Business and charity

By Zubeida Mustafa
Source: Dawn

THE Pakistan Centre for Philanthropy has prepared a report on corporate philanthropy to estimate the volume, patterns and range of ‘giving’ of Public Listed Companies in Pakistan. The findings of the PCP survey are significant as well as interesting. They confirm the changing trends in philanthropy in the country which has captured the interest of the government in a big way.

That is nothing intriguing. The government has been reducing its share in the social sectors which are directly concerned with human resource development. For instance, there was a time in the heyday of socialism when it was considered the responsibility of the government to provide basic education and health care to its citizens. Social welfare, from the cradle to the grave, was considered to be the responsibility of the state. Although Pakistan never succeeded in undertaking this responsibility fully, it did not reject this concept theoretically.

In the market-driven system of today, the emphasis has shifted from these concerns. Private entrepreneurs and charitable organisations and trusts are increasingly being called upon to play the role that was conventionally assumed to be that of the state. This approach has serious inherent limitations. Charitable trusts do not have unlimited resources.

As for those running private education and health institutions, their compulsion is to generate profits to keep them going. Profit driven by cupidity can be disastrous for the poor. The charges of such institutions are exorbitantly high and beyond the reach of the indigent. Whose responsibility should it then be to provide the social services to people of modest means?

Now that the government has begun to realise the weakness in the approach of minimal intervention, it has been trying to encourage private individuals and the corporate sector to step up their donations to meet the shortfalls in the services in the social sectors. The PCP was set up in 2001 as an independent non- profit support organisation to promote philanthropy for social investment. It is not engaged directly in philanthropy. But it does seek to create the climate and the support services to facilitate giving by others.

For instance, the PCP has undertaken a programme of certification of non-profit organisations and put up the details of the institutions which it considers qualified for receiving donations. That may help guide people trying to decide who is deserving of charity. It has also been promoting the concepts of corporate philanthropy (CP) and corporate social responsibility (CSR) which refer to the act of corporations donating a part of their profits to various charitable causes and their duty not to cause any harm to society — or atone for it if harm has been caused.

Such promotion is badly needed, for the image the public has of the corporate sector’s role in the development of health, education and housing is extremely poor. The recently launched report Corporate Philanthropy in Pakistan clearly establishes that the corporations are not as generous in their giving as one would have expected them to be. They have not shared their profits magnanimously with the poorer sections of society.

Prime Minister Shaukat Aziz once suggested that the corporate sector should assign at least one per cent of its profit before tax to giving. What do we have? According to the PCP the business sector is giving barely 0.33 per cent. True, some companies are very generous — e.g. one business donated Rs 0.7 million (82.2 per cent of its profit before tax) in 2003 while another donated Rs 36.8 million (37.2 per cent of PBT) in the same year and were at the top in terms of percentage and absolute amount paid. But a review of the reports of public listed companies shows that only 50 per cent of companies actually make donations.

The corporations’ role in boosting human resource development can be a vital one and raises some key questions. What is the corporate sector’s contribution in the promotion of the education of its own workers and their children and in providing them health care? Taking full responsibility should, incidentally, involve their setting up schools, literacy centres and hospitals for their own employees and not simply doling out medical and educational allowances to them. Companies could join hands to set up educational and health institutions to make optimum use of them. If their capacity is under-utilised, they could be opened to others as well.

The other issue that is now being questioned is the concept of philanthropy itself. If it is interpreted as charity — the act of giving to increase the well-being of mankind — as it was in the good old days of yore, one can well ask whether an institution that takes donations from the public is entitled to charge any fee from the needy who come to use its services. It is now known that many hospitals and schools, which run campaigns to raise funds for themselves from the people at large, charge fabulous fees from their beneficiaries. If a person can prove his poverty — at the cost of his self-esteem — he may get a hefty discount. Since these organisations do not show a profit on their books, they are termed nonprofit organisations and are entitled to accept philanthropy.

The PCP’ Gateway to Giving is a directory of 84 certified non-profit organisations that provides useful information about these bodies that are contributing to the social development of the country. By creating a certification mechanism the PCP hopes to promote “transparency, accountability and good governance”. This would certainly help donors determine the credibility of an organisation.

The directory lists many organisations that are known to charge a considerable sum for the services they render. But this is not mentioned specifically in the directory. In fact, among the organisations providing public service in education and health care only a handful offer free services. Others provide free/subsidised services but only to a fraction of their users after elaborate interviews have established the indigence of a person seeking this facility.

The PCP should do well to look into this aspect when certifying an organisation. The so-called charities which charge fabulous amounts from some and claim that this income is used to cover the cost of providing services to the deserving should be asked to show the exact ratio of paying and non-paying users.

It would also help if the organisations be asked to provide information about their rates, if they charge, or declare categorically that their services are free. The directory should state this very clearly so that the philanthropists know where their money is going. Declaring an institution a non-profit organisation is not enough because it may still be charging the users a hefty amount and showing this income as its expenses and not profit.