locate any fierce critics of super-rich donors. Despite generous tax breaks for charitable donations and weak regulation, few Hongkongers find it offensive when the gilded elite choose to indulge their ego with a university building on which their name is writ large. Even on the rare occasions when objections are raised – as in 2005, when the University of Hong Kong planned to rename its Faculty of Medicine after tycoon Li Ka-shing, who had pledged HK$1 billion – the final decision tends to favour the philanthropist.

Likewise, few Hongkongers seem to raise an eyebrow when super-wealthy individuals fund a prestigious art gallery while less fortunate people sleep in cardboard boxes, old folks scavenge for rubbish to make ends meet and families fret about the quality of the air their children breathe.

It’s a cruel paradox that while the gap between rich and poor widens and our environment deteriorates, Hong Kong remains one of the most charitable places on Earth. That’s why some in local NGOs and charitable foundations are calling for a new type of giving, called “catalytic philanthropy”, that jump-starts change in social and environmental issues close to home.

 

ACCORDING TO THE RECENTLY published 2015 Coutts Million Dollar Donors Report, philanthropy is expanding fast both in Hong Kong and on the mainland. Hong Kong saw 128 donations worth US$1 million or more in 2014, the total value of which was US$2.67 billion. This figure is greater than the combined total for Britain, Russia and Singapore. And given the mismatch in the size of the respective economies, it also compares very favourably to the mainland total of US$3.61 billion.

Lisa Genasci

According to the report, in recent years, the philanthropic sector in Hong Kong has grown dramatically. The number of registered tax-exempt charitable organisations jumped from 3,435 in 2000/01 to 7,592 in 2012/13, a rise of more than 120 per cent. On December 31 last year, the Inland Revenue Department published the updated list of charitable institutions and trusts of a public character, which are exempt from tax under Section 88 of the Inland Revenue Ordinance. The list now runs to 714 pages and features more than 10,000 organisations.

Despite the impressive growth in giving, not a single million-dollar donation was made to an environmental cause in 2014. Globally, just 1.2 per cent of funds covered by the Coutts report went to projects related to the environment, which seems curious given the high media profile issues such as air pollution, water contamination, habitat destruction and climate chaos receive locally and internationally.

“I just don’t think people think about environmental issues as potential philanthropy,” says Lisa Genasci, of ADM Capital Foundation, which was established in 2006 by the partners of an investment firm who wanted to put something back into the region. The foundation is atypical as far as Hong Kong philanthropy is concerned in that it offers strategic funding and support to environmental conservation as well as children’s charities. While it does enjoy the support of a few local charitable foundations, Genasci admits it’s difficult to stimulate interest in environmental projects.

“I don’t do a lot of fundraising any more – it’s such a hard sell,” she says.

So where does all the money go?

 

To give an indication, in 2014, the five so-called mega-grants made in Hong Kong were given as follows: Joseph Tsai, the co-founder of Alibaba Group, donated US$1.18 billion to set up a private philanthropic trust; US$350 million was gifted by Ronnie Chan Chi-chung’s Morningside Foundation to Harvard’s School of Public Health, in the United States; the Hong Kong Jockey Club Charities Trust gave US$167 million to Chinese University, to establish a teaching hospital on its Sha Tin campus; the Galaxy Entertainment Group set up a corporate foundation with a pledge of US$167 million for the people of Macau; and Ronald Chao Kee-young, vice-chairman of family-owned Novel Enterprises, donated US$150 million to establish the Bai Xian Education Foundation, which aims to nurture future Asian leaders through scholarship programmes at top universities in the region.

Of course, mega-donations do not tell the entire story, but experts think this breakdown is pretty typical because the numbers show most Hong Kong philanthropists aim their generosity at higher education. This might explain why most buildings at local universities and hospitals are named after Hong Kong’s great and good. Of the 128 individual donations detailed in the Coutts report, 48 were made to centres of higher learning.

 

One expert who helped compile the data thinks cultural factors provide clues as to what money goes where. Professor Roger King is the founding director of Hong Kong University of Science and Technology’s Tanoto Centre for Asian Family Business and Entrepreneurship Studies and he firmly refutes the stereotype of the brash tycoon splashing cash to boost an already inflated ego.

“Sure, part of this is about a social legacy – not for personal ego, though, but for subsequent generations of the family to benefit from,” he explains.

King is part of the philanthropic family of late shipping magnate Tung Chao-yung – having married one of the patriarch’s daughters, Alice – and so is well placed to comment on business dynasty foundations such as the Tung Foundation, the Li Ka Shing Foundation, Morningside, the Shaw Foundation and the Tin Ka Ping Foundation.

According to King, the original wealth creator sets the agenda, and the motivations driving the philanthropy of his or her family are: to preserve their wealth for future generations; to preserve a legacy for the benefit of the family; and to preserve harmony in the clan and avoid conflict after the death of the family head.

 

King explains that Chinese business dynasties traditionally seek social capital that can be leveraged by future generations in a way that is not as common in the West, and that typically they will favour good causes in their communities – in Hong Kong and on the mainland – where the benefits will be observed and appreciated. This would explain why so many charitable foundations and trusts – as well as the buildings they finance – retain the family name and why tangible university and hospital wings remain so popular. It also suggests why environmental causes lose out; as one foundation executive jokes privately, “You can’t paint your family name on a panda.”

Even those charitable foundations and trusts that are progressive, and advised by the new growth industry of consultants and experts, remain influenced by their founder, who themselves are or were swayed by their own upbringing and life experiences.

Ronna Chao Wei-ting, chief executive of the Bai Xian Asia Institute – which, according to its website, “believes that education is the most critical tool in building a world of greater understanding, trust, and stability” – told the Coutts report that, “The philosophy goes back to the positive personal experiences of my father, [Hong Kong businessman] Ronald Chao, when he was a student at the University of Tokyo, in the late 1950s.”

David FongDavid Fong Man-hung, of the Fong Shu Fook Tong Foundation, told the compilers of the report, “My father had a special concern for those without parents.”

Well-endowed foundations aimed at causes dictated by the original wealth creator are not restricted to the Chinese business community. The Croucher Foundation was established after the death of businessman and keen sailor Noel Croucher, in 1980. Croucher was a self-made man from humble origins in England who started working life as a hotel bell boy in Macau and died a multimillionaire, living on The Peak.

“He was motivated by his own lack of education, so he wanted to ensure that young people in Hong Kong without the right family connections could still afford an excellent education,” explains foundation director David Foster. The Croucher Foundation has helped more than 1,000 scientists with Hong Kong connections undertake research or further their education. “He particularly did not want his name on the side of a building,” says Foster. “He was a very astute man and wanted to invest in people.”

There are variations on the theme but, in many cases, the driving force or general direction of altruism for these foundations was defined many decades ago, when the social and environmental landscape was very different.

Debra TanDebra Tan, director of China Water Risk, which is supported by the ADM Capital Foundation, says this approach is leaving some dangerous blind spots in charitable giving. Tan’s organisation is concerned about threats to China’s water supply and what she calls “the double whammy” of rapid glacial ice melt and sea-level rises that will affect 15 major Asian cities. Governments either have too much on their policy plates or simply don’t have the resources to examine the problem.

“This is where ‘catalytic philanthropy’ can fill a gap,” she says, meaning donations that will allow experts to start looking at a critical environmental issue that is being neglected, and seek solutions.

“The combined Hong Kong, China and Singaporean philanthropists’ efforts amounted to a shameful US$3 million,” she says, quoting a previous Coutts report. This apparent reluctance to fund important work in the environmental sector may also be related to the type of donor.

“Hong Kong is basically nouveau riche and, being an immigrant city, most people made their money in the 1960s, 70s and 80s,” Ronnie Chan told the South China Morning Post in 2013. “The nouveau riche show empathy because they remember what life was like before they succeeded.” It could be that this empathy favours social rather than environmental causes and, as Chan also indicates, the situation is much worse on the mainland, where any philanthropic gesture is complicated and giving to environmental causes is almost impossible because of political sensitivities.

 

“If you donate to the mainland, it’s not as simple as giving money. You need a lot of psychological resilience,” he told the BBC in 2014. “In mainland China, there are so many headaches.”

Even big hitter Jack Ma Yun, of Alibaba, who has set up his own, US$2.37 billion philanthropic trust, has been quoted as saying that, in the mainland, it is much easier for him to earn money than it is to give it away. Last year, he told the SCMP that, because many local charities lacked the infrastructure, legal systems and human resources to do a good job, it was difficult to pick a worthy target for one’s largesse.

Things appear to be changing in Hong Kong and the mainland, though.

“The younger generation are often better educated and Western-influenced,” says King. “Impact investing is more important for them. They want to kick something off and then get an NGO to take it on at a later stage and progress it. They like to stay with and manage a project, not just sign a big cheque and have their photo taken.”

One of the new breed is Annie Chen Ang-yee, of RS Group, a family investment house and one of the donors supporting ADM Capital Foundation’s environmental projects.

“I think the whole concept of philanthropy is now outdated,” says Chen, whose sophisticated investment strategy seeks a conventional level of financial return on her investments but prefers ethical com-panies and funds with an appreciation of their environmental foot-print. The return is used to finance the overheads and a generous grant-giving strategy.

“We are creating consequences, not just financial consequences,” she says. Even Chen admits, though, that “we don’t give that much to environmental causes – it looks very technical and it’s difficult to know where to start. That’s why we work with ADM.”

University of Hong Kong medical alumni stage a sit-in protest against the proposed renaming of the HKU’s Faculty of Medicine to the Li Ka Shing Faculty of Medicine, in Pok Fu Lam, in June 2005.

If King is correct and the traditional motivator for local philanthropy is to preserve wealth, create social capital for future generations and secure the involvement of younger family members, environmental projects look like a perfect fit.

“If you want a real family legacy, what better way than investing in your children’s and grandchildren’s environment and the air they will breathe, the water they will drink and the food they will eat,” asks Genasci, who concedes that some of her projects, such as those concerned with water supply, marine pollution, sustainable fashion and air quality, do not tick all the boxes for many donors.

“In environmental projects there is less focus on credit,” says Genasci, a deterrent for more traditional foundations. So for now, university buildings, research grants, schools, art galleries and hospitals are likely to remain the chief beneficiaries.

Cynics might regard it as egomania but there is a genuine culture and proud history of giving in Hong Kong. Their causes may be worthy and the wealthy have the right to donate their hard-earned cash where they please but, when their benevolence overlooks acute social and environmental problems, the rationale can appear opaque and self-indulgent to those excluded from the world of the gilded elite.

According to the Law Reform Commission, there is no comprehensive legal framework for regulating charities in Hong Kong. An entity recognised by the Inland Revenue Department as a charitable institution is entitled to tax exemption, but there is a limited statutory definition of what a charity must be and the department is not responsible for registering such organisations or for monitoring their conduct. The Law Reform Commission has been working on recommendations for change since 2011 but, apart from the occasional high-profile photo call and the names on buildings, not a great deal is publicly known about Hong Kong philanthropy.

No one is voicing major fears about corruption but Forbes reports that in Australia, after a national charity regulator that few thought was necessary was set up, in December 2012, more than 1,300 complaints were made against Australian charities within the first two years of operation.

Given the huge amounts of money involved, the massive surge in the numbers of charitable bodies and the tax exemptions offered to some of the city’s richest individuals, maybe more scrutiny should be given to who is spending what and why? If not, questions might one day be asked as to why another ostentatious seat of learning is being erected for an already well-endowed institute while the ordinary citizens of Hong Kong are denied affordable housing, clean air and decent career prospects.