As Singapore reinvents itself as an international business centre and a new multicultural community, it’s time to relook our philanthropy landscape
Singapore is positioning itself to be a regional centre for philanthropy. Deputy Prime Minister Lawrence Wong, our next Prime Minister designate, said at a philanthropy forum in September that the nation is encouraging family offices, businesses and individuals to set up base here and contribute to impactful solutions for social causes, with the Government reviewing its tax incentive schemes to facilitate this.
Singapore sits at a pivotal point in history. Geopolitical tensions between China and the USA continue to simmer. The recent G20 Summit in Bali may have seen the leaders of the world’s superpowers shaking hands but there is a long way to go before anything like amity between the nations is established, let alone trust. China’s continued COVID management measures whose severity has led to demonstrations in major cities means its already slowing economy is not going to get a reprieve – pushing Chinese businesses and private wealth to look for bases outside of the country.
Elsewhere, the Russia-Ukraine conflict continues to inflict pain beyond their borders, in the form of rising oil prices, food shortages and disrupted global supply chains. Inflation has increased, raising interest rates and threatening economic calamity worldwide.
What Does This Mean For Singapore?
The Republic has weathered the Covid storm relatively well, and international confidence in our handling of the pandemic has been a boon to our economy. Our hotels now heave with international tourists, and our main retail street Orchard Road is so full of shoppers that the police are talking about implementing crowd control measures.
Uncertainties about China and the continued political unrest in Hong Kong, which still has pandemic-control measures in place, have seen capital flows from North Asia flood into Singapore. The number of family offices here jumped fivefold between 2017 and 2019, and almost doubled from 400 in 2020 to 700 a year later.
To signal that we are open for business, Singapore recently announced a new and, in the words of the Manpower Minister, “offensive strategy” to attract top talent, in the form of expanded employment passes for leaders in fields across technology, finance and the arts.
Time To Re-look The Philanthropy Landscape
The government cannily understands that creating a thriving philanthropic landscape is an important pillar to a successful positioning of our nation as one of the key hubs in a changing world. Globally, 71% of family offices are engaged in charitable giving, while among family offices in the Asia Pacific, that figure is 90% according to UBS and Campden Wealth, as mentioned in the Monetary Authority of Singapore’s website on Philanthropy.
As part of wanting to “do good well”, a large proportion of these family offices are prioritising sustainable investments for their portfolios. Corporates now espouse ESG missions, with engagement in the philanthropy sector a good way to achieve both the E (environmental) and S (social) objectives. The Economic Development Board (EDB) reports that 35% of wealth is expected to be in the hands of millennials in the next five to seven years – a demographic that, according to a July Forbes article, is more engaged in social causes than prior generations were.
As more foreigners make Singapore their home, or at least a second base, integrating them well into the local community is important for the preservation of Singapore’s social fabric. By participating in charitable causes, they will get to know the country better and showcase their positive contribution as our new neighbours.
The EDB’s Philanthropy Handbook published this year on Singapore’s strategic position in philanthropy acknowledges that many of today’s biggest challenges are cross-territorial. Environmental problems, for example, cannot be solved by any country acting alone.
Singaporeans have been very blessed. That makes being a force for good a moral imperative, but first we need to level the potholes in the road ahead.
Singapore’s Charity Framework
To become a regional philanthropy hub, Singapore must engage on the most important issues and some of the biggest harms do not respect borders. Child sex trafficking, global warming and internet-based offences, for instance, must be tackled across territorial boundaries. For philanthropists who want to fund causes, we must provide a framework that allows capital to flow where the needs are.
Under Singapore law, charitable organisations wanting to be established here must be registered and must serve the needs of the community in Singapore – if not wholly, then at least substantially. The requirements are even more stringent for Institutions of a Public Character (IPC), a status accorded to more established charities where donations are tax deductible. IPCs must focus on local needs only. Donors cutting cheques for substantial donations, tax exemption aside, will want to ensure that the institution is subject to stringent reporting and oversight requirements. Giving to an IPC becomes a default choice.
These rules have not been updated for effective supporting of cross-border causes.
A Filipino family office may want to establish a Singapore charity to empower young women in the region through education, having seen the damage from child sex trafficking in their home country. Or a US-based multinational company (MNC), as part of its overall ESG efforts, may wish to register an IPC to fight cruelty to animals. The current rules require their Singapore registered charity to focus largely, or wholly, on local issues, where such needs are not of paramount concern.
Similar restrictions hamper the efforts of philanthropists intent on funding regional causes. The Community Foundation of Singapore is an IPC that promotes philanthropy through facilitating the establishment of charitable funds. Its Chairperson is appointed by the Minister for Culture, Community and Youth. However, the bulk of funds placed in these foundations must be channelled to Singapore charities. A tech billionaire making Singapore his home and wishing to set up a global foundation to support causes may well look elsewhere, based on the present framework.
Singapore, due to our strong governance and well-developed legal system, is a great place to base a non-profit organisation. However, in an increasingly inter-connected world, the stakeholders and beneficiaries are in multiple jurisdictions. Our registered charities must be encouraged, and empowered, to embrace broader needs. Yes, there will be challenges, not the least of which are proper oversight of public donations and prevention of money-laundering. But we did not become an international financial centre without having rigorous structures in place for our corporates – why not our charities?
Christmas, soon upon us, is a season of giving. More importantly, Singapore is at a point of reinventing itself as an international business centre, a new multi-cultural community and a hub for good. We will only be able to achieve this if our charity framework is updated.
As Senior Minister Goh Chok Tong said at a philanthropy forum in 2011, “philanthropy makes the world a better place…it is crucial that we continue to give generously, to local and foreign deserving causes”. That was 11 years ago. It is a call to action that we should take to heart today.