Centre for Asian Philanthropy finds way forward for Sri Lanka with Doing Good Index

■ Social sector looks to govt. and corporates as demand for domestic support rises ■ Balanced policies and incentives can drive private capital into the social sector

The Centre for Asian Philanthropy and Society’s (CAPS) second edition of its Doing Good Index (DGI2020) reveals the vital role of the social sector, and how Asian countries help or hinder it.

The study identifies opportunities for the Sri Lankan government to do more for society, as well as how private/corporate donations must play their part in meeting people’s needs.

“Asia has amassed one-third of the world’s wealth, but still has two-thirds of the world’s poor,” said Dr. Ruth Shapiro, CEO of CAPS.

“There is now a unique opportunity to use this newly created wealth to alleviate poverty, protect the environment and promote societal resilience. DGI2020 makes it clear that governments, private donors and the social sector must work together, now more than ever, to build a stronger, more prosperous and more equitable Asia as we overcome the economic crisis caused by COVID-19.”

As the world struggles to cope with the ongoing pandemic, one thing has become clear: there is no going back to the way things were. Faced with stagnating or contracting economies, governments in Asia are finding it difficult to keep pace with the growing needs of their people. In this context, the social sector, backed by funding from businesses and private individuals, has become even more critical in the provision of vital social services.

In the wake of the COVID-19 outbreak, charitable giving has focused on local community response. International support is declining and “Asia for Asia” philanthropy must fill the gap. If Asians donate the equivalent of 2 percent of their gross domestic product, an enormous US$ 587 billion can be made available annually – 12 times the net foreign aid flowing to Asia, and nearly 40 percent of the additional US$1.5 trillion that Asia Pacific needs to spend annually to meet theunited Nations Sustainable Development Goals by 2030.

“The global pandemic has accelerated the decline in foreign funding among local social delivery organisations, and there is a growing reliance on domestic philanthropy more than ever to ensure that community needs are met,” said Kithmina Hewage, Research Economist of the Institute of Policy Studies of Sri Lanka. “It is crucial for the social sector to work closely with the government and corporates to increase domestic funds that not only address immediate Covid-19-related needs, but also longerterm needs related to disaster management, environmental conservation, poverty alleviation, and post-conflict reconciliation.”

DGI2020 is a study of the context in which private capital meets society’s needs. It provides a roadmap of the policies and practices that will incentivize giving and foster a thriving and effective social sector. The index can help philanthropists, policymakers, researchers, social delivery organisations (SDOS) and engaged citizens understand what lever scan best increase philanthropic giving in their countries. It also spotlights how to improve accountability and transparency to address the trust deficit faced by the social sector that can hold potential donors back.

DGI2020 identifies the following six broad trends across Asia:

1. Government involvement matters. In Asia, institutions prefer to work in tandem with government, so public policy related to the social sector not only has a direct effect, but also a signaling effect that amplifies its impact.

■Governments across the region are seeking increased local philanthropy and CSR.

■ More than half of Asian economies are witnessing declining foreign funding. In the 6 countries and territories that impose restrictions on foreign funding, many SDOS report funding has decreased by 20 percent or more.

■ 45 percent of SDOS across Asia receive funding from foreign sources, making upapproximately 25 percent of their budget.

■ Today, 71 percent of Sri Lankan SDOS surveyed receive foreign funding, making up 54 percent of their budget. With Sri Lanka having been classified as a lowermiddle-income country in 2010 and uppermiddle-income in 2019, foreign funding is increasingly being redeployed to low-income countries.

■ Only 16 percent of SDOS surveyed in Sri Lanka receive government grants, half the average proportion across Asia.

■ Government grants make up around 2 percent of the average Sri Lankan SDO budget.

2. Regulatory oversight of the social sector is increasing, with mixed results

■ More than half (56 percent) of Asian economies have increased government supervision of the sector.

■ The establishment of the National Secretariat for Non-governmental Organisations in 1996 made all necessary regulations easily accessible through its official website, and more recently, it introduced an online platform for registration. However, oversight of the organisation has changed frequently between different government ministries.

■ 41 percent percent of SDOS in Sri Lanka find laws pertaining to the social sector difficult to understand.

3. Tax and fiscal policies are a major incentive for charitable giving, but widespread confusion about them frequently holds back donations

■ One in four SDOS across Asia are unaware that tax deductions are available for charitable donations.

■Country experts in 14 out of 18 economies, including Sri Lanka, have difficultyin accurately identifying relevant tax policies.

■Incentives for philanthropic giving upon an individual’s death in the form of charitable bequests are lacking, with only six among the 18 economies surveyed having arrangements for inheritance tax.

■ 70 percent of Sri Lankan SDOS believe it is difficult to claim available tax deductions. 4.Government procurement can be an important source of growth for the social sector, but most economies are underperforming in this area.

■ Only 11 percent of SDOS surveyed in Sri Lanka have contracts with the government, compared to the Asia average of 26 percent.

■ Across Asia, 61 percent of SDOS with government contracts find it difficult to access procurement information.

■ Most SDOS continue to find procurement processes lacking in transparency.

5. Governments are increasingly consulting

SDOS on policy issues.

■ Three- quarters of organisations surveyed report being involved in policy consultations, up from half in 2018.

■ In Sri Lanka, nearly 80 percent of SDOS report occasional or regular participation in policymaking.

6. Corporate social responsibility (CSR) and public-private partnerships are playing a growing role in Asia.

■ 11of 18 economies say CSR and public-private partnerships are receiving more attention.

■ 86 percent of Asian SDOS surveyed work with the corporate sector in some capacity.

■ 51 percent of Sri Lankan SDOS receive corporate funding, making up 16% of their average budget.

■ 40 percent of Sri Lankan SDOS receive in-kind services from corporates or partner with them to raise awareness of social issues.

The DGI2020 research surveyed 2,189 SDOS and interviewed 145 country experts across 18 Asian economies: Bangladesh, Cambodia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Myanmar, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam.it examines regulatory regimes,tax incentives, procurement procedures, and sociocultural conditions.

CAPS’ Doing Good Index 2020 offers a way forward for governments, private and corporate donors to meet the imperatives of building a vibrant social sector for a brighter Asian future. The next edition of the index, planned for 2022, will reveal how these economies have fared following the Covid-19 pandemic.

The Institute of Policy Studies of Sri Lanka (IPS) is the local partner for the Sri Lankan component of the study.