Philanthropy – unlocking corporate resources in Asia
by Rob John, Associate of the Centre for the Study of Philanthropy & Public Good, Global Advisor to Social Ventures Hong Kong (SVhk), and Partner at Asiability.
In 2012 I joined ACSEP, a research centre at NUS Business School in Singapore to examine how philanthropy in Asia is developing, and in particular, responding to the needs of social entrepreneurs in the region. Asia is culturally, politically and economically diverse – covering more than 30 states and special administrative regions. Wealth is being created at an unprecedented rate and millions have been lifted out of extreme poverty in the last 25 years. Philanthropy has deep cultural and religious roots while also exposed to contemporary American and European practices.
I introduced the term ‘Entrepreneurial Social Finance’ to capture a growing number of models that focus on providing financial, human and intellectual capital to social entrepreneurs and their ventures. Over the course of six working papers, I and my collaborators explored the drivers of philanthropy innovation, documented engaged models such as venture philanthropy and angel investing for social impact. We surveyed the growing number of giving circles in Asia that help a new generation of donors learn about philanthropy. I was also curious about the role played by businesses in supporting social entrepreneurs – how traditional models of corporate philanthropy were being adapted to meet new opportunities for social investment. My working definition of corporate philanthropy was intentionally generous to encompass more than what we think of as traditional grantmaking. I see corporate philanthropy as ‘a business using its discretionary financial, human and intellectual resources for primarily social impact, recognising that benefit might also accrue for the company’s shareholders and employees’. This means corporate philanthropy is about more than giving grants, and includes offering volunteers and know how. And, it does not have to be purely ‘altruistic’ but might yield gains for the company (such as increased reputation or employee retention).
The study, published in 2017, draws on 23 case studies from Australia, China, Hong Kong, India, Japan, Singapore and the Philippines, to illustrate how corporations and their foundations are offering finance, volunteering and business know-how to non-profits and social enterprises across the region. The case studies cover a wide breadth of innovations, including grantmaking, skilled volunteering, a development impact bond, enterprise awards, business accelerators, corporate venture capital and the outsourcing of business processes. They all blend financial capital, volunteering and transfer of business know-how. The following are a selection of the report’s case studies, illustrating how innovations are disrupting the corporate sector’s traditional approaches to philanthropy. In the first three examples, I illustrate corporate philanthropy predominantly directed towards charities (non-profits) using grants as the most appropriate financing tool, and volunteering. Venture philanthropy is an engaged philanthropy model offering a mix of grants and non-financial advice usually to charities undergoing a step change, such as expansion.
Grantmaking: In India new legislation requires qualifying companies to allocate 2 percent of net profits to CSR, potentially releasing billions of dollars into the sector. But linking this new source of capital with high-potential non-profits is challenging in a country where the non-profit ecosystem is underdeveloped. Sammaan was launched in 2015 by the Bombay Stock Exchange as a platform where pre-screened non-profits can connect with the CSR priorities of public corporations. A year after the online platform went live, 209 corporations were actively funding screened projects of over 500 non-profits from 348 towns and cities across India.
Giving Circles are rapidly growing in number throughout Asia, as groups of individuals who pool philanthropic capital and together choose which charities to fund. Some engage with local businesses as funding or skills partners. The Funding Network Australia (TFN) uses an event-driven, live-crowdfunding model where pre-selected non-profits “pitch” to a room of potential donors. TFN has commoditised its events for corporate partners, providing their employees and clients with a donating experience that contributes to professional development and strengthen client relationships. Companies that host TFN events sometimes match their employees’ donations or offer desk space or volunteer time to young non-profits.
Skilled-Based Volunteering: The advent of more strategic approaches to philanthropy recognises that donating skills is as important as giving a grant. We developed a typology of volunteering practices in Asia, based on skill level, and whether the programme is delivered directly by the company or through an intermediary. Asian Charity Services provides free training and leadership development to small and medium charities in Hong Kong over the course of a 10-month programme, and thematic seminars. The talent needed to run a comprehensive round of workshops is drawn from the substantial corporate sector in Hong Kong. Volunteer selection is rigorous to ensure only individuals with the right adaptive skills, and time commitment will work alongside charity staff during the workshops.
Venture Philanthropy is an approach that blends funding and hands-on business advice to help non-profits scale their impact. EdelGive is the corporate foundation of the Indian financial services company Edelweiss Group, a disruptive, entrepreneurial start up that grew into a major company. The foundation was established after the company’s IPO in 2007 with the aim of its philanthropy sharing the same entrepreneurial spirit that grew the business. Its venture philanthropy approach begins with a dialogue with a charity that helps its senior management team identify short-, medium- and long-term horizons to explore strategic options and social impact. EdelGive can offer charities grants to fuel growth, coupled to business advice and coaching volunteered by the company’s staff.
Of particular interest to us during the study was how corporate giving is responding to the rise of social enterprise in Asia. A social enterprise is a business with explicit social objectives, that has to balance profitability with impact. Corporations have the financial, human and intellectual resources that can be useful to the entrepreneurs who drive these enterprises. In the study we wanted to know how such resources could be unlocked across the lifecycle of a venture – from idea, concept testing, growth and commercialisation.
Enterprise Philanthropy is a term first coined by Monitor Inclusive Markets as the strategic use of grants to support social enterprises in the earliest stages of their development. Such judicious funding would help close what they called the “pioneer gap” where a lack of finance and technical support prevents enterprises reaching the point where they are attractive to impact investors. DBS Foundation builds on the longstanding support its parent bank has given the social enterprise sector in Southeast Asia through banking services. The Foundation provides tiered grant capital and business advice to help social enterprises develop through the three stages of their lifecycle – start-up, growth and scale.
Accelerators nurture young enterprises by providing seed capital, working space and networking. Singtel Future Makers is a four-month accelerator programme for social enterprise and non-profit start-ups in Singapore and Australia. The telecom’s senior staff offer regular coaching sessions, video conferencing and technical advice in addition to grants.
Angel Investing is a well-known route for commercial, early stage ventures looking for growth capital and business advice. Angels are typically wealthy individuals with entrepreneurial or corporate experience who invest alone or in networks. I found in Asia that an increasing number of angels are looking for deals that help them make a financial return and make positive social impact. I’ll write more about ‘Impact Angels’ in a later blog in this series.
Corporate Venture Capital: Companies sometimes invest in other businesses, to gain technical knowledge as a route to new products, or to break into new markets. Clearview was a small start-up healthcare enterprise that brought high-quality cancer diagnostic equipment to poor semi-urban communities in India. Business growth was necessary to serve multiple locations and that required investment. This came through a commercial, equity-based partnership with Medipass, an Italian medical equipment company. The resulting joint venture, ClearMedi, has given more poor communities access to low cost diagnostics, and enabled Medipass to enter the Indian market. While venture capital clearly moves beyond our usual definitions of philanthropy or social investment, it can be a source of engaged, value-added finance for social businesses. The potential downside of course is the risk to social mission by diluting or giving up ownership to investors.
Creating Shared Value is a framework promoted by Porter and Kramer (Harvard Business School) to enable a company to enhance its competitiveness while “simultaneously advancing the economic and social conditions of the communities in which it operates”. Despite criticism from some scholars, shared value has gained traction with major corporations globally. Ayala Corporation is one of the Philippine’s oldest and largest family business conglomerates. The corporation moved “from philanthropy to beyond CSR” to embrace shared value across all its business units, to bring clean water, affordable education and financial services to low income communities.
Certified B Corporations attempt to codify the claim that a business can behave as a responsible corporate citizen and measure its social value. Together with the Shared Value approach, B Corps are an approach to move beyond corporate philanthropy and CSR, towards a private sector that seamlessly creates shareholder and stakeholder value. In an updated version of my publication on corporate philanthropy I will include a new study of B Corps in Taiwan, Hong Kong and Shenzhen. In a noisy market where all businesses claim ‘green and good’ credentials we will explore if B Corp certification brings clarity and proof.
You can read about the changing face of corporate philanthropy in Asia, the case studies mentioned here and many others in our report online Corporate Philanthropy in Asia: innovations that unlock the resources of business for the common good.[1]
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[1]Corporate Philanthropy in Asia: Innovations that unlock the resources of business for the common good, by Rob John, Audrey Chia & Ken Ito. NUS Business School, Singapore, May 2017. The full report can be downloaded at: http://www.academia.edu/attachments/53191227/download_file?s=portfolio
Image: Ayala Education: affordable private schools in the Philippines, courtesy of Rob John