New charity financial disclosure requirement brings further confusion to interpret charity’s financial information

Hong Kong Economic Times

Vincent Cheng (CAPS) analyzes the Hong Kong government’s latest requirement stipulating all charities to release audited financial accounts of their public fundraising activities. Intended to address public concerns over costly charity fundraisers, he believes the measure will instead further deepen public misperception and mistrust of overhead costs, and penalize less established charities with an even greater administrative burden.

Here is an age-old horror story of donations: people—with enormous goodwill—send money to a charity, hoping that these funds will be used to help those in need. To their dismay, they soon find out that a considerable portion of their donations goes to anything but that. The donor feels deceived, their money squandered for little or any return. These types of experiences and the worry about them, together with other mishaps or scandals, contributes to the trust deficit of the charitable sector. Hong Kong is not alone in this situation.

On 1st August 2018, the Hong Kong government issues a new regulation meant to increase transparency and accountability specifically on charities’ public fundraising activities, after complaints of the hefty price tag of fundraisers. Charitable organizations in Hong Kong are now required to place on a public website audited financial statements of each of their public fundraising activities (e.g. flag days, the sale of raffle tickets, or other charity sales). The new measure aligns with other efforts of achieving greater transparency such as HKCSS’s WiseGiving initiative, an information-sharing platform where charities can voluntarily share their mission, structure, governance, and financial information with the public.

While the government’s goal of increasing transparency is well-intentioned, this latest attempt is half-baked and will likely do more harm as it adds fuel towards the general public’s visceral, but misguided understanding regarding the administrative costs associated with both fundraising and project management. Unbeknownst to the policymaker, the new measure may also unwittingly penalize less established charities as all compliance takes time, effort, and often professional knowledge that many charities lack.

The two faces of regulations

The Doing Good Index by the Centre for Asian Philanthropy and Society (CAPS).

Regulations, in general, have two important purposes, as the inaugural Doing Good Index published by the Centre for Asian Philanthropy and Society explains. First, they can make it easy or more difficult to exist as a legal charitable entity. For the charitable sector to thrive, it is essential to have clear, easily understandable and enabling regulations which encourage organizations to register and operate within the law. Second, regulations can enhance transparency and accountability through, for instance, annual reporting requirements and assign legal liability for noncompliance.

Hong Kong performs reasonably well in the Doing Good Index, although it ranks behind Japan, Taiwan, and rival Singapore, and is on the same footing as developing countries such as Vietnam and Thailand. Generally, the charitable sector is mature and vibrant. Laws are established, clear, and easily understandable and charities are incentivized to register and operate within the law. Hong Kong is only second to Taiwan in this regard: only 17% of HK charity respondents find laws pertain to the charitable sector difficult to follow, the second lowest across 15 economies we surveyed (the Asia average is 39%).

But, Hong Kong could do even better with some relatively accessible fixes which could propel the charitable sector further. The recent directive for charities to share audited financial statements of public fundraising is no doubt intended to increase transparency. However, there are two potential issues with this well-intended measure, one operational which can be easily mitigated; another has to do with its underlying logic, which is less easy to fix.


A blinkered perspective of understanding charities

Close to half of HK respondents said that it took them more than 3 months to comply with the annual reporting requirement, which—for many—merely requires the submission of an audited financial statement. This percentage is the highest across 15 economies. One interpretation is that many charitable organizations do not have the capacity to adequately manage and explain their accounting practices as well as measuring the impact of the projects they manage. Grappling and complying with new requirements—especially those having to do with tax and fiscal policies—often equates to extra time, manpower, and resources. For nonprofits with tight budgets and stretched staff, they find it difficult to explain their programs and outcomes as well as their budgets in clear, compelling manners. Unfortunately, the result is that many people assume that they must have something to hide. For larger charities with professional staff, additional reporting requirements may work but the burden on small organizations can be life-threatening.

The more important issue, however, is understanding what is included in administrative costs (or more commonly known as overhead cost outside of Hong Kong), and why these are necessary and useful. While a blow by blow report of each public fundraising activity will quell public concerns over the costs of these fundraisers, it will not necessarily allow the public to come to a meaningful conclusion on how effective these charities are in doing their job. Why is that?

Firstly, funds for charities come from a variety of sources, so a measure that only necessitates explaining those funds raised as a result of a public exercise, only tells a portion of the story. Most charities in Hong Kong also receive funding from government and corporate sponsorship, funding streams that are not accounted for in the new regulation. In fact, those charities which raise considerable government and corporate support may rely less on the public.

More importantly, there are several points to bear in mind when thinking about administrative costs, which generally include such items as the salaries of administrative personnel and rent, in many cases of Hong Kong and internationally. Funds spent on raising more funds are also considered part of overall administrative expenses because they do not go directly to project support. Here is the main issue: these expenditures differ greatly from one charity from another due to their age, size, the nature, and function of charitable activities. Charities which require higher skilled professionals will certainly have higher overhead costs. In Hong Kong with a very low unemployment rate, charities compete with government and the private sector to find and hired skilled staff. Only by paying reasonable wages can they hope to compete for many of these employees.

But this lopsided attention on financial matters of charities is perhaps reflective of the larger context of oversight of Hong Kong’s charitable sector. With the exception of fiscal matters, there is little continual oversight for Hong Kong’s charitable sector after the approval of their tax-exempt status. For instance, charity’s eligibility to continue to be tax-exempt, which is determined by the organization’s objective and may change across time, is not a remit of any governmental body. Nor does governance mishaps of charities, except perhaps with criminalizable acts, or those receiving lump sum grant from the government.

A dedicated charity commission is needed

The Law Reform Commission (LRC)’s 2013 suggestion of having charitable organizations be registered and overseen by a future charity commission in the long run was a good step towards Hong Kong’s regulatory progression, an issue reiterated an audit report released by the Audit Commission in 2017. The LRC suggested an oversight system similar to the one used in the Philippines and currently being adopted by several countries in Asia.

The Law Reform Commission released its report on charities in December 2013. Source: The Government of the HKSAR.

The Philippine Council for NGO Certification (PCNC) in the Philippines was set up as an accreditation body with the blessing of the Filipino government to scrutinize aspects of charities’ mission, projects, governance, and financial information every one, three, or five years. Only with this accreditation can donors to the organization receive a tax subsidy. If respected charitable sectors practitioners who understand the operations, together with professionals in legal and accountancy team up to monitor, accredit, and offer timely and appropriate professional assistance to charities, as with the case the Philippines, charities in Hong Kong can become more accountable, transparent, at the same time, an enabling ecosystem for these organizations to grow and prosper. The future charity commission—as a standard bearer—can also educate to the public of the appropriate ways to understand and evaluate the work of charities they support, and show that which charities are checking all the boxes under this rubric. It will, in short, help build trust for those working in the charitable sector.

Overall, while we applaud the government’s bid to increase transparency and accountability of the social sector, the downside of the new measure requires attention. There are easy fixes to give the public a fuller picture in the shorter term: we recommend the government request charities to submit their annual audited financial statements ready for Inland Revenue Department’s review, and make them public on one centralized governmental platform for public scrutiny. Specific accounting requirements can be made to make clear of the specifics as deemed necessary for better transparency and accountability, such as fundraising administrative cost or overall administrative cost in these statements. With this measure in place, at least 74% of Section 88 charitable organizations, which are legally incorporated as a limited company, will be made more accountable and transparent. Some charities in the city have taken the initiative to achieve this goal on their own. World Vision Hong Kong, for instance, has put their audited financial statements online and gone the extra mile to lay out clearly how donations are spent. In the long run, a one-stop charity commission which registers, oversees, and provides professional support to the charitable sector should be set up to offer to inspire confidence and trust for all those endeavoring to make Hong Kong a better place.

 

This op-ed is an extended version of the Chinese op-ed ran originally in the Hong Kong Economic Times.

How Can Asia Boost Philanthropy?

AsiaGlobal Online

Wealth in Asia is growing rapidly, but philanthropy has not kept pace. Governments should improve regulation and change tax and fiscal policies to make it easier for Asians and corporations to give in a systematic way. They should also ensure donations can efficiently reach organizations working to meet society’s needs.

This article looks at how the Doing Good Index can help governments improve regulations and policies relevant to the philanthropic and charitable sectors by identifying the levers that best enhance local philanthropy across 15 Asian economies.

This article was first published in AsiaGlobal Online.

Philanthropy in Asia needs a push from good government policies

South China Morning Post

Ruth A. Shapiro says that governments in the region must send strong signals that they value philanthropy through tax incentives and other policies. This could encourage a more systematic approach to giving and spark innovation in the social sector.

The Centre for Asian Philanthropy and Society has just released its inaugural Doing Good Index, which looks at the factors that both enable and hinder philanthropy and other kinds of private social investment in Asia. We found that Asia has enormous potential to do good. If Asia were to donate the equivalent of 2 percent of its GDP, the same as the United States, it would unleash US$507 billion (HK$3.9 trillion) annually. This is more than 11 times the foreign aid flowing into the region every year and one-third of the annual amount needed globally to meet the sustainable development goals by 2030.

We did this study after understanding several important dichotomies affecting Asia and its social sector. First, there is enormous wealth being created in Asia but still incredible and at times tragic need. Second, while there is a long history of charity in Asia, philanthropy, or the systematic approach to doing good, is relatively new. Third, while many on the ground are carrying out extraordinary efforts to help relieve suffering and need, there is often a debilitating lack of trust towards the sector. Last, many Asian governments realize that philanthropy is growing and are reacting by crafting new policies and regulations that both encourage and control its flow.

The Doing Good Index is an ambitious initiative. Supported by donors in Asia, the team worked with 34 partners from 15 economies to survey 1,516 social delivery organizations and 80 experts. They answered questions about a range of factors that influence philanthropic capital. The questions fell into four categories – regulations, tax and fiscal policies, procurement and ecosystem. The first three are government-driven, while ecosystem looks at the role that people, communities, companies and universities are playing in addressing social challenges and nurturing the social sector.

We find that people are ahead of government: on average, Asian economies perform better in the ecosystem category than in the other three. Society is rewarding philanthropists and organizations in the social sector. Public recognition and awards are becoming more prevalent in most economies we studied. Many are volunteering both through their companies and on their own, people are serving on boards, and universities are offering classes in philanthropy and non-profit management.

Our study also shows that the right policies and incentives do matter. Tax subsidies contribute a great deal towards the propensity to give across income levels and have an important signaling effect. Asian philanthropists are pragmatic. People want to help their communities but also want to do this in ways that are aligned with their own government’s goals. When a government signals that philanthropy is appreciated, it has a positive influence on giving.

The right policies can address the trust deficit and mitigate the deleterious effect on philanthropy. Many social delivery organizations in Asia are endeavoring to become more transparent and accountable. In our study, 75 percent of those surveyed have a website and 86 percent have a board of trustees with nearly all reporting regular board meetings. Organisations in 13 of 15 economies are required to submit an annual report. The right regulations create a culture of accountability and facilitate the ability of organizations to report.

However, regulations need to be calibrated to reduce friction in the social sector and facilitate its growth. In some economies, organizations need to work with many government agencies, with one country having 15 different ministries all with different reporting requirements. This puts a burden on non-profit organizations and encourages underreporting.

Last, the social sector is vastly understudied. There is very little reliable data. For the Doing Good Index, we had to create the data from scratch. More information about philanthropy can help address the trust deficit and showcase which practices, models and policies are best in class. There is no dearth of humanity, creativity and commitment in Asia.

The key is to put systems and practices in place that allow us to learn from each other, contribute to our communities and help Asia become a global philanthropic leader and a center for social innovation.

Ruth A. Shapiro is the founder and chief executive of the Centre for Asian Philanthropy and Society.

This article appeared in the South China Morning Post print edition as: Right policies can boost Asian philanthropy.

This article ran originally in the South China Morning Post.

Asia’s embrace of social enterprises: governments lean in

Philanthropy Impact Magazine, Autumn 2017

Asia is awash with enthusiasm for social entrepreneurship, and Asian governments are demonstrating their faith in it not only with ancillary services but with cold, hard cash.

This article looks at government support for social entrepreneurship, particularly in India, South Korea, Hong Kong, Singapore, and Thailand.

This article was first published in Philanthropy Impact Magazine.

Charity in China, Where Giving Begins on Your Phone

Shen Bin (Sixth Tone)

As the largest economy in Asia and only second to the United States in the world, China boasts a technologically advanced society. The use of mobile payment is just as common as swiping a credit card or spending cash. Homegrown high-tech manufacturing firms, software conglomerates, and creative startups such as Tencent, Xiaomi, and Alibaba are at the forefront of China’s economic growth and are an integral part of Chinese citizens’ day-to-day lives.

The reach of China’s technological ecosystem is now seeping into the industry of doing good. With a few touches on their smartphones and free mobile applications, individuals can make quick donations to charitable causes and organizations. Furthermore, these tech companies are applying their creative abilities and ideas to promote individual philanthropy on an unprecedented scale. From matching donations as part of their corporate social responsibility to hosting social media donation competitions, China is making philanthropy cool and trendy.

Shen Bin’s article in the online publication Sixth Tone provides a comprehensive snapshot of an introduction to this intersection between technology and philanthropy in China.

Click here to read the full article.

 

Hong Kong’s spirit of charitable giving is strengthened by its history, laws and belief in education.

South China Morning Post

Hong Kong outperforms larger markets in its donations, thanks to vivid memories of past poverty, belief in the life-changing power of education, and faith in the rule of law that many other Asian economies lack, writes Dr Ruth Shapiro in the South China Morning Post.

The Charity Aid Foundation recently released its annual World Giving Index. To collect data for the survey, people are asked if, over the past month, they have helped a stranger, donated money to a charity or volunteered time at an organisation. Hong Kong ranked 25th out of the 139 economies in the survey, with 43 per cent saying they had done at least one of these activities in the last month.

The index offers one lens to see how charitable people are but there are other means to evaluate giving. Last December, the chairman of our board hosted a dinner in Hong Kong for Rafael Reif, president of MIT. He noted that among those attending were some of the largest contributors to Harvard, Yale, the University of Southern California and a host of other universities.

John Wood, founder of the charity Room to Read, noted that Hong Kong had consistently been one of its top four fundraising regions and “punches way above its weight, outperforming larger markets such as Australia, Switzerland and Canada”. Each year, around 10 per cent of its global fundraising comes from Hong Kong alone.

Why has Hong Kong come to be such a philanthropic centre? A mixture of Chinese values, unusual history and commitment to a strong legal foundation have worked together to underpin this largesse.

First, in recent decades, much wealth has been made in Hong Kong. From 1990 to the present, Hong Kong’s per capita gross domestic product has grown from US$5,000 per year to more than US$38,000 in 2013. Many people have done extremely well and have enough disposable income to be quite generous. Additionally, many can still recall a time when their families did not have enough. According to Forbes, there are more than 55 billionaires living in Hong Kong, ranking it seventh in a list of territories by that measure.

The second reason is that Chinese people have always greatly valued education. A proverb says, give a man a fish and feed him for a day, teach him to fish and feed him for a lifetime. According to Harvard’s Kennedy School 2015 report, China’s Most Generous, 57.5 per cent of total giving from China’s top philanthropists goes to education. According to Coutts, in 2014, the single largest recipient of donations in Hong Kong was the University of Hong Kong. The great majority of the Centre for Asian Philanthropy and Society’s benefactors support education generally and scholarships in particular.

Hong Kong’s devotion to social investment dates to at least its establishment as a British colony in 1841. The British, with limited numbers, were unable and at times unwilling to provide many social services. They encouraged the creation of local self-help organisations to address social issues. Thus, Hong Kong people’s tendency not to rely on government but organise citizen-driven social efforts is embedded in the DNA of our city.

Of the 395 non-profit organisations listed in the city’s Directory of Social Services Organisations in 2016, 49 per cent of their total income comes through government contracts and project funds. This is the highest amount of government support to independent non-profit organisations in all of Asia.

When the government procures the products and services of social delivery organisations, there is an implicit endorsement and validation of their work. This is important as a signal to the public at large that social delivery organisations are credible, important players in the community. There are many governments in Asia and around the world who do not procure services from social delivery organisations at all. Hong Kong stands in stark contrast.

Hong Kong also has philanthropic organisations as part of its social fabric. After the second world war, when Hong Kong struggled to overcome the destruction caused by the war, the Hong Kong Jockey Club created its foundation to channel a significant portion of its funds to charitable causes. Since that time, the Jockey Club Foundation has become the most important philanthropic institution in Hong Kong. The formation and success of the foundation has cemented the linkage between wealth, entertainment and charity in the minds of Hongkongers.

The last critical factor of Hong Kong’s philanthropic strength has been the rule of law. Throughout Asia, the lack of trust that people feel towards non-profit organisations is profound. The Centre for Asian Philanthropy and Society attributes this lack of trust to several factors, including a murky regulatory environment around NGOs and the prevalence of headline-grabbing stories of fraud and fiscal abuse. In Hong Kong, the laws have been and remain clear and there has been a noticeable absence of scandals involving non-profit organisations. Hong Kong people trust social delivery organisations to carry out legal, helpful and important work.

Many of the things that make Hong Kong successful are unique – its geography, its governance, its people. But there are factors in place in Hong Kong which are helpful to foster philanthropy in any economy. Philanthropy thrives under the conditions it promotes: belief in education, government support of non-profit efforts, and the strong rule of law. Together, they encourage the giving and receiving of philanthropy to allow an easy and transparent way for those who want to improve society, both in Hong Kong and around the world.

This article ran originally in the South China Morning Post.

Dangers to Going It Alone: Social Capital and the Origins of Community Resilience in the Philippines

Greg Bankoff (Continuity and Change)

Abstract: Robert Putnam’s influential article ‘Bowling alone: America’s declining social capital’ puts forward a number of possible factors to explain the decline of civil society in the USA. Many of these same forces are also at work in America’s erstwhile colony in Asia, the Philippines, where almost the opposite outcome is true if one can measure such things as social capital by the activity of formal and informal associations and networks devoted to mutual assistance. Unlike Americans, however, Filipinos are exposed to a much higher degree of everyday risk. This article traces the evolution of mutual benefit associations and networks and suggests that it is in precisely those geographical regions most exposed to personal misfortune and community danger that they proliferate most readily.

Click here to read the full publication. (Note: Subscription is required for access.)

Asian companies develop new forms of philanthropy

Nikkei Asian Review

Anxiety about the gap between rich and poor has spread to Asia.

Rising joblessness led South Koreans to replace the dominant Saenuri Party in April. Even in the Philippines, with the healthiest economic growth since 1970, voters rejected the ruling elite in favor of the anti-establishment Rodrigo Duterte, who campaigned on profanity-laced vows to cut poverty. Yet not all solutions to social problems are political. Around the world, companies are seeing community engagement as not only in their own interest but also as an important part of their role in society.

Donations already play a large role. Corporate philanthropy has been on the rise for a decade and continues to grow. In 2012, 66% of all charitable giving in China came from corporations, as estimated by the Conference Board, a non-profit business research group.

India now requires top companies to pay 2 percent of after-tax income into certified philanthropic activities. According to Finance Minister Arun Jaitley, such giving totaled Rs 8,347.47 crore in the last year, about $1.5 billion USD. We do not know if the money is being spent wisely or efficiently, but it is clear that the bottom line is massive and will trickle through to increase the impact of many charitable programs throughout India.

Companies can help in at least four other ways, starting with sharing technical expertise. Some companies are already using their skills alongside financial resources to build capacity and bring about sustainable change. In India, the Axis Bank Foundation (ABF) opened a strategic partnership with Dilasa Sanstha, an organization devoted to helping farmers increase production and earn stable livelihoods. The ABF helped Dilasa expand rural credit, strengthen internal budgeting and create an evaluation system. For the first time, Dilasa could collect critical data on beneficiary income, household assets, education levels, diet and investment plans.

Similarly, support from Khazanah Berhad, Malaysia’s sovereign wealth fund, helped improve the capabilities of Mercy Malaysia, a medical response group active after natural disasters. Khazanah helped Mercy develop systems that assist it in managing people and resources and deploying them efficiently to disaster zones. The partnership has helped Mercy become an internationally acclaimed provider of disaster assistance.

Social delivery organizations may be non-profits, but they need to think more like businesses. To maximize their impact, they should be concerned with transparent accounting, financial forecasting, strategic planning, organizational management and development and a host of other skills that have traditionally been labeled as business skills. The private sector has plenty of these skills. In both of these cases, the companies provided financial resources and technical resources. They committed to the social delivery organizations for the longer term.

Another way companies can help is through shared value initiatives. Shared value, a term coined in 2006 by Harvard professors Michael Porter and Mark Kramer, is a strategy in which companies bring economic value to themselves while addressing a social need. In the Philippines, Manila Water figured out how to decrease siphoning and protect the pipeline so that clean, cheaper water reached those in the poorest districts of Manila. This successful project improved water access for the poor and increased Manila Water’s bottom line.

Uniqlo owner Fast Retail provides another example of shared value. With garment factories in Bangladesh, Fast Retail knows first hand the difficult circumstances facing many workers there. Uniqlo has launched a line of products inspired by traditional designs. Proceeds from these clothes go toward continuing education for women working in their factories.

Not surprisingly, there is considerable excitement around the notion of shared value. When the company and the community both prosper, the initiatives are more sustainable. Still, shared value initiatives are new globally and very new in Asia, and we can expect to see much more innovation of this kind.

A third strategy for community engagement is when companies work on their own. They believe and with some justification, that they have the skills to deliver a social good more efficiently than by working through an NGO. Shopping mall operator SM Prime Holdings in the Philippines is building clinics and schools, through its BDO Foundation, in the typhoon-ravaged areas of Leyte and Samar. The Reliance Foundation, the philanthropic arm of India’s Reliance Industries, carries out work through its own rural development, health and education initiatives.

Lastly, in some cases, corporations find it useful to develop alliances to bring about change. In China, corporate leaders have come together to create the SEE Foundation to work on environmental issues and the Ai You Foundation to provide medical aid to children. The Philippines’ largest conglomerate, the Ayala Group, and the telecommunications firm PLDT together created the Philippine Disaster Recovery Foundation to build a disaster operations center to coordinate the private sector relief efforts during major disasters.

How can companies evaluate whether they are doing enough? There are several key questions to ask.

First, how robust is your volunteer program? According to a Deloitte survey, 90% of HR managers believe that volunteering aids in building an employee’s leadership skills and according to a Price Waterhouse Coopers study, employees are less likely to resign if they feel engaged with their companies including through volunteer programs. A robust volunteer program can assist local charities while at the same time boosting employee company pride and loyalty.

Second, what subject areas best align with a company’s strengths and goals? Community engagement is much more sustainable when aligned with key competencies. It makes sense for Uniqlo to be utilizing clothing to engage with the community or for Axis Bank to focus on livelihoods and financial inclusion. Not everything a company does must be aligned with its interests and strengths, but it is helpful to know what these are and how they can be utilized to benefit the community.

Third, tone from the top is critical but innovation at all levels of the company is equally important. Employees have ties to the community and understand the needs of those living there. Creating programs that allow some latitude in addressing community concerns can harness this knowledge.
The rise in corporate involvement is clear. There is no question about whether a company should engage with the community, the only question is how. With their technical expertise, shared values and productive partnerships, Asia’s corporations are poised to be constructive, long-term stakeholders in the region’s continued growth.

Ruth Shapiro is chief executive of the Centre for Asian Philanthropy and Society, an organization dedicated to facilitating excellence in philanthropy.

This article ran originally in the Nikkei Asian Review.

 

Social Entrepreneurship: A Fundamental Game Changer

Skoll World Forum and Forbes

Editor’s note: Dr. Ruth Shapiro is the Social Entrepreneur in Residence at the Commonwealth Club and Principal of Keyi Strategies. Ms. Shapiro previously founded the Asia Business Council and served as its Executive Director since its inception in 1997 until 2007, and is now its Senior Advisor.

This article was originally written for the Skoll World Forum.

“Whenever I see a problem, I start a business”, said Nobel Laureate Muhammad Yunus in May 2010 at a program at the Commonwealth Club’s Series on Social Entrepreneurship.  Thirteen of the leading lights in the field of social entrepreneurship gave talks which have been put together and edited by Dr. Ruth Shapiro in a new book, The Real Problem Solvers.

Whether there is a profit motive or not, the notion that business has a role to play in addressing societal issues is at the heart of today’s discourse on social entrepreneurship. Defining what social entrepreneurship is as well as the difference between it and traditional non-profit management as well as philanthropy is a flourishing discourse. Coined by Bill Drayton of Ashoka in the early 1980’s, the term social entrepreneurship has become somewhat of a catch-all phrase. Originally it referred to someone with the passion of an entrepreneur tackling a social challenge. Now, it has evolved into a number of meanings including but not limited to social interventions with distinctly business characteristics as well as businesses themselves.

With his remark, Dr. Yunus hit upon one of the main themes of the book: the blurring line between profit and non-profit, business and charity when providing a social good. The term non-profit organization has been used to describe what an organization is not rather than what it is. The equalization of social service work with non-profit balance sheets became sacrosanct. In order to do good, common practice and wisdom told us, we could not also do well. Now, that notion is being turned on its head. Not only do social investors believe that it is possible to do good and do well, other aspects of the old mindset are falling away. Many non-profit organizations are developing profitable income streams to both help their constituencies as well as the sustainability of their organizations by ensuring a stable bottom line. Throughout this book, stories of individuals and organizations are blurring the distinction between profit and non-profit are presented.

Another aspect of the social entrepreneurial movement is to approach social change with business rigor and analytical tools. What is efficacy in the non-profit world? What is the difference between a dreamer and an effective do-gooder?  Social entrepreneurs are keenly interested in understanding impact. There is great effort to measure efficacy and seek means of improvement. As Jed Emerson, a leading writer and thinker in this space said, “The point isn’t so much whether you are a non-profit or a for-profit by rather how you manage for maximum value and impact as a leader.” The Acumen Fund has created a management system called Pulse which establishes metrics to determine efficacy and improvements in delivering social good.  Room to Read measures every dollar against a number of schools, libraries, books published and distributed and the time it takes to accomplish each task. These efforts help the non-profit sector become more effective, efficient with better and more economical programs.

Third, there is an extraordinary sense that change needs to be scaled and quickly. There is an increased sense that we must act now. While this is certainly true on environmental issues, the sense of urgency and individual responsibility has spilled out into the larger community. More and more people are feeling personally motivated to be more socially responsible. Schools are responding to this need. According to Aspen Institute, in 2007 63% of business schools in the United States offered courses on social enterprise or other aspects of the nexus between environmental, social and ethical considerations with business decisions.  Ashoka provides course materials to over 800 undergraduate programs on social entrepreneurship.

There are a number of people and organizations contributing to the rise of social entrepreneurship. Today, the field has expanded to include the entire ecosystem involved with the promotion, support, and network of those involved with an endeavor designed to make the world a cleaner, more-equitable, healthier, and better-educated place.

Webster defines a movement as an organized effort to promote or attain an end. Today, there are many players, organizations, and strategies within the field of social entrepreneurship. It has become a movement, although not a centrally organized one.  It is also a movement where there is a great deal of experimentation and creativity going on.  Taking down walls around profit, innovation and investment has cleared the way for new and vibrant thinking and action around social change. While the larger goals remain constant, the strategies of getting there are expanding at a rapid pace. There is tremendous excitement and energy in the world of social entrepreneurship today and with that energy, comes real opportunity for sustainable change.

To view the original links published by the Skoll World Forum and Forbes please click here or here, respectively.

Private Philanthropy in Multiethnic Malaysia

Elizabeth Agee Cogswell (Macalester International)

As with most other social and economic activities in Malaysia, private philanthropy in multiethnic Malaysia also remains to be determined by the division between ethnic groups of Malays, Chinese, and Indians. By interviewing philanthropists, private foundation staff members, charity fund raisers, non-governmental organization executives, professional fundraising staff of international NGOs, and employees in charge of corporate foundation and direct giving programs. Cogswell teases out the status quo, the intricacies, and issues that private philanthropy in multiethnic Malaysia as it further develops.

Click here to read the full publication.