I The Growth Of Giving In The GCC

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The Growth Of Giving In The GCC

According to a report by LGT, the international Private Banking and Asset Management Group, philanthropy in the GCC area has grown over the last ten years to hit an estimated $210 billion annually, in part driven by an increase in the number of business leaders committing to philanthropic practices.

The report Giving In The Gulf Cooperation Council (GCC): Evolving Towards Strategic Philanthropy by LGT, the Centre for Strategic Philanthropy, and the University of Cambridge Judge Business School reveals that in-depth research on philanthropy in GCC has been limited due to a culture of privacy and discretion in giving practices. The study considered the practice of “Zakat,” which obliges Muslims to give 2.5% of their wealth to charity, and calculated an estimated figure of $210 billion of annual giving based on expert analysis, GCC household wealth, and the net wealth of GCC billionaires, which stood at $29.8 billion, excluding Saudi billionaires, as of November 11, 2022, according to Forbes.

The study also shows that the GCC has made noticeable strides as millennials and Gen-Z take the helm of their family businesses. In general, family businesses contribute greatly to founding and supporting some of the largest philanthropic organizations in the region. They comprise up to 90% of the private sector economy and 80% of the workforce, making them a key player in the region’s voluntary sector.

Family businesses in the region are now moving towards impact investing, according to PwC, through venture philanthropy and social entrepreneurship. Globally, the impact investing market is valued at $1.2 trillion in assets under management held by 3,349 organizations, according to a 2022 report by the Global Impact Investing Network (GIIN). While 50% of the impact investment organizations are located in the U.S. and Canada, only 2% are located in MENA.

However, philanthropic capital in the region is expected to grow rapidly with the maturation of capital markets, the growing ambitions of family offices under the leadership of the next generations, and the diversification of economies away from fossil fuels. Besides generational shifts, LGT reports that GCC philanthropists are increasingly aligned with government priorities for national development, aiming to see a longer-term impact.

With mixed views on the role of philanthropy in supporting developmental goals beyond only charitable relief, there is a need for more opportunities to enhance regulations to cater to the shift towards more strategic approaches. The past decade has seen many efforts by GCC governments to reform and improve regulatory frameworks to catalyze the growth of the sector, with countries like U.A.E., Kuwait, Bahrain, Saudi Arabia, and Qatar releasing their economic visions that support wide-scale reforms and sustainability, to name a few.

Reports also show growth in the number of philanthropic foundations and non-profit organizations operating in the GCC, with indications that the sector will continue to boom. Over the past few years, the ecosystem has expanded from a small number of organizations to dozens, ranging from broad development funds to specific issue-focused family philanthropies led by the new generations. Traditionally placing great importance on knowledge and learning, funding for education and health dominates, with an added international focus on poverty and disaster relief.

Behavioral shifts have also been noticed after the pandemic, triggering a greater drive for systemic improvements by drawing attention to the importance of developing a robust social infrastructure, such as healthcare and education, all with the need to rely on digitization for the future of giving.

50%

50% of the impact investment organizations are located in the U.S. and Canada. 2% are located in MENA.

$1.2 trillion

Value of impact investing market: $1.2 trillion in assets under management held by 3,349 organizations.

$29.8 billion

Net wealth of GCC billionaires, excluding Saudi