I would like to begin by expressing, in the strongest possible words, my belief that economic growth and our ambitions for the eradication of poverty depend upon the energy and drive of business & commerce, directly by creating jobs and indirectly by donating money and using their organizational abilities to address social causes. 

 

To an economist, charity is driven by preferences; to human beings, the act of giving achieves a much greater purpose.  In our classrooms, we are taught that taxes are the only means of redistributing wealth from the fortunate to the less fortunate.  We are taught to assume that taxes need to be enforced with a stick – why would any individual, otherwise, willingly let go of his hard-earned money?  But, ladies and gentlemen, this afternoon is evidence enough to the contrary.

 

People give – and give willingly.  Corporations give – and do so willingly.  Their motives may be subjective (some give back to the community as a symbol of gratitude, others give in pursuit of a better life for others) but the desire for redistributing wealth does not have to be forced upon a moral society.  You, at the PCP, have provided an avenue for the fulfillment of this desire by providing benchmarks and standards for donors and charitable organizations, which has already helped enhance and formalize donation channels.  And it is heartening to see our corporate world come to the fore.

 

The great long-running debate on the role of businesses’ in a society has been in between two ideological poles. On its one side, there are those who argue that, to borrow Milton Friedman’s words, “the business of business is business.” This belief implies that the sole legitimate purpose of business is to maximize shareholders value while social issues are peripheral.  On the other side, there are corporations which believe in, to borrow Rousseau for the corporate world, “a social contract”, and build social issues into their strategy to articulate their social contributions.

 

The debate may be tilting in favor of those who believe in the social contract idea. Globally companies increasingly see corporate philanthropy as a way to provide benefit to the communities where they are located. In donating funds to social causes such as education, healthcare, culture, community and environment etc, they seek to enhance the welfare of societies beyond the goods and services they produce. In return companies have actively sought business benefits from their philanthropy programs as well. Specifically aiming to enhance their corporate reputation and brand which could help attract socially aware customers and ethical investors. In 2008, McKinsey & Company conducted a global survey of 721 corporations on the state of corporate philanthropy. More than 70 percent respondents reported that they were aiming to improve their corporate reputation and brand through philanthropy.

 

Pakistan is full of examples of highly successful and sustainable philanthropic initiatives. Especially, during the last century, philanthropists and family foundations were actively involved in setting up hospitals, educational institutions, relief centers, scholarship programs and technical training institutes. In 1947, Pakistan inherited reputed institutions like Ganga Ram Hospital, Gulab Devi Hospital, Janki Devi Hospital, Sindh Madressa tul Islam, Hamdard Trust etc. to name a few. More recently, individual philanthropists established large-scale public benefit institutions like the Lahore University of Management Sciences (LUMS), Edhi Trust, Shaukat Khanum Memorial Hospital, Layton Rehmatullah Benevolent Trust (LRBT) (on whose sister organization, Graham Layton Trust in the UK, I served as Trustee for 8 years), Fatmid Foundation and Qarshi Foundation, which continue to provide much needed basic social services to millions of people. 

 

It is indeed heartening to know that in Pakistan the corporate sector is embracing philanthropy. Thanks to the efforts of the Pakistan Centre for Philanthropy (PCP) as a vehicle for promoting partnerships between civil society, the private sector and the public sector to enhance indigenous giving. 

 

PCP estimates indicate that corporate contributions have multiplied by more than 14 times over the last seven years.  The PCP research is not only good for information but also crucial for policy development & formulation and monitoring progress overtime because what cannot be measured cannot be improved. 

 

PCP also assists grant givers by professionalizing grant making; and enhances the grant recipients’ effectiveness by building their capacity in forming and maintaining relationships with grant makers through Certification. All these efforts improve visibility of corporate giving, bridge the trust gap between various stakeholders and create healthy competition.

 

According to the Human Development Report 2011 released by UNDP, Pakistan is among countries as the lowest in human development. The report places national multidimensional poverty, which is a composite of several social indicators including health, education and standard of living, at 49.4 percent of the population. Given this high level of social and economic deprivation, the corporate sector must rise to shoulder the burden of development with the government. 

 

I would, therefore, urge the corporate sector to move the narrow focus of Corporate Philanthropy (CP) from a public relations tool to a vehicle for creating social value for long term impact. This move would require the following: 

 

First, institutions must adopt a strategic approach to CP programs. Therefore, CP programs must be well structured in terms of striking a balance between business needs and the community’s preferences with a high focus on leveraging and +harmonizing for scale. One way of achieving this could be through the involvement of employees and community in the development of the programs to create broad based ownership and sustainability. 

 

Second, The 2008, McKinsey survey found that only 20 percent of senior executives believed that their corporate philanthropy is effective in achieving social goals. Therefore, institutions must adopt CP focus and communication strategy, such as through their annual reports and websites, for both internal and external stakeholders to give CP initiatives greater visibility among its internal and external stakeholders. 

Third, institutions must need to put in place verifiable criteria for measuring and monitoring achievements of CP initiatives. The criteria must measure the impact on both dimensions of business performance and society’s well-being. 

 

Fourth, develop a business case for CP initiatives: The business case may be developed on fundamentals such as strengthening corporate legitimacy and reputation, building competitive advantage, and creating win–win situations through synergistic value creation. 

 

Lastly, CP must seek partnerships to create synergies with other philanthropists for scale and sustainability and long term impact on social indicators.

 

I must say that the increasing emphasis on corporate giving for social causes shows greater responsibility and readiness of the private sector to share the burden of social development. However, now is the time to further build the institutional mechanism for pooling philanthropic contributions from individuals and corporations to address the social issues on a greater scale. These efforts would feed into the overall competitive context of the corporate sector, enabling the companies to leverage the efforts and infrastructure for development of the nation. 

 

Finally, I would like to conclude with the hope that this inspired afternoon has filled us all with a renewed vigor and desire to develop indigenous philanthropy.  For SBP’s part, we are willing to help, to the best of our ability, to serve PCP’s splendid vision.  For my part, I place my energies at PCP’s disposal.  After all, we all hope that a better future awaits us all.

 

Thank you!

Bismillah Ir Rehaman Ir Rahim

 

Honourable governor of the State Bank of Pakistan, Mr. Yaseen Anwar, Excellencies, Officials of the Government of Sindh, representatives of the UN system, corporate leaders, philanthropists, civil society representatives, distinguished ladies and gentlemen, Asalam o alaikum.

 

On behalf of the Board of Directors of Pakistan Centre for Philanthropy, I welcome you all on this happy occasion of the fifth “PCP Corporate Philanthropy Awards” ceremony. Today we are also launching our fifth research study on “Corporate Philanthropy in Pakistan: Survey of Public Listed Companies 2010” which forms the basis for the awards this afternoon. 

 

The Centre owes gratitude to the support of several institutions and individuals as well as donor agencies including the Aga Khan Development Network for these pioneering endeavours as well as support for our programmes and activities. Many of these well wishers are present here today and we express our deep appreciation to them.  Above all, Governor Yaseen Anwar, we want to thank you today for being our chief guest and for joining us in recognizing these philanthropists.  

 

As many of you know, PCP’s mission is ‘to increase the volume and effectiveness of philanthropy’ and ‘to assist in linking government, business and civil society in synergistic partnerships for social development’ in Pakistan.  The Centre’s programmes are designed to meet these objectives and supplement the government’s social welfare efforts. We do this through several initiatives which include action research, encouraging public private partnerships, the Philanthropy Website Portal and the Certification Programme for Civil Society Organizations.  

 

Talking about philanthropy, I am reminded here of what a young boy said to his mother. He said: “When I grow up, I want to become a philanthropist!” “Why, that’s wonderful” replied the mother.  “Yeah,” the boy responded, “they all seem to have a lot of money.”

Governor Yaseen Anwar, it is well known that through its research efforts the State Bank has established an enviable record of forecasting economic trends in the country  We believe it is among the institutions best equipped to estimate the wide gap that exists in the need for social development and the sources for funding it. It is therefore PCP’s request on behalf of philanthropists as well as well as Civil Society Organizations (CSOs) of this country that the State Bank cooperate with us in identifying potential solutions for filling this resource gap. 

 

Thanks to the work of PCP, it is now well known that Pakistanis are a very generous society, ready to give when ever the need arises whether on an on going basis or in a disaster situation. However, decision makers in government have rarely seen philanthropy as a resource to be harnessed in a meaningful manner for the socio-economic development of Pakistan. 

 

Sadly, reliable statistics about individual philanthropy in the country are outdated. They are over a decade old. They need to be updated in order to assess their true potential for investment in social assets.  A research study conducted recently by PCP on behalf of the government of Punjab has confirmed that the quantum of philanthropy in that province is substantially larger than estimated. This may well be true of the country as a whole. It is therefore our hope that together, the State Bank and the PCP can cooperate on conceptualizing the role of philanthropy as an alternate source of funding for socio-economic development. 

The Centre is indebted to the SECP and acknowledges its support with gratitude in providing the data on which PCP’s annual surveys of philanthropy by listed corporations are based.. The SECP’s notification of Companies (Corporate Social Responsibility) General Order, 2009, which makes it mandatory for entities to make descriptive and monetary disclosures of their Corporate Social Responsibility (CSR) activities in their Directors’ report to the shareholders as part of the annual audited accounts is a major step forward in this objective. It will also enable the PCP to make a richer analysis of data in our reports which are often quoted as a reference at national, regional and international publications and fora. Let me here acknowledge Governor Yaseen Anwar’s initiative during his tenure as member of SECP Board, to immediately follow up on our request with the SECP which lead to expeditious issuance of the above referred General Order. We are thankful to you, Governor Yaseen Anwar for this.

 

Let me here link the facilitative role of the Federal Board of Revenue which partners the PCP in its certification regime. The regime seeks to streamline the governance processes of civil society organizations and thereby create a pool of credible users of philanthropic resources.  Certification of CSOs is our flagship programme which evaluates CSOs volunteering for certification on 84 parameters. These include governance, management, finance and programmatic attributes of CSOs as well as the impact of their work as perceived by beneficiaries. To date our Centre has certified 231 new organizations and renewed the certification of 123 organizations. The majority of these entities are small and certification paves the way for their securing tax exempt status from the FBR, besides increasing their eligibility for financial support from various quarters. The bottom line is that this Certification by PCP definitely helps in bridging the trust deficit which has always stood between donors and recipients in the social sector.

 

Let me turn now to the Corporate Survey for 2010 being presented today.  It is most heartening that the volume of philanthropy during the last year has risen from Rs. 2.35 billion in 2009 to Rs. 3.3 billion in 2010.  This is a remarkable increase of 40%. In absolute numbers it represents the highest documented corporate philanthropy for a fiscal year to date. The outpouring of support for flood victims last year may well have been one reason for this surge. However, as a contribution in terms of profit before income tax, the figure fell from 0.9% to 0.8% in 2009. The figure still hovers very close to international best practice recommendation of 1%. Interestingly, the trend of giving by listed companies over the past ten years is even more dramatic. Compared with the base year, 2000 which is when the corporate sector, CSOs and eminent citizens of Pakistan joined together to establish the  increased more than fourteen fold from Rs. 228 million in 2000 to Rs. 3.3 billion in 2010. Corporate profits during this same ten year period registered an eleven fold increase. This increase reflects enhanced social consciousness on the part of the PLCs. In the case of the larger corporations perhaps their improved Corporate Social Responsibility services have proved to be a contributory factor. While appreciating the philanthropic activities of PLC, we pray that Allah bless all their stakeholders with much Barakaat for supporting this kar e khyar. 

 

On behalf of all of us here, I convey my warmest congratulations to the corporate sector for this generosity; and special felicitations to the Award winners today.  Our plea is that you consider giving more and channel as much of your philanthropy to CSOs certified by PCP.  Giving to these CSOs will also entitle you to tax benefits, resulting in a cash flow impact of only 60 paisas for every Rupee donated. A comprehensive directory of PCP certified CSOs, titled ‘Gateway to Giving’ has been published by the Centre; you can also access them through our website.   

The impulse to give to the less fortunate is ingrained in our society since times immemorial. It is not only a religious obligation which is oft repeated in the holy Quran but an inherent part of our culture. 

 

Sura Baqra of the holy Quran says:  “And be steadfast in your prayer and pay charity; whatever good you send forth for your future, you shall find it with God, for God is well aware of what you do’. Exhortations to charity are spread in the Holy book chronologically even before the command for compulsory zakat was revealed. 

 

Instances and stories of giving that touch the heart abound in our midst. One such recent story is about a deprived young man asking for help from a well to do lady at a traffic light in an upscale district of our city, Karachi, to buy himself a meal. The lady handed the man a five hundred rupee note as she did not have any smaller change. As the grateful man left she decided to trail him to see what he did with the money. The man went to a burger shop and bought himself a satisfactory meal and with the change in his hand moved down the road followed by the gaze of the giver. He stopped at an Edhi donation box and put the rest of the cash in it and moved on! Ladies and gentleman, “The quality of mercy is not strained…”

 

Before concluding, I wish to take this opportunity on behalf of the Board of Directors of PCP and my own behalf to acknowledge the excellent leadership provided to PCP by its Executive Director, Dr. Anjum Haque. She is stepping down today from her responsibilities at the end of her three year tenure. This is at her own request and in keeping with our agreement when she joined PCP. She has demonstrated a remarkable passion for promotion of philanthropy and has made a valuable contribution to enhancing the quality of research at our Centre. While we wish her all happiness in her retirement from full time work, we know that our association with her will continue in other ways in future.

 

Please also join us in welcoming our in coming Executive Director, Mr. Tanwir Ali Agha. He is well known to most of you as the recently retired Auditor General of Pakistan. Tanwir brings to PCP, a life time of civil service experience including as Secretary, Ministry of Finance and as Executive Director of the Board of the World Bank for several years representing Pakistan and seven other countries. 

 

Finally, I must acknowledge with gratitude the support of the One UN System and specifically the One UN Joint Programme on Environment, for supporting these Corporate awards of 2011. Yesterday, as part of their Corporate Social Responsibility initiatives, they jointly sponsored with PCP and National Disaster Management Authority, a conference to enhance CSR activities of listed corporations in Pakistan. We are delighted to have them here among us and look forward to prospects for creating greater synergies between the UN system and corporate philanthropists as well as civil society partners.

 

Let me conclude by thanking all the philanthropists present today for the good that you do for our community through your charitable endeavours. May Allah bless you with much Barakaat.

 

Thank you.