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Charity vs philanthropy: A clash of ideas at AVPN’s Abu Dhabi conference

Jovi Ho
Jovi Ho • 7 min read
Charity vs philanthropy: A clash of ideas at AVPN’s Abu Dhabi conference
From left: Phyllis Costanza, co-founder of OutcomesX; Abdallah Abu-Sheikh, co-founder and CEO of Astra Tech; Laurence Lien, co-founder and CEO of the Asia Philanthropy Circle; and Vichien Phongsathorn of the Premier Group of Companies Photo: AVPN
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As with most protracted events, the close of the three-day AVPN Global Conference 2024 in Abu Dhabi was relatively quiet.

Compared to the crowd of 1,500 delegates that filled the ballroom at St Regis Saadiyat Island Resort on April 23, and the buzz of the annual conference’s second impact investing day on April 24, only about a quarter of the ballroom was filled on April 25.

Those who attended the morning plenaries, however, would have heard from Laurence Lien, co-founder and CEO of the Asia Philanthropy Circle, who spoke about the membership platform’s partnership with Tri-Sector Associates (TSA).

TSA was covered by The Edge Singapore last month (Issue 1132: “Investing for impact? Learn these lessons from ESG investing”). Founded in 2017, the social enterprise was brought into Temasek Trust’s fold in 2023.

TSA’s “pay for success” mechanism “essentially is the money-back guarantee for social impact donations”, said Lien, who is also chairman of Lien Foundation.

“What happens here is that if the outcomes are not achieved, a guarantor, who is another funder, will step in to pay the outcome funder. I think with some of these innovations, you can match those who are more risk-taking to those who are less risk-taking and unlock capital,” said Lien, the grandson of the late Lien Ying Chow, one of the founders of Overseas Chinese Union Bank, later known as Overseas Union Bank.

See also: AVPN launches social investing system in Abu Dhabi with MAS support

The moderator of the panel, titled “Financing new ideas and out-of-the-box innovations”, then turned to Vichien Phongsathorn for his views. Phongsathorn is president and CEO of the Premier Group of Companies, a diversified conglomerate of Thai companies. Phongsathorn is also co-founder of the BKIND Fund, Thailand’s first socially responsible investment mutual fund, which invests in Thai-listed companies that meet sustainability targets. 

But the tenor of the panel — and perhaps the entire conference — turned on its head when the third panellist was called. “In this part of the world, we have a very different view of philanthropy [compared] to the rest of the world,” said Abdallah Abu-Sheikh, co-founder and CEO of Astra Tech, the UAE-based company building an “ultra app” for Internet calls, payments and services in the Middle East.

“Philanthropy was made sort of obligatory for this part of the world — and we did not use mutual funds to do it,” said Abu-Sheikh of Muslims’ religious obligation to donate a portion of their income to the needy. “We’re probably the most generous part of the world when it comes to philanthropy… We’ve [had] 1,400 years of zakat and charity, and it was never a thing about whether we need to create social-impact foundations or businesses or what have you.”

See also: AVPN Global Conference debuts in Middle East with three-day social investing programme

With these words, Abu-Sheikh distanced himself from his fellow panellists — a philanthropist from generational wealth and the head of a conglomerate.

Philanthropy is not objective, Abu-Sheikh said, “because unfortunately, it’s done by humans”. “We have different biases; what is philanthropic to me might sound like it’s terrorist to you, or what’s philanthropic to somebody else might sound like it’s primitive to a third party. So, our philanthropy is different by nature,” he added.

Abu-Sheikh’s repeated references to “this part of the world”, in contrast to his fellow panellists from Southeast Asia, also drew a line in the sand between the Middle East and Asia — a divide that AVPN CEO Naina Batra had hoped to bridge through multiple media interviews.

The 2024 conference marked the first time in 11 years that it had left Southeast Asia, drawn by the UAE’s financial support for the event. Speaking to The Edge Singapore a day before the conference began, Batra said she believes the conference is still being held in Asia. “West Asia is part of Asia, we don’t tend to recognise that we often talk about the Middle East, but really middle of what, and east of what? So, it is really a part of Asia.” (Issue 1135: “AVPN launches social investing system in Abu Dhabi with MAS support”)

‘Tilted measure of humanity’

Abu-Sheikh pulled no punches in his conversation with moderator Phyllis Costanza, co-founder and president of OutcomesX, a social outcome exchange headquartered in New York.

“I don’t like the differentiation of saying there are people in the social sector and the rest of us are in some other sector,” said Abu-Sheikh with a laugh. “We share the Earth, so we’re all in the same society.”

See also: AVPN CEO hopes to welcome faith-based givers into social investing, philanthropy

While he acknowledged that “there needs to be certain measures and metrics”, Abu-Sheikh was critical of the “bond-like structures” raised by Lien and the mutual funds raised by Phongsathorn.

“A lot more of the focus should go towards where are you going with your philanthropic action, as opposed to how you are systemising and how you are creating more and more very expensive tools for people to get philanthropy,” said Abu-Sheikh.

Costanza, when introducing the panel, had let slip of a notable figure: “It costs non-profits $20 for every $100 they raise; because we are having them do so much when it comes to filling out applications and updating reports that, frankly, few of us read.”

Abu-Sheikh cited this as an example of leakage owing to bureaucracy. “They make a charity, maybe a non-profit, spend 20% of whatever money they raise just getting to the capital; that’s not very functional, because that 20% to 30% could make a lot of difference had it been used where it should be used.”

Terms like “risk” are borrowed from the capital markets, he added. “It’s not a concept in [the realm of] social impact. It’s not like I go help someone and I think: ‘Okay, what’s the risk of me supporting them?’”

Abu-Sheikh warned of a “tilted measure of humanity” today — “at least in the West”. “We see non-profit organisations that are backed by certain financial companies that have certain agendas. They want to support certain things but not other things; they want to support some regions, but not other regions, and so on and so forth.”

He added: “Unless you create an ecosystem where every person, every company is a social contributor, you will always have a wall between social impact and financial contribution. Those two things need to be mixed; they cannot be separated.”

Charity vs philanthropy

Lien was ready to defend his work following that, speaking of the importance of building a community of like-minded philanthropists. “We need people to be humble rather than think that they know everything, and then we learn together.”

The community should be “agnostic about things”, Lien added. “We don’t follow fads; we follow evidence… We start by looking for the evidence, doing research, being curious about what works, what doesn’t work around the world, and looking at what is relevant to our context.”

Talk of context thickened the line in the sand, but Lien pressed on. “I make a distinction between philanthropy and charity. Charity must be the DNA of everybody, I agree. But if you define philanthropy — I know we all have different definitions of philanthropy — I’m talking about being a problem-solver of some of the most intractable issues.”

The future of problem-solving, the way Abu-Sheikh sees it, is a lot less stratified. “Across each and every industry, disintermediation is going to start happening at a much, much more rapid pace. A lot of the middle layers of things will not be needed anymore, given how fast computers are evolving.”

For philanthropy, this will “close the gap between the giver and the taker”, he added. “A lot of organisations that now exist, charge fees and control the flow of funds will cease to exist very, very quickly. That’s a thing we see across every single industry.” 

Learn more about impact investing and philanthropy:

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