Sustaining community philanthropy – A response from Thailand

Woraphat Arthayukti

In Thai society, although the philanthropic impulse is strong, the ordinary channels for philanthropy are culturally and socially implanted. They include, for example, giving to Buddhist temples during the yearly Kathin fundraisers (each temple does a Kathin fundraiser and every individual receives a number of donation envelopes from acquaintances once a year); for special events such as a friend’s son being temporarily ordained as a monk; purchasing tickets for charity events (concerts, walkathons, charity dinners) from friends.

This social/cultural ‘tax’ is quite substantial in terms of percentage of personal income for many families.

There is also a history of local cooperative financing in Thailand, but not the philanthropic culture that is encompassed within the community philanthropy organization (CPO) structure. The village cooperatives sometimes function as banks for the villagers. They charge interest rates higher than ordinary banks but much lower than those charged by loan sharks. A percentage of the profits is then given to the community for local requirements as determined by a committee. The whole system is based on trust and works well for the group of member villages.

No link between donors and recipients

Thailand also has area-specific foundations like the Foundation for the Blind which do their own fundraisers. Royal Foundations do not fundraise directly but families and businesses are regular contributors both because of the recognition that comes from donating to a royal charity and, very importantly, because Royal Foundations are seen as trustworthy and capable of ensuring the donated funds reach those worthy of receiving assistance.

But none of these donations link donors with recipients directly, nor do they allow donors to take a  leadership role in project creation or to be emotionally involved with the projects supported. It is reasonable to assume that, given the opportunity to donate to a cause close to the donor’s hearts through a CPO, a wide spectrum of Thai donors would be likely to give, but this has yet to be demonstrated through the actual establishment of such an organization.

Creating community foundations – the Thai approach

Our approach to establishing community foundations in Thailand is based on the traditional approach of creating funds for specific projects rather than asking new donors to contribute to a permanent endowment right from the start. At the present time, the creation of four CPOs through funding from the Thai Health Foundation has been initiated through a partnership with the Kenan Institute Asia and the Local Development Institute. In this project, the Friendship to Community Foundation (FCF) provides day-to-day support for work designed to establish these emerging foundations, and the Synergos Institute has provided ongoing technical assistance both to the CPOs and to FCF. Several other CPOs are also beginning or in the planning stages. These emerging organizations represent a variety of different types of community, from large cities to rural areas, and each is developing its own local characteristics. We deliberately chose a variety of communities to experiment with the CPO concept within differing environments in Thailand.

Endowment – a little known concept

We face several challenges in trying to build these new organizations. The concept of charitable endowment is largely unknown in Thailand, but not non-existent. But we do feel that the endowment concept is compatible with and marketable in Thai society. There is one case, for example, at the monks’ hospital in Bangkok, where people have been setting up funds in their names, with only the interest being used to assist sick monks.

In another example, when my brother, who had Downs Syndrome, passed away, my elderly mother created a fund in his name. This was to be set aside, with only the interest from the fund used to donate to hospitals and centres treating Downs Syndrome patients. The idea of setting up such a permanent fund was completely her own idea, independent of any knowledge of the concept of a community foundation. The fund is now kept in the Bangkok Community Foundation establishment project until such time as the foundation is registered and operating. Funds created in the memory of a departed relative could be a substantial source of permanent endowment in Thai society.

From pass-through to endowment

Although in Thailand people may understand the concept of pass-through funding for projects, they may not see the value of permanent endowments earning at best 5 per cent a year. For a number of years Thailand lived with bank interest rates of 12 per cent and the notion of foundations using the interest to support charitable activities was well understood. Today, however, foundations use whatever interest can be obtained (now 2 per cent or so) to make grants but must also conduct special fundraisers to supplement the meagre income from interest rates.

Another issue is that it is very difficult to ask for a permanent endowment from a donor with whom the CPO has no previous relationship, as CPOs do not yet exist in Thailand and have no track record here. Hence it might be more feasible to start relationships with potential donors by getting them to develop community projects through the CPO with pass-through funding. Then, over time and after undertaking activities with the donors, the foundation would be in a better position to convince them to start a fund for a cause they could relate to. Thus the donor may make a yearly donation partly as capital and partly as direct grant money, and may commit sufficient funding over a period of years to allow the fund to grow. This might well be feasible in Thailand. Thus a number of funds could be set up starting from pass-through funding for specific projects and moving towards the permanent endowment.

Sustainability

Sustainability of these CPOs will be a challenge for the future. Endowments from foundations are typically deposited in banks and earn low interest rates (currently around 2-3 per cent per annum in savings accounts in local banks or around 5.5 per cent for government bonds). If the CPO charges a 1 per cent management fee on an endowment, one would need an endowment of 144 million Baht ($3.6 million) to retain the services of a CEO earning $3,000 a month. The interest remaining would then be used for grantmaking. However it would take a substantial period of time for a new CPO to obtain this level of endowment.

In addition, not all donations to the foundation will be used to create permanent endowments; most may go to pass-through projects or to funds where both investment proceeds and part of the capital will be used every year. For project supervision, the CPO has a case for charging a management fee which is higher than 1 per cent. It is evident that outside financial assistance for a CPO’s operating costs will be needed throughout the initial phase of establishment of the CPO.

Looking beyond material measures

Any measurement of the performance of CPOs should include both CPO assets (the traditional measure) and the value of contributions to community activities passing through the CPO. Ultimately, it is the involvement of community philanthropists through the CPO with the community that is sought. Another metric could be the number of community members who give in excess of a certain amount (say, $50 equivalent), since we are trying to build a widespread culture of philanthropy, as Shannon St John’s article suggests.

I further agree with Shannon that sustainability is the key word. And I also agree that permanent endowments alone cannot ensure sustainability. I have considered, for example, whether CPOs should also manage community volunteers but I am concerned that volunteer management is extremely costly and would become a burden on the operating costs of a foundation. The point remains that elements other than financial ones should be studied in determining sustainability and that community involvement should be one of those elements. I think that selling the ‘innovative involvement’ of community donors, having community civil society organizations be the implementers, and measuring the amount of funding going into the resulting activities should be the key factors in determining the true value of the community philanthropy organization, and will ultimately determine its sustainability.

1 Editor’s note: We felt that it would be interesting to include a response to Shannon St John’s article from a country in the Global South in which the development of community philanthropy organizations is new.

Dr Woraphat Arthayukti is Vice Chairman of Friendship to Community Foundation, a support organization for newly emerging community philanthropy organizations in Thailand. He can be contacted at warthayu@ksc.th.com


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