Trends in philanthropy

Philanthropy in the Philippines

My staff at Zuellig Family Foundation made a study based on the Forbes listing of the wealthiest in the country, SEC records and the individual foundation annual reports. The study does not claim to be comprehensive nor up to date. However, it does give me an indication of the trend. The top 10 foundations in alphabetic order are as follows: Aboitiz Foundation, Ramon Aboitiz Foundation, ABS-CBN Foundation, Ayala Foundation, GMA Kapuso Foundation, Gokongwei Brothers Foundation, Lopez Group Foundation, Metrobank Foundation, SM Foundation and Tan Yan Kee Foundation. The total expenditures of these 10 foundations in 2010 were estimated at P2.3 billion.

The Aboitiz Group foundations

Allow me to describe two of those listed above: the Aboitiz Foundation and Ramon Aboitiz Foundation. My selection is based on my personal knowledge of their company and foundations. I will be retiring as a director of Aboitiz Equity Ventures in May after 10 years. From the perspective of the Philippine Stock Exchange and the Management Association of the Philippines aside from regional organizations, the Aboitiz Group of companies has been recognized and indeed considered an icon of Philippine industry. I share those sentiments. Moreover, I would suggest that other family held organizations may wish to study and emulate their best practices.

But it is the foundations which I would like to describe in greater detail. The Aboitiz Foundation’s source of funds derives from one percent of the net before tax of the various business units and 70 percent of which is given back for the companies to implement their own CSR projects based on the foundation’s set directives leaving the balance of 30 percent for the foundation.

In 2010, the total CSR outlay was P237 million. In 2011, the CSR outlay was P361 million which is a 66-percent increase. More dramatic was the increase in foundation allocated funds: P252 million in 2011 as compared to P95 million in 2010 representing a 163 -percent increase.

In the field of education, P226 million (62 percent of their annual outlay) were allocated to the following: 130 classrooms (since inception 436 classrooms have been donated); 312 computer units (since inception 1383 units have been donated and 27 computer labs), an additional six schools were provided a server based network; 2300 scholars per annum; five science labs (since inception 16 schools have been beneficiaries).

The balance of CSR outlay was devoted to the field of enterprise development; primary healthcare and childcare; corporate/other donations; and programs for environment and employee initiated activities.

I once asked Jon Aboitiz, the chairman of Aboitiz Equity Ventures whether they should consider reducing their number of projects. It seemed to me that they should be more selective. His answer was: “We want to be the neighbor of choice wherever we operate.” In sum, each geographic environment has different needs. They operate in Luzon, Visayas and Mindanao. Their funds are allocated 33 percent for Luzon, 37 percent for Visayas, 16 percent for Mindanao and 14 percent nationwide.

The Aboitiz Foundation is Corporate Social Responsibility personified. Their performance speaks for itself. However, I would be remiss if I did not cover the Ramon Aboitiz Foundation (RAFI) which was founded 45 years ago, before corporate citizenship was in vogue. Unlike the Aboitiz Foundation, its funds are derived mainly from the dividends of an endowment of stocks given by its founder Don Ramon Aboitiz. In 2011, RAFI spent a total of P296 million (excluding RAFI micro-finance figures).

One of the significant highlights in 2011 was the Mega Cebu Project spearheaded by RAFI president Roberto Aboitiz, which was established to create a livable and sustainable region that will answer escalating urban problems. This is a joint project being implemented by the Metro Cebu Development and Coordinating Board composed of local government units, provincial government, national line agencies and leaders of the business sector and civil society.

Two other highlights were in the field of environmental advocacy and concrete socialized houses for the Bajaus residing in Cebu City. The RAFI micro-finance project has improved 20 percent in terms of clients and income resulting in 17,000 borrowers with a loan release of P250 million and P85 million in outstanding loans.

The ‘new’ philanthropies

“Guided by the belief that every life has equal value, the Bill and Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people’s health and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to ensure that all people  especially those with the fewest resources  have access to the opportunities they need to succeed in school and life.” (From the foundation’s fact sheet). Bill and Melinda Gates together with Warren Buffet are trustees who provide the funds and oversee the foundation. Funding from 1994 to the present amounts to $26 billion of which $15 billion go to global health and $6 billion goes to the US programs.

The Bill and Melinda Gates Foundation believe the right approach is to focus the foundation’s work in the 21st century. “We will spend all of our resources within 50 years after Bill’s and Melinda’s deaths”. In addition, Warren Buffet has stipulated that the proceeds from the Berkshire Hathaway shares he still owns upon his death are to be used for philanthropic purposes within 10 years after his estate has been settled.  

One of the key features of the “new philanthropies” as reflected by the Bill and Melinda Gates Foundation as well as the George Soros Foundation is that organizations with a limited lifespan pursue an entirely different sustainability strategy than organizations that were established to outlive the founder. These types of philanthropies tend to scale up their impact differently. In the case of the Gates foundation, the objective is to use the resources to address more intractable health issues: eradication of malaria; vaccine against HIV-AIDs, eradication of TB. The assumption here is that intractable health challenges are resolved because needed resources are available and applied. Soros Foundation takes on a different tract. For example, it develops an innovative approach towards education with the hope that this innovation results in a policy change that is adopted by a mainstream institution (i.e. government). Both use resources to address substantive “now” issues. Implicitly, it says that the wealth creator is the best person to direct resource use; rather than leave it up to the next generation of trustees, whether business associates, family members or independent trustees.

Unlike Gates and Soros, I do not agree that philanthropies must have an expiry date. To me, it is still relevant that the fortunes of today address tomorrow’s issues as well, especially in developing countries. But I resonate with what Gates wants to do: that the work of philanthropy must have measurable impact on today’s challenges and societies; and like Soros, I believe that if an approach or methodology is worthwhile, then it must be adapted and co-owned by the mainstream institutions.