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PHILANTHROPY


Unlocking potential in developing countries


Philanthropists are increasingly recognizing the importance of adopting a more businesslike approach to philanthropy to maximize social and environmental returns of their philanthropic investments. A new paper from Credit Suisse Group AG and CSR Asia explores approaches to venture philanthropy that optimize financial returns while stimulating entrepreneurship and small business growth in developing countries.


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THE PROPORTION OF JOBS SMALL AND MEDIUM- SIZED ENTERPRISES CONTRIBUTE TO THE ECONOMY IN DEVELOPING COUNTRIES – MOST SMES ARE INFORMAL MICRO-ENTERPRISES EMPLOYING UP TO FIVE PEOPLE, MAINLY WOMEN


hile the United States continues to dominate international philanthropy, local philanthropists are coming to the fore, especially in emerging markets. At the


same time, the environment for philanthropy in these countries is maturing and governments are increasingly acknowledging the value of harnessing the expertise of wealthy entrepreneurs. Successful private-government partnerships have been established in China, the Middle East, Russia (where philanthropy was negligible a decade ago) and Africa, among many other regions. The paper includes several case studies. The focus throughout is on unlocking entrepreneurial potential in developing countries, thus hastening the time when they are freed from dependence on aid and donations. It also features key principles to make venture


philanthropic investments successful, including practical suggestions on combining non-financial assistance with investments and tailoring it to local needs, and ideas on how to select good partners and investees. Measuring impact is a crucial component of


successful philanthropy as it helps to focus on results and impact, ensures effective allocation of resources and upholds accountability. The paper describes the impact value chain and impact measurement tools that help to quantify changes in the community resulting from investments.


Rethinking development strategies A growing number of people question why foreign aid has failed to produce sustainable growth in many developing countries. They feel money is not the primary problem, but governments and the current development aid structure are. Governments and


94 FAMILY OFFICE: ASIA TOMORROW


development agencies started to collaborate with strategic philanthropists from various backgrounds in the late 1990s to increase their capacity to combat global problems. At the same time the private sector has become aware that they also have a role in supporting the disadvantaged. Inspiring individuals such as Mohammed Younus, who pioneered microfinance through Bangladesh’s Grameen Bank; CK Prahalad, who developed the concept of inclusive capitalism; Bill Gates, who argues that through capitalism new markets can be found and innovative solutions can be developed to provide economically disadvantaged people with easy access to high-quality products; and Jacqueline Novogratz, founder of Acumen Fund, who stresses the advantages of business models over charity – these people represent a wave of innovation that cuts through development thinking. They all incorporate entrepreneurial thinking in their approaches to development, and have inspired many well-established organizations to rethink concepts of professionalism, accountability and strategy. In developed countries small and medium-sized


enterprises contribute 57 per cent of jobs and over 50 per cent of GDP; in developing countries the


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