This month, Tina Tong at Tufts University shares with us the benefit of her expertise in international research to speculate on the future of world wealth, and where high net worth individuals will be found in years to come.

Where are the next BRICs?

Background

As I was preparing for a presentation on international prospect research, I came across many wealth world reports and philanthropy reports. I also sit on one of Tufts University's campaign planning working groups that focuses on international fundraising and constituent relations. Many of the reports indicated that the number of high net worth individuals (HNWIs) has decreased in some of the BRIC countries. Furthermore, Ruchir Sharma argues in the November/December 2012 issue of Foreign Affairs that the BRICs are crumbling because of unsustainable economic growth and other factors, such as demographics and politics(1). I began to wonder where the next up and coming countries would be.

The world is still recovering from the economic crisis of 2008. Forbes' The World's Billionaires list included 1,226 billionaires in 2012, the highest number in its 25-year history(2). There are more rich people out there than ever. However, the number of billionaires in China dropped from 115 in 2011 to 95 in 2012, and in Russia the number dropped from 101 to 96. While it should be to no one's surprise that the Asia Pacific region surpassed North America with the highest number of HNWIs, according to the 2012 Capgemini RBC Wealth Management World Wealth Report, the number of HNWIs also dropped in several once promising countries(3). In India, the number of HNWIs decreased by 18% from 2010. Hong Kong's HNWIs also dropped 17.4% in 2011.

According to Wealth X Ultra Wealth Report 2012, the numbers of ultra high net worth individuals (UHNWIs) and total wealth in Asia and Europe both dropped in 2011(4). Mirroring trends in the Forbes list and the Capgemini report, UHNWIs in China and India both dropped.

Rising Stars

Despite all these negative indicators, there are positive signs going forward. The BRIC countries may be declining, but Sharma in his Foreign Affairs article predicts that the countries that will probably have a 3% growth rate or higher over the next decade are: Czech Republic, South Korea, Turkey, Poland, and Thailand.

The collective wisdom from the world wealth reports and philanthropy reports seems to indicate that Asia is an area of growth in terms of GDP and HNWIs. Wealth X predicted that Asia's number of UHNWIs would surpass that of the United States in 2025, which is earlier that what it had predicted a year ago.

Knight Frank's The Wealth Report 2012 predicts that by 2050, Asia will have the world's wealthiest citizens(5). I believe that Thailand and Indonesia will be the bright spots in Asia.

From the Forbes' billionaires list of 2012, Thailand had five billionaires and Indonesia had 16. According to Capgemini World Wealth Report 2012, Thailand's HNWIs population grew by 12.8% because of significant gains in real estate. According to Wealth X Ultra Wealth Report 2012, 2011 was a strong rebound year for Thailand. Its UHNWIs population grew by 4.2%. Thailand was also mentioned by Knight Frank as a country to watch.

Indonesia also had a great year in 2011. Their UHNWIs population grew by 4.7% and total wealth grew 41.2%, according to the Wealth X. Wealth X believes that Indonesia has great potential, because more than half of its population is under the age of 30 and a large part of its population is poised to enter the middle class. However, pervasive corruption and bureaucratic inefficiencies will be a challenge.

Besides Asia, Africa is another region where wealth will grow rapidly. Wealth X indicated that of all regions, Africa's UHNWIs is expected to grow at the fastest rate and that Tanzania and Kenya will lead in the growth of UHNWIs in the region. Tanzania's growth will be fueled by the global demand for gold and coffee.

The Giving Culture

While it is important to understand where the new emerging wealthy countries are, we also need to know if the folks in these countries are philanthropic since we are in the fundraising business.

Charities Aid Foundation has produced a World Giving Index for 2010 and 2011(6). The 2011 report looked at three elements of giving: charitable donation, helping a stranger, and volunteering one's time. The survey asked people if they have done any of the three activities in the past month.

In 2010, there was a global increase of helping a stranger and volunteering one's time, but charitable donation went down. Nonetheless, Asia has the biggest growth in World Giving Index scores. In Southern Asia, the score grew by 11%.

According to the World Giving Index 2011, Thailand was ranked 9^th in overall giving, while Indonesia was number 49. Thailand also did well in the charitable donation area. Eighty-five percent of the people surveyed said they had given money to a charity in the last month compared to 73% of those in Hong Kong. In Indonesia, 72% of the people surveyed said that they had given money to a charity in the last month.

At a recent webinar on global fundraising, Jay Frost, partner at Jerold Panas, Linzy & Partners, said that fundraisers should not worry so much about the giving culture around the world. Giving or charitable donations have taken form in one way or another all over the world for many years. He advocated that we just need to go and ask. Frost also indicated that some emerging and developing countries have no reputable or established charitable organizations for these HNWIs to donate to. Thus, there are opportunities for the well-established and better organized charitable organizations to provide the avenues to which these HNWIs can donate.

Conclusions

BRICs are still important countries to concentrate on or to start with. However, with some evidence of their slowing down, it is time to look ahead so our organizations will not be left behind. With a good prediction of high net worth growth and strong evidence of charitable activities, I believe that Thailand and Indonesia are two countries not to be missed in Asia.  Let's not forget Africa. Researchers should also keep an eye on Kenya and Tanzania.