DAVID FONG MAN-HUNG, BBS, JP
David Fong is the Managing Director and a third-generation member of Hip Shing Hong (Holdings) Co. Ltd., a family-owned property developer in Hong Kong. The Group donates a tenth of its annual profits to support philanthropic work, mainly through two family foundations – the Fong Shu Fook Tong Foundation and the Fong’s Family Foundation. By October 2015, the family had donated over HK$500m (US$64m) to causes including education, medical services and social welfare. In recognition of the family’s contribution to society, two asteroids were named after David’s parents, Dr Fong Yun-wah Star and Mrs Fong Tam Yuen-leung, in 1994 and 2006 respectively.
How did your family start with giving back to society?
We started in a very small way with community services. My grandfather and my father lived in Shau Kei Wan, a fishing village offering shelter to fishing boats during typhoons. They saw people suffering from poor living conditions and started donating little things like blankets during the winter.
Connecting with other community supporters, they launched the Aberdeen Kaifong Welfare Association and helped the needy in the spirit of ‘neighbours helping neighbours’, mainly through donations, advocacy and networking. By doing all these little things, they formed a philosophy of giving and a positive attitude towards contributing to society.
How did your family grow its philanthropic involvement?
We started with the sesame and cinnamon trade in the early days. We diversified away from these businesses as we developed and more recently we have focused on real estate. The influx of refugees from China to Hong Kong drove up the demand for housing, and our income grew in the 1960s.
The 1967 riot, however, caused both the stock and real estate markets to crash. We were involved in a lot of projects at the time, and we needed to liquidate our assets to repay loans. To my surprise, the shrinking wealth did not discourage my grandfather and father from setting up the foundations and participating in charity work. They learnt that wealth comes and goes, but charitable contributions leave a legacy. Nobody – not even banks – can take that away.
Since then we have committed 10% of the company’s profits to charities. We even privatised our business in 1989 to allow for more flexibility with our donations.
Why does your family have two foundations?
The Fong Shu Fook Tong Foundation was founded by my grandfather, Fong Shu-chuen, and my father, Fong Yun-wah, in 1970. My grandfather has five children and the foundation covers the initiatives of the entire clan. My father has his own group of companies, and he wanted to set up his own foundation to direct initiatives he is passionate about. This resulted in the birth of the Fong’s Family Foundation in 1986. The earlier foundation is larger in size, having benefited from investment in the booming real estate market. At times, the two foundations cooperate to support the same cause.
How do you fund the foundations?
The foundations receive rental incomes from their own investment properties, plus 10% of the profit from the Group. Unlike other foundations, which may be more risk-averse, we invested about half of the foundation assets into the property market in the late 1970s. We knew the industry and we knew we would be in the business for a long time.
Throughout the years, property prices and rental incomes have soared. Despite low interest rates in the past eight to nine years, the foundations’ assets have grown in size, allowing us to make bigger donations when necessary, but we have to manage our risks correctly. The risk exposure of our real estate portfolio is much lower now, given our investments were made early on, offering a big fat cushion. We also diversify our investments into securities in the utilities and banking sectors and selected bonds. We make sure that our cash position is sufficient to fulfil our promises regardless of market fluctuations.
Your business and your foundations are very similar, in a way, but their underlying nature is essentially different. How do you manage the objectives behind each of them?
Wearing my corporate hat, I focus more on the corporate social responsibility (CSR) initiatives while the foundations are doing their own work. We have participated in the Caring Company scheme for years already, learning while serving the community. We also try out new means of giving through the corporate platform.
For example, we have a project called Genesis, a revitalised industrial building in Wong Chuk Hang. Part of the building is rented out to artists, young entrepreneurs and non-governmental organisations (NGOs) at a below-market rate. We hope to retain our tradition of community building and promote work-life balance.
In terms of investment, our board members and corporate financial controller manages all the portfolios, but we have separate accounts for the Group and the foundations.
What are the causes your family is supporting?
My father was deprived of the opportunity to study during World War II. Before that, he was with King’s College, which was considered an elite school at that time. After the War, because of his age, he could not go back to school and so he studied on his own and learnt English as a business language. Because he understood how education can help a family out of poverty he started donating to the first school in his hometown, Dongguang, and gradually reached out to other provinces.
In addition to education, he is passionate about human welfare. My grandmother died of tuberculosis when my father was only seven; tuberculosis was a common epidemic in Hong Kong at that time. Because of this, my father had a special concern for those without parents.
Most recently, we have focused on health care. My father, at the age of 90, keeps track of what Chinese society needs and foresees what will deliver more concrete results. In light of this, the Fong’s Family Foundation has identified health care as our next primary focus in mainland China. We have set up acute care clinics in remote villages because we see an urgent need for acute care in these areas. This kind of immediate clinical management can at least buy time for the villagers to travel to get treatment in city hospitals. These clinics are much more affordable and cover a wider population than other sorts of facilities.
How do you monitor the progress of numerous ongoing projects?
As an example, take our project on building acute care clinics. We will have to work with government officials and agencies to channel our funds to the clinics. Site visits will be difficult as the clinics are in remote areas. How can we verify that the clinics exist and truly operate? How do we measure the effectiveness of these clinics? This requires us to set up new supervisory channels and personnel, and we have professional managers doing all of this. We also partner with government agencies in the regions to reduce the administrative costs of travelling to these areas.
Like our business investments, we have a due diligence checklist to make sure that things are done correctly. Money won’t get wired unless a particular list of people have signed and documents from the relevant municipal units have been issued. Sometimes we will need our mainland partners to commit a certain amount as well. At times we will also ask for quarterly progress reports. At least then we have a record that we can refer to if we need to perform an audit.
What are your thoughts on donations in the new era? How do you engage the next generation in family philanthropy?
The older generation tends to donate money, but the new generation is more focused on donating their time, creativity and influence. Donations-in-kind can be very important. I volunteer much of my time to serve different charities and government boards such as the Hong Kong Council of Social Services and the Social Welfare Advisory Committee. I help social enterprises build their capacity and, at times, teach them how to raise funds, as fundraising is very competitive these days with different NGOs going after similar donors.
Our family has a solid consensus that the missions of the foundations should continue regardless of who the future leader is. Unlike the family business, no one owns the foundations and we just look after the public money. I train my children in a tough way – businesses come and go, and what they have today may disappear tomorrow. I tell them not to rely on the future wealth but to equip themselves with good knowledge so that when it is their turn to run the foundations, they have the necessary skills. Relying on a blood relationship alone is not sustainable, indeed it is dangerous. They should be able to take care of themselves and the business before they can steer the foundations.
What do you see as the challenges of your foundations and philanthropy?
One of the challenges we have is that we are not donating fast enough. We need to see the right opportunities instead of blindly giving away the money. We do regularly donate, but there are some years that we have been more cautious. Scams were reported regarding agencies’ officials not handling donations in the correct manner and so we had to review the projects more carefully. That slowed us down a bit but did not hold us back from our work.
The two foundations have separate boards. While thoughts from my father are often taken, the board reviews new ideas together and makes sure that the donations fit the needs of the charities and society as a whole. We foresee some complexities within the boards as the foundations grow in size and when we lose the founder’s leadership. We are moving towards a more democratic approach to board management, increasing the transparency of decision-making and following more robust processes. I believe decisions will be more evidence-based and substantiated by research.
What can other families in philanthropy learn from you?
Every family is unique. We are still refining our working model. However, I believe you should not be unduly conservative or aggressive in your investment. Families should find new sources of income for their foundations. It is like a going concern. You don’t want to leave behind a big chunk of money and just let the foundation grow on interest. With a low interest yield, the foundation will have little to give away.
You also need to think about the business model, not only preserving the foundation but growing it. The needs of society change and grow and you need to do the same or you will get smaller and be marginalised. You need to rejuvenate your foundation like a business and be sensitive to the environment. Doing good deeds requires wise planning, advice and adjustment. With the legacy, what you have done is great. You make a mark. But the question is: Do you want to leave a bigger mark going forward? If you have a bigger heart, why don’t you do something more influential for society?