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Community spirit, corporate gain

Michael Yeoh is founder, executive director and chief executive officer of the Asian Strategy & Leadership Institute (ASLI) and the ASLI Foundation, based in Kuala Lumpur.

Asian family business are returning some of their globally-made fortunes to good causes back home, fueling a growing philanthropic sector in Asia. Michael Yeoh reports on the business families who traditionally preserved their wealth for family

Corporate philanthropy is not new in Asia, but it's not particularly old either. The concept has been part of Chinese business culture, for example, for many generations. Many overseas Chinese running successful family businesses, based mainly in south-east Asia, Hong Kong and Macau have, for a long time supported philanthropic causes across Malaysia, Thailand, Indonesia, Singapore, Vietnam and the Philippines. Today, increasingly, corporations in Japan, Korea and India are also embracing philanthropy as a form of corporate social responsibility (CSR). With CSR gaining importance and credibility, corporate philanthropy is expected to increase exponentially. Many Asian companies and successful family businesses now set aside capital every year to donate to worthwhile causes. In the Philippines, a branch of Chicago's One Percent Club has been founded to encourage companies to donate 1% of their after-tax profit to charitable causes.

Previously, many Chinese family businesses contributed mostly to the key educational and medical causes. Chinese families who had migrated to south-east Asia in the 19th and early 20th centuries, and thrived in their adopted homelands, eventually created a wide network of business families and successful entrepreneurs. This group sought to gain influence and prestige in their new countries by building schools and hospitals there – and it did the trick. Today, across much of south-east Asia, particularly in Malaysia, these families, their companies and foundations are the major donors to a large network of Chinese schools and hospitals: the renowned Lam Wa Ee Hospital in Penang and the Tung Shin Hospital in Kuala Lumpur are two examples. Although these hospitals were initially built to serve the poor who could not afford healthcare, they have, under the patronage and continued funding of their benefactors, developed into reputable centres of medical excellence, providing specialist medical care too.
 
Overseas Chinese also put a lot of stock in good education, particularly as many of them and their parents were too poor to complete basic schooling, and Malaysia boasts hundreds of Chinese-built schools with impressive scholastic records. Nanyang Technological University, originally founded as Nanyang University by self-made rubber tycoon Tan Lark Sye in 1953 as Singapore's first Chinese university is one example; in Malaysia, the non-profit and private Tunku Abdul Rahman University (UTAR), strongly supported by corporate philanthropy, is another example.
 
Fundraising activities such as dinners and cultural shows used to be the primary way corporations and family businesses raised cash for these activities. However, many Asian family businesses today have professionalised their giving and have established family foundations to channel their philanthropic contributions. They are usually afforded tax-exempt status by their ­governments for this, which encourages the sector to grow and for more generous gifts to emerge. Through these foundations, family businesses are better able to manage their several philanthropic contributions at once, and design their own programmes. Many such foundations provide scholarships for study in universities, both locally and abroad. As they have professionalised, families have also diversified their scope of giving and are, in some ways, uniquely placed to react to charitable needs without much of the bureaucracy that often plagues bigger, public charities; hundreds of millions of dollars were raised by these foundations for relief to victims of the 2004 Asian tsunami crisis.
 
Setting up charitable foundations also provide family businesses with more focus when they want to meet growing requests for charitable contributions. Increasingly, Asian corporations have begun to recognise that CSR should no longer be the exclusive domain of governments. It is now widely accepted in Asia that corporations cannot just look at their bottom lines without recognising the wider interests of their stakeholders.

In Japan, the not-for-profit Nippon Foundation has taken on a pro-active role in advocating corporate philanthropy and social responsibility in Japan. The foundation is run by chairman Yohei Sasakawa, whose father Ryoichi – notoriously monikered "the word's richest fascist" after using extensive wealth from various business ventures to fund China's paramilitary forces during the Sino-Japanese War. Though arrested at the end of the second world war as a war criminal, he subsequently became a full-time philanthropist, establishing the foundation in 1959. His achievements in this field are now widely noted, with his son carrying on his philanthropic legacy.
 
As well as having a large focus on eradicating leprosy, the Nippon Foundation is aiming to publicise the CSR activities of 2,000 publicly-listed Japanese companies, and to have an assessment of these activities by an independent panel of experts. Yohei Sasakawa has said in the past that companies will change when they know that their consumers are interested in what they do in terms of CSR and philanthropy.
 
Going forward, the trend is that as CSR continues to grow in importance, corporate philanthropy in Asia will follow. Setting up foundations and running established foundations appear to be the choice of many corporate leaders in the region. Others continue to donate from corporate profits. Governments can play a key role in promoting corporate philanthropy by allowing tax deductions of contributions given to charity. It is clear that new entrepreneurs – Asia's own 'nouveau riche' – also contribute generously to corporate philanthropy, evident in the fundraising for the Asian Tsunami victims. Corporate philanthropy is certainly here to stay in Asia.

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