From charity to philanthropy to impact investment

Engaging in philanthropy is the act of promoting the welfare of others or society through charitable acts and good works. Philanthropic efforts can take various forms, such as monetary donations, advocacy for social causes and initiating projects to address critical issues. The ultimate purpose is to create meaningful and lasting change in sectors like education, healthcare, poverty alleviation and the environment. Research suggests that Pakistan is a generous country when it comes to charitable giving.

Over 1% of Pakistan’s GDP is directed towards charity, a figure comparable to wealthier nations like the UK and Canada. The country has numerous established charitable foundations and organisations that tackle pressing issues within the nation. Resources are often channeled towards critical areas such as healthcare, infrastructure development, quality education, clean water and relief efforts for natural disasters. The corporate sector also contributes to social issues through corporate social responsibility (CSR) initiatives. To an extent, the Government of Pakistan also recognises the importance of philanthropy and has implemented policies to encourage and facilitate charitable activities. Also, the Islamic emphasis on zakat, sadqa and fitrana further fuels the culture of giving within the nation. In 2018, Pakistanis gave approximately Rs240 billion to charity, highlighting the integral role of giving in the country.

Despite this strong tradition of charity, there are instances where the nation deviates from the main essence of philanthropy — for me “the soul”. Research has indicated that Pakistan falls short on a number of things which consequently reduces the impact of philanthropic efforts that well-meaning individuals engage in. To begin with, various stakeholders are about the lack of transparency observed within the country. Owing to how transparency and accountability are important principles in philanthropy, involved individuals are often weary about the lack of openness and accountability in the distribution of funds, decision-making processes as well as resource allocation in philanthropic efforts. Due to this there is often a lack of trust amongst potential donors which hinders the effectiveness of existing philanthropic efforts.

Inequality in resource allocation is another significant issue in philanthropic efforts in Pakistan. Despite the aim of philanthropy being to promote equitable welfare, certain issues, regions or communities are prioritised over others. Gender inequality, religious discrimination and socioeconomic disparities in underserved regions are often overlooked, exacerbating existing inequality in the nation. There is also limited focus on systematic change. Efforts are sometimes directed towards addressing the consequences of critical issues through large-scale donations, rather than tackling the root cause.

In particular, Pakistan often focuses on providing immediate relief to vulnerable communities rather than working on long-term solutions that will ensure that they do not fall into the viscous cycle of poverty again. Consequently, these efforts provide short-term relief but are ineffective in addressing the larger picture. Owing to this, there should be more emphasis bettering the current situations. Not only should measures be taken to ensure more transparency as well as accountability by generally promoting such a culture, but there should be annual reports published to show resource utilisation as well as the “impact per dollar invested”. Moreover, external audits and evaluations should be encouraged to improve allocations as well as effectiveness of philanthropic efforts. Moreover, there should be a greater focus on impact investment.

Critical issues within Pakistan should be identified, and efforts should be made to cater to areas with deteriorating conditions. Philanthropic efforts should be inclusive and reach marginalised populations that are often overlooked. The focus should shift towards sustainable development, directing philanthropic efforts towards long-term solutions and betterment. In fact, in order to truly assess efficacy, the use of data and evidence-based approaches should be promoted in order to measure the impact of philanthropic interventions. This will allow for informed decision-making and guide future strategies. Lastly, a more coordinated strategy should be implemented for philanthropy in Pakistan.

Philanthropists should work collectively towards common goals, allowing for maximum impact and the betterment of the nation. Strategic alignment among stakeholders, sharing goals and opening opportunities for joint initiatives would enable pooling of resources towards specific objectives. This organised and coordinated effort would lead to greater developmental gains for Pakistan compared to the current fragmented approach.