Opinion: The UAE's philanthropy boom

The United Arab Emirates is an emerging philanthropic power. For over a decade now, the number of philanthropic organizations has been booming in the UAE, as the country has enjoyed economic prosperity. The UAE is not only one of the most affluent countries in the Middle East but in Asia too.

Wealth has trickled down

Personal wealth in the UAE is estimated to reach $590 billion by 2022 in the form of investable assets, one of the highest in the world according to Boston Consulting Group. Furthermore, the number of millionaires in the UAE is set to rise to 61,292 by 2023 — a 14 percent increase from 53,798 millionaires last year.

With the increase in prosperity, greater attention is now being placed on giving. Philanthropy is a growing trend among the country’s rich and the UAE is creating its own league of philanthropists.  

The surge in philanthropy is driven by multiple factors beyond the growth in wealth, most notably government policies and legacy building for the region’s leading businessmen.

The country is making its mark in philanthropy and development professionals need to take note of how and why this shift is occurring.

Government policies

Dubbed the “humanitarian nation,” relative to its national income, the UAE is the world’s largest donor of official development aid according to the Organisation for Economic Co-operation and Development. In addition to boosting aid spending, the government is taking great strides to enhance a culture of corporate and community giving.

2017 was declared as “the year of giving,” with a federal national strategy announced and roadmap created to promote corporate responsibility and volunteerism.

The UAE Ministry of Economy established a national corporate social responsibility index to rank private sector corporations by their philanthropic spending on social development projects, humanitarian initiatives, and charity causes.

Major corporations are establishing philanthropic foundations and companies are earmarking a percentage of profits for charitable purposes.

For example, Emaar Properties, a Dubai-based real estate developer and one of the largest in the UAE, created Emaar Foundation in 2015, as its philanthropic arm. The foundation acts as the property company’s CSR wing and carries out various initiatives throughout the region.

This is the beginning of a trend in corporate philanthropy in the UAE with more foundations being created by corporates that will operate in the Middle East and beyond.

Institutionalizing philanthropy

Not only is the government taking steps to develop community-based volunteering, it has also created the regulatory infrastructure needed to institutionalize philanthropy.

At the federal level, the regulatory body for philanthropic organizations is the Ministry of Social Affairs but at the Emirate level, Abu Dhabi and Dubai have different regulators overseeing philanthropic organizations.

According to the International Center for Not-for-Profit Law, Dubai — and more specifically the free trade zones — hosts the majority of the UAE’s philanthropic organizations.

Last year, the Dubai International Financial Centre, a financial free zone based in Dubai, enacted the “foundations law,” intended, among other purposes, to provide an enhanced framework for an individual or family with philanthropic objectives.

The foundations law provides a robust governance structure to support the philanthropic sector and lays the groundwork for foundations to set up and operate.

Legacy building

Attitudes toward giving are also changing.

Public displays of giving are typically uncommon in Arab tradition, however, a cultural shift is occurring as philanthropists are moving out of the shadows and encouraging others to follow in their footsteps.

A new era of philanthropy is upon us, whereby the founders of some of the region’s largest family businesses are starting to build their legacy.

Globally, the largest philanthropic foundations are founded by family businesses.

In the Gulf Cooperation Council, family businesses are the backbone of the regional economy and dominate the private sector. Family business accounts up to 90 percent of the private sector economy in the GCC.

Historically, family businesses in the UAE have been closely aligned to the country’s goals and visions as the two have developed in tandem with some family businesses operating before the unification of the Emirates.

Today, UAE business leaders are redefining their roles and getting into the business of philanthropy.

A case in point is the Abdulla Al Ghurair Foundation for Education. The world’s largest private education foundation, AGFE was founded in Dubai in 2015 with an endowment of $1.1 billion by prominent Emirati businessman Abdulla Al Ghurair who pledged a third of his wealth to the foundation for education.

Looking ahead, as founders of prominent family businesses hand the reigns to the next generation, more will set their sights on philanthropy.

Founders of family businesses will be setting up foundations with substantial endowments with the aim of translating their success in the business world to the philanthropic sector and cementing their legacy.

Conduits of change

In recent years, development funding has witnessed a major shift as nontraditional donors such as the UAE have leapfrogged traditional ones in their contributions. With philanthropy a nascent industry in the UAE, strategic and institutional philanthropy is developing as a concept.

With a rapidly growing number of foundations being established in the UAE, as these young foundations with substantial endowments look to amplify their impact and reach, they will no doubt look to partner with more established donors.

Foundations in the UAE are paving their own path and with the significant rise in wealth, these organizations will no doubt play a crucial role in shaping the region’s development in the future.