Read the full story from Wealth Briefing by clicking here. 

Across China, Hurun reports that wealthy philanthropists gave on average 1.5 percent of their income to charity, and that 35 percent of wealthy philanthropists have established personal charitable foundations.

Read the full Hurun Reports here:

Shanghai Wealth Report 2012

China Philanthropy Report 2012

According to the recent “Shanghai Wealth Report 2012,” published by the Hurun Reportand Australia’s Gao Fu Wealth Management, Shanghai, mainland China’s financial center and a rising star on the global business scene, now has 370,000 residents worth at least 6 million yuan (US$949,710), with business owners, real estate investors and professional investors ranking as the city’s wealthiest. The report adds that 140,000 Shanghai residents have assets of 10 million yuan (US$1.6 million) or more, an increase of 6.1 percent over last year and a full 14 percent of China’s high net worth individuals. A similar increase of 5.1 percent was seen among the 8,200 “super-rich” residents, whose net worth meets or exceeds 100 million yuan (US$15.8 million). Of the super-rich individuals in Shanghai, the Hurun Report details, 75 percent are business owners, while real estate investors account for 15 percent and professional investors account for 10 percent. “This year’s report,” said Rupert Hoogewerf, chairman and chief researcher of the Hurun Report, “shows that property is the biggest source of wealth in Shanghai, while globally, most wealth comes from professional investment.”

To read more about the philanthropy habits of Shanghai’s wealthy, click here. 

By Thomas Parks 

Burma (also known as Myanmar) may be on the verge of a dramatic expansion of international assistance. After last month’s parliamentary by-elections, there is likely to be more support for easing sanctions and increasing foreign assistance to the country to support the changes underway. Several major donor governments have announced easing of sanctions and increased aid to Myanmar, including Canada, the European Union, and Denmark. Dozens of donors and international NGOs are poised to establish new programs in the country in the coming months.

The hotels in Yangon are packed with international aid professionals. According to one NGO leader, “there are many ‘Burma experts’ in Burma right now” – an allusion to the dozens of researchers and aid workers that keep his phone ringing constantly. The development and humanitarian needs in the country are enormous, so this new wave of assistance is likely to bring much needed aid to millions of people. But in these heady days of Burma’s opening up to the world, let’s not forget the risks and lessons from scaling up the level of foreign aid too quickly.

There are several recent cases in Asia where the international community dramatically increased aid to a country that was not previously a major recipient. This scenario has generally played out in response to a major political transition, a post-conflict moment, or in the aftermath of a devastating natural disaster. Burma is a unique case. In most of the other cases, rapid scale-up of international assistance has come on the heels of civil wars that have left the country devastated. Burma is neither a post-conflict nor a “fragile state.” So, in many ways, this will be new territory for the international community.

The Government in Naypyidaw is preparing the groundwork for an expected increase in foreign aid. In a speech on March 1, President U Thein Sein spoke of the government’s interest to open up the economy, expand services, stabilize the currency, and achieve reconciliation with ethnic minorities. By preparing a “roadmap,” the Government is sending a clear message that it expects international aid to support its plans for development and reconciliation.

At this stage, it is important to reflect on some of the key lessons from other countries that have been down this road with rapid scale-up of assistance. For example, during the post-tsunami response in Indonesia and Sri Lanka, and in the immediate post-conflict periods in Cambodia, Timor-Leste, and Afghanistan, the international community responded with an outpouring of support in the form of technical assistance, democratization and elections support, budget support, and humanitarian aid. In the past 25 years, hundreds of billions of dollars have been spent in transitional, conflict-affected countries. While Burma is not at the same level of risk as these other countries have been, these comparisons may provide some useful guides for the international community given that the scale of assistance and the diversity of international organizations involved are likely to create similar challenges.

There are a few basic lessons from the past that should be kept in mind at this early stage, as the international community has an opportunity to get things right in Burma.

Lesson #1: Don’t let scale overwhelm the mission. When international assistance scales up rapidly in a place unaccustomed and unprepared for large-scale aid, problems are likely to follow. In post-tsunami Aceh and Sri Lanka, and post-transition Timor-Leste, large-scale aid often created perverse incentives that led to poor program quality and wasted resources. In most cases, donors are faced with the challenge of moving large sums of money in areas that have difficulty absorbing the funds. This scenario typically leads to implementation decisions that may have negative consequences. For instance, when donors cannot find adequate local capacity, they may turn to international contractors to deliver the assistance and meet the accounting and financial requirements of the donor. Under pressure to deliver quickly, contractors must often spend the funding on high-priced, imported materials rather than going through the more time-consuming process of sourcing locally. Tensions between the foreign aid providers and local groups can also lead to difficulties in monitoring of program activities, and low levels of local ownership. There is a major risk that aid to Burma could follow a similar course, without a concerted effort to manage the risks stemming from rapid, large-scale aid.

Lesson #2:  Political dynamics and informal “rules of the game” are just as important as formal institutions. In many past cases, international assistance has focused primarily on formal institutions, such as elections, courts, and parliaments, while ignoring the political dynamics that have largely shaped (and often undermined) these institutions. Intense political competition and informal patronage relationships were usually the factors that shaped power and governance before the transition, so it is almost certain that they will continue to play a significant role during and after the transition. In Cambodia, for example, the international community helped to establish a fragile truce between the major factions in 1993 – including two prime ministers – only to see it all fall apart in 1997 when the Hun Sen faction took over the government. Setting up the formal institutions and running an election is not enough. The informal power dynamics will eventually overwhelm formal institutions if the political settlement (a term commonly used to describe the informal power arrangements or “social order” in a country) does not hold.

In recent years, international donors have recognized the importance of political settlements in determining the trajectory of governance and stability in a country. In Nepal, during the post-civil war transition, the UK Department for International Development (DFID) recognized that the political settlement itself was in transition, as the major parties and the CPN-Maoists sought to recreate the political system and break down the old system of Kathmandu elite-dominated rule. DFID programs during these years sought to support this transition by supporting the peace process, strengthening new political leadership, and facilitating dialogue between elites to manage tensions between the major parties.

Lesson #3: International best practices are probably not the solution for Burma. In many developing countries that receive a large-scale influx of foreign aid, the international community has urged host governments to considered establishing state-of-the-art, western-designed models for new government agencies and formal state institutions. These new institutions are often poorly suited for the political and cultural realities in these countries. For example, with the support of international assistance, many countries quickly set up anti-corruption and human rights commissions to monitor abuses and prosecute officials and political leaders who broke the rules. Within a few years, however, it was clear that corruption was flourishing, human rights violators were acting with impunity, and these new western-modeled institutions were being mostly subverted.

Lessons #4: Prosperity at the center largely depends on the stability at the periphery. While most aid will likely be concentrated on change at the center of government, the key to Burma’s future stability and development will largely be determined by what happens in the conflict-affected ethnic minority regions. For more than half a century, the struggle between the ethnic Burman-dominated regime and ethnic minority insurgencies has profoundly shaped governance and security in the country. Many border regions are still affected by armed conflict. It will be essential to use this opportunity to draw the isolated, conflict-affected ethnic minorities into the positive changes that are taking place. Experiences in other countries have shown that international aid is often concentrated in the ethnic populations with the best connections to power. Ethnic groups with long-running resistance movements are often excluded – not necessarily by donors, but by governments that are seeking to use aid to reward their allies in the conflict area. For example, in Mindanao (southern Philippines) from the 1980s to the early 2000s, the vast majority of assistance was concentrated in the Christian-Filipino growth centers of Davao, General Santos, and Cayagan de Oro. The ethnic Moro-Muslim population close by in the Autonomous Region of Muslim Mindanao was largely left out of the economic transformation happening nearby, often creating more tension and frustration within this critical community. Donors mostly recognize that there will need to be an extra effort, and considerable additional risk, to channel aid to these subnational conflict areas. This is often enough to deter them from making the conflict areas a priority. In the case of Burma, neglecting the remote conflict areas could lead to a renewed cycle of armed resistance and military suppression, putting the whole transition at risk.

Lesson #5:  Do not underestimate the complexity and diversity of subnational conflict areas. While it will be critical for the international community to focus much of our effort on the subnational conflict areas, delivering aid to these regions will be extremely challenging. One common mistake in conflict-affected areas and fragile states is to treat the entire country (or subnational conflict area) the same, using the same program models and approaches across the region, and delivering the benefits through organizations or government officials who are not from the area. In reality, subnational conflict areas are usually extremely diverse and complex environments, with multiple factors leading to violence and multiple local political factions competing for dominance. Internal conflict areas are increasingly known for their “conflict micro-climates,” where local dynamics are a more frequent cause of violence than regional or national factors (i.e., conflict between insurgent group and the military). In Mindanao and Nepal, for example, the types of conflict and key actors involved may differ considerably from town to town or valley to valley. The international community has an increasingly sophisticated understanding of these local conditions, but has generally struggled to adapt programs to these complex realities.
The subnational conflict areas of Burma will likely be one of the most challenging environments for aid programs, and will require much greater adaptation. Business as usual will simply not work.

Thomas Parks is The Asia Foundation’s regional director for Conflict and Governance based in Thailand. He can be reached at tparks@asiafound.org. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.

Recently, Friends International was featured on PBS NewsHour. Watch the story below.

Sebastien Marot, founder of Friends International will be speaking at Give2Asia’s 10th anniversary event this fall on replicating successful charitable models in multiple countries. Read more about Marot, Friends International and Give2Asia’s 10th anniversary celebration by clicking here.

Billions for Charity? In China, Just Give It to the Government (Minyanville)
China saw 80 billion yuan in public donations in 2011 (Economic Times)
[Property] Developers lead China’s charitable donations (China Daily)

INDIA

Cipla to cut prices on cancer-fighting drugs (Global Post)
Where Are NGO Foreign Contribution Funds Really Going in India (The Chakra)

MYANMAR

How Can International Assistance to Burma Avoid Mistakes of the Past (In Asia)
Burma to jumpstart development (Radio Australia)

PAKISTAN

Red Cross Suspends Operations in Two Pakistani Cities (LA Times)

SINGAPORE

Businesses not doing enough to help society, says Singaporeans (Channel News Asia)

THAILAND

Irregularities in disaster funds found (Bangkok Post)
Thailand: Completion of Flood Prevention Projects Set for August, Minister Says (Dredging Today)

DISASTER RESPONSE

When disaster strikes: How to remain in business (Rappler)
Asia faces threat to crops if El Nino unleashed again (Reuters)

ENVIRONMENT

Asia-Pacific cannot afford to grow without addressing environmental concerns (UN)

MICROFINANCE

Wokai Shuts Down: A Setback for Microfinance in China (Asian Philanthropy Forum)

PHILANTHROPY

Rich seek better guidance on how to give away cash (Financial Times)

Nicholas Benes

Nowadays, we are seeing a lot of corporate governance and risk management blow-ups. Many of these failures result in massive risk externalization events, in which the company causes so much damage that it goes bankrupt or otherwise can’t compensate for the huge trouble and losses it has caused.

The list includes Lehman Brothers, AIG, Enron, Fannie Mae, and a major portion of the Japanese banking sector in the 1990s. It also includes a host of lesser-known firms that went under, and assorted events such as the BP oil spill and Tepco’s meltdowns.

The resulting drag on the global economy and public safety is huge. It has been estimated that the collapse of Enron and Worldcom shaved .34% off the GDP[1] for the U.S. in the first year alone, and there’s little doubt that Wall Street’s mishaps in the recent financial crisis, and Tepco’s three meltdowns, will each end up having a much larger overall impact than that.

This is why a group of us formed The Board Director Training Institute of Japan (BDTI), a government-certified non-profit association whose primary mission is to train directors, statutory auditors and managers regarding corporate governance and effective board practices. BDTI collaborates with major educational institutions, law firms, consultants and other experts. Such programs fill a pressing need because currently there are no other comprehensive director training programs in Japan.

One of the biggest problems the world faces is that on the one hand, people have become very adept at rapidly developing new technologies, and these advancements sometimes bring unpredictable, large risks with them. However, mankind refines organizational systems to control those risks much more slowly. We are much better at inventing complex financial products, nuclear reactors, or floating oil rigs, than we are at fine-tuning governance and risk management.

This is not surprising. The pace of technological change has always been exponential, because each new discovery enables a host of others. In contrast, governance systems only improve very slowly, hobbled as they are by the need for consensus about changes in societal customs, practices, laws and regulations.

Furthermore, even if we knew how to measure and manage risk more capably, organizations simply cannot be commanded to change instantly. They are not staffed by robots, but human beings.

Thus, the gap between the damage that technology can cause, and mankind’s organizational ability to control those risks, is now expanding at an alarming rate.

What can be done? The first step is to recognize the depth of the problem. It’s deep. We may be able to land a man on the moon, but we are still in the Neanderthal age when it comes to corporate governance and risk management systems.

The second step is to see that because no country has developed perfect corporate governance and risk management methods, all nations need to work together in finding systemic solutions. We need to join forces to consider improvements and refininements to laws and regulations.

Last and most importantly, we need to recognize that most of our potential to “close the gap” will not come from structural changes, but rather from “soft” efforts such as training, leadership, and taking personal responsibility. Said another way, structure matters, but in the end, implementation, attitude, and training will make a much bigger difference.

For  this reason, BDTI’s mission is to increase understanding about corporate governance and its benefits among the general public through education and information dissemination by offering (a) public seminars and training programs, (b) low-cost E-Learning, (c) speaker events, and (d) an internet discussion forum and a documents/data library.

Japan saw its share of governance and risk management lapses last year: Tepco, Olympus, Daio Paper, and other incidents. After three meltdowns, the public thinks something needs to be done. Japan also has a fine history of humble introspection and resourcefully finding holistic solutions. At BDTI, we think these traits can help Japan become a prime example of how to inject true dedication into corporate governance – how to “put the spirit in the Buddha,”- in a way that might help other nations as well.

Nicholas Benes is Representative Director of The Board Director Training Institute of Japan,http://bdti.or.jp/english/introduction. BDTI is a non-profit“public interest” organization certified as such by the Japanese government. (Contact: info@bdti.or.jp ).

The Guo Mei Incident and Grassroots NGOs (China Development Brief)

INDIA

The Tangled Tale of Aakash, the World’s Cheapest Tablet (NY Times, part 1)
The Aakash Project’s Bitter Finish (NY Times, part 2)

JAPAN

As Japan strains to care for its elderly, sacrifices begin (Washington Post)

KOREA

Eyes on Social Entrepreneurism (Korea Herald)

MYANMAR 

EU Refuses to Lift Myanmar Sanctions until Human Rights Issue Addressed (Bangkok Post)

THAILAND

Flood aid refusal ‘was self defeating’ (Bangkok Post)

VIETNAM

Nearly 80 percent of Vietnamese SME’s lack disaster plans (InsuranceInsight)

CORPORATE SOCIAL RESPONSIBILITY

Three reasons why genuine social change is better than CSR (Forbes)

DISASTER RESPONSE

Asia Must Increase Investment in Urban Disaster Risk Management (Asian Development Bank)
Asian countries told to reduce climate change’s negative impact (Jakarta Post)

PHILANTHROPY

Be Encouraged — Global Philanthropy Is Growing Up (RE: Philanthropy)

SOCIAL ENTREPRENEURISM

Scaling Social Enterprises (Huffington Post)

From the report:
“The corporations we represent have tremendous potential to heal or to harm. How do we engage the full spectrum of our corporations’ assets to ensure the results are positive—for  the business and for our communities? What skills and competencies must we and our colleagues master? What are the appropriate next steps for corporate philanthropy in light of  the critical issues around the globe?”

The report also includes a 5-point framework for advancing the field of corporate philanthropy:
1. Create a new narrative for corporate philanthropy as an investment in society.

2. Develop an inclusive “operating system” for philanthropic investement.

3. Professionalize the field.

4. Improve collaboration, communication and knowledge sharing.

5. Mobilize the “field level” leadership behind this agenda.

Download the full report (via CoF) by clicking here. 

Chinese surprised by U.S. charities’ lack of state control (AdvisorOne)
China Moves to Tighten Rules for Financial Disclosure by Charities (Chronicle of Philanthropy)
Quenching China’s Thirst for Water (Forbes)

INDIA 

India to offer microloans to people living with HIV (CMAJ)
Changing perspectives through experiential learning: Oliver Balch explores how Journeys for Change, which introduces English business executives to Indian social entrepreneurs, can alter people’s perspectives (The Guardian)
The Emerging and Committed Indian Giving Market (Family Office Review)
Parliament likely to take up new Companies Bill this session (Economic Times)
Arvid Subramanian: A report card for India’s social sector (Business Standard)

JAPAN

Lingering Agony (the Economist)

MALAYSIA

Islamic Microfinance Represents Opportunity to Develop Ethical and Profitable Products (Bernama)

VIETNAM

Vietnamese businesses ill-prepared for climate-linked disasters — study (AlertNet)
To reduce impact of natural disasters, Vietnam must engage small businesses (InAsia)

CIVIL SOCIETY

2011 State of Civil Society Report (CIVICUS)

DISASTER RESPONSE  

Annual Report: International Disaster Response Laws, Rules and Principles (IDRL) Programme (International Federation of the Red Cross and Red Crescent Societies)
Learning Lessons: Intense Climate-Related Natural Disasters in Asia and the Pacific (Asian Development Bank)