Spotlight on business in Pakistan – Business and charity

Zubeida Mustafa

The findings of a report by the Pakistan Centre for Philanthropy (PCP) on the volume, patterns and range of ‘giving’ by public listed companies in Pakistan are significant as well as interesting. They confirm the changing trends in corporate philanthropy in the country – trends which have captured the interest of the government in a big way.

That is nothing intriguing. The government has been reducing its share in the social sectors that are directly concerned with human resource development. There was a time in the heyday of socialism when it was considered the responsibility of the government to provide basic education and health care to its citizens. Social welfare from the cradle to the grave was considered to be the responsibility of the state. Although Pakistan never succeeded in undertaking this responsibility fully in practice, it did not reject the concept in theory.

In the market-driven system of today, the emphasis has shifted. Private entrepreneurs and charitable organizations and trusts are increasingly being called upon to play the role that was conventionally assumed to be that of the state. This approach has serious inherent limitations. Charitable trusts do not have unlimited resources.

As for those running private education and health institutions, their compulsion is to generate profits to keep them going. Profit driven by cupidity can be disastrous for the poor. The charges of such institutions are exorbitantly high and beyond the reach of the very poor. Whose responsibility should it be, then, to provide social services to people of modest means?

Now that the government has begun to realize the weakness in the minimal intervention approach, it has been trying to encourage private individuals and the corporate sector to step up their donations to meet the shortfalls in services in the social sectors. PCP was set up in 2001 as an independent non-profit support organization to promote philanthropy for social investment. It is not engaged directly in philanthropy, but it does seek to create the climate and the support services to facilitate giving by others.

For instance, PCP has undertaken a programme of certification of non-profit organizations and publishes the details of institutions which it considers qualified for receiving donations. That may help guide people trying to decide who is deserving of charity. It has also been promoting the concepts of corporate philanthropy and corporate social responsibility.

Such promotion is badly needed, for the image the public has of the corporate sector’s role in the development of health, education and housing is extremely poor. The recently launched report Corporate Philanthropy in Pakistan clearly establishes that corporations are not as generous in their giving as one would have expected them to be. They have not shared their profits magnanimously with the poorer sections of society.

Prime Minister Shaukat Aziz once suggested that the corporate sector should assign at least 1 per cent of its profit before tax to giving. What do we have? According to the PCP report, the business sector is giving barely 0.33 per cent. True, some companies are very generous – one business donated Rs 0.7 million (82 per cent of its profit before tax (PBT)) in 2003 while another donated Rs 36.8 million (37.2 per cent of PBT) in the same year; these two were at the top in terms of percentage and absolute amount paid. But a review of the reports of all public listed companies shows that only 50 per cent of companies actually make donations.

Corporations’ role in boosting human resource development can be a vital one and raises some key questions. What is the corporate sector’s contribution to promoting the education of its own workers and their children and in providing them with health care? Taking full responsibility should involve their setting up schools, literacy centres and hospitals for their own employees and not simply doling out medical and educational allowances to them. Companies could join hands to set up educational and health institutions to make optimum use of them. If their capacity is underutilized, they could be opened to others as well.

Zubeida Mustafa is a regular columnist for Dawn, a leading Pakistani daily newspaper. This article is based on a longer piece published in Dawn on 17 May 2006.

For more information
Contact Sarah Pervez at the Pakistan Centre for Philanthropy at sarah.pervez@pcp.org.pk or visit http://www.pcp.org.pk


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