A landscape study on donations in Singapore

NUS’ study found that indi­vid­ual giv­ing is much more resilient than cor­po­rate giving.

By ASSO­CIATE PRO­FES­SOR LAM SWEE SUM & GABRIEL HENRY JACOB

With favourable poli­cies and increas­ing inter­est in the local phil­an­thropic scene, dona­tions to Sin­ga­pore char­i­ties have increased sig­nif­i­cantly over the past decade. Total dona­tions to char­i­ties with Insti­tu­tion of a Pub­lic Char­ac­ter (IPC) sta­tus grew at an aver­age rate of 11 per­cent per annum, from S$381 mil­lion in 2001 to S$776 mil­lion in 2010. To bet­ter under­stand this phe­nom­e­non, we con­ducted a land­scape study on dona­tions in Singapore. 

Dona­tions to IPCs are made by cor­po­rate and indi­vid­ual donors. Our study showed that although cor­po­ra­tions are the major donors of IPCs, the rel­a­tive con­tri­bu­tion of indi­vid­ual giv­ing is increas­ing. In 2001, 22 per­cent of dona­tions to IPCs were made by indi­vid­u­als. In 2010, indi­vid­ual dona­tions increased to 35 per­cent. From 2001 to 2010, indi­vid­ual dona­tions grew at an annual rate of 17 per­cent per annum, a higher rate than that of cor­po­rate dona­tions, which grew at nine percent. 

Our study also gives us a bet­ter insight into indi­vid­ual donors in Sin­ga­pore. First, we found that indi­vid­ual giv­ing tends to be more resilient than cor­po­rate giv­ing. The Global Finan­cial Cri­sis (GFC) in 2008 caused both indi­vid­ual and cor­po­rate giv­ing to dip sub­stan­tially. But, post-​GFC, indi­vid­ual giv­ing recov­ered faster than cor­po­rate giv­ing. From 2008 to 2010, indi­vid­ual giv­ing reg­is­tered an annual growth rate of three per­cent while cor­po­rate giv­ing declined by three per­cent per annum. This sug­gests that while cor­po­rate giv­ing is muted by the global uncer­tainty, indi­vid­ual donors are more than will­ing to pick up the slack.

Sec­ond, we found indi­vid­ual dona­tions to be closely asso­ci­ated with eco­nomic growth. Inter­est­ingly, as indi­vid­ual giv­ing increases, its chan­nel of giv­ing also changes. We analysed the total funds raised by Com­mu­nity Chest by Singapore’s GDP. This ratio declined over the past five years. Our analy­sis sug­gests that indi­vid­ual donors are becom­ing more sen­si­tive to the char­i­ta­ble causes they sup­port and pre­fer to give directly to charities.

Third, our study showed that per capita indi­vid­ual giv­ing is increas­ing. While one may argue that total indi­vid­ual dona­tions have increased due to the growth in pop­u­la­tion, our analy­sis points to another fac­tor. Analysing total indi­vid­ual giv­ing by the cor­re­spond­ing year pop­u­la­tion, we find that per capita indi­vid­ual giv­ing is on an uptrend (see chart below). We infer that Sin­ga­pore donors are becom­ing more gen­er­ous and are giv­ing more. It seems that even the non-​residents are sup­port­ing local charities.

We credit the growth of indi­vid­ual dona­tions to the favourable tax pol­icy in Sin­ga­pore. Stud­ies have shown that tax poli­cies are effec­tive in pro­mot­ing indi­vid­ual giv­ing. Tax shields reduce the tax price of giv­ing and moti­vate donors to give more. In Sin­ga­pore, donors will receive a 250 per­cent tax deduc­tion for dona­tions to IPCs. This ben­e­fit is very attrac­tive to donors, espe­cially the high net-​worth indi­vid­u­als. Uni­ver­si­ties in Sin­ga­pore are some of the major ben­e­fi­cia­ries. Besides receiv­ing tax shield, dona­tions to uni­ver­si­ties attract match­ing grants from the Sin­ga­pore Gov­ern­ment, which fur­ther decreases the price of giv­ing. How­ever, we note that the reach of this tax ben­e­fit is lim­ited as only 21 per­cent of the pop­u­la­tion in Sin­ga­pore pays income tax.

The land­scape study points to the grow­ing impor­tance and con­tri­bu­tion of indi­vid­ual giv­ing in Singapore’s phil­an­thropic scene. This is a timely reminder for local char­i­ties to scale up their engage­ments with indi­vid­ual donors. We fore­see such endeav­ours to be reward­ing in the near future. 

Dr Lam Swee Sum is an asso­ciate pro­fes­sor of finance and direc­tor of the Asia Cen­tre for Social Entre­pre­neur­ship and Phil­an­thropy (ACSEP) at the National Uni­ver­sity of Sin­ga­pore (NUS) Busi­ness School. Gabriel Henry Jacob is a grad­u­ate stu­dent at the Lee Kuan Yew School of Pub­lic Pol­icy and a research asso­ciate with ACSEP at the NUS Busi­ness School.