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The changing face of philanthropy
PHILANTHROPY as we know it is changing. The traditional practice of cheque-giving is making way for the likes of impact investing and venture philanthropy as the wealthy seek newer, more collaborative ways to give back to society - a trend that's especially prevalent amongst the next-gen, who tend to pursue purpose in their endeavours.
Amidst this shift, we view the rise of social enterprises in both Asia and the rest of the world as a core element in philanthropy's next chapter. These social enterprises - for-profit businesses with a social mission - are determined to address societal problems, and could potentially spark significant positive impact if provided with the necessary guidance and resources.
This was the central theme of DBS Private Bank's recent "Windows of Philanthropy" session for clients, a quarterly series of talks around pertinent philanthropy topics, which brought together a panel of industry experts (Jayesh Parekh, Senior Adviser of Jungle Ventures; Lam Nguyen-Phuong, formerly Co- founder and Senior Managing Partner of the Private Markets division of Capital Group; Bjorn Low, Founder of Edible Garden City; and Noor Quek, Founder of NQ International).
Mr Low, in particular, is an example of how the younger generation, with their desire to tackle entrenched problems in society, are driving change.
Edible Garden City is a social enterprise that builds and maintains food gardens in unused spaces across Singapore, helping our city become more self-sufficient while finding solutions to waste management challenges. In the seven years since they started, they have completed 200 food gardens in locations such as Marina Bay Sands, Resort World Sentosa, and the Raffles City Rooftop.
Here are some key takeaways I've personally found instructive:
WHAT ARE SOCIAL ENTERPRISES?
Mr Lam shared a quote by Bill Drayton of Ashoka, who coined the term 'social enterprise' in the 1980s - "Social entrepreneurs are the essential corrective force. And from deep within they, and therefore their work, are committed to the good of all."
The dynamism of Asian economies has improved the lives of millions over the past decades, greatly contributing to the prosperity of generations.
Yet challenges such as widening income disparities, ageing populations and gender inequality, among others, continue to remain. There are opportunities for social enterprises to help address such issues but achieving the twin goals of profitability and social impact is no mean feat.
For one, these businesses may attract investors that do not share the same values, especially at the start-up phase when they are desperate for financing. This is a situation that Mr Lam has often seen playing out, which he warned could lead to disastrous consequences.
Should these funds or investors be under pressure to generate higher returns, it could lead to conflicting agendas between the investor and the social enterprise at some point, which could end with the latter having to forgo their original objectives until they reach a certain level of profitability.
Another key success factor is mentorship. It is important for social enterprises to have advisors on board to help them navigate the complicated path towards profitability and social impact.
Not only do these businesses need to tackle the usual issues of cashflow, talent management, and operations, they also have the added challenge of achieving their social mission. Advice from an experienced business person on how to deal with such problems, as well as how best to structure the business and access suitable financing sources, could prove invaluable.
A WIN-WIN SITUATION
There are potential synergies to be gained by bridging social enterprises and our wealth clients, many of whom are experienced entrepreneurs themselves and are well-positioned to co-invest with or mentor these social enterprises.
Bound by the common desire for both financial and societal returns, both parties can be reassured that values and objectives are aligned, ultimately creating a win-win scenario whilst also generating greater good for society.
Though many wealthy families already take part in philanthropic and other social impact initiatives, these are often not done in a formalised manner. From the perspective of wealth and legacy planning, properly integrating such investments can also be a means of ensuring the family's values are shared and retained across generations.
As Mrs Quek shared, bringing family members together to work on social impact projects could hone their awareness of societal issues, help the younger ones appreciate their privileged situation more keenly, while enabling the older generation to be closely involved with their projects so they can witness for themselves the positive impact of their investments.
DO AWAY WITH DOUBLE STANDARDS
A common question posed by clients when first exposed to the idea of investing in social enterprises is: "But what if they fail?"
Whether the startup is focused on technology, agriculture or social impact, they go through similar processes - from identifying the big problem to solve, building the business concept and model, to bringing it to fruition - and none can promise to deliver.
As Mr Parekh rightly put it: there is no difference between the types of entrepreneurs, so to single out social enterprises as "riskier" investments wouldn't be accurate.
Instead, investors should seek to understand where they're putting their money and how it's being used. As with any other investment, make the effort to assess the founders or managers behind it, ask the right questions, speak to other investors and if possible, spend time with the social enterprise to understand the fabric of the company and its motivations - then make your judgment based on all the data and information collected.
THE MOVEMENT IS HAPPENING
Many traditional businesses are starting to realise that making money at the expense of the environment and other stakeholders is not sustainable. In today's commercial world, business for good is the new way of doing business.
The trend will only accelerate as consciousness around sustainability issues continues to grow. Increasingly, traditional businesses are expected to embed social impact principles into the core of their operations as they recognise the changing world that we're in - one sign of this movement is the rising number of companies that have joined the global B Corp community.
B Corp certification measures a company's social and environmental performance and currently has over 2,600 certified companies across 150 industries in 60 countries, including Singapore.
I quote Mr Low, who closed the session with a thought-provoking reminder: "Time is running out and change needs to come fast. Social enterprises will be a key frontier in pushing for that and driving society forward."
We are optimistic that more individuals like Mr Low will step up to the challenge of seeking profit with purpose. Together with DBS Foundation, which supports and nurtures social enterprises across Asia, DBS Private Bank is well-placed to identify and connect clients with opportunities to give back to society, to catalyse the social enterprise ecosystem and ultimately spark change for good together.
- The writer is Regional Head of Wealth Planning, Family Office and Insurance Solutions at DBS Private Bank