A Holistic Approach
Affluent families turn to HSBC Private Bank to guide their philanthropic activities as well as advise their investments
HSBC has been a leader in succession planning for wealthy family businesses in Hong Kong for more than seventy years. During those seven decades it has also developed close relationships with many charities throughout Asia.
HSBC Private Bank now manages over US$ 1 billion of assets in more than 100 charitable trusts in Hong Kong. And last year, the Private Bank and its high- net- worth clients donated HK$ 234 million, which almost matched the HK$ 273 million of the Community Chest of Hong Kong.
“The greatest increase in wealth has been in Asia, where there are now more billionaires than in the US,” says Bernard Rennell, regional head of Global Private Banking, Asia- Pacific and global head of Private Wealth Solutions at HSBC Private Bank. “For many in the region, this new wealth comes with a growing sense of responsibility to give back to society, and a desire for guidance on how to make a longer term impact.”
Its philanthropic service thrives in Private Wealth Solutions, which includes experts recruited from nongovernment organisations ( NGOS) and multilateral agencies that have deep roots and track records in the region.
A case in point is Cynthia D’anjou- Brown, head of philanthropy advisory, North Asia and family governance advisor, Private Wealth Solutions at HSBC Private Bank, whose postgraduate education and training in Canada focused on social work policy and community planning.
“Private Wealth Solutions offers a complete service in conjunction with its clients, providing execution, monitoring, management and administration,” she says.
It provides critical advice to help clients to identify strategic goals, and appropriate projects for individuals and family offices to channel their charitable donations. The evaluation process includes on- site meetings and then follow- up visits to ensure the funds are spent wisely.
The division also helps clients navigate their
way through Asia’s multijurisdictions, which have different rules that regulate the non- profit sector.
However, HSBC’S philanthropy service should not be viewed as an appendage to its wealth management offering. On the contrary, it is a fundamental part.
It is important to understand that philanthropy within the region is regarded by people as an ethical and civil duty, and may be an important part of their legacy. Unlike in some other countries, charitable donations are rarely made for tax reasons. Instead, the values of a family and its business enterprise are often aligned and so philanthropy becomes integral to the business operation through its CSR.
“In fact, first generation entrepreneurs generally feel a particular obligation to ‘ give- back’ because their families often came from poor or disadvantaged backgrounds. They are keen to share the results of their hard work and good fortune,” explains Christopher Marquis, managing director, head of Private Wealth Solutions, Asia at HSBC Private Bank.
Philanthropy is also a way for families to build and maintain unity and harmony across generations. The establishment of the successful commercial enterprise that generated a family’s wealth would require qualities such as competitiveness and tenacity, but the pursuit of philanthropic activities, such as the setting up of a charitable foundation, is more conducive to cooperation.
“It certainly requires fortitude and clarity of mind, but it is less threatening and so can bind families closer together and maintain continuity,” adds Marquis.
By examining suitable beneficiaries, helping plan the process for donations and then monitoring its efficacy, children learn about collective decision- making, conflict resolution, and personal as well as civic responsibility.
“They learn important social skills at the same time as the family bond through participation in a shared journey. It is a tangible mechanism for reinforcing and sustaining shared values that instill cohesion and diffuse conflict,” says D’anjou- Brown.
Equally important, for philanthropy to be effective it has to be sustained over time, so the involvement of children is critical to ensure that the initiative of the founder has a legacy.
If there is no one left in the family to run a foundation then HSBC will undertake a fiduciary responsibility. Marquis and D’anjou Brown sit on a committee that has this role.
Indeed, sustainability and longevity are essential characteristics of successful philanthropy. During the past couple of decades philanthropic activities worldwide have evolved rapidly and taken many forms. Straightforward charitable giving remains an important model, and it fulfills a key role in providing relief for the poorest individuals and communities, or when disasters strike.
However, impact philanthropy directed at entities that can be self- financing has become popular.
Another related trend that D’anjou- Brown identifies is a shift in emphasis from “hardware” to “software”. Rather than focusing on building physical infrastructure, clients are looking at how systems - whether for education or healthcare for example - can function more effectively.
Family offices are well- placed to deploy the logistical and performance measurement techniques that they use in their business enterprises to the not- for- profit sector.
“The common feature of these trends is to tackle the root causes of societal problems rather than the symptoms,” explains Marquis. Also, charity as an expression of personal values is significant, not least because many people within Asia have more disposable income and fertility rates in several countries are declining. These conditions have nurtured a new breed of social activists and special interest groups.
HSBC helps connect donors who share common causes and also acts as partners and advocates to government and NGO representatives for those causes and the concerns that underlie them.
In addition, as D’anjouBrown points out, some of the region lacks sufficient social infrastructure. Emergent charities in China, for instance, often need assistance to create a sustainable operational model in order to attract funding. HSBC is able to provide this guidance and advice.
The role of the Private Bank is therefore inclusive of the whole philanthropic process, and its significance can only increase in Asia as the region becomes more affluent.
HSBC Private Bank is a division of The Hongkong and Shanghai Banking Corporation Limited
Cynthia D'anjou-brown, head of philanthropy advisory, North Asia and family governance advisor, Private Wealth Solutions; Christopher Marquis, managing director, head of Private Wealth Solutions, Asia