GCC family businesses have untapped potential for philanthropy, finds regional think-tank

GCC family businesses have untapped potential for philanthropy, finds regional think-tank
GCC family businesses could maximise the outcomes of their philanthropic efforts by adopting a more impactful approach, according to a recent study by the Ideation Centre, the leading think-tank for management consultancy Strategy& in the Middle East (formerly Booz & Company).
Representing around 90% of the private sector economy, GCC family businesses historically have maintained a tradition of carrying out philanthropy activities across the region.
They are significant players in the region’s third sector, alongside non-governmental (NGOs), nonprofit organisations (NPOs), co-operatives, social enterprises, and charities.
At a minimum, their philanthropic contributions include the religious obligation to give money to charity (Zakat), while most wealthy families in the GCC make additional contributions (Sadaqa),  Strategy& noted.
On the state of philanthropy amongst GCC family businesses, Fadi Adra, partner with Strategy& and a member of the public sector practice, said, “We estimate the annual philanthropic capital of 100 of the largest family businesses by net worth at a bare minimum of around $7bn. This considerable amount has the potential to diversify the economy and contribute to GDP, create jobs, and address critical issues in key areas such as healthcare and education if GCC family businesses tailor their approach to maximise the impact of their philanthropic efforts.”
“Beyond allowing them to “do good” in their community, philanthropy could also enable GCC family businesses to “do well” provided they follow global family businesses in their adoption of impact philanthropy by formalising their philanthropic engagement and introducing innovative financial tools as well as non-financial support that deliver higher returns. This will in turn enable them to closely monitor and measure the impact of their efforts, ensuring transparency and accountability,” said Ramy Sfeir, partner with Strategy& and the leader of family business, investments, and real estate practice.
Strategy& identified only 22 family businesses with a philanthropic foundation in its sample of 100 top GCC family firms. In fact, some family businesses have even established their foundations overseas, such as Saudi Arabia’s Al Dabbag Group and MBI.
“As GCC family businesses start their transition to impact philanthropy, governments can play a role in improving the third sector’s ecosystem to overcome challenges and unlock the full potential of family business philanthropy by establishing a government entity in charge of the third sector, streamlining the regulations for setting up and operating a foundation, growing the talent pool and raising awareness and providing data on the third sector,” concluded  Maria Abou Sakr, manager with Strategy&.