Guiding family foundations for effective philanthropy


Suzanty Sitorus


Along with their increasing wealth, many families who own business empires in Indonesia set up a foundation to carry out their philanthropic mission. In recent years, the second and third generations of some of the family foundations have begun to take the lead. They bring in new approaches such as strict separation between family foundation and their business group’s corporate social responsibility and employing professionals to run the foundations. Other family business group remain traditional, blending family philanthropy with corporate social responsibility of their business. Either way, the family and corporate foundations are showing bigger interest in collaborating with other partners.

Such encouraging development is a good start to make philanthropy by family foundations more effective. The global and local challenges today require strategic and systemic interventions as they become ever more complex and interwoven. Many foundations are increasingly drawn to align their work with Sustainable Development Goals (SDGs). The SDGs’ universal values present an opportunity for the foundations to work on underlying issues and collaborate with other stakeholders. At the same time, the interlinkages of the goals can be overwhelming. While a strong drive from the founders can help a foundation to consistently stay in focus, various relevant challenges emerge—often unexpectedly, and create distraction. Traditional family foundations who are not supported by seasoned professionals are more prone to such a distraction.

Whether they are newly established or recently revamped, philanthropic foundations established by the family of large business groups and high net worth individuals might want to consider three areas to allow them to work more effectively while embracing SDGs.

One, using policy and practical tools to guide foundations’ leader and management in identifying priority and supporting areas from a suite of SDGs challenges which all seem important and urgent. One of the latest toolkits published by Rockefeller Philanthropy Advisors provides entry-point guidance to understand the SDGs and how philanthropic funders can contribute to the SDGs achievement. The step-by-step approach with concise case studies are easy to follow and relevant for foundations working across topics and geographic regions.

Two, productively collaborating with like-minded groups including peer entities and philanthropy support organisations. No foundation is immune to the reality in which SDGs challenges are bigger than available capacity. Multidimensional approach to each SDG needs bigger financial resources, more variety of financial instruments, and also different kinds of knowledge and expertise. On education alone, even all philanthropic capacity combined will not be able to overcome all the problems. Although the government has mandatory 20 percent budget allocation for education, there are still many gaps in improving education quality at all level across Indonesia. The Indonesia Philanthropy Association and its members initiated the establishment of several issue-based philanthropy clusters, including education, to promote collaborative actions based on cross fertilisation of ideas and practice. On finance, there is a need for family foundations in Indonesia to take collective action to leverage private capital that can support the causes of mutual concern.

Three, being open minded and proactive to continuous learning. Being associated with enormous wealth, family foundations rarely reach out to others for their capacity building. In one-on-one engagement, in fact, the families recognise their shortcomings on improving both the management and program of their foundations. Philanthropy learning providers are not limited to world-class advisory firms—which usually also provide advisory for the family’s business. Although still limited in number, there exists not-for-profit organisations that can provide advisory and facilitate learning with domestic and international counterparts. For instance, the Indonesia Philanthropy Association regularly organises Philanthropy Learning Forum to discuss latest developments and issues in different areas as well as skill-share classes and dialogue between Indonesian and global philanthropists to allow exposure of philanthropic foundations to new skills and different solutions.

Philanthropy has been a force for social change in Indonesia. Meeting SDGs in the country requires participations of family foundations more than ever. With more modern approaches to philanthropic management, coupled with vigorous cross-learning and deepened collaboration, the foundations will be able to optimise their philanthropic capital and contribute meaningfully to the SDGs.

Suzanty Sitorus, Indonesia Philanthropy Association

This article was originally published in Philanthropy in Focus by WINGS. The original article can be viewed here.

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