- City Fajr Shuruq Duhr Asr Magrib Isha
- Dubai 04:36 05:52 12:21 15:49 18:45 20:02
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Arab businesses must apply their venture capitalist spirit to their philanthropic projects to ensure the greatest positive social impact, according to experts at a regional forum in Dubai.
Following the release of a report that found corporate philanthropy in the Middle East was on the rise, private sector companies were urged to treat their charity work like any other investment in order to capitalise on the social returns. Findings from the study, From Charity to Change: Trends in Arab Philanthropy, revealed that Arab businesses and professional leaders were increasingly realising the advantages of formalising their charitable work in the form of a registered fund attached to their company or endowment established in the name of their family. Barbara Ibrahim, Director of the John D Gerhart Centre for Philanthropy and Civic Engagement and co-author of the report, said: “One interesting trend in some of the organisations is to take the principles of venture capital and apply them to the world of social change. There was front-end investment of a large amount of money and not drizzling it out over a number of years. “They would particularly offer the philanthropic organisations, which are carrying out the work, management advice, and the kind of business acumen that comes with identifying opportunities and managing risks. And these principles can also apply to social problem solving,” she said. Ibrahim said businessmen were increasingly turning their hand to social causes to secure the future economies in which their companies operated. “What has happened is that our business leaders have made all the money they need, they have secured their commercial interests, and now they are turning their talents and their expertise to solving major social problems. This is because they know their gains will not be sustainable if the political systems is not strong, the social systems is not strong and if we do not have economies that are strong.” Ibrahim’s report identified a number of key institutional philanthropists in the UAE that had spear-headed the move to a more formalised and systematic approach to charity work, including the Emirates Foundation and Bait Al Khair. In 2007, the Mohammed bin Rashid Al Maktoum Foundation was launched with an endowment of $10 billion (Dh36bn) as a personal initiative of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, with the aim to develop knowledge and human capabilities in the Arab Word for the creation of a future generation of leaders in the region. Nabil Ali Alyousuf, acting CEO of the Foundation, said: “More and more businesses are getting involved in this kind of work and are bringing their business thinking to the area of philanthropy. So we are now more than ever measuring the return on investment in philanthropy, but the return is not necessarily financial it’s more of a benefit to the society. Businesses across the board are starting to get involved, be it financial services or regular business people working in trade. The Foundation’s endowment is currently being managed by Dubai Holding. Education has been one of the main beneficiaries of institutional philanthropic money, as governments struggle to tackle the issue of an estimated 200 million illiterate people in the Arab world. Fadi Ghandour, CEO and Founder of logistics and courier firm Aramex, argued the private sector was best placed to tackle long-term social problems through its capacity to execute successful business ventures. “The institutional private sector has a great role to play in philanthropy. And over the next 20 years we have a big challenge in the region and the private sector has to be prepared. We have more ability in the future because we have more flexibility and can find solutions for people in need because we’re able to identify strategic targets. “Businesses must invest in the local communities in which they operate, and because it has such an important role to play, the public sector must do the same. We are telling the private sector to invest to solve the crises and challenges that face communities,” Ghandour said. He added that the private sector must transfer prosperity to the margins of society. Ibrahim said: “Citizen business leaders are drivers of this change, and are using a real next generation way of thinking about their role in public life. Instead of investing profits for quick returns today in luxury markets, increasingly business leaders are thinking about ways they can invest so economic growth is sustainable for the future.” But she said a major challenge facing philanthropy in the UAE is lack of a supportive legal framework, which facilitates independence and good governance of foundations. “Everywhere we went we heard the frustration of philanthropic leaders about the legal and regulatory environment in which they work,” she said. “There are not enough financial reports, stock market reports, and so on. We need to encourage policy and legal reform.” Khaled bin Zayed Al Nahyan, CEO of the bin Zayed, added that another major obstacle is that charity is often hidden in the Muslim world. “The majority of people who want to give do not inform anyone so there are no references. If we want to promote philanthropy to a higher level we need databases so we can compare alternatives to find out which are more effective,” he said. “You need to get better comparisons between different causes in the same way as in the private sector. We need to apply the principles of the private sector to philanthropic work.” Dr Ibrahim added that the limitation secrecy provides is that philanthropists are not sharing enough information, and they are not learning best practices or networking the sector as effectively as possible. Kuwait’s Government has asked every corporation to donate one per cent of their annual profits, transferring into hundreds of thousands of dollars that goes into research and development at the Kuwait Institute for the Advancement of Science. “Other corporations feel they should give the zakat amount so they give a bit more. It varies from place to place but they are mobilising tremendous amounts,” Ibrahim added. In Egypt, the official five billion Egyptian pounds donated each year is estimated to be much higher as a result of the large amounts of aid given by the private sector. Egypt’s contribution is larger than that in the USA or the EU, she added. Dubai-based private equity firm Abraaj, which has $4bn assets under management, has established a charity committee to promote the overall culture of giving among members of the firm. A certain percentage of the annual bonuses distributed to employees is automatically deducted and given to the committee to spend. Q&A Nabil Ali Alyousuf
The Mohammed bin Rashid Al Maktoum Foundation has spearheaded the development of large-scale philanthropy for social change around the world since its inception in 1996. Nabil Ali Alyousuf, acting CEO of the Foundation, explains that business leaders are calling on their investment know-how to transform once simple charity into strategic philanthropy. The education sector, which is a major part of the Foundation’s investment of its $10 billion (Dh3.67bn) endowment budget, is one key area that has benefited from corporate philanthropy in the Arab World. The organisation’s budget for the 1997-2002 period was approximately $29.97 million. Excerpts from an interview: How do you see corporate philanthropy developing in
the UAE? In the UAE we have seen a move towards the institutionalisation of philanthropy, for example the Emirates Foundation and the Mohammed bin Rashid Foundation plus other large-scale groups have transformed the face of philanthropy to a more institutional and strategy thinking. And we are seeing this trend continuing and we are hoping to see more and more philanthropic institutionalisation being established. What’s your definition of institutional philanthropy? The three criteria of institutionalisation of philanthropy are: first the transformation from hand-outs to more of a planned assistance to those who need, so that they can become independent after the assistance is given, second is institutionalisation in the organisation itself, so that it adopts the best practice in terms of management and transparency and promoting its causes and third is looking at more specific causes that are most pressing in a society like the UAE and the entire Arab world. How are UAE businesses approaching this type of investment? More businesses are getting involved in this kind of work. They are bringing the business thinking to the area of charity. We are now more than ever measuring the return on investment in philanthropy, but the return is not necessarily financial it’s more of benefit to the society. Businesses across the board are starting to get involved, be it financial services or regular business people working in trade. Why is institutional philanthropy necessary? We’re living in an era of globalisation and growing challenges, and unless we address these challenges systematically we will not be able to solve them. This is the best way to make an impact. Unless we focus on how we spend our resources, then they will be wasted. What area has seen the greatest impact from institutional philanthropic money? The greatest impact for this kind of work has been seen in areas like education. We have seen a lot of schools being built by philanthropists; and cultural areas used to nurture talent. Where will the Mohammed bin Maktoum Foundation train its efforts in the future? The foundation will focus on education and research, job creation and helping entrepreneurs, and creating new thought process and helping future authors to write and contribute to the leadership of the Arab world. |
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