Archive for the ‘Arab Philanthropy’ Category

When it comes to news on socio-economic trends in the Arab World, government and business leaders turn to Trends Magazine. Tahseen Consulting is honored to have its insights on emerging trends in Arab philanthropy featured in the publication’s September issue.

Tahseen Consulting’s Chief Operating Officer, Wes Schwalje, spoke with Nikhil Inamdar, a leading voice on key business trends in the region, regarding the region’s transition from charity to strategic philanthropy. In a wide-ranging discussion, Schwalje discusses recently launched large scale philanthropic initiatives, emerging trends in strategic philanthropy, and what the future holds for Arab philanthropy.

Tahseen Consulting's insights on emerging trends in Arab philanthropy are featured in Trends Magazine's September issue

Tahseen Consulting’s insights on emerging trends in Arab philanthropy are featured in Trends Magazine’s September issue.

Nikhil Inamdar: What are the latest trends being witnessed in Arab philanthropy?

Schwalje: The three most transformative trends I see now are as follows:

High Net Worth Individuals Are Playing an Increasing Role: In 2010, Berkshire Hathaway CEO Warren Buffet and Microsoft co-founder Bill Gates established the Giving Pledge to persuade American billionaires to donate at least half their wealth to philanthropy or charitable causes either during their lifetime or after their death. This initiative has since been broadened to include philanthropists globally. In 2012, Tahseen Consulting conducted a study in which we looked at the potential impact of Arab billionaires signing the giving pledge. At the time, we estimated that $24 billion could be mobilized if Arab billionaires signed a pledge to donate their wealth to philanthropy. While many high net worth individuals have a strong tradition of giving informally, we are witnessing more wealthy Arab individuals making large scale philanthropic contributions transparently and publicly. Their motivations are no different from philanthropists in other parts of the world – wanting to give back to those less fortunate, gaining public recognition and social capital, establishing a legacy, and playing a greater role in shaping their country’s or region’s future. The $1.1 billion donation of Abdullah Ahmad Al Ghurair to capitalize a private foundation and Prince Al Waleed bin Talal’s pledge to direct most of his $32 billion in wealth to philanthropy, we are potentially witnessing a new phase of Arab philanthropy. We are likely to see several more of the Arab World’s approximately 36 or so billionaires making sizable pledge to philanthropic initiatives to strategically manage their wealth for the greater good.

The Transition from Charity to Strategic Philanthropy: In the past, charity in the Arab World was motivated by individual, unpublicized initiatives to give back to local communities. Giving was often focused on societal issues affecting local communities like poverty, housing, and heath care. Arab philanthropy historically has been individually motivated acts of kindness that did not typically address the root cause of societal issues. In the late 2000s, we witnessed a significant push in the region to institutionalize charity, philanthropy, and corporate social responsibility to make philanthropic efforts more strategic. This push towards philanthropic investment and strategic philanthropy remains rooted in the region’s religious traditions of Zakat and Waqf. In the early 2000s, many philanthropic efforts could still be characterized as donations to fund program execution by nonprofits. Philanthropists were primarily concerned about programmatic execution commensurate with the size of their donation with little regard for measuring impact and enhancing institutional capacity. A pivotal watershed occurred in 2007 when Sheikh Mohammed donated $10 billion to endow his namesake foundation the Mohammed bin Rashid Al Maktoum Foundation. The scope of this philanthropic gesture catalyzed a number of dialogues in the region about strategic philanthropy. The late 2000s saw the emergence of a number of endowed foundations in the region that began investing resources into nonprofit enterprises in order to increase their capacity to address the root causes of regional development challenges. By 2015, a number of the initiatives launched in the early 2000s and earlier have adopted strategic approaches to philanthropy which involve building internal capacities to deliver programs, developing the institutional capacities of nonprofit partners and grant recipients, pursuing programs with well thought out approaches that address the root causes of development issues, and strong systems of monitoring and evaluation to measure impact and value for money.

Arab Philanthropy is Playing an Increasingly Important Role in Global Development: Many of the region’s philanthropic institutions have become involved in international development and engage regularly with multilateral institutions and bilateral donors. Increasingly large Arab philanthropic initiatives have been able to shape the policies of multilaterals and bilateral institutions through their funding, provide input on program design and development, and contribute funding for scaling up successful initiatives.

Nikhil Inamdar: What distinguishes Arab philanthropy from global philanthropy?

Schwalje: In addition to the relationship between philanthropic giving and religious traditions, a unique aspect of philanthropy in some of the Arab countries is the emergence of hybrid foundations which are funded by government or quasi-governmental funds and private donors. In other regions, public charities generally receive their funding from the public through grants from individuals, government, and private foundations, while private foundation generally receive funds from a single source, such as an individual, family, or corporation. In this respect, the definition of what constitutes a charitable organization and to whom it should be held accountable is not as clear cut as elsewhere. Adding to this confusion is the fact that many of the region’s philanthropists wear multiple hats in business and government.

Nikhil Inamdar: What will need to happen in terms of regulation etc. for this segment to mature like the way it has in Western economies like the US?

Schwalje: In many Arab countries, civil society laws make the registering of philanthropic organizations immensely difficult and can preclude fund raising. Such laws have the potential to negatively influence the development of civil society. Laws which might also serve to motivate individual giving and corporate philanthropy, such as tax deductible charitable giving, are also lacking. Emerging forms of philanthropy, such as venture philanthropy and crowdfunding, currently exist in regulatory grey areas which require regulation to ensure they can thrive in the region.

Nikhil Inamdar: Does philanthropy need to become more organized in terms of impact assessment, audit etc. so as to give the sector a more formal structure?

Schwalje: Several elements are required to Advance Arab Philanthropy:

Mapping Giving Patterns: More effort is needed to map philanthropic giving to determine what entities are giving and to whom in order to identify unmet needs. An interesting initial attempt to map private philanthropic contributions is the UAE’s Annual Foreign Aid Reports which included information on giving by many of the UAE’s philanthropic organizations. More information on giving patterns with promote coordination and reduce overlap of efforts.

A Focus on Improving Delivery Capabilities of Beneficiaries Linked to Funding: In many cases, regional nonprofits lack the capabilities and internal controls to absorb and manage large-scale donor contributions. This has promoted a tendency of Arab philanthropists to work with international organizations over home-grown Arab institutions. Capacity strengthening of Arab donor recipients linked to philanthropic contributions will be required to strengthen the region’s civils society institutions to deliver more effectively on large-scale initiatives and attract larger philanthropic donations.

Improved Capabilities to Analyze Value for Money: Because of the youth of strategic philanthropy in the region, there are several organizational capabilities that philanthropic organizations need to improve. This includes identifying program objectives to determine the strategic intent and envisioned impact of initiatives, examining the ongoing relevance and validity of programs, ensuring efficiency and economy of activities, and assessing the impact of programming.

Dear Readers,

As 2013 draws to a close, here is a look at our most popular content of the year. We hope you are enjoying Tahseen Consulting’s Research and Insights, and we look forward to continuing to engage with you in 2014.

Best wishes for a happy and productive new year,

The Tahseen Consulting Team

Tahseen Consulting’s Walid Aradi Interviewed on Dubai TV’s Money Map

Tahseen Consulting’s CEO Walid Aradi appeared on Dubai TV’s Money Map to discuss the role of entrepreneurship policy in economic development and meeting the region’s youth unemployment challenge.
 
Women Wanted: Attracting Women to Technical Fields in Qatar

In this article, we discuss the difficulties Qatar faces in terms of promoting technical and vocational education amongst females. Over the past several decades Qatar has dramatically reformed its education and training system to align it with macroeconomic policies aimed at advancing towards a knowledge-based economy. However, technical vocational education and training (TVET) has not been a significant focus of educational reform.

   
Promoting Entrepreneurship in the Arab World: The Need for Tailored National Approaches

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An Arab Open Government Maturity Model for Social Media Engagement

While embrace of social media as a component of open government initiatives is still in its infancy in the Arab World, there is much expectation that public sector social media use will have a transformative impact on citizen participation in government, policy formation, and the way public sector entities conduct business. However, existing evolutionary models of e-government and open government maturity based on the experiences of Western democracies offer little support to Arab entities that operate in an institutional environment characterized by much different governance traditions.

   
Arab Knowledge Economies Require More Effective Skills Formation Systems to Generate High Skill, High Wage Employment

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Based on our projections that a another $87 to $124 billion could potentially enter the Islamic banking system in the UAE by 2015, approximately 7,800 new jobs will be created at Islamic banks in the UAE assuming current asset concentration ratios remain similar.

   
Arab Corporate Social Responsibility Rapid Appraisal Diagnostic

Given the scattered use of Global Reporting Initiative standards in the region, Tahseen Consulting has developed an Arab Corporate Social Responsibility Rapid Appraisal Diagnostic based on analysis of a representative sample of 128 regional CSR initiatives and previous literature.

   
The Arab World’s Most Generous Philanthropists Could Mobilize $24 billion by Signing the Giving Pledge

If the Arab World’s billionaires signed a pledge to donate their wealth to philanthropy, an estimated $24 billion would be mobilized.

   
Arab Students Studying Abroad Contribute $77 Billion to Other Economies

Arab students studying abroad have generated $77 billion in income for other countries over the last decade without even considering other economic externalities.

   
Only 11% of Arab Educators Regularly Use Educational Technologies in their Classrooms a Tahseen Consulting Study Finds

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Arab companies make up just 1% of the 4,650 organizations which are registered and have filed reports on the Global Reporting Initiative’s Sustainability Disclosure Database. Global Reporting Initiative registration and filing statistics point towards adoption of reporting standards in only a select few countries, primarily in the Gulf, in the oil and gas, construction, financial services, and telecom sectors and to a more limited extent in the government and healthcare sectors. Even with the growing acceptance of the Global Reporting Initiative’s standards, at least amongst large Arab companies, as a common reporting framework, how and what is being reported differs substantially between companies making the standards more a benchmark of content rather than a framework that enables cross organizational comparison of actual economic, environmental, and social performance. A list of the companies which have registered and filed at least one report is included at the end of this post.

The Dominance of Small and Medium Enterprises Suggests A Reason Why the Global Reporting Initiative’s Corporate Social Responsibility Reporting Standards are Not Widely Used in the Arab World

Though the reasons for the lack of adoption of Global Reporting Initiative standards in the region are unclear, the industrial structure of the region in which small and medium sized enterprises dominate economic activity is one plausible explanation. Much has been written about small and medium sized enterprise opacity in the Arab World stemming from weak financial infrastructure, lack of use of accounting and financial reporting standards, and lack of human resources to implement financial and accounting standards (see for example the 2011 report on the Status of Bank Lending to SMEs in the Middle East and North Africa Region or the reports of the intergovernmental working group of the United Nations Conference on Trade and Development on international accounting and reporting standards). The Global Reporting Initiative mission “to make sustainability reporting by all organizations as routine as, and comparable to, financial reporting” suggests a critical causal link between the adoption of financial and accounting reporting standards and corporate social responsibility reporting that allows us to conclude with reverse causal inference that widespread adoption of financial and accounting standards is likely to precede adoption of corporate social responsibility reporting in the region. In this way, the limited use of Arab small and medium sized of financial and accounting standards likely serves as a limiter for the adoption of corporate social responsibility reporting. This logic chain potentially explains why the Arab companies which have registered and have filed reports on the Global Reporting Initiative’s Sustainability Disclosure Database tend to be comparatively large, publically listed companies which have strong capabilities in applying international financial and accounting standards to regulatory filings.

A Rapid Approach to Appraising the Corporate Social Responsibility Initiatives of Arab Companies  

Given the scattered use of Global Reporting Initiative standards in the region, Tahseen Consulting has developed an Arab Corporate Social Responsibility Rapid Appraisal Diagnostic based on analysis of a representative sample of 128 regional CSR initiatives and previous literature. Our diagnostic is based on a matrix by which we assess corporate social responsibility initiatives along two dimensions, social and business impact, while balancing philanthropic aspirations with commercial objectives. We view social impact as a sequential path that ranges from charitable activities that are bound by the activities of social sector partners to social investments that facilitate social sector innovation and initiative scaling while building the capabilities of social sector institutions. Similarly we view the business impact of social sector investments as ranging from charity-based initiatives with little business impact to more transformative social sector investments that allow companies to influence social, political, and strategic business factors such as trained workers, R&D, supporting industries, quality of life, and infrastructure.

Tahseen Consulting has developed an Arab Corporate Social Responsibility Rapid Appraisal Diagnostic based on analysis of a representative sample of 128 regional CSR initiatives and previous literature. Our diagnostic is based on a matrix by which we assess corporate social responsibility initiatives along two dimensions, social and business impact, while balancing philanthropic aspirations with commercial objectives.

Our aggregate data analysis of publically available accounts of 128 of the region’s corporate social responsibility programs reveals several key findings about corporate social responsibility in the Arab World:

  • There are few programs that address social and business goals simultaneously
  • Most Arab companies have diffused, unfocused giving
  • Companies are offering small cash donations for operating expenses
  • The emphasis of many CSR programs is publicity, not social impact
  • There are many examples of cause marketing aimed at goodwill over social impact
  • There is very little partnership with other entitles that also have corporate social responsibility programs
  • Many companies support the same entities with little emphasis on innovation

An Example: Appraising the Corporate Social Responsibility Initiatives of Majid Al Futtaim Holding

Since 2010, Majid Al Futtaim Holdings, a large family-controlled retail and hospitality conglomerate based in the UAE with operations in several countries in the Arab region, has had a corporate social responsibility strategy in place. Based on publically available sources, Majid Al Futtaim Holding devotes approximately $7.4 million to corporate social responsibility annually which includes both cash and significant in kind donations of commercial space. Based on an analysis of the annual report for their property division which is likely indicative of the practices across other divisions, Majid Al Futtaim Properties has a number of corporate social responsibility policy aims but its current disclosures do not provide sufficient level of detail to adequately assess social impact of their programming or link their programs to the achievement of specific stated social aims. Based on press accounts, Majid Al Futtaim Holdings has approximately 31 corporate social responsibility programs in three focus areas: resource efficiency and sustainability, community and economic development, and employee wellbeing, attitude, and identification. These initiatives are targeted at customers, tenants and suppliers, local communities, and their employees. A list of their CSR initiatives is shown below.

Majid Al Futtaim Holdings Resource Efficiency and Sustainability CSR Activities

Resource Efficiency and Sustainability CSR Activities

Majid Al Futtaim Holding's Community and Economic Development CSR Activities

Majid Al Futtaim Holding’s initiatives are targeted at customers, tenants and suppliers, local communities, and their employees.

Majid Al Futtaim Holding’s Employee Wellbeing, Attitude, and Identification CSR Activities

Based on publically available sources, Majid Al Futtaim Holding devotes approximately $7.4 million to corporate social responsibility annually which includes both cash and significant in kind donations of commercial space.

Though we do not have sufficient information for a detailed social impact assessment of Majid Futtaim Holding’s corporate social responsibility initiatives, we are able to determine that a number of their programs are at the partner-driven stage or represent investments that might require work to more effectively engage the social sector to develop institutional capabilities and more innovative approaches to social challenges. Significant effort must also be placed on scaling innovative activities across the 10+ countries they operate in the region. We have included our assessment of Majid Futtaim Holding’s corporate social responsibility activities using the Arab Corporate Social Responsibility Rapid Appraisal Diagnostic below.

Arab Corporate Social Responsibility Rapid Appraisal Diagnostic for Majid Al Futtaim Holdings

Though we do not have sufficient information for a detailed social impact assessment of Majid Futtaim Holding’s corporate social responsibility initiatives, we are able to determine that a number of their programs are at the partner-driven stage or represent investments that might require work to more effectively engage the social sector to develop institutional capabilities and more innovative approaches to social challenges.

Arab Companies Which Have Filed Reports on the Global Reporting Initiative’s Sustainability Disclosure Database

UAE (28 companies)

Abraaj Capital

Abu Dhabi Gas Liquefaction Company

Abu Dhabi International Centre for Organizational Excellence

Abu Dhabi National Oil Company (ADNOC)

Abu Dhabi Tourism Authority (ADTA)

Abu Dhabi Water & Electricity Authority

ADCCI (Abu Dhabi Chamber of Commerce & Industry)

Aldar Properties

Borouge

CEMEX UAE

Department of Economic Development – Abu Dhabi

Department of Municipal Affairs, Abu Dhabi

Department of Transport Abu Dhabi

Dolphin Energy

DU

Dubai Customs

Dubai Properties Group

Emirates Foundation

Energy Management Services

Environment Agency Abu Dhabi (EAD)

Jordan Energy Management Services

Jumeirah Group

Metito

National Bank of Abu Dhabi (NBAD)

RAK CERAMICS

Sama Dubai

Sorouh

Zones Corp

 

Jordan (9 companies)

Arab Bank

Jordan River Foundation (JRF)

Nuqul Group

Aquaba Container Terminal (ACT)

Aramex

Electricity Distribution Company EDCO

Zain Jordan

Schema

Jordan Aircraft Maintenance (Joramco)

 

Saudi Arabia (7 companies)

Dr. Soliman Fakeeh Hospital

Majid Society

Saudi Aramco

The National Commercial Bank (NCB)

The Saudi Investment Bank (SAIB)

International Medical Center (IMC)

Zain KSA

 

Kuwait (5 companies)

Burgan Bank

Kuwait Finance Housing

National Bank of Kuwait

Agility

National Real Estate Company

 

Qatar (3 companies)

Qtel

RasGas

QAFCO

 

Oman (2 companies)

National Bank of Oman

Tawasul/Global Connections Center

 

Bahrain (1 company)

Gulf Petrochemical Industries Company

 

Palestine (1 company)

Paltel Group

 

Egypt (1 company)

SEKEM Group

In 2010, Berkshire Hathaway CEO Warren Buffet and Microsoft co-founder Bill Gates established the Giving Pledge to persuade American billionaires to donate at least half their wealth to philanthropy or charitable causes either during their lifetime or after their death. While the initial focus is on the wealthiest families and individuals in the United States, there is consideration to extend the Giving Pledge globally. A total of 81 American billionaires, representing close to 20% of US billionaires, are signatories which amounts to promises estimated at $125 billion.

Many of the signatories amassed their wealth through entrepreneurship that had a transformative impact on the business world. Through their philanthropic activities, they seek a social impact. The underlying goal of the Giving Pledge is to engage American billionaires in an open way to mobilize more money for philanthropic causes which target particular issues of global concern and increase the efficiency of how social investments are deployed.

While there have been some notable philanthropic donations (such as Sheikh Mohammed’s $10 billion endowment of his namesake foundation the Mohammed bin Rashid Al Maktoum Foundation in 2007) and strategic philanthropy has entered the agenda, no similar initiative to the Giving Pledge exists in the Arab World. The Forbes Middle East’s Arab billionaires ranking includes 36 individuals, a number which is understated since the list does not include members of royal families, with a net worth estimated in the range of $120 billion. Assuming a similar volume of Arab billionaires signed a pledge to donate their wealth to philanthropy, an estimated $24 billion would be mobilized (based on an average Arab billionaire net worth of $3.4 billion). This raises an interesting question – what are Arab billionaires doing to contribute to the development of the Arab World through philanthropy? In this post, we review the Forbes Middle East’s Arab billionaires ranking to see how Arab billionaires based in the region are giving back to the region.

Forbes Rank 2012Name
Nationality
Net Worth (in billions)
Background
Causes
3Mohammed Hussein Al AmoudiKSA$12.5
Corral Petroleum Holdings and MIDROCHeathcare, R&D
4Mohamed Bin Issa Al Jaber
KSA
$7.0
MBI International & Partners
Higher education, cultural understanding
6,7,10
Sawaris Family
Egypt
$11.1
Orascom Group
Employment creation and training, microfinance, health, community development
8,9
Mikati Family
Lebanon
$6.0
Investcom
Health, nutrition, social, educational, cultural and social services
11
Miloud Chaabi
Morocco
$2.9
Ynna Holding, Riad Mogador, Aswak Assalam
Health, education, social services, culture, sport, and environmental issues
12Abdul Aziz Al Ghurair
UAE
$2.9
Mashreq Bank
Education, microfinance, sports, youth
13,22,33,34
Hariri Family
Lebanon
$6.8
Saudi Oger
Education, health, training, social services, culture
15
Othman Benjelloun
Morocco
$2.3
RMA Watanya, BMCE Bank
Early education quality, rural education
21,24,29
Mansour Family
Egypt
$4.8
Mansour Group
Education, illiteracy, poverty, microfinance, health

Mohammed Hussein Al Amoudi

Al Amoudi has funded several research centers and academic chairs and pledged $20 million to the William J. Clinton Foundation to combat AIDS.

Mohammed Hussein Al Amoudi

Mohammed Hussein Al Amoudi

Mohamed Bin Issa Al Jaber

The MBI Al Jaber Foundation is a UK registered charity that provides scholarships to graduate students from the Arab region and sponsors educational and cultural projects.

Mohamed Bin Issa Al Jaber

Mohamed Bin Issa Al Jaber

Sawaris Family

The Sawiris Foundation for Social Development is an Egyptian charity organization established in 2001 that supports initiatives that encourage job creation through training, education, and access to microcredit.

Naguib Sawiris

Naguib Sawiris

Mikati Family

The Azm wa Saade Association is a Lebanese non-governmental organization founded in 1988 that focuses on issue related to health, nutrition, education, culture, and social services.

Najib Mikati

Najib Azmi Mikati

Miloud Chaabi

Chaabi donated 10% of his fortune to build the first American university in Morocco. The Miloud Chaabi Foundation supports activities in in the areas of health, education, social services, culture, sport, and environmental issues.

Miloud Chaabi

Miloud Chaabi

Abdul Aziz Al Ghurair

Al Ghurair sits on the Board of Directors of Emirates Foundation, UAE Higher Colleges of Technology. He is also a supporter of UNICEF, UNESCO, Planet Finance, and the UAE Disabled Sports Federation.

Abdul Aziz Al Ghurair

Abdul Aziz Al Ghurair

Hariri Family

The late Rafic Hariri established the Hariri Foundation in 1979, which has helped over 34,000 Lebanese students, attend universities globally. The Foundation also operates schools, clinics, a university, and technical institutes, provides health and social services.

The late Rafic Hariri

The late Rafic Hariri

Othman Benjelloun

Benjelloun’s BMCE Bank Foundation works in the field of education focusing on quality and rural accessibility.

Othman Benjelloun

Othman Benjelloun

Mansour Family

The Mansour Family is linked with two social sector organizations: Established in 2003, Lead is a non-profit NGO that provides poor and low-income entrepreneurs with microfinance services. The Mansour Charity Foundation, founded in 2001, was the first donor NGO to be fully funded by an Egyptian family.

Mohamed Mansour

Mohamed Mansour