Vincent leads BCG’s Financial Institutions practice in Southeast Asia and is also the regional leader of our Philanthropy work in the Asia-Pacific region. He has led several Social Impact projects in the region, most notably with companies that seek to enhance their abilities to effectively balance and serve both commercial and social missions.
Could you please describe the current situation, dynamics, and trends in philanthropy?
Unlike in the West, Asian economic government systems tend to fall either far right (capitalist) or far left (socialist) of center. In other words, the governments here provide either a big safety net or a little one. In the latter, it is up to the wealthy citizens to give back. This tradition of philanthropy has been well practiced. For instance, in Singapore, as far back as a century ago, when it was still a British colony, rich entrepreneurs like Eu Tong Sen were already building schools and hospitals for the community.
This tradition remains, and business executives regularly establish social foundations when they retire. The challenge, however, with this sort of giving is that it is highly dependent on the personal wealth of the benefactor. This is exacerbated by the fact that Asian countries are becoming wealthier and therefore are able to provide for the public good better than in the past. This means that social foundations today have to be better planned and better run to achieve impact.
To this end, a small number of experienced guides in Asia (including BCG) have helped philanthropic organizations to become more impactful. Our advice is centered on helping these benevolent institutions and individuals become more meaningfully involved in projects that are more efficient, accountable, and ultimately more socially impactful.
How can philanthropic organizations ensure that their efforts are sustainable?
So many Asian companies, be they state-owned or entrepreneur-owned, have sought to find a more sustainable way of making social impact. Some have sought our help, and we recently developed "The Silver Book," a strategic guide for companies in Malaysia to formulate their social responsibility agenda. In a nutshell, “The Silver Book” prescribes that to give back, one must first be able to generate surpluses, and, ideally, the giving enhances the ability to give more.
A case in point is rural banking. A bank tasked (by regulation) to open a branch in a rural community can choose to do it either as charity or as a strategic option. In the former case, the bank would aim to minimize the cost of the branch. However, in the latter case, the bank would look for creative ways to make its customers more bankable, which means uplifting them from the poverty trap of living hand-to-mouth, as well as making them better customers for the bank.