In recent years, corporate philanthropy is usually targeted at specific causes. Some companies introduced the corporate business model into social enterprises and started up novel projects for public interest, hoping that long-term, influential charity strategies can be implemented to create a win-win situation for the business sector and society.

In the past, donating to charitable organizations were the most common gesture to give back to society for many entrepreneurs. However, they did not know whether the donations were put to good use. Therefore, philanthropists who ride on their existing strengths and advantages and personally take part in charitable projects could ensure appropriate and effective use of resources.

Develop social enterprises with investment impact

According to Christina Tung, Head of Philanthropy Advisory APAC, UBS Wealth Management, more and more family businesses have initiated their philanthropic projects in recent years. Many of these projects were developed into social enterprises and impact investments, which have resulted in a win-win situation where the companies can give back to society and generate profit to support future growth. “Social enterprises are a way to run social causes with business models such that both businesses and society gain from them. Impact investment, on the other hand, refers to companies investing on selected projects that have positive impact on society, in hopes that on top of gaining investment return, they could also establish their branding image,” said Tung.

Over the past few years, the government has been actively advocating the idea of creating shared values. It hopes that companies could on one hand generate profit, and on the other create values for society, or even help solve social problems. Philanthropy precisely complements the said government direction. Entrepreneurs do not need to worry about their own business and charitable work interfering with or even hindering each other. On the contrary, they should uphold the perseverance and determination they had when they started their business – success is more achievable by engaging in development innovatively.

Philanthropy initiated by family business helps succession

Initiating philanthropy in family businesses is also helpful for succession. Tung pointed out that succession in family enterprises can be categorized into three directions, namely business succession, wealth succession, as well as culture and values succession. Developing philanthropy is most useful in the third one. In business succession, the rule of thumb is “may the competent work on what they are good at”. Wealth succession, on the other hand, relies on the wealth management strategy of the family. Developing philanthropy in an excellent platform to keep the family together.

Tung thinks that family enterprises establishing a foundation to develop philanthropy could help members cultivate good values. “Not every family member is willing to take over the family’s business, but they usually spare no effort in charitable work. This can help nurture a spirit to help others. Furthermore, when every member has a common goal to work towards, it would help enhance the cohesion of the family in the long run, and the family’s spirit could be passed on.”

Select causes prudently and use resources effectively

Tapping into philanthropy certainly brings family enterprises benefits, but it is no easy task to achieve and sustain development. Tung stressed that philanthropists must clearly consider the scope that they would like to work in. She said, “Philanthropy is not about ‘going with the flow’. To do it well, the cause must be dear to the hearts of philanthropists. Therefore, they must ask themselves which area they are passionate about. Could that be education, healthcare, or elderly care? They must also know how that particular area is developing. For example, which areas require special aids? Things work more effectively when entrepreneurs ride on their business skills and networks and put them to work in their philanthropy.” It takes time to develop philanthropy, and the progress of the work must be monitored, such that the strategy could be adjusted according to changing circumstances. By doing so, a proven and effective model could be gradually developed to help solve social issues.

The sound legal and tax systems of Hong Kong have made it an ideal location to develop philanthropy. As such, many Mainland entrepreneurs have come to Hong Kong to set up their charity foundations in recent years. Tung envisioned gathering the strengths of all the philanthropists to help solve various social issues more effectively. “It’d be difficult to achieve good results if we only rely on one or two foundations. By working concertedly, resources can be more effectively deployed, and more social problems could be solved. These would help build a harmonious and diverse community.”