5 Lessons in Family Venture Philanthropy

By Anh Ton, Asian Philanthropy Forum

May 28, 2013

[Note: On 9 and 10 May, the Asian Venture Philanthropy Network hosted a two-day conference in Singapore attended by 340 delegates from 31 countries.  Dana Doan, a member of the LIN team was invited to attended the conference and speak on one of the panels, “Toolkits – Mobilising Human Resources”.  All of the sessions were recorded and videos from each session are now available here:  http://www.avpn2013.com/. Below is an article about one panel session written by one of AVPN’s media partners, The Asian Philanthropy Forum.]

Ms. Dana Doan, LIN's strategic advisor (1st - right), attending a panel discussion at the conference.

Ms. Dana Doan, LIN’s strategic advisor (1st – right), attending a panel discussion at the conference.

During this past month’s AVPN Conference, one of the most anticipated sessions was the “Families in Venture Philanthropy” panel discussion. From the panel title alone, you can probably guess why: the idea of applying an investor mindset to maximizing social good is at the heart of a growing philanthropic movement, and surging wealth, coupled with a long tradition of family giving, bodes well for family philanthropy in Asia.

The panel was moderated by Lien Centre’s own Laurence Lien and brought together three Asian pioneers in family venture philanthropy. They included Frederick Tsao (Chairman of IMC Pan Asia Alliance Group and President of Family Business Network Asia), PrashantJhwar (Chairman of the Usha Martin Group and a lifelong education advocate), and James Chen (Chairman of Waihum Group Holdings and Co-Chairman of the Chen-Yet Sen Family Foundation).

The three philanthropist-cum-entrepreneurs shared their experiences with humor and humility, speaking frankly about the challenges they’ve encountered in trying to navigate philanthropy in Asia. A lot of great ideas came from the session, but here are 5 key lessons we found most compelling.

1. Make a family charter.

In the words of Frederick Tsao, “Families are a complex system with a complex dance.” It goes without saying that members of the same bloodline aren’t always of the same opinion. Coming up with a family charter not only creates multi-generational coherence in a family’s philanthropic strategy, it can also thwart potential personality clashes. PrashantJhwar added that it’s important for families to invest proper time in creating a charter–it took him two years to come up with his–and that carving out a formal space for non-family members in the foundation can bring forward invaluable perspectives.

2. Sustainability isn’t just a buzzword; it’s a culture.

To make a true difference in people’s lives, you have to think about the long-term. This was the thinking that led PrashantJhwar and the Usha Martin Group to develop the Total Village Management model, based on Total Quality Management principles. The integrated approach to rural development, focusing on a number of key areas like agriculture productivity and microenterprise, led to “huge ownership” and “huge improvement” compared to their previous social initiatives.

3. Embrace risk. 

James Chen underscored a fundamental difference in family-based and business-based philanthropy: the freedom to embrace risk. Most businesses gravitate towards risk-aversion, so while building the bottom line may overlap with CSR initiatives, the incentive to invest in novel social interventions is mostly absent. With venture philanthropy, the profit motive is secondary–even tertiary–to maximizing social impact. This kind of flexibility impels family foundations to fund those game-changing ideas that may not have commercial appeal or slip through the cracks of conventional philanthropy.

4. Start young, lead by example.

In the transfer of wealth between generations, there’s a legitimate concern that younger generations will lose an ability to sympathize with those less fortunate–so much so that some parents in China have started paying up to $10,000 for their children to attend courses on how to be charitable.

While that may seem extreme, the idea that younger generations should be involved in philanthropy early on is a powerful one. PrashantJhwar explained that in his family, younger generations accompany older family members, who are retired from business and focused primarily on philanthropy, into the field and to site visits. Seeing this type of leadership in action instills into them a greater sense of compassion and cultivates a natural interest in philanthropy. James Chen added that by bringing his children to Bring Me a Book events, his young son began donating his own pocket money to the program–uncoerced and without $10,000 fundraising lessons.

5. Collaborations should happen across sectors, but expertise is domain specific.

To borrow from Frederick Tsao again, “Collaboration is the story of man, both of his failures and success.” So it is with social and economic transformations. Interventions are most likely to succeed when there is buy-in from the community, when governments commit to sustaining positive change, when philanthropists take chances on innovative ideas, and when businesses are willing to extend their support. Cross-sector collaborations are a must.

But families must be careful not to spread their resources too thin either. Rather than trying to collaborate within one particular sector (i.e. between foundations or NGOs only), focus on building domain expertise and engaging all the stakeholders within that domain. For instance, James Chen’s philanthropic work with the Chen Yet-Sen Family Foundation has revolved around education. They started out by looking at how to make education more exciting for children, realized the importance of quality and accessible libraries (normally a public good), worked with various field experts, and are now one of the go-to resources in literacy.

Have you applied any of these lessons to your philanthropy?

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