In the last 20 years, the philanthropic landscape has shifted phenomenally, with capital markets, governments, and non-profit sectors coming together more than ever before to advance social, economic and environmental change in ways never before thought possible. Taking stock of how Asia has changed since the 1997 global financial crisis and forecasting the challenges and opportunities that will shape its next two decades is the focus of the Milken Institute’s annual Asia Summit in Singapore, which will be held on September 14 and 15 at the Four Seasons Hotel.
Established in 1991 by businessman-philanthropist Michael Milken, the Milken Institute is a non-profit and non-partisan think tank based in the US, and is widely recognised for its rigorous data-driven research and efforts in connecting the business and civic sectors to solve the world’s most pressing social and economic challenges. It has eight centres in the US, the UK and Singapore focusing on access to capital, job creation, and health, while its Singapore-based Asia Center launched in end-2012.
Richard Ditizio, president and chief operating officer of the Milken Institute, says that donors are now demanding more accountability for their giving. “Today, people are looking at their philanthropic portfolio in the same way they do their investment portfolio. Beyond holding organisations accountable for the stewardship of these gifts, donors also want to understand what the returns are,” says Ditizio, who joined the Milken Institute in 2012 after a 25‑year career in banking, including being CEO of Citi Private Bank and heading its North American ultra-high net worth practice.
But unlike financial returns, which can be quantified with profit and loss statements, social returns are more challenging to quantify. While some may balk at the term “smart giving”—which incidentally is the tag line of Milken Institute’s Center for Strategic Philanthropy—for its businesslike connotations, the question of whether we are giving effectively is critical to making good charity decisions.
Ditizio says, “The notion today is the recyclability of capital where if I can loan you the money, could you do more with the same dollar while achieving what you want to achieve, and give it back to me so that I can use it for another philanthropic cause?”
There are three key concerns in the philanthropic space that Ditizio believes need addressing: wake (or the effect of an action), scale and talent. He says, “People often think that because something is done with good intentions, that there is no negative wake to philanthropy. But issues can arise from ineffective giving because problems are often prismatic in nature—something seems to hit in a single beam of light but it gets refracted into different components. Unless you understand how all these interact, you might be solving one problem and creating another.”
He cites one example: the campaign to eradicate Aids in Africa could possibly be interconnected with increasing terrorism. Sounds far-fetched? Not if one realises the repercussions of a situation where more than half of a country’s population is under 18 years old—having survived the Aids epidemic thanks to widespread access to affordable medication—yet with no jobs nor roofs over their heads.
“Your parents died by the time the correct medication came along, property prices are increasing, unemployment is at 40 to 50 per cent, and here comes a terrorist organisation that’s willing to feed you, and gives you some quasi-family feel. You can’t really say that a person becomes a terrorist because of that, but things are more interrelated on a macro level than we realise. This is one of many examples where we’re not thinking through the issues clearly despite all the good intentions we have.”
“Don’t be afraid of that discipline.
It can actually be quite productive and critical
to achieving the good that you want to do,” advises Ditizio.
Moreover, organisations with similar causes can be more powerful together when they share overheads such as rental and employment of staff, instead of duplicating efforts. Not everything needs to be started afresh, argues Ditizio, and merger and acquisition through the philanthropic space can create more targeted and effective organisations.
Top talent is also vital and the idea that people in charitable organisations should not be paid as much must be dispelled. “You’re asking the non-profit space to solve some of the most vexing issues on the planet, yet you’re going to judge the organisation by how much it pays its employees,” says Ditizio.
“As an investor, I’m not looking to companies that get the cheapest person they can find; I want them to employ the best person they can find.” With the rise of ESG (environment, social and governance) activities in corporations, Ditizio predicts that there will be increased career movements between the profit and non-profit sectors as the importance of social governance policy in corporations and how investment funds can create social good while generating financial returns gain traction.
The Milken Institute’s Asia Center plays that role of promoting the growth of inclusive and sustainable financial markets in Asia while identifying strategic opportunities for deploying public, private and philanthropic capital.
“With wealth unfolding at such a fast rate in Asia, can we deploy the money smarter and actually generate returns from doing something that’s productive for society?” asks Ditizio.
At the crux of the philanthropic movement is disciplined management, for which a corporate lens view may well be the key to better stewardship of resources. Ditizio says, “Establishing the metrics for success and running philanthropy like a business, understanding risk and return, retaining and developing human capital, are very corporate notions that the philanthropic space sometimes lacks.
“Don’t be afraid of that discipline. It can actually be quite productive and critical to achieving the good that you want to do.”