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'Philanthropic investments' touted

The Nation, June 28, 2015 – The THAIPAT Institute has embraced the concept of "philanthropic Investments", an alternative approach to sustainable corporate social responsibility efforts to achieve win-win situations. Through such investments, organisations can extend contributions without losing the start-up funding for their CSR mission and their recipients can enjoy adequate resources until the goals of CSR projects are achieved.

Until now, social contributions through CSR activities have usually been done in the form of grants. While such grants of money or other assets pave the way for organisations to engage target communities or stakeholders short-term, they cannot be a long-term approach with unlimited budgets.

After the start-up fund for the delivery of aid runs out, communities or civil organisations that run the projects have to struggle on their own to find additional resources. If their efforts fail, projects may succumb before they really fulfil their goals.

THAIPAT Institute director Dr.Pipat Yodprudtikan says philanthropic Investments can remove or at least ease such problems, as these investments promise to generate returns that can be used to fund philanthropic projects. This means communities or civil organisations can receive constant funding for the long term, or at least until the projects' goals are achieved.

"Philanthropic investments are about investing money or assets for the purpose of generating returns that can be used to help society in the areas of education, public health, occupational development, environmental conservation and more. Through such investments, the start-up funds or assets remain intact. So they are different from direct philanthropy or traditional donations of money and supplies to society," he explained.

The US-based Ford Foundation pioneered a similar tool known as programme-related investments. Ford-funded PRIs use low-cost loans, loan guarantees and equity investments in a strategic way to strengthen the work of its grantees and to provide risk capital for cutting-edge initiatives.

To date, the foundation has committed US$560 million (nearly Bt19 billion) for PRIs, and sets aside annually an average of $25 million for new investments.

Philanthropic Investments are good alternatives to the traditional grants in the philanthropic sector. They provide a tool that can help bring long-term financial stability to organisations that are addressing critical social needs.

It is believed that philanthropic Investments will become more widespread in the future as an extension to responsible investments. A number of asset owners and investors, after all, are interested in using their investments not just to generate financial returns but also to tackle social or environmental issues.

Organisations in the private and civil sectors that wish to upgrade their philanthropy activities to philanthropic Investments can contact the THAIPAT Institute for advice.