Hong Kong could enhance its role as a centre for family offices by offering more tax incentives for philanthropy and exploring cross-border flow of capital for charitable purposes, according to a study by Centre for Asian Philanthropy and Society released on Thursday. With the third-largest stock market in Asia and its position as a gateway to mainland China, which has the world’s largest population of billionaires, Hong Kong has the potential to be a philanthropy hub for Asia, according to the study, sponsored by the Better Hong Kong Foundation. The centre’s co-founder and CEO Ruth Shapiro presented the findings of the study in a forum on Thursday. Promoting philanthropy will be an important step for Hong Kong to compete with Singapore as a hub for family offices, the companies wealthy families or individuals set up to invest their riches and handle succession planning. Many wealthy families place great emphasis on charitable works. Financial Secretary Paul Chan Mo-po on Wednesday announced the government will allocate HK$100 million (US$12.8 million) to InvestHK to promote family offices and other wealth-management businesses. Earlier, Chief Executive John Lee Ka-chiu in October set a target of having 200 large family offices set up in the city by 2025. Hong Kong already has some of the biggest donors worldwide, such as the Hong Kong Jockey Club, which gives away around US$500 million every year. However, Hong Kong has only attracted few overseas charities outside China to set up here. This is because the city lacks tax incentives for overseas foundations, and the process to register tax-exempted, charitable organisations is too lengthy and costly, Shapiro said. Charitable status and tax exemptions are currently limited to organisations that directly benefit Hong Kong, and there are no additional incentives to set up grant-making foundations. Hong Kong vs Singapore: can city regain impetus in plan for family offices? To turn the city into a hub for philanthropy, Hong Kong should find ways to shorten and simplify the registration process for grant-giving charities, as it is now losing out to Singapore in this area, Shapiro said. Hong Kong’s government will invite some of the world’s wealthiest family offices from the Middle East, mainland China, the US and Europe to meet in the city in late March in a confab dubbed the “Wealth for Good” summit, a government spokesman said on Thursday. InvestHK is committed to promoting the city as a leading hub for family offices in Asia through its dedicated FamilyOfficeHK team, he said. The department will support the Financial Services and the Treasury Bureau to launch key projects for attracting more family offices worldwide to Hong Kong, he said, adding that more details will be shared in due course. Hong Kong individuals can only claim tax deductions for donations up to 35 per cent of their taxable income, while Singapore allows a full deduction. The average number of days for a Hong Kong charity organisation to receive clearance stood at 365 days in Hong Kong, longer than Singapore’s 270 days and the 124-day average in Asia, the study said. Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said during his keynote address at the forum on Thursday that Hong Kong has given tax incentives for family offices and charity organisations. The number of registered tax-exempt charities in Hong Kong has risen over the past five years and is now approaching 10,000, he said. Deep liquidity, diversified offerings make Hong Kong a family office haven: SCMP panel “It is illustrative of the growing charity culture in Hong Kong,” he said. The government should “drive this forward” with a long-term vision and more favourable policies such as new tax incentives for grant-making foundations, social enterprises or social investments, said Amy Lo, co-head of wealth management for Asia-Pacific at Swiss lender UBS, who also spoke at the event. “We also hope to see more global philanthropists and social innovators come to Hong Kong to share their experiences,” she said. “It is important to create a buzz in the Hong Kong philanthropy scene.” Asia’s second-richest man Ambani to set up family office in Singapore As a gateway to mainland China, Hong Kong could work with mainland authorities to allow more cross-border philanthropic flow, allowing Hong Kong-based donors to fund mainland charities and mainland philanthropists to direct funds into Hong Kong, the study said. Sixty-six per cent of ultra-high-net-worth families in Hong Kong and mainland China believe philanthropy has an impact on strengthening their family cohesiveness, according to a survey the Centre for Asian Philanthropy and Society conducted in May last year on 300 families with assets over US$30 million. Hong Kong ideally placed to be family office hub The survey showed 97 per cent of respondents want to learn more about social investments and philanthropic giving, while the top issues of concern are education, health and the environment, the study said. The family-office team of InvestHK, a government promotional agency, should make philanthropic opportunities part of its pitch when it is encouraging wealthy investors to set up family offices in Hong Kong, the study said. UBS earlier this year introduced a donor-advised fund in Hong Kong, which pools client money together for charities without the need to set up an independent foundation, Lo said, adding that this type of fund has been popular in the US and Europe, as it is cost effective.