While there are many established families in Asia which have been involved in philanthropy for decades, the conversation has now turned to how to best engage the next generation of family members, Citi Private Bank’s Karen Kardos told Asian Private Banker.
“When we talk to our clients about that, we try to help them to think through what they want to accomplish from the conversation – is it more about just informing the children about what they need to do, or is it more about the children actually being engaged and becoming decision-makers,” explained Kardos, global head of philanthropic advisory, Citi Private Bank.
Karen Kardos, Citi
A recent survey by Citi Private Bank, the Global Family Office Survey Insights 2023, showed that while the philanthropic focus of family offices is yet to adapt to reflect the priorities of the rising generation, families are nevertheless increasingly aware that a transition is coming.
“The younger generation also views philanthropy very differently than their parents, and this is independent of when they move into the succession of philanthropy,” she highlighted.
For example, for the next generation, philanthropic work can be more about their lifestyle choices. “When they work, they want to work for a company that is trying to get to net zero, or that promotes free trade policy. They are also more inclined to use ESG investment strategies.”
In order to prepare the next generation to take over the family office, Citi has its own programme called ‘Citi Latitude’ to educate the next-gen on family matters.
Co-investment opportunities
Another trend that Kardos highlighted is that of co-investment opportunities among families in Asia.
Faye Ong, Citi
“As we go further along the collaboration spectrum, is connecting families and networking them with like-minded funders and the more established families in philanthropy,” she said.
Kardos added that she recently had a discussion with a client from India who was really interested in climate issues. The bank then connected the family to other clients in the US who are doing work in that space, to bring programmatic co-investment opportunities for the two families.
“Our clients are looking for other funders to come in on what they are doing from a programmatic perspective, and connecting the clients is really beneficial on both sides.”
Endowment model sees uptick
While there are different vehicles for philanthropy, such as family foundations or corporations, Citi PB sees a growing interest among Asian clients to use endowment models.
“In Asia, we are increasingly seeing families use the endowment model. We believe this will be the way to go for very sophisticated philanthropists,” said Faye Ong, head of family office advisory, Asia, Global Family Office Group, Citi Private Bank.
“For instance, we have a client whose family office team does investments for the foundation. With all of the capital invested, they make returns and then distribute 20% of those returns every year with the notion of having 80% of their fortune in the foundation. So, it’s profit-driven because they want to make returns for the giving,” Ong noted.
Kardos added that the donor-advised fund space in Asia is also beginning to grow. “It is very well established in the US – an industry of over US$230 billion – and we are seeing more and more growth and uptick in the donor-advised fund space here in Asia.”
Hong Kong and Singapore catching up
Hong Kong and Singapore are the key wealth hubs in Asia, and when it comes to philanthropy, both regions are catching up fast, Ong said.
“In Singapore, we have long seen the establishment of private foundations. What we have seen more recently is an increasing trend of family offices and private individuals who now want to move on from the early part of the giving journey, which is usually less structured, to giving that is more tailored, more customised and more sophisticated across both donor-advised funds and private foundations,” she said.
Whereas for Hong Kong, Ong noted following the Wealth for Good summit, the region is actively attracting family offices and is looking to establish the market as a philanthropic hub.
“We would expect to see more frameworks or reforms that support this ambition.”
