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From Charity To Change Social Investment in Selected Southeast Asian Countries

From Charity to Change: Social investment in selected Southeast Asian countries

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From Charity To Change

Social Investment in Selected Southeast Asian Countries

Scope and Methodology

• Landscape study of Indonesia, Philippines, Singapore and Thailand, overview of Cambodia and Vietnam

• Review of existing research

• Review of learnings from other social investment markets

• Over 100 interviews conducted

• Adapted Nonprofit Finance Fund’s complete capital approach to frame findings

Complete Capital Framework

Financial

Intellectual Social

Human

Adapted from Nonprofit Finance Fund, U.S.

Social Solutions

Social Investment: Framework

: Investment approach to disbursement decisions

• Understanding of underlying issues derived from research / data / experience

• Intent of achieving discernible / measurable outcomes

• Monitoring and evaluation of progress

• Engagement other than financial

• Multi-year perspective

Social Investment in SE Asia: The Big Questions

What roles could it be expected to play?

• Alleviate specific social issues • Support the larger development agenda • Address issues of inequality • Broader societal engagement with social issues • Possibilities for cross-sector collaboration

What are the potential roles of existingand emerging players?

• Philanthropists • Social purpose organisations • Social entrepreneurs • Businesses • Government • ODA

Emerging Themes

Dominance of traditional philanthropy

• But pioneers and innovators emerging

Evolution of corporate philanthropy and engagement

• Push and pull factors for corporate venture philanthropy

Impact investing at a very early stage of development

• Range of social enterprises emerging, but gaps remain

Human, social and intellectual capital gaps inhibit effectiveness of financial capital

• More and more diversified sources of funding still needed

Traditional Charitable GivingDominates Philanthropic Landscape

• Strong religious and cultural context • Family centred and/or individual behests • Often affiliation driven • Concentrated in traditional issues • Very local • Very stand-alone approach • Cited deterrents to giving:

• Lack of trust in NPOs - transparency, accountability, effectiveness

• Lack of knowledge of social issues

Traditional Charitable GivingInnovators Emerging

• Pioneering family foundations practicing catalytic philanthropy

• Pooling of traditional charitable funds • Community Foundation of Singapore • Rumah Zakat • PBSP • One Thailand

• Non-traditional funding sources • “Sin taxes” • Tote Board • Thai Health Promotion

Foundation • Philippines: capital market innovations and conversion of

foreign debt to social funds

Corporate Venture

Philanthropy

Pushfactors

Mandatory CSR FundsExtractive industries

Disability employment quota fines

Reputational CSR

Potential of CorporatePhilanthropy: Beyond CSR

Corporate Venture

Philanthropy

Pushfactors

Pullfactors

Mandatory CSR Funds

Reputational CSR

• Cultural + historical context

• Stakeholder expectations

• Investor recognition • Proliferation of awards,

indexes and ratings • Affinity for new social

investment models • Repository of needed

resources

Extractive industries

Potential of CorporatePhilanthropy: Beyond CSR

Disability employment quota fines

Impact Investing at Early Stage of Development

• Growth of start-up/early stage funding opportunities at national level

• Relatively few investments of substantive size

• Proliferation of social enterprise models

• Investors cite lack of investment readiness and scaleability

• Key intermediaries are champions for the sector

• Ecosystem building inhibited by lack of funding

• Growth of start-up/early stage funding opportunities at national level

• Relatively few investments of substantive size

• Proliferation of social enterprise models

• Investors cite lack of investment readiness and scaleability; concentration in incursive businesses

• Key intermediaries are champions for the sector

• Ecosystem building inhibited by lack of funding

Impact Investing at Early Stage of Development

The Capital Gaps

Human

• Experienced resources for capacity building

• Professional service providers • Pro bono models • L/T career path for social sector

professionals

Financial • Funds for SPO capacity building • Ecosystem development • Absence of pooled funds for scale • Growth funding gap for SEs

Social

• Lack of collaboration and convenors

• Networks and support organisations for philanthropy and non-profits

• Sharing of successful models

Intellectual

• Research on social issues and effective interventions

• Effective policy measures and regulatory frameworks

Thailand: Themes

• NPOs face negative perceptions: lack of trust, transparency and effectiveness

• Charitable giving dominated by religious and royalty affiliated institutions

• Regulatory reporting convoluted and tax incentive systems lack transparency

• Growing interest in, and ecosystem evolving for, social enterprises

• Positive developments in corporate philanthropy/CSR

Thailand: Capital Needs

• Human : Capacity building models for SPOs

• Financial

• Divert traditional charity and CSR to social investment

• Pooling of mandatory CSR funds

• Intellectual : Effective policy measures and execution to support social sector

• Develop models of corporate engagement

• Understanding of social issues as convening mechanism

• Social: Collaboration among philanthropists; individual and corporate

Thailand

Collaboration on SEs

Corporate philanthropy / CSR

Indonesia: Archipelagic Challenge

• Large addressable SI market

• Post-1997, massive expansion of NPO sector

• Weak ecosystem and legacy of mistrust regarding transparency and accountability.

• ODA declines increase reliance on domestic sources of capital.

• Religious

• Corporate

• HNWIs

• “islands” of activity, strong need for collaboration and coordination across the “archipelago”

Indonesia: Capital Needs

• Human : capacity builders / incubators • Financial : smart capital / intermediaries • Intellectual : internal and external

landscaping • Social : cross-sector collaboration platforms /

convenors

Indonesia Highlights

Strategic implementers Ecosystem innovators

Philippines Overview: Needs Drive Success

• Most vibrant civil society in SE Asia – strong and credible leadership

• Family foundations are leaders for strategic, collaborative philanthropy

• Institutional philanthropy created through innovative funding mechanisms

• Longstanding history of corporate engagement

• No of high profile social enterprises

• Local funds financing and building capacity for community based SEs

• Constraints include geography and relatively small amounts of funds

Philippines Overview: Capital Needs

• Human : attract and retain talent • Financial : ODA declines not yet offset by

domestic capital • Intellectual : none! • Social : overcome geographic isolation /

metro-Manila domination

Philippines Highlights

Collaboration & networks Innovative funds

Xchange( PEACe Bonds

Cambodia and Vietnam: Sparks

• Donor dependency hampers SI growth.

• Expatriate vanguard (HSEG, DDD)

• NGO-led social enterprises (Friends Internaional, BSDA)

• Corporates MIA (ANZ)

• Regulation / leakage

• Pioneer capital (ADM, Uberis, Arun, Insistor)

• Scattered capacity building / convening ( Shift 360, PDI)

Cambodia Vietnam• Legacy of autarky hampers SI growth (until

doi moi) • Regulatory challenges for both NGOs and

business • Expatriate / returnee vanguard (Koto

International) • Domestic and international private

philanthropy marginal (Vietnam Education Foundation)

• Destination for international impacting investment funds / flows (RCC)

• Emergence of domestic capital (Lotus Impact / VinaCapital)

• Corporate philanthropy institutionalized (Vinamilk)

• Capacity builders and conveners (LIN, CSIP, BC, Spark)

Singapore Overview

• Social concerns a new national priority

• Government support central to NPO sector

• Maturing ecosystem for NPO sector and philanthropy

• Family foundations a key feature and promising trends in corporate philanthropy

• Rapidly emerging ecosystem for social enterprises

• New generation of SEs still struggling to achieve scale

• Growing as a regional hub

• Constraints to growth around capacity and orientation of funding support

• Many elements in place for continued evolution for SEs and NPOs

Human

Intellectual

Social

• Several well-supported field support orgs

• Youth interest in social issues • Professional services orgs emerging • International organisations bringing new capacity

• Growing corporate interest

• Capacity of field support orgs needs to be built as system still maturing

• NPO and SE capacity needs to be built • Remains difficult to attract talent given attractive

alternative career paths

• Lack of effective channels for meaningful engagement

• Several local and into orgs involved in knowledge building

• New platform / networks emerging • More conversations and sharing taking places

• Still insufficient understanding of what works • Lack of strong evaluation efforts

• Collaboration still rare

Type of Capital Strengths Needs

Singapore: Capital Needs

Financial

• Strong government support

• Some tradition of family foundations • Growing corporate foundations

• Availability of modest seed capital for SEs • Availability of growth capital

• Aggregators emerging

• Core support lacking • Less independent support, little for advocacy-

type efforts

• Few examples of strategic philanthropy • Level of individual giving low relative to wealth

• Lack of more substantial early stage capital for SEs

Singapore Highlights

Numerous field support organisations Regional hub developing

Some Questions for Singapore

• Can we change the way capital is provided? i.e. more core support to NPOs, more substantial early stage capital to SEs?

• How can we be more strategic in our social investment?

• Is the constraint on NPO/SE capacity building capital or talent, or both? How can it be addressed?

• How can we come to better understand what works?

• Are local SEs maturing and starting to achieve scale?

Social Investment in SE Asia: The Big Questions

What roles could it be expected to play?

• Alleviate specific social issues • Support the larger development agenda • Address issues of inequality • Broader societal engagement with social issues • Possibilities for cross-sector collaboration

What are the potential roles of existingand emerging players?

• Philanthropists • Social purpose organisations • Social entrepreneurs • Businesses • Government • ODA

Traditional Charity

Appendix: Range of People & Organisations with Social Purpose

Revenue Producing Non-profits

SustainableNon-profits

EntrepreneurialSocial

Enterprises

Inclusive Businesses

Issue-based

Community-based

Cooperatives

Community leaders & social entrepreneurs

Start-ups

Innovation

(Often tech-linked)

Products & services for BoP

Livelihood enhancement

Frequent Characteristics

of Organisations

LikelyFounders /

Entrepreneurs

Younger gen social & business

entrepreneurs

Experienced businessmen

(Innovation)

Mainstream Businesses

BoP in supply chain

Social Intrapreneur

Strategic corporate

philanthropy / CSR

“Social Enterprise”