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Thursday, September 22, 2016, 20:14

Forum: Philanthropy needs business models

By Sylvia Chang

The time has arrived for the philanthropic sector to engage business models in addressing metropolitan social issues, said Michael Porter, professor with Harvard Business School.

Speaking at an international philanthropy forum on Thursday in Hong Kong, Porter said in 2015 Hong Kong saw over $2.5 billion of charitable donations. Among the donations, 34 percent came from individuals, 20 percent from foundations and 46 percent from corporations.

Although robust, Porter said, the philanthropic sector is facing new challenges as new social issues have arisen in the city, including the aging population, the growing demands of technological advancement and environmental conservation, as well as maintaining sustainable development.

The same is true for other Asian economies with an increasing population living in urban areas.

Under such circumstances, the role of business in the philanthropic sector is changing dramatically, Porter emphasized.

He explained that the approaches of business have been evolving from donating money to society and being compliant with ethical and community standards to “addressing societal needs and challenges through the business itself, with a business model”.

To accommodate the new role, the philanthropic sector needs to achieve superior social value, by “focusing on important unmet needs” of society and “delivering integrated sets of activities”, not just by giving money, Porter said.

Strategically, he suggested leaders in the business realm select the best partners and help improve their performance, to foster collaboration across entities and shareholders and to find leverage points that trigger the system to improve, such as common measures of success.

The aim is to achieve shared value and make clear trade-offs between the community and the economy so that both can benefit and be sustained.

In practice, measures include enhancing suppliers’ capabilities and efficiency, improving employees’ health and safety and enhancing productivity and retention through wages and benefits for lower-income employees.

To achieve shared value, it is also important that private enterprises, NGOs, charity institutions and the government all join forces, Financial Secretary John Tsang Chun-wah said at the opening ceremony of the forum convened by the Hong Kong Jockey Club, the city’s largest charity institute.

Tsang expected to build a more prosperous city through both advanced and well-designed hardware and software of social consciousness – the philosophy that animates philanthropy.

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