Corporate Philanthropy in Pakistan Survey of public listed companies 2006 An Exploratory Survey on the Nature and Dimensions of Corporate Giving in Pakistan Pakistan Centre for Philanthropy Pakistan Centre for Philanthropy Corporate Philanthropy in Pakistan Survey of public listed companies 2006 An Exploratory Survey on the Nature and Dimensions of Corporate Giving in Pakistan This survey has been funded by the Aga Khan Foundation (Pakistan). Aga Khan Foundation Pakistan Centre Pakistan for Philanthropy Any reproduction of this report without prior permission of PCP and AKF (P) is discouraged. Printed by Colorline Islamabad Cover and design, desktop composition and production management: Asad Zia, Pakistan Centre for Philanthropy, Islamabad Foreword F o r e w a r d I Acknowledgements This survey, the second follow up of the data cleaning and verification exercise. report, 'Corporate Philanthropy in A token of appreciation is also due to Pakistan: the case of public listed Asad Zia Iqbal for the cover design and companies' is another milestone layout. Special thanks to Mr. Eazaz A. towards promoting qualitative and Dar, Senior Programme Manager for quantitative research in Pakistan. This coordinating, guiding and leading the report and the survey is a result of entire effort and whose meticulous collective efforts of many individuals editing and final analytical review was without whom Pakistan Centre for instrumental in refining and finalising Philanthropy (PCP) would not have been the report. able to bring out this publication. PCP acknowledges gratefully the support of PCP owes its gratitude to Securities and all the Board members and the Exchange Commission of Pakistan guidance extended by Dr. Shamsh (SECP), Karachi Stock Exchange (KSE) Kassim-Lakha, Chairman PCP, and Arif Habib Securities (AHS) for throughout the duration of this project. providing the financial data as The Centre also owes its gratitude to contained in this document. The Centre Mr. Mahomad Jaffer, Chairman also owes gratitude to all the Research Committee and members, companies who dutifully verified and Syed Babar Ali, Mr. Mueen Afzal, Mr. provided additional relevant Shoaib Sultan Khan, Mr. Badaruddin F. information for the purpose of this Vellani, Dr. Attiya Inayatullah, Mr. Asad survey. Finally, a special mention of the Umar, Mian Ahsan M. Saleem and Mr. Aga Khan Foundation (Pakistan) whose Zaffar A. Khan. financial support made it possible to bring out this report. The overview, collection of data, insightful analysis and results as documented in this survey are a meticulous contribution of Kashmala Shahnaz Wazir Ali Shahab Kakakhel, Junior Programme Executive Director Officer Research. This report is an evidence of her sharp analytical skills and professional dedication. Credit is also due to staff members, Asad Zia Iqbal for data collection, graphical illustration and input in analysis and Syed Tariq Ali for his contribution to the A c k n o w l d g e m e n t s III Executive Summary Key Findings PLCs participation in giving increased from 54% in 1 2005 to 60% in 2006 Total donations increased 10 times from Rs.228 2 Million (US$ 3.8 million) in 2000 (base year) to Rs. 2.3 Billion (US$ 38.3 million) in 2006 Contributions jumped from Rs. 1.6 billion in 2005 to 3 Rs. 2.3 billion in 2006; about 1.5 times increase Top 25 giving companies contributed 73% of total 4 PLC giving in 2006 as compared to 68% in 2005 58% of top companies desired recognition. PCP's 5 instituted PCPA has led to more awareness and interest amongst the corporate sector Corporate philanthropy is on the rise but remains 6 mostly unorganised and undocumented and there is potential for more Key Findings PLCs continue to support causes related to health and 7 education E x e c u t i v e s u m m a r y V Contents I. Foreword i II. Acknowledgments iii III Executive summary iv 1. Context Corporate Social Responsibility 1 Corporate Philanthropy 2 Emerging trends of top giving PLCs in Pakistan 3 Pakistan Corporate Philanthropy Awards (PCPA) 6 2. The survey Methodology 7 The sample 8 Data collection and measurement 9 Limitations 10 3. Rankings Unusual philanthropic pattern continues 11 Donations if taken as 1% of Profit Before Tax (PBT) 12 Comparison with previous years 14 Donations by top 25 giving PLCs 16 Philanthropic contributions by top companies; individual rankings 18 Sector-wise giving 21 4. Looking ahead Conclusion 24 1 Context Corporate Social Responsibility C o n t e x t 01 C O R P O R A T E P H I L A N T H R O P Y I N P A K I S T A N : S U R V E Y O F P U B L I C L I S T E D C O M P A N I E S 1 Corporate Social Responsibility”, accessed from http://strategis.ic.gc.ca/epic/sit e/csr- rse.nsf/en/h_rs00094ee.html, on September 14, 2007 2 Corporate Philanthropy Dr. Pamela Hartigan and Dr. Maximilian Martin(2004): Social Entrepreneurship: Understanding the New 3 Strategic Space for Social Emerging trends of top giving PLCs in Pakistan 4 Joe M. Ricks, Jr.(2002) :The Effects Of Strategic Corporate Philanthropy On Consumer Perception: An Experimental C o n t e x t 03 C O R P O R A T E P H I L A N T H R O P Y I N P A K I S T A N : S U R V E Y O F P U B L I C L I S T E D C O M P A N I E S Figure 1 Documentation of CSR Policies by PLCs in Pakistan 15% 40% 45% Have a written CSR policy Do not have a written CSR policy In the process of making CSR policy 5 The Certification Programme seeks to bring transparency, accountability and good governance in the nonprofit sector in Pakistan. The first initiative of its kind in South Asia; it involves the evaluation of a nonprofit organisation on standardised parameters of internal governance, financial management and programme delivery. This voluntary assessment aims to enhance the NPOs' credibility and resultantly their access to funding. Through the allied activities of this programme, PCP promotes certified NPOs in an annual directory and on its website C o n t e x t 05 C O R P O R A T E P H I L A N T H R O P Y I N P A K I S T A N : S U R V E Y O F P U B L I C L I S T E D C O M P A N I E S Pakistan Corporate Philanthropy Awards (PCPA) PCP's constant engagement with the criteria: volume of giving and donations corporate sector through its various as a percentage of profit before tax . programmes such as Research, Public PCPA emanated out of Corporate Private Partnerships (3Ps) in Education, Philanthropy in Pakistan: Survey of Public Philanthropy support services and Listed Companies for the years 2004 and Philanthropy Portal (2P) reveals that 2005 which has now become an annual companies do appreciate and are event. Similar awards will also be given desirous of recognition and incentives. for the year 2006 based on the rankings This statement has been confirmed by of this survey. It is hoped that these the fact that almost 60% of the top 20 awards will not only inculcate healthy giving companies were of the opinion competition among PLCs but will Government provision of greater contribute to a tradition of philanthropic incentives and recognition in the form of discourse and institutionalised CSR in awards to top givers, will encourage Pakistan. enterprises to become socially responsible members of society. 40% of the companies emphasised the importance of an enabling environment to foster high levels of philanthropy. Therefore, in an effort to recognise and honour the philanthropic endeavours of PLCs as well as to encourage business sector philanthropy across a wider spectrum in the country, PCP initiated the 'Pakistan Corporate Philanthropy Awards' (PCPA), first of its kind in Pakistan. Top three performing companies for the years 2004 and 2005 were awarded, based on two 2 The Survey Methodology 6 Cochrane and Wood, (1984): The impact of corporate behaviour on perceived T h e s u r v e y 07 T h e s u r v e y 09 C O R P O R A T E P H I L A N T H R O P Y I N P A K I S T A N : S U R V E Y O F P U B L I C L I S T E D C O M P A N I E S Limitations 3 Rankings PLCs ranking are based on the following for the issue related to the varying sizes criteria: of PLCs. Since companies differ in size, lby total volume of donations turnover, level of profit, consequently the lby volume of donations as a donations also reflect a wider range. percentage of Profit Before Tax Therefore, as was done in the preceding (PBT) reports, to discount the size factor, 'donation as a percentage of PBT' as the Employing 'donations as a percentage second criteria has been employed for of profit before tax' as an indicator for the purpose of this survey as well. corporate commitment to giving factors Unusual Philanthropic Pattern Continues R a n k i n g s 11 C O R P O R A T E P H I L A N T H R O P Y I N P A K I S T A N : S U R V E Y O F P U B L I C L I S T E D C O M P A N I E S Table 2 Number of PLCs involved in CP YEAR 2006 2005 2004 2003 2002 2001 2000 329 299 283 287 282 268 263 NUMBER OF COMPANIES GIVING 546 551 552 568 565 551 500 TOTAL SAMPLE 60 54 51 50 49 48 52 PERCENTAGE OF SAMPLE INVOLVED IN CP Table 2 presents a timeline profile of the aforesaid years gave beyond their the PLC sector engaged in giving budgets in order to participate in over a period of seven years.