RIYADH, Saudi Arabia — Philanthropy is booming in Arab Gulf states. Over the past decade, the number of foundations and nonprofits operating in the region has exploded, up from just a handful to dozens of organizations, ranging from broad development funds to specific issue-focused family philanthropies. Often modeled on Western foundations, but drawing on a history and culture of generous giving, these organizations will be a powerful force in the Middle East’s development for years to come.
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The boom in funds follows a dramatic rise in economic prosperity, coupled with a host of upcoming social and economic challenges. Successful businessmen who have made their fortunes in Dubai, Riyadh, Doha and elsewhere are now poised to help overcome the obstacles ahead. Youth populations are rising quickly, oil rents are starting to fall, and the broader region is facing several civil conflicts that have displaced record numbers of civilians and set back a handful of countries’ development by years or even decades.
For the moment, the philanthropic sector is still in the early stages; activity is growing more quickly than information about where, how, and how effectively it’s taking place. There is little data and no central means to collect information about regional organizations’ work. Many foundations do not conduct or release impact assessments.
But that is starting to change. While most philanthropies in the Gulf still operate on annual budgets, meaning they can’t offer grants with long time horizons, there is growing discussion in the sector about becoming both more sustainable and strategic. The coming years may see a rise in the number of foundations with endowments and multi-year funding commitments.
In dollar terms, philanthropies in the region have serious heft. In the United Arab Emirates alone for example, philanthropies gave $337 million in 2014, about 40 percent of regional foundation spending. The UAE leads in giving, with Saudi Arabia close behind.
“What you’re seeing in the UAE is the rise of private philanthropic organizations” as a central part of funding for arts and culture, education and other key priority areas, Angela Migally, executive director of the Salama bint Hamdan Al Nahyan Foundation, told the Abu Dhabi Culture Summit last month.
Just one foundation alone, Alwaleed Philanthropies, stands to wield billions with the pledge by founder Prince Alwaleed bin Talal in 2015 to give his entire fortune to charity, signing the so-called Giving Pledge.
“In the most basic sense, there is no data point in the region where one can find a comprehensive view of the sector.”— Naila Farouky, chief executive officer of the Arab Foundations Forum
Hungry for more impact, a growing number of regional foundations are also looking for strategic and programmatic partners. Devex spoke to regional foundations, as well as experts in the field for insight into what potential partners in the West should know.
1. Founders’ priorities are paramount
The majority of foundations in the Gulf region are focused on specific priority areas, usually designated by the founder(s) and/or a board of directors. Fitting programs into this framework is vital to seeing them funded.
Among the most popular topics in the region at the moment are youth, education and science — areas that touch on some of the major challenges the Gulf countries and the broader region are facing. All six Gulf states are seeing a boom in their youth populations at exactly the moment when oil revenues are starting to fall. Saudi Arabia, where just under one-third of citizens are under age 15, has seen oil rents fall to 22 percent of gross domestic product, down from around 40 to 50 percent from 2005-2012. Foundations are working to help develop the skills and programs needed to help transition the next generation toward a “knowledge economy.”
“We have a long history of people being socially engaged in their communities. However, we need to upscale it with such a youth bulge in the region,” said Princess Banderi A.R. Al Faisal, director general and board member of the King Khalid Foundation in Saudi Arabia, speaking at a UNESCO conference in Riyadh last week.
Driven by this commitment to founders’ goals and mandates, many foundations prefer to partner or collaborate with outside groups with whom they find shared organizational chemistry and philosophy. Personal connections to either the founders or board members can help facilitate more detailed conversations about programmatic cooperation.
“I believe it is very important for philanthropists to be involved in the work that they are supporting,” Abdulaziz Al Ghurair, chairman of the Abdulla Al Ghurair Foundation for Education, told Coutts as part of its annual philanthropic survey 2016. “I take time to visit everyone from students and parents to university presidents to Ministers of Education.”
2. Closer collaboration with government
A combination of legal, financial and practical conditions mean that most foundations are inclined to cooperate or collaborate with national governments in a way that isn’t as frequent in the Western context.
Legally, several countries in the Gulf Cooperation Council do not officially recognize nonprofit organizations, meaning that all foundations must be launched by a royal decree or linked to a for-profit company.
Strict counterterror financing rules also largely prohibit public fundraising, except through government-sanctioned events or campaigns. As a result, many Gulf foundations either rely directly on the government for funding, seek government help in providing a clearinghouse to raise public donations, or are supported by the wealth of a member of the ruling family.
In a programmatic sense, this can often have the effect of encouraging alignment between broad government objectives and foundation goals. That synergy is also just practically necessary, particularly for home-country projects. The longstanding economic dependence on natural resources in Gulf countries has meant that government ministries have taken on many of the social tasks that might elsewhere fall to the private or nonprofit sectors. Working on youth education, therefore, would not make sense without a minimal level of coordination with local ministries.
When philanthropies work outside their home countries, they tend still to do so with the official blessing and often in collaboration with national governments.
3. Processes may be less developed — but that may open a window for partnership
Many of the newer philanthropic organizations in the Gulf were modeled on private family foundations in the United States, according to Susan Kippels, researcher at the Sheikh Saud bin Saqr Al Qasimi Foundation for Policy Research in Ras Al Khaimah, in the UAE. So while many internal processes and external branding will look familiar, monitoring and evaluation is one area that remains underdeveloped.
“This is difficult for young organizations,” which is most in the region, said Kippels. “But it’s an area people have expressed interest in.”
This area may form one of the major opportunities for collaboration or partnership with organizations in the West. Foundations and other charitable organizations could prove a vital resource in sharing best practices and procedures.
4. Blue chip partnerships
Gulf foundations are often both ambitious and careful, a combination that points them toward partnerships with blue chip companies, organizations and nonprofits. Kippels says that working with the United Nations and other well established organizations and multi-laterals “adds credibility to people’s work” and also offers a platform to extend the foundation’s reach internationally.
Examples of these partnerships abound in the Gulf philanthropic space. The Saudi-based Mohammed bin Salman bin Abdulaziz Al Saud Foundation boasts partners including the Massachusetts Institute of Technology and Harvard. UAE-based Salama bint Hamdan Al Nahyan Foundation funds a Rhodes Scholarship specifically for Emirati students at Oxford University. The Abu Dhabi Fund for Development, meanwhile, recently discussed a possible partnership with the Inter-American Development Bank for projects in Latin America.
Kippels urges interested potential partners in the West to start by reaching out to clearinghouse organizations, such as the Arab Foundations Forum, or interest-specific collaborations. Like-minded philanthropists on education might find one another through the International Education Funders Group, for example, or the Education Cannot Wait fund, an initiative that UAE-based foundation Dubai Cares helped spearhead.
Due diligence about partner organizations is something that foundations here often take very seriously, in part because of the reputational and other risks of forming poor-quality partnerships. With some foundations Devex spoke to, the process can take several months to a year.
5. Challenges on forensic accounting, information sharing, and coordination
If Gulf philanthropy seems like a world of unknowns, that is in part because of the lack of data on the sector. “The general lack of a metrics for accountability and transparency across all sectors in the region has created a culture where no expectation of either exists,” according to a 2016 paper by Naila Farouky, chief executive officer of the Arab Foundations Forum. “In the most basic sense, there is no data point in the region where one can find a comprehensive view of the sector.”
One result is that neither governments nor foundations themselves have a clear sense of what else is happening in the philanthropic space. Aside from personal conversations between foundation staff — which are happening more and more often — there is no official coordination mechanism to ensure that work doesn’t overlap or leave obvious social gaps.
An additional accounting challenge stems from counterterror finance regulations in the Gulf and related to Middle Eastern jurisdictions. European and American banks have at times balked at accepting regional charities as clients or transferring significant sums through their accounts. Some foundations have set up second branches or registered in overseas jurisdictions to facilitate international work.
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