How Family Offices Could Shape Philanthropy
Singapore has a long history of family philanthropy. The first family foundations were established after World War II and they donated generously to alleviate poverty, care for the vulnerable and build schools and hospitals. Today, there are over 400 foundations and trusts registered with the Commissioner of Charities but families that institutionalized big-ticket giving early on – such as the Lee Foundation and the Lien Foundation – continue to dominate philanthropic giving in Singapore.
Family offices are entities which typically manage assets for or on behalf of a family. And Singapore – well-regulated, transparent and politically stable – is rapidly becoming the region’s preferred choice for family offices. In 2020 alone, approximately 200 single family offices were set up here, doubling the total count. As wealth grows, charitable giving is likely to keep climbing.
These high-net-worth families have the potential to shake up philanthropy in Singapore. Traditionally, the Asian family office was an extension of the family business, with a laser-sharp focus on the bottomline. “However, as founders age and younger successors take over, we expect to see greater value placed on sustainable and responsible investing as well as on strategic philanthropy,” says our CEO Catherine Loh.
Research firm Wealth-X estimates that $1.9 trillion worth of wealth in Asia will be passed on to the next generation in the coming decade. For many heirs, giving back is emerging as an integral part of doing business. For them, philanthropic activities are an optimal way to build and sustain a family’s legacy, strengthen family cohesion and better engage family members.
But here’s where it gets interesting. “Family offices have the power to shake up traditional philanthropy as they tend to be more agile and responsive compared to large foundations or corporate foundations, which are answerable to multiple stakeholders and layers of decision makers. Secondly, family businesses tend to be built by entrepreneurs and disruptors, making them more open to new ways of doing things,” says Catherine.
What this means is that the new wave of family-driven philanthropy could fund untested, possibly radical new approaches to problems. It could find innovative ways of harnessing capital for social impact. It could move away from cheque book charity to a more engaged approach which could lean towards social enterprises or private-public initiatives.
However, while most family offices across the globe are engaged in some form of giving back, only 41% of them have a philanthropic strategy in place, notes the Milken Institute. Few family offices have the in-house expertise to evaluate nonprofits, deploy philanthropic dollars optimally, or monitor and measure impact.
“At CFS, we believe giving should be thoughtfully planned and driven by evidence-based insights,” says Catherine. As a cause-neutral philanthropy advisor, CFS offers unparalleled access to over 400 charities in Singapore, across a diverse range of sectors. We conduct due diligence to ensure the giving is accountable and creating a social impact.
For family offices, a cost-effective and flexible way to embark on philanthropy is to set up a donor-advised fund (DAF). Since 2008, CFS has set up close to 200 DAFs: of these, almost half have been for families. We pool donor funds for investment management and with over $90 million in assets at any one time, smaller individual funds can reap the economies of scale that large foundations enjoy. Beyond this, as the country’s largest convener of philanthropic activities, we mobilise donor capital through collaborations and collective models to scale up impact and generate more empowering solutions.
If you would like to find out more about how CFS can help you achieve your giving goals, please click here.
References:
- June Lee (January 2019) Exploring Family Philanthropy in Singapore – Asia Centre for Social Entrepreneurship & Philanthropy, National University of Singapore https://wings.issuelab.org/resources/34346/34346.pdf
- EDB Singapore (February 2022) How Singapore is Becoming Asia’s Family Office Hub https://www.edb.gov.sg/en/business-insights/insights/how-singapore-is-becoming-asia-s-family-office-hub.html
- Richard Newell (March 2022) New study sees Singapore as top family office hub – Asian Investor https://www.asianinvestor.net/article/new-study-sees-singapore-as-top-family-office-hub/476226
- Milken Institute (June 2021) Philanthropy in a Family Office https://milkeninstitute.org/article/philanthropy-family-office
- Related Topics For You: ADVISOR STORIES, DONOR STORIES, DONOR-ADVISED FUND, OPINION
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