Middle East CSR: Zakat, Sadaqah and Ownership Structure

CSR is creating internal tensions in some Middle Eastern Businesses

Many traditional, family owned businesses in the Middle East are taking on external investors and partners and many are experiencing tension and conflict around Corporate Social Responsibility strategy and implementation.

External investors and partners are pushing for a more strategic, mutually beneficial approach to corporate social responsibility, societal and community engagement.

Islamic business has a long standing tradition of supporting people and communities that has evolved from the Islamic principles of Zakat and Sadaqah [while Zakat is obligatory, Sadaqah is voluntary]. 

CSR in the Middle East has traditionally taken more of a philanthropic or charitable approach; a transfer of money and resources from business to social needs and issues with limited attention to sustainable impact or business value. 

The philanthropic focus and recipients have generally been driven by the charitable interests of the families that own the business, rather than the strategic needs and opportunities of the business. 

For the ownership families there is often a close personal and family connection with the causes supported and the charities and organizations that are involved.  New partners and external investors seldom have the same connections with the charities and causes and look to see more strategic, mutually beneficial approaches to social responsibility and community engagement.

This is leading to internal tensions and putting managers and leaders in difficult positions.

While there is no one-size-fits-all approach to resolving these issues a systematic value-focused analysis [basically a CSR SWOT (strengths, weaknesses, opportunities and threats)] can provide a solid platform for developing effective go-forward strategies.

A CSR SWOT can help any company to be more effective at meeting societal obligations and expectations and, importantly, at integrating them with shareholder expectations and interests.  This applies to all businesses.

It isn’t just family owned Middle Eastern businesses that fall into a pattern of blindly supporting societal causes and issues without periodic review and assessment.  This happens to businesses of all sorts and from all over the world.

Executives and managers have elaborate systems in place to analyze business priorities, budgets and activities.  But, seldom does corporate social responsibility and sustainability get subjected to the same regular scrutiny and analysis.

A CSR SWOT can be a smart investment for most businesses, including Middle Eastern businesses where there is tension between founding families and external investors and partners over the focus and extent of CSR priorities, activities and budgets.

For more on CSR SWOTS see an earlier post CSR SWOT – discover risk, value and more or contact me directly (wayne at csrtraininginstitute dot com)

A secret door to sustainable competitive advantage

CSR and Business Innovation Strategy and Training

Society is demanding more of business.  So are shareholders.  And often governments too. These expectations will keep growing and businesses and organizations that don’t adapt will struggle to survive.  Those that figure it out can create a sustainable competitive advantage that can help drive profits and success.

Business innovation coupled with strategic corporate social responsibility can help find ways to align business and societal value, creating sustainable competitive advantage and game changing go-forward strategies.

Traditional thinking too often pits societal expectations against corporate profits creating a zero sum game that not only destroys value but also sucks energy and vitality from organizations.

The CSR Training Institute specializes in helping businesses and organizations to innovate and develop strategic approaches that can align societal and shareholder expectations.  Through customized training programs and strategic and advisory services the Institute can help organizations find that sweet spot where value is created for shareholders and stakeholders.

Bespoke training programs integrate theory and practice in ways immediately applicable to current business issues and opportunities.  Sessions are customized based on the needs and interests of the company and participants.  They are then re-calibrated on a daily basis to follow the energy and interests of the group, enabling the training to match real-world challenges and opportunities.

A valuable side-benefit is the team-building that naturally occurs during the session.  Programs include participants from across organizations; from departments that seldom have opportunities for engaging collaboration.  The focus on business innovation, strategy and social responsibility serves to bring together strategic and personal interests that would seldom meet in business as usual situations.  Participants leave with shared experiences and vision and a commitment to collaborating on innovation.

Participants and organizations consistently notice post-training outcomes like

• Business wide strategy
• New thinking and organization-wide energy to address key non-market business issues
• Sustainable competitive advantage
• Improved teamwork and organizational energy
• Identification of new opportunities
• Improved employee engagement and commitment

If you are interested in discussing how we can assist your business through training, strategy and advisory services and an integration of both please email Wayne Dunn at wayne@csrtraininginstitute.com

CSR in the Middle East & North Africa

CSR in the Middle East & North Africa is dynamic and exciting.  It is built on centuries of Islamic tradition and principles and evolving rapidly to meet the business reality of the 21st century.

I was recently interviewed on CSR in the Middle East and North Africa and thought my responses might be interesting for some.  The transcribed interview is below.

For any that are interested in CSR in this region you will want to take in the ta’atheer MENA Social Impact and CSR Forum in Dubai (May 22-25, 2016).   I will be Chairing the Summit and delivering two post-summit bootcamps.

If you are interested there is a 20% discount available for my blog readers.  Contact me for details

Do you agree that the term CSR is outdated and the region is now moving towards sustainable social impact? 

CSR, Sustainability, Social Responsibility, Social Impact and other phrases are all attempts to put words and phrases around society’s increasing expectations on the role of business in society (and society’s increased ability to impose those expectations on business). 

None of the words and phrases are able to perfectly capture this phenomena, this evolving reality in the space where business meets society.

I’m not convinced that focusing on the language is terribly helpful (although it isn’t unhelpful).  To me, what is more important is focusing on how societal and shareholder value can be efficiently created in the space where business meets society.

In your opinion, what is Social Impact Investment and how would you explain it’s context in the Middle East?

Middle East CSR/Social Impact Investing is evolving from pure charity and philanthropy to more strategic approaches which include Social Impact Investing and increased consideration for linkages with business and shareholder value.

My understanding of the phrase and the drivers of the discussion is that it has more to do with the growing realization that simple charity and philanthropy doesn’t fully meet society’s evolving expectations of business, nor does it fulfil business’ responsibility to its shareholder to use business resources in the interests of the business.

For many Middle Eastern businesses CSR and Social Impact Investing are evolving from the more traditional Zakat and Sadaqah [while Zakat is obligatory, Sadaqah is voluntary]

Zakat, Sadaqah and other societal support has traditionally taken more of a philanthropic or charitable approach; a transfer of money and resources from business to social needs and issues with limited attention to sustainable impact or business value.  That is changing.

Middle Eastern businesses are feeling the financial pressures that are the reality of recent years.  They are dealing with margin and profit squeezes and reduced amounts of discretionary capital.  At the same time many now have global project and ownership partners that are questioning the traditional philanthropic and charitable spending.

Society expects business to be engaged with key societal issues.  Business has to learn to meet these expectations in ways that integrate business and societal value.   Social Impact Investing, as well as more strategic approaches to CSR are approaches that enable better alignment of societal and business interests.

But, this should not be taken to mean that philanthropy and charity are wrong.  Just that they need to be looked at in a broader, value-focused context that considers societal and shareholder value and impact as well as sustainability.

What are the latest 3 trends you are seeing in how organisations are adopting sustainability and social impact in the region?

• Growing awareness of the need for more strategy and focus on results, rather than simply supporting projects and programs
• Tensions between partners as family owned businesses engage with international partners and investors who have more focus on linking CSR and Social Impact investing to business interests
• Increasing use of partners and collaborators including from civil society, governments and international interests

What is the role of social entrepreneurship in the social impact space? 

It’s all about social entrepreneurship.  It is about innovation and motivation to be more efficient at creating, delivering and capturing value.  In this case it is societal value.

Social entrepreneurship helps to identify and lead new opportunities and helps to make old opportunities more efficient.

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For any that are interested in CSR in this region you will want to take in the ta’atheer MENA Social Impact and CSR Forum in Dubai (May 22-25, 2016).   I will be Chairing the Summit and delivering two post-summit bootcamps.