Corporate Philanthropy in Pakistan 2004 & 2005

Pakistan
Centre for
Philanthropy
Corporate
Philanthropy
in Pakistan
Survey of public listed
companies
2004 & 2005
Pakistan
Centre for
Philanthropy
Corporate
Philanthropy
in Pakistan
Survey of public listed
companies
2004 & 2005
This survey has been funded by the Aga Khan Foundation (Pakistan).
Aga Khan Foundation
Pakistan
Any reproduction of this report without prior permission of PCP and AKF (P) is discouraged.
Printed by Colorline Islamabad
Cover and design, copy-editing, desktop composition and production management:
Sarah Pervez Afzal and Asad Zia, Pakistan Centre for Philanthropy, Islamabad
Foreword
Development does not stand alone – it
involves a myriad of intricately woven
linkages between government, civil
society and the private sector, each of
which contributes to the resource base
in its own unique way. Of all the
partners contributing towards
development, the private sector is the
main engine generating economic
wealth. It is increasingly recognized that
for a developing country like Pakistan,
with pressure on its existing resource
base, the importance of philanthropy as
a social safety-net needs
acknowledgement; particularly when
the wealth creating corporate sector
engages in social investment. The
means to solving some of the world's
most intractable problems rest in the
proactive private initiative and an
enabling environment facilitated by
government that together form an
effective public private partnership.
Beyond their monetary contributions,
corporations bring powerful and
effective resources to the table for the
service of society. They can leverage
their impressive assets with in kind
contributions, including volunteer
services of their executives, technology
and unsurpassed distribution channels.
Recognizing that social development
and responsibility are not the sole
domain of government, it is heartening
that the corporate sector in Pakistan is
now actively engaged in philanthropy
for sustainable development.
From its inception in 2001, Pakistan
Centre for Philanthropy (PCP) has
engaged in an evidence based
approach to document and examine
individual and corporate philanthropy.
PCP's pioneering research study:
“Corporate Philanthropy in Pakistan: the
case of public listed companies”, was
launched by Prime Minister Mr. Shaukat
Aziz in April, 2006. It contained indepth analysis and data on corporate
giving for 2000 - 2003.
As a consequence of the significant
positive feedback on this first report, a
follow up, 'Corporate Philanthropy in
Pakistan: Survey of Public Listed
Companies (2006)', is an update for
2004 and 2005. It is a small yet
important step towards recognizing the
role that Pakistani companies are
playing as good corporate citizens. The
top giving companies and their CEOs
are inspiring examples for the Pakistani
business community as they
demonstrate how well motivated
corporate boards and CEOs meet
shareholder demands whilst responding
to their societal expectations.
The latest survey indicates that
corporate philanthropy witnessed a
staggering seven-fold increase, from
Rs.228m (US$3.8m) in 2000 to
Rs.1.61 bn (US$26.7m) in 2005.
During 2005, corporate contributions
rose 3.5 times over the previous year
Foreward
I
largely attributable to the outpouring of
support for earthquake victims. The
step forward now, is to encourage
sustained corporate philanthropy
regardless of special circumstances
and to institutionalize it towards the
objective of attaining maximum
efficiency and impact.
To recognize, honour and encourage
contributions of the corporate sector,
the board of directors of PCP has
decided to undertake annual surveys of
corporate philanthropy. It is hoped that
the data contained in these survey will
be valuable in guiding corporate
leadership in their decisions on routing
philanthropic resources for social
investment in Pakistan. The survey
results will also be useful for business
leaders as well as researchers, media,
government, other philanthropists and
civil society in moving the agenda
forward. Starting with 2007, the PCP
board has also instituted awards for
two categories of corporate giving: (i)
companies with the highest donation
as a percentage of profit before tax
and (ii) companies contributing the
highest amounts of philanthropy.
Dr. Shamsh Kassim-Lakha, H.I, S.I
Chairman Board of Directors PCP
Acknowledgements
This Corporate Survey, a sequel to the
Centre's earlier published research on
corporate philanthropy in Pakistan, is a
product of deep and extensive effort
and commitment of many individuals.
The successful completion of this survey
on corporate philanthropy owes
acknowledgment to the collective efforts
of those, without whose contribution
PCP would not have been able to bring
out this report. First of all, PCP owes its
gratitude to Dr. Shamsh Kassim-Lakha,
Chairman PCP, for his unwavering
support, rich experience, guidance, and
perceptive input. PCP also owes its
appreciation to Mr. Mahomed Jaffer,
Chairman of the Research Committee
and members Mr. Zaffar A. Khan, Syed
Babar Ali, Mr. Badaruddin F. Vellani, Mr.
Mueen Afzal, Mian Ahsan M. Saleem,
Mr. Shoaib Sultan Khan, Mr. Asad Umar
and Dr. Attiya Inayatullah. The financial
data contained in this survey was
obtained through the Karachi Stock
Exchange, Securities and Exchange
Commission Pakistan and Arif Habib
Securities, to each of which PCP owes
its gratitude for their valuable
cooperation.
Acknowledgment is also due to staff
member Asad Zia Iqbal for his input in
analysis, graphical presentation and
data collection and to Kashmala
Kakakhel, Junior Research Officer for
her meticulous support work in the
preparation of the text of the report.
Special thanks to Mr. Eazaz A. Dar,
Senior Programme Manager, for his
dedicated help and oversight in
finalising the report. I would also like to
sincerely thank the professional staff at
PCP: Ms. Sarah Pervez, Communication
Specialist and Mr. Javed Iqbal,
Administrative Assistant for the
painstaking work in helping to give the
report its present shape.
Finally and indisputably the generous
financial support provided by the Aga
Khan Foundation (Pakistan) made it
possible for PCP to undertake the study
and publish this report.
Shahnaz Wazir Ali
Executive Director
The collection of data, description of
results and analysis as contained in this
survey are a painstaking contribution of
principally Sadika Farouk Hameed,
Research Officer. This report is an
evidence of her industriousness and
professional commitment.
Acknowldgements
III
Executive
Summary
The Corporate Survey (2004 & 2005)
builds on a report previously published
by PCP, 'Corporate Philanthropy in
Pakistan: the case of public listed
companies 2005'. The objective of the
survey is to estimate the volume of
corporate philanthropy in Pakistan for
the years 2004 and 2005. Additionally,
it looks at trends and patterns over a 6
year period (2000-2005).
The survey focuses on Public Listed
Companies (PLCs) - a small, organized
and well documented sub-set of the
business world. Corporate Philanthropy
(CP) has been defined to include only
cash and in kind donations. Top
corporate givers have been ranked
using this definition for the years 2004
and 2005.
This survey included compilation of
data from the annual published audited
accounts of 551 PLCs, subsequently
validated through direct communication
with each company.
The principal findings of this study are:
I.
PLC participation in giving
increased from 51% in
2004 to 54% in 2005 as
compared to an average of
50% over the years 20002003.
II. The total donations
increased 7 times in the
years 2000-2005, from
Rs. 228m in 2000 (base
year) to Rs. 1.61bn in 2005.
If all PLCs had conformed to the
international standard of donating
a minimum of 1% of profit before
tax, in each year the aggregate
donations would have more than
doubled.
III. In 2004 & 2005 a small number
of highly motivated companies
gave a significant percentage of
the total contribution of the PLCs.
The top 25 giving
companies contributed 70%
(Rs. 456.6m) of total giving
in 2004 and 68% (Rs. 1.1bn)
of total giving in 2005.
IV. The October 8, 2005 earthquake
elicited a large philanthropic
response from the business
community. Philanthropic
contributions jumped from Rs.
653m to Rs. 1608m more than a
2.5 times increase. However, this
figure may not reflect total
earthquake giving as some
companies close their financial
year in June and therefore would
reflect the earthquake
Executive summary
V
contributions by PLCs in their audited
accounts for 2006.
V. Health and education still rank as
the most important sectors which
receive corporate giving.
The massive response to the
earthquake by PLCs, in comparison with
corporate philanthropic contributions
made in the absence of a disaster
situation shows the existence of a large
giving potential of PLCs in Pakistan. It
remains now, to channelise and
institutionalize CP so as to make it
effective. Moreover, to encourage those
PLCs who do not engage in
philanthropy, research needs to be
conducted regarding incentives that can
be instituted to increase corporate
donations and to understand constraints
to their giving. To recognise the
philanthropic edeavors of PLCs, the
Pakistan Centre for Philanthropy is
proposing the introduction of the
Pakistan Corporate Philanthropy Awards
(PCPA) which would be given on an
annual basis from a prestigious
business forum. These awards are
based on two criteria: volume of
donations and percentage of Profit
Before Tax given as donations. The
awards will be given to three top
ranking companies for each criteria,
based on the validated data collected in
PCP’s annual corporate survey.
Contents
About Corporate Philanthropy
The Survey
Rankings
Conclusion
01
06
10
25
Tables & Figures
Table 1:
Table 2:
Table 3:
Table 4:
Table 4a:
Table 5:
Table 6:
Table 7:
Table 8:
Table 9:
Table 10:
Table 11:
Table 12:
Table 13:
Table 14:
Breakdown of PLCs in Sample
Number of PLCs Giving
Donations if taken as 1% of PBT
PLCs by Spread of Donations (2000-2005)
PLCs by Spread of Donations (2004 & 2005)
Donations by Top 25 Giving PLCs
PLCs Giving Rs. 5 Million or More
Donations by Top 25 Giving PLCs
Top 25 PLCs by Volume of Donations (2005)
Top 25 PLCs by Volume of Donations (2004)
Top 25 PLCs by Aggregate Volume of
Donations (2004 & 2005)
Top 25 PLCs by Volume of Donations as
a % of PBT (2005)
Top 25 PLCs by Volume of Donations as
a % of PBT (2004)
Top 25 PLCs by Aggregate Donations as
a % of PBT (2004 & 2005)
Sub-sectors by Average Volume of
Donations (2004 & 2005)
Figure 1: Donations if taken as 1% of PBT
Figure 2: Percentage Contribution of Top 25
Giving PLCs (2005)
Figure 3: Percentage Contribution of Top 25
Giving PLCs (2004)
Figure 4: Donation of Top 25 Giving PLCs by Volume
08
10
11
13
14
15
15
17
19
20
21
22
23
24
25
12
16
16
17
1
1
Lehman, T. and D. Johnson,
(1970): ‘The Economics of
Charity’ (Center for the Study
of Public Choice, Blacksburg,
About
Corporate
Philanthropy
“The new approach for social development should be
strategic, based on knowledge and market consciousness to
maximise social returns as well as complement the business
'Corporate community involvement' is
a broad term that covers a wide
range of corporate activities in the
community. In its simplest form the
involvement is philanthropy. A more
sophisticated form might be a
formalized community business
partnership. Corporate Philanthropy
(CP) is an act of giving, where
corporations donate a portion of
their profits to various charitable
causes that can be seen as a
component of the corporation's
broader social responsibility. It
extends to giving of cash, gifts,
products and in-kind donations,
establishing foundations, use of
company facilities/equipment and
employee volunteerism. CP has
become a subset of corporate
citizenship which is the range of
attitudes and practices around
serving shareholders, employees, the
environment, customers and
communities.
A classic definition of CP is the
“charitable transfer of a firm's
1
resources at below market prices”. In
an attempt to clarify the definition,
Jones (1994) has noted that corporate
philanthropy fits well with the notion of
the discretionary responsibility of
business. This discretionary
responsibility involves a firm's
choosing how it will voluntarily
allocate its available resources to
charitable or social service activities
that are not business related and for
which there are no clear social
expectations as to how the firm should
perform.
Business is embedded in the
community – it hires from the
community, their employees live in the
community and customers are from
the community. Thus, the whole
enterprise is dependant on the health
of the community. It is from this
symbiotic relationship between
community and corporation that
corporate philanthropy gets its
purpose. CP is different from other
types of philanthropy due to this ip,
About corporate philanthropy
01
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
inextricable relationship of company
and community. While it is
understood that corporations and
their communities have a natural
interwoven relationship, many view
the philanthropic expression of this
affinity as a part of companies' core
values while other firms see it as a
component of profit-driven strategy.
In fact, the debate on the motives for
CP whether it is used as profit driver
2
strategy, or whether it is driven by
3
nonprofit motives, is a vast topic in
itself, needing more clarity of thought
and committed action. The success of
a business is dependant largely on
the goodwill of the community in
which it operates. The significance of
philanthropy is recognized as it is
being incorporated into corporate
mission statements, standards and
daily policies and procedures.
Background and Context
2
Bock, B., H.J. Goldschmid, I.M.
Millstein and F.M. Scherer,
(1984): ‘The Impact of Modern
Corporation’ (Columbia
University Press, New York).
3
Neiheisal, S.R., (1994):
‘Corporate Strategy and the
Politics of Goodwill’ (Peter
Long, New York)
4
5
6
Useem, M., (1984): ‘The Inner
Circle: Large Corporations and
the Rise of Business Political
Activity in the US and the UK’
(Oxford University Press, New
York)
'Simplistic terms to meet the
needs of the present without
compromising the ability to
meet the needs of the future',
World Commission on
Environment and Development
(1987), Our Common Future
Milton Friedman, “The
Business of Business is
Business”, Advancing
Increasingly, corporations are entering
the social order such that Corporate
Social Responsibility (CSR) and
Corporate Philanthropy (CP) have not
just remained theoretical notions but in
effect become a business bottom line.
The means to solving some of the
world's most pressing problems rests in
the private sector. Recognizing that
social development and responsibility
are not the sole domain of government
and that passive philanthropy is not
4
enough for sustainable development,
corporations have in fact started to
engage in active philanthropy. As
Warren Buffet notes, “A market system
has not worked in terms of poor
people.” Companies bring powerful
and effective resources to the table,
above and beyond their monetary
contributions. For the service of society,
corporations can leverage their
impressive assets which can extend to
product and in kind contributions,
volunteers, technology, professional
services and unsurpassed distribution
channels.
CP if undertaken with a balance
between focused corporate giving for a
specific purpose and calculated risk
taking on innovative community and
social investments, can uncover lessons
that would never have been realized by
investments from traditional philanthropic
institutions. Thus, tapping the extensive
resources of corporations to strategically
match social, community, and public
needs can bring immense benefits to all
parties.
Professor Milton Friedman wrote a
number of years ago that business
communities who speak about their
concerns with social responsibility and
philanthropy are “preaching pure and
5
unadulterated socialism”. His belief was
that corporate executives have one
objective only i.e. to maximize profits
where spending corporate funds to
promote social goals would in fact
detract from this objective. However,
most people would agree now that
corporate philanthropy is not only good
for its own sake – it also benefits
companies themselves. “Well designed
philanthropic programmes are often
among the most effective long term and
sustained means of boosting corporate
6
profits and building shareholder value”.
Corporations are also aware of the
advantages that generosity and
compassion bring to their public image
as well. As Bill Gates, Founder and CEO
of Microsoft so aptly asserted, “Is the
rich world aware of how four billion of
the six billion live? If we were aware, we
would want to help out, we'd want to get
involved.” A focused and engaged CEO
not only sets the pace for a company but
by actively participating in the
philanthropic programme also sends a
clear message internally and externally
that the company is sincere about CP
and establishes complete commitment to
their efforts.
Cognizant of the role businesses can
play, UN Secretary General Kofi Annan
first proposed the Global Compact in an
address to the World Economic Forum
on January 31, 1999. The Secretary
General invited business leaders to join
an international initiative – the Global
Compact – that would bring companies
together with UN agencies, labour and
civil society. Such a consortium would
support nine universal principles in the
areas of human rights, labour and
environment. Globally, business leaders
are engaging in debate on the impact
that businesses can make for sustainable
development on society.
All business leaders agree that to
achieve results, a strategy is required.
Philanthropy and corporate giving
should not be any different. The
relational aspects of business in society
are not a new driver for business. The
focus on these relationships has resulted
in even more thought and action
dedicated to matching a company's
giving with its corporate objectives. The
current defining words are 'strategic
philanthropy'. Strategic Philanthropy is
when a company donates resources to a
social problem that is not directly
attributable to the company but the
management would like to meet two
principal objectives: it wants to help
society fight the problem and it wants
the company to benefit. “True strategic
giving addresses important social and
economic goals simultaneously [by]
targeting areas of competitive context
where the company and society both
benefit because the firm brings unique
7
assets and expertise”.
With structured corporate giving
programmes in place, it has been
realized that corporate philanthropic
endeavors are much more effective
specifically targeting underlying causes
rather than spreading themselves too
thinly to address symptoms. Gordon and
Betty Moore (who were ranked as the
most generous philanthropists by
Business Week in 2005) take a
business-like approach to philanthropy.
Rather than throwing money at
problems, they ensure the most
productive use by funding projects they
believe can produce "significant and
8
measurable" results.
7
International Trends in CP
Corporate Philanthropy is gaining
importance worldwide. Two particularly
remarkable trends that have been
witnessed at the firm level are firstly, the
Porter, M and M. Kramer
(2002): “The Competitive Edge
of Corporate Philanthropy”;
Harvard Business Review
8
convergence of corporate philanthropic
programmes with other corporate
programmes, and the emergence of
9
strategic philanthropy. Before the
9
About corporate philanthropy
“The 50 Most Generous
Philanthropists”, accessed from
http://www.businessweek.com
/bwdaily/philanthropy/on
September 24, 2006
Pasqeuro, J. (1991): Trends in
International Corporate
03
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
advent of organized and structured CP,
it was a marginal activity carried out at
the discretion of CEOs.
The first trend is attributed to
globalization and growth which have
blurred the boundaries around
corporate communication, public
relations, community involvement, social
responsibility and even traditional
advertising, such that philanthropy is
becoming integrated with other activities
of the firm. The second trend has its
roots more in the way that corporates
actually approach CP. Firms are
increasingly managing their
philanthropic decisions like other
spending activities with performance
objectives, where some even have
separate departments with permanent
staff to manage their charitable
activities.
10
Otis, J. (1997): Higher Ground:
Latin America's Business Leaders
Two macroeconomic trends are also
noteworthy. Firstly, increasing global
competition has meant that firms must
look to new and innovative areas to find
their competitive advantage. As is now
widely acknowledged, active CP adds
brand recognition and loyalty, promotes
a socially responsible image of a firm
and at times may even be a major
factor in attracting and maintaining a
work force. Secondly, a world wide
trend of elimination of government
agencies and state budgets supporting
arts and social services has stimulated
growth of voluntary agencies, nonprofit
sector and private foundations to
operate in their stead. A key pipeline of
funding for these organisations are
private corporations as government
support declines. In response to this
demand, corporations themselves are
setting up foundations to channel these
requests. In Europe up until the 1960s
strong and almost exclusive state
support of arts and social services was
the norm. The late 1980s saw a number
of organisations established comprising
over 600 corporate members to fill the
resulting void. A similar trend in all Latin
American countries was found –
foundations established as a response to
10
social needs unmet by the public sector.
However, at least some mention must be
made about the two other stakeholders
involved – CSOs and Government. Peter
Drucker stressed the need for nonprofits
to convert donors into contributors - that
if nonprofit groups expect to acquire
more financial resources from
corporates, those who give will need to
feel more like participants. Nonprofits
must also learn how to offer volunteers a
greater sense of community and
common purpose with the kinds of
attachment that working for a nonprofit
organization can provide. Nonprofits in
turn must also be transparent and
objective in their dealings.
Many corporations are frustrated that
governments and the public do not
recognize the extent and depth of their
activities in relation to corporate giving.
For their part, CSOs engaged with
business can ensure communication
channels that effectively convey results
and objectives achieved and desired. In
this way, increased visibility enhances
nonprofits and the work they do and
gives corporations their due recognition.
A government can choose to foster a
climate that is hostile or supportive of
corporate giving. Similarly, recognition of
outstanding corporate givers from formal
platforms not only appreciates the role
that business is playing in civil society but
also provides recognition of best
practices. As a first step in Pakistan, the
'Pakistan Corporate Philanthropy Awards'
(PCPA) are being initiated through a
collaboration with a prestigious business
platform. The awards will be conferred at
an annual event that recognizes top 25
public listed companies for their
philanthropy. For the years 2004 and
2005 awards will be presented to the
top 3 companies for their philanthropic
contributions firstly by absolute volume
of donations and secondly, those
making highest donations as a
percentage of profit before tax.
Challenges Ahead
In an environment where free trade is
not only encouraged but in fact
measures to protect domestic companies
result in retaliatory penalization in
international markets, the future sees no
choice but to move towards freer
markets. As the country moves toward a
neo-liberal economic model, observing
philanthropy may suggest whether
Pakistani firms will adopt the traditional
shareholder model of the firm, or a
broader social stakeholder model of the
firm.11
The neo-liberal economic model is
based on a greater role of the private
sector in economic activity; specifically
the privatization of state enterprises, the
elimination of price controls and
subsidies, and lifting of trade barriers
among others.12 A look at corporate
philanthropy might suggest what role the
private sector will play as the
government seeks it’s support in creating
conditions for the social and economic
well-being of Pakistani citizens.
The study of Pakistani corporate
philanthropy may also reveal how
Pakistani firms are adjusting to another
significant pressure – globalization.
Global market pressures have forced
many Pakistani firms to look beyond
their traditional markets and competitors
to grow and survive. At the same time,
reduced trade barriers have allowed
foreign firms to compete for business in
local markets against Pakistani firms.
Pakistan’s business landscape has seen
companies established by family
enterprises occupying an economically
dominant position in industry and
commerce. But it is envisaged that over
time increasing free trade will further
lower barriers to entry for foreign firms,
making it difficult for Pakistani
companies to defend their markets both
politically and economically. Pakistani
firms may believe that by making
philanthropic social investments in the
local community, they will induce a more
favorable response from customers and
other stakeholders, create a more
enabling and positive perception of
business, and in the process redouble
their ability to compete with foreign
firms.13
11
12
13
Roberts, N.C and P.J. King,
(1989): The Stakeholder Audit
Goes Public
Norvell, S. (1995): El Salvador:
Investing and Selling in Latin
America
Cochran, P.L. and R.A.Wood,
(1984): ‘Corporate Social
Responsibility and Financial
About corporate philanthropy
05
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
2
The Survey
“Corporate giving is more than just a line item on
a company’s balance sheet. A caring company
should serve the community where ever it
Pakistan Centre for Philanthropy's
pioneering report, “Corporate
Philanthropy in Pakistan: the case of
public listed companies” was launched
by Prime Minister of Pakistan, Mr.
Shaukat Aziz on April 29, 2006 in
Karachi. “Philanthropy for social change
and development is emerging as a
important sector in society, giving rise to
a new breed of corporate philanthropists
and social entrepreneurs”, he stated
during his speech on the occasion. The
report contained in depth analysis and
data of corporate philanthropic giving
for the years 2000-2003. Significant
positive feedback has been received
since its launch.
This follow up survey is an attempt to fill
the knowledge gap that still exists today
and to update data for the years 2004
and 2005. Rankings of the most
generous PLCs have been provided. The
top giving companies and their CEOs
demonstrate how leading corporate
citizens in Pakistan reconcile competing
demands for profitability and
responsibility while fulfilling both
economic and social functions in society.
The survey provides well-deserved
recognition of the role that the Pakistani
business sector plays in society albeit it
only captures the monetary giving. It is a
small yet vital step towards the ultimate
goal of a more cohesive society where
businesses are so integrated that they are
seen in the mainstream of sustainable
development. The corporate sector not
only has the will but also immense ability
to bring decisive change. The survey
shows that our corporations not only give
generously at present but highlights the
colossal potential for the future that is
inherent in our business sector. The
results of this survey will be useful for
business leaders as well as academic
researchers, media, government,
philanthropists and civil society in moving
the agenda on social issues and
participation forward.
Methodology
The methodology employed in this
survey closely follows that of 'Corporate
Philanthropy in Pakistan: the case of
public listed companies.' In an attempt
to identify the relevant and appropriate
sample for our study, sources like the
Securities and Exchange Commission of
Pakistan (SECP), Chambers of
Commerce and Industries (CCIs) and
Stock Exchanges (SEs) were tapped for
data purposes. The most comprehensive
source of data was the SECP, which is a
regulatory authority where every
company has to register to operate
legally in the country. For the purpose of
the survey, it was not possible to include
the entire range of the corporate sector.
As was done with 'Corporate
Philanthropy: the case of public listed
companies', it was decided to focus on
Public Listed Companies (PLCs). There
are two reasons for this. Firstly, financial
information pertaining to these firms is
classified universally as public
14
information and is readily available. By
law, PLCs are required to submit and file
annual audited accounts with the SECP
and SEs. Public/ private companies and
sole proprietors, are not required to do
this. Such companies, as noted in the
previous corporate report, have also
reported reluctance in sharing their
financial information were approached
through surveys and questionnaires.
Secondly, the availability of a
comprehensively well-defined list of
PLCs with the SECP in general and SEs
in particular, made the task of collecting,
verifying and actually validating the data
possible, keeping in view the time and
financial constraints.
Data Measurement, Collection and
Verification
There are difficulties in defining and
measuring corporate giving. The
quantum of in-kind contributions, by
their very nature, is particularly hard to
gauge. Only cash and in-kind donations
reported as an expense by PLCs is being
used as a measure of CP. The main data
instrument used to measure the quantum
of each company's giving, were the
annual audited accounts of the
company. Annual published audit
accounts are the major source of
information for corporate donations and
provide a reasonable assurance that
figures mentioned are free from any
material misstatement. These are
published in Annual Reports and
regarded internationally as reliable.
Companies declaring Profit Before Tax
(PBT) of less than or equal to Rs. 1
million have been excluded from the
analysis for the purposes of ranking
because they were showing levels of
donations significantly higher than their
profits. Consequently such data was
revealing misleading trends.
The data for the years 2004 and 2005
has been collected in mid of year 2006
from the annual audited accounts of
companies for 2004 and 2005. As a
starting point, Arif Habib Securities
Limited (AHSL) provided data for a large
number of companies. The data
provided by AHSL was verified using the
annual reports of PLCs as well as
through visits to the libraries of SECP
and Karachi Stock Exchange (KSE). Data
for companies not provided by AHSL
14
According to part III (1-E) of
Schedule 4 of the Companies
Ordinance, 1984, Other
expenses, showing separately
every material item and the
nature of each such item, in the
case of donations where any
director or his spouse has
interest in the donee, the names
of such director, their interest
in the donees and the names
The survey
07
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
was collected from SECP and KSE. The
data re-validation exercise was carried
out through letters to PLCs in the sample
asking them to validate the figures being
used for their company in the survey.
The Sample
For more comprehensive analysis, the
list of PLCs was segregated according
to the 33 KSE standard sub sectors as
provided in the daily quotations
published by KSE. Segmenting
companies on the basis of their nature
Table 1
Breakdown of PLCs in Sample
YEAR END
MARCH
JUNE
JUNE (9 MONTHS)
JUNE (6 MONTHS)
SEPTEMBER
NOVEMBER
DECEMBER
TOTAL
NO. OF PLCS
% OF SAMPLE
3
289
133
1
38
1
86
551
0.54
52.45
24.14
0.18
6.90
0.18
15.61
100
of work germinated significant results
and allowed more rigorous mapping of
trends amongst the sectors. According to
the daily quotations published by KSE, a
total of 661 companies were listed on
the stock exchange at the end of
calendar year 2005.
Out of the total 661 listed companies,
23 companies were open/ closed mutual
funds and were not included in our data
collection exercise. Therefore, a sample
of 638 companies was drawn and data
collection exercise was conducted for the
same. The records of 551 companies
(excluding de-listed as well as merged
companies) could be found from the
sources and form the final sample of this
survey. Information for 87 companies
could not be located.
Importance of Financial Year-End
The only part of this survey's
methodology that differs from the earlier
corporate report is the emphasis on the
financial year ends of the PLCs. There
are two vital reasons for concentrating
on this aspect for this survey.
I. Firstly, SECP required all listed
companies in the textile industry to
close their financial year in June. As
a result of this, the figures in 2005
for the textile industry are not
representative of a complete year for
all the companies. For the financial
year 2005, 133 companies with
formerly September year ends
reported 9 months profits and
related financial information to
adjust to the SECP required change.
II. 2005 was a monumental year
in terms of philanthropic and
charitable donations. The October
8, 2005 earthquake elicited a
mammoth charitable response. For
the 86 companies whose financial
year closes in December, the
donations figure represents
earthquake philanthropy as well and
reflects higher annual giving than
normal. Companies whose financial
year closed in months other than
December will report their donations
for the disaster in their next audited
accounts. In an attempt to counter
the earthquake philanthropy effect,
major analysis has been conducted
first with these companies included
and then excluded to draw a more
normalised picture of the state of
CP undertaken by PLCs.
Limitations
The results of any research cannot be
regarded as robust unless the limitations
are addressed. Briefly, the limitations of
this research are presented here. Firstly,
the very measurement used for CP does
not capture large components of
corporate giving – time volunteered and
sharing of facilities, technical expertise
and resources. Secondly, the figures only
reflect the monetary values associated
with corporate giving. With a perceptible
shift occurring from CP to strategic
corporate philanthropy, no clear
conclusions can be drawn regarding the
actual destination of the donations or for
that matter the impact of corporate
giving. Thirdly, the companies interpret
the law for disclosing corporate giving
differently. Some examples of differing
interpretations extend to companies only
disclosing those donations where a
director or his/her spouse has an
interest. Other companies may not
include the monetary figures for free
access to education or health provided
to employees and/or communities. In
many cases, the monetised value may
not include the full extent of in-kind
giving.
As a result of this, along with differing
accounting practices, the figures in the
audited reports are not uniform in what
they disclose. More importantly, the
actual quantum of philanthropic
contributions differs from the amount
actually donated. This effect may be
exacerbated when aggregating across a
large cross section of companies as in
this survey.
There are some limitations associated
with the choice of PLCs. PLCs are
generally larger than the average
company in terms of revenues, profits
and assets and are concentrated in the
major cities. Their total turnover
amounts to approximately an average
of PKR 1.8 trillion for the years 2004 &
2005. However, they form a relatively
smaller component of the business
universe. Keeping these factors in mind,
the sample is partially representative of
Pakistan's business sector. However, over
time with Pakistani markets evolving and
becoming more sophisticated, an
increasing trend of more companies
going public is being witnessed. This
trend along with the fact that PLCs
represent the most progressive and
developed form of corporate giving,
reduce the severity of the problem
associated with only including PLCs in
the sample. Since PLCs have the most
advanced and sophisticated forms of
CP in Pakistan, when it comes to
ascribing best practices for developing
CP in Pakistan, naturally PLCs will be
held up as examples.
The survey
09
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Rankings
3
“The real joy of business is to contribute to
economic empowerment and sustainability of the
society we live in.”
Companies are ranked using two
criteria:
I. Volume of donations
II. Volume of donations as a
percentage of Profit Before
Tax (PBT)
The rationale behind the percentage
of PBT criteria is related to the
different sizes of PLCs and the
Table 2
resulting varying turnovers, revenues
and PBTs. Larger companies with
larger funds for corporate giving tend
to rank high when using volume of
donations as a measure for ranking.
To overcome the size bias and to
make our results more precise, the
second standard of donations as a
percentage of PBT has been
introduced.
Number of PLCs Giving
YEAR
NUMBER OF COMPANIES GIVING
TOTAL SAMPLE
PERCENTAGE OF SAMPLE INVOLVED IN CP
2005
2004
2003
2002
2001
2000
299
551
54
283
552
51
287
568
50
282
565
49
268
551
48
263
500
52
Whilst the total number of corporate
givers has marginally decreased
between 2003 and 2004, which may
be due to the smaller sample size as
well, the percentage of PLCs in the
sample that donate has seen a
nominal rise from 50% to 51%. This
has increased in 2005 to 54% of the
companies in the sample making
philanthropic contributions.
Table 3 and Fig 1 illustrate the status
of total corporate giving over the
years. It is encouraging to see that
corporate philanthropic contributions
are steadily increasing over the
years. However, when looking at the
major increase in philanthropic
contributions in 2005 as compared
with 2004, such an increase can be
attributed to the generous
contribution of the business sector for
the earthquake affectees. As per the
international standard, former
Finance Minister, Mr. Shaukat Aziz
had suggested in 2001 that all
companies should contribute at least
1% of their PBT for philanthropic
purposes. Table 3 and Fig 1 also
show what the picture of corporate
giving by PLCs would have been if all
companies had adhered to this
standard. In this case, with the
exception of the year 2000,
corporate donations would have
been more than double the existing
donations each year.
Table 3
If PLCs had donated 1% of their PBT,
we see from Table 3 and graphically
in fig 1 a steady increase of donations
would have accrued peaking in the
year 2004 at Rs. 11.8 bn. However,
the most surprising effect occurs in
2005 where donations projected as
1% of PBT fall drastically from Rs.
11.8 bn in 2004 to Rs. 4.8 bn in
2005. This decrease does not reflect
any change in attitudes towards CP;
rather it simply reflects a fall in the
level of corporate profits. Certain
macroeconomic pressures, other than
inflation, account for the severe drop
in PBT between 2004 and 2005.
Firstly, increasing oil prices led
industries based on oil or oil
derivatives to face increasing costs
that could not totally be passed on to
consumers. This led to a tightening of
gross margins. A second vital factor
contributing to the decrease in PBT is
attributable to the increasing cost of
debt. Whereas interest rates lay
between 3-3.5% in 2004, they rose to
8-8.5% in 2005. Additionally,
Pakistani exports came under pressure
due to changing trade policies and
environments.
Donations if taken as 1% of Profit Before Tax (PBT)
PKR Million
YEARS
2000
2001
2002
2003
2004
2005
TOTAL
TOTAL PBT
36,477
88,166
150,349
172,626
1,177,586
484,001
2,109,205
TOTAL DONATIONS
228
277
336
496
653
1,608
3,598
PERCENTAGE
DONATIONS AS
1% OF TOTAL PBT
0.6
0.3
0.2
0.3
0.1
0.3
0.2
365
882
1,503
1,726
11,776
4,840
21,092
Rankings
11
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Thus, it can be assumed that the
level of philanthropic giving is fairly
associated with the financial and
economic volatility of the market that
PLCs face.
Figure 1
Donations if taken as 1% of PBT
Donations (PKR Million)
14,000
12,000
11,776
10,000
8,000
6,000
4,840
4,000
1,503
2,000
365
0
228
2000
1,726
1,608
882
277
2001
496
336
2002
2003
653
2004
2005
Years
Actual Total Donations
The sample sizes in the year 2004 and
2005 are close to the sample sizes in
2000 - 2003 (see table 2). Table 4
1 % of Total Profit Before Tax
shows the number of companies giving,
segregated into categories according to
size of donations.
Table 4
PLCs by Spread of Donations (2000-2005)
Number of Companies by Year and Category
CATEGORY BY SIZE OF DONATION (PKR MILLION)
MORE THAN OR EQUAL TO 5 MILLION
MORE THAN OR EQUAL TO 4 AND LESS THAN 5 MILLION
MORE THAN OR EQUAL TO 3 AND LESS THAN 4 MILLION
MORE THAN OR EQUAL TO 2 AND LESS THAN 3 MILLION
MORE THAN OR EQUAL TO 1 AND LESS THAN 2 MILLION
MORE THAN OR EQUAL TO 0.5 AND LESS THAN 1 MILLION
MORE THAN ZERO AND LESS THAN 0.5 MILLION
ZERO
TOTAL
Analysis has been conducted in Table
4a using two methods: First, the years
2004 and 2005 were compared with
the respective preceding years to
examine percentage changes in each
2005
2004
2003
2002
2001
2000
63
11
14
14
21
26
149
253
551
31
10
3
14
21
33
170
270
552
26
4
6
8
33
35
175
281
568
16
3
6
13
18
32
194
283
565
16
4
3
6
14
34
191
283
551
12
1
5
3
22
29
191
237
500
category under the total spread.
Second, the years 2004 and 2005 were
compared with the year 2000 taking it
as a base year.
Comparison With Preceding Year
The numbers in Table 4a highlight
interesting trends. When comparing the
two years under review with their
preceding year the most significant
findings are presented below:
I.
An increase of 103% in the 1st
category in 2005 compared with
2004. However, these figures
need to be treated with caution.
This large increase in the highest
category is essentially also
reflecting the sizeable donations
PLCs (with December year ends)
made for the earthquake. In this
sample, earthquake philanthropy
is only being revealed for those
companies with December yearends. If the total quantum of CP
that occurred in response to the
earthquake were included, this
category would reflect an even
larger change. However, as
companies have differing yearends and will document their
earthquake philanthropy in the next
auditing year, it is safely presumed
that the next annual corporate
survey will see a similar increasing
trend in this category.
II. 2004 saw an increase of 150%
when compared to 2003 in the
category of PLCs that gave
between PKR 4-5m. When
comparing with 2004 in the same
category an increase of only 10%
is evident.
III. For the last three categories (PKR
Rankings
13
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Table 4a
PLCs by Spread of Donations (2004 & 2005)
Number of Companies by Year and Category
CATEGORY BY SIZE OF DONATION (PKR MILLION)
2005
% CHANGE WITH
PRECEDING YEAR
MORE THAN OR EQUAL TO 5 MILLION
MORE THAN OR EQUAL TO 4 AND LESS THAN 5 MILLION
MORE THAN OR EQUAL TO 3 AND LESS THAN 4 MILLION
MORE THAN OR EQUAL TO 2 AND LESS THAN 3 MILLION
MORE THAN OR EQUAL TO 1 AND LESS THAN 2 MILLION
MORE THAN OR EQUAL TO 0.5 AND LESS THAN 1 MILLION
MORE THAN ZERO AND LESS THAN 0.5 MILLION
ZERO
2004
% CHANGE WITH
BASE YEAR 2000
103
10
367
0
0
-21.2
-12.3
-6.3
425
1000
180
366
-5
-10
-22
7
zero – 3m), in both years, the number of
companies giving has
decreased. Moreover, the percentage
decrease is highest in 2005. The largest
decrease of 21% (in the range PKR zero
– 3m) occurs in companies giving PKR
0.5 -1m in 2005.
IV. The proportion of companies
giving in the sample (Table 2) has
increased both in 2004 and
2005. The sample shows a trend
of companies shifting from the
lower categories (PKR zero –
3m) into the higher categories.
This trend has been witnessed in
both 2004 and 2005. However,
the larger decreases in the
number of companies giving more
than PKR 3m in 2005 may in fact
be due to EP, which may have
% CHANGE WITH
PRECEDING YEAR
19
150
-50
75
-36
-5.7
-3
-3.91
158
900
-40
366
-5
14
-11
14
resulted in companies giving more
and moving into higher categories.
Nevertheless, this can still safely be
treated as a trend over the two years,
rather than an anomaly, especially if we
examine this tendency in conjunction with
(II). No outstanding event (like a disaster
which elicits larger than normal
philanthropic contributions) occurred in
2004. Yet, PLCs donating PKR 4-5m saw
a large percentage (150%) increase in
2004. Hence, without the number of
PLCs in the sample significantly
changing, what we actually see here is
companies increasing the amount they
give. This is suggesting that PLCs are
donating more without any additional
external cause such as a disaster
influencing their giving practices in
2004.
Using 2000 as a Base Year
Undertaking a similar analysis using the
year 2000 as a base year, the following
% CHANGE WITH
BASE YEAR 2000
findings are of note:
I. The largest increases for both years
occur for PLCs giving PKR 4-5m.
Companies giving more than 5m
have also increased.
II. PLCs giving PKR 3-4m shows
drastically different results for
Table 5
2004 and 2005. In 2004 there is
a 40% decrease when compared
to the base year 2000. The fact
that there is a significant increase
in 2005 of 180% could be
attributed to the earthquake
philanthropy effect.
Donations by Top 25 Giving PLCs
YEAR
2005
2004
2003
2002
2001
2000
1087.4
TOTAL DONATIONS BY TOP 25 PLCS (PKR MILLION)
43.5
AVERAGE DONATIONS BY TOP 25 PLCS (PKR MILLION)
68
CONTRIBUTION OF TOP 25 PLCS (AS A % OF TOTAL GIVING)
32
OTHERS (AS A % OF TOTAL GIVING)
482.3
18.3
70
30
344.3
13.8
61
39
235.9
9.4
42
58
201.4
8.1
37
63
158.4
6.3
32
68
From Table 5 and Table 6 we see that, of
the total giving, a large amount is highly
concentrated amongst the top givers
each year. This is shown in the pie charts
seen in Fig. 2 and Fig. 3. This is an
increasing trend till 2004. In 2005 the
contribution of top PLCs as a percentage
Table 6
of total giving falls marginally owing to
the fact that companies other than the
top 25 increased their quantum of
donations which may be attributed to
earthquake philanthropy. This trend, as
seen over 6 years, is illustrated in Fig.4.
PLCs Giving Rs. 5 Million or More
CATEGORY
MORE THAN OR EQUAL TO 100 MILLION
MORE THAN OR EQUAL TO 50 AND LESS THAN 100 MILLION
MORE THAN OR EQUAL TO 10 AND LESS THAN 50 MILLION
MORE THAN OR EQUAL TO 5 AND LESS THAN 10 MILLION
2005
2004
3
4
32
24
1
0
14
16
Rankings
15
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Figure 2
Percentage Contribution of Top 25 Giving PLCs (2005)
34%
32%
Contribution of top 25 giving companies as a % of total giving
68%
Others
Figure 3
Percentage Contribution of Top 25 Giving PLCs (2004)
30%
70%
Contribution of top 25 giving companies as a % of total giving
Others
Figure 4
Volume of giving (PKR Million)
Donations of Top 25 Giving PLCs by Volume
1200
1087.4
1000
800
600
456.6
400
201.4
235.9
344.3
200
0
8.1
2001
13.8
9.4
2002
2003
2004
44.0
2005
Years
Donations by Top 25 Giving Companies
Average donations of the top 25 PLCs
showed modest increase in 2004 when
compared to 2003. However, donations
more than doubled in 2005. The
number of companies amongst the top
25 with December as a financial year
Table 7
19.3
Average Donations by Top 25 PLCs
end (as seen in Table 1) are 7 in 2004
and 16 in 2005. To analyse this trend in
more detail, the rankings are provided
without the December year end
companies, so as to counter the
earthquake philanthropy effect.
Donations by Top 25 Giving PLCs
Excluding Year-End December
TOTAL DONATIONS BY TOP 25 PLCS
AVERAGE DONATIONS BY TOP 25 PLCS
CONTRIBUTION OF TOP 25 PLCS AS A PERCENTAGE OF TOTAL GIVING
PKR Million
2005
2004
501.6
20.1
75%
387.7
15.5
78%
Rankings
17
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
The figures presented in this particular
analysis should be treated with caution.
For transparency, both years have been
treated similarly by excluding the
companies with financial year ending in
December in table 7. Though such
companies comprise only 15% of the
sample, the following points should be
borne in mind when reading these
figures:
I. By excluding these companies,
a large chunk of giving is
automatically removed which in fact
does not include earthquake
philanthropy.
II. Certain companies that on
average give a large amount have
been excluded on account of them
having a financial year closing in
December.
Table 7 shows the figures associated with
the top 25 PLCs exclusive of companies
with December year end. We find that
even when excluding companies to
counter for the earthquake philanthropy
effect, top 25 giving companies account
for a majority of total giving.
Top Givers
Ranking Individual Companies by their
Giving Performance
Tables 8-10 rank PLCs on the basis of
absolute volume of donations. Rankings
for each year are provided separately.
We see that when using total volume of
donations as a measure for positioning
companies according to their
philanthropic contributions, large
companies with large donation figures
tend to outrank smaller companies that
give less in absolute terms but more in
terms of percentage of PBT.
The outstanding PLC by far is Pakistan
Petroleum Limited, which ranks first in
both 2004 and 2005. With a financial
year ending in June the substantial
amounts contributed by PPL do not
include any earthquake philanthropy.
This fact coupled with its performance in
both years is truly noteworthy. Bank
Alfalah ranks 2nd and National Bank 3rd,
both with sizeable donations in 2005 as
seen in Table 8.
In 2004, Unilever and Indus Motor
Company rank 2nd and 3rd respectively
as seen in Table 9.
Table 8
Top 25 PLCs by Volume of Donations (2005)
PKR Million
RANK
COMPANY
PROFIT BEFORE TAX
DONATIONS
13,475.0
179.4
2,563.3
117.6
19,056.0
107.8
1
PAKISTAN PETROLEUM LTD.
2
BANK ALFALAH LTD. z
3
NATIONAL BANK OF Pz
AKISTAN LTD. z
4
NESTLE MILKPAK LTD. z
1,630.6
67.9
5
UNITED BANK LTD. z
9,708.7
63.4
6
FAUJI FERTILIZER COMPANY LTD. z
7,214.3
60.3
7
ENGRO CHEMICAL PAKISTAN LTD. z
3,219.6
52.3
8
PICIC COMMERCIAL BANK LTD. z
1,905.6
35.2
9
METROPOLITAN BANK LTD. z
2,031.7
32.4
10
MCB BANK LTD. z
13,018.5
30.1
11
ASKARI COMMERCIALz
BANKLTD. z
2,859.1
30.0
12
UNILEVER PAKISTAN LTD. z
2,482.2
29.6
13
PAKISTAN TOBACCO COMPANY LTD. z
2,082.1
24.6
14
BANK AL-HABIB LTD. z
2,022.0
24.4
15
JAHANGIR SIDDIQUI AND COMPANY LTD.
1,187.7
24.1
2,303.0
23.8
179.7
22.9
1,297.9
22.7
53.7
22.6
16
INDUS MOTOR COMPANY LTD.
17
SHAKARGANJ MILLS LTD.
18
BESTWAY CEMENT LTD.
19
JAVED OMER VOHRA & COMPANY LTD.
20
PAKISTAN STATE OIL COMPANY LTD.
9,226.4
22.1
21
UNION BANK LTD. z
2,777.9
20.9
22
SHELL PAKISTAN LTD.
3,643.0
20.9
23
FAUJI FERTILIZER BIN QASIM LTD. z
3,914.9
18.2
24
CRESCENT STEEL & ALLIED PAKISTAN LTD.
420.9
17.7
25
FATEH TEXTILE MILLS LTD.
140.2
16.7
z
December year end
__ All figures rounded
to one decimal place whereas,
rankings were made on the basis of actual donations
Rankings
19
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Table 9
Top 25 PLCs by Volume of Donations (2004)
PKR Million
RANK
PROFIT BEFORE TAX
DONATIONS
9,063.5
165.5
2
PAKISTAN PETROLEUM LTD.
UNILEVER PAKISTAN LTD. z
2,167.1
29.1
3
INDUS MOTOR COMPANY LTD.
2,266.3
23.2
4
ENGRO CHEMICAL PAKISTAN LTD. z
2,315.1
18.7
5
BANK ALFALAH LTD. z
1,653.7
17.1
1
COMPANY
6
BESTWAY CEMENT LTD.
929.8
16.6
7
SHELL PAKISTAN LTD.
2,188.9
16.1
8
PAKISTAN STATE OIL COMPANY LTD.
6,263.0
13.6
9
SHAKARGANJ MILLS LTD.
210.0
12.94
10
CRESCENT STEEL & ALLIED PRODUCTS LTD.
326.7
12.87
11
METROPOLITAN BANK z
1,377.9
12.5
12
ARIF HABIB SECURITIES LTD.
1,753.9
11.6
13
PICIC COMMERCIAL BANK z
1,901.7
10.8
14
JAHANGIR SIDDIQUI AND COMPANY LTD.
761.5
10.2
15
NATIONAL REFINERY LTD.
2,764.5
10.1
16
INTERNATIONAL INDUSTRIES LTD.
524.2
9.6
17
JAHANGIR SIDDIQUI INVESTMENT BANK LTD.
447.7
8.8
18
LIBERTY MILLS
198.2
8.2
19
BANK AL-HABIB LTD. z
1,039.2
7.8
20
PAKISTAN SERVICES LTD.
235.1
7.4
21
PAKISTAN TOBACCO COMPANY LTD. z
1,056.0
7.3
22
CRESCENT TEXTILE MILLS LTD. *
98.3
7.1
23
GLAXOSMITHKLINE PAKISTAN LTD.
2,119.3
6.9
24
JAVED OMER VOHRA & COMPANY LTD.
1,607.4
6.5
25
HUB POWER LTD
5462.96
6.4
z
December year end
* The financial year changed from September to June
__ All figures rounded to one decimal place whereas,
rankings were made on the basis of actual donations
Table 10
Top 25 PLCs by Aggregate Volume of Donations (2004&2005)
PKR Million
RANK
1
2
3
4
5
COMPANY
2005
2004
AGR. DONATIONS
PAKISTAN PETROLEUM LTD.
z
BANK ALFALAH LTD.
179.4
165.5
344.8
117.6
17.1
134.7
107.8
0.1
107.9
67.9
4.9
72.8
52.3
18.7
71.0
NATIONAL BANK OF PAKISTAN LTD.
NESTLE MILKPAK LTD. z
z
z
6
ENGRO CHEMICAL PAKISTAN LTD.
z
UNITED BANK LTD.
63.4
0.0
63.4
7
FAUJI FERTILIZER COMPANY LTD. z
60.3
2.1
62.4
8
UNILEVER PAKISTAN LTD. z
29.6
29.1
58.8
9
INDUS MOTOR COMPANY LTD.
METROPOLITAN BANK LTD. z
23.8
23.2
46.9
32.4
12.5
44.9
10
11
BESTWAY CEMENT LTD.
22.7
16.6
39.3
12
SHELL PAKISTAN LTD.
20.9
16.1
37.0
13
PICIC COMMERCIAL BANK LTD. z
35.2
1.1
36.2
14
SHAKARGANJ MILLS LTD.
22.9
12.9
35.8
15
PAKISTAN STATE OIL COMPANY LTD.
22.1
13.6
35.7
16
24.1
10.2
34.2
17
BANK AL-HABIB LTD.
24.4
7.8
32.1
18
PAKISTAN TOBACCO COMPANY LTD. z
24.6
7.3
31.9
19
MCB BANK LTD. z
30.1
1.4
31.5
20
CRESCENT STEEL & ALLIED PRODUCTS LTD.
z
ASKARI COMMERCIAL BANK LTD.
17.7
12.9
30.6
30.0
0.0
30.0
21
JAHANGIR SIDDIQUI AND COMPANY LTD.
z
22
JAVED OMER VOHRA &COMPANY LTD.
22.6
6.5
29.1
23
UNION BANK LTD. z
20.9
4.1
25.0
24
GLAXOSMITHKLINE PAKISTAN LTD. z
16.0
6.9
22.8
25
PICIC. z
10.5
10.8
21.3
Tables 11-14 rank companies according
to percentage of PBT. Percentage of PBT
given for philanthropic purposes is seen
as a measure of commitment to
philanthropy. Needless to say, a robust
picture emerges when we capture this
commitment by ranking companies
according to their percentage of PBT.
z
December year-end
__ All figures rounded
to one decimal place whereas,
rankings were made on the basis of actual donations.
Rankings
21
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Table 11
Top 25 PLCs by Volume of Donations as % of PBT (2005)
PKR Million
RANK
1
COMPANY
PBT
DONATIONS
% OF PBT
DEWAN SALMAN FIBRE LTD.
14.6
6.8
46.9
2
SHAKARGANJ MILLS LTD.
179.7
22.9
12.7
3
FATEH TEXTILE MILLS LTD.
140.2
16.7
11.9
4
CHERAT PAPERSACK LTD.
47.8
2.7
5.6
5
BANK ALFALAH LTD. z
2563.3
117.6
4.6
6
CRESCENT STEEL & ALLIED PRODUCTS LTD.
420.9
17.7
4.2
7
NESTLE MILKPAK LTD. z
1630.6
67.9
4.2
8
KOHINOOR TEXTILE MILLS LTD. *
147.6
5.5
3.7
9
SERVICE INDUSTRIES LTD. z
74.3
2.5
3.3
10
LIBERTY MILLS LTD.
224.9
7.5
3.3
11
QUETTA TEXTILE MILLS LTD. *
113.7
3.3
2.9
12
FIRST HABIB MODARABA
101.8
2.8
2.7
13
GUL AHMED TEXTILE MILLS LTD. *
121.9
3.3
2.7
14
TATA TEXTILE MILLS LTD. *
80.7
2.0
2.5
15
ASKARI GENERAL INSURANCE COMPANY LTD. z
60.5
1.5
2.5
16
DEWAN SUGAR MILLS LTD.
57.5
1.3
2.3
17
PAKISTAN SERVICES LTD.
457.2
10.5
2.3
18
INTERNATIONAL INDUSTRIES LTD.
502.8
10.3
2.1
19
KSB PUMPS COMPANY LTD. z
145.0
3.0
2.0
20
ITTEHAD CHEMICALS LTD.
90.1
1.8
2.0
21
JAHANGIR SIDDIQUI AND COMPANY LTD.
1187.7
24.1
2.0
22
JAHANGIR SIDDIQUI CAPITAL MARKETS LTD.
121.0
2.4
2.0
23
JAHANGIR SIDDIQUI INVESTMENT BANK LTD.
370.7
7.3
2.0
1.2
1.8
35.2
1.8
24
METROPOLITAN STEEL CORPORATION LTD.
63.4
25
PICIC COMMERCIAL BANK LTD. z
1905.6
Some companies are giving higher level
of donations despite low levels of profits.
This may not necessarily show strong
z
December year end
* The financial year changed from September to June
__ All figures rounded to one decimal place whereas,
rankings were made on actual percentages.
philanthropy trends. Such a situation
may be explained by carry over profits or
some exceptional circumstances.
Table 12
Top 25 PLCs by Volume of Donations as % of PBT (2004)
PKR Million
RANK
COMPANY
PBT
DONATIONS
% OF PBT
KARAM CERAMICS LTD.
34.5
5.8
16.8
2
CRESCENT TEXTILE MILLS LTD. *
98.3
7.1
7.3
3
ISLAND TEXTILE MILLS LTD. *
17.3
1.2
7.2
4
SERVICE INDUSTRIES LTD. z
37.1
2.6
7.0
5
SHAKARGANJ MILLS LTD.
210.1
12.9
6.2
6
PARAMOUNT SPINNING MILLS LTD. *
23.3
1.2
5.3
7
SITARA ENERGY LTD.
90.4
4.3
4.8
8
TATA TEXTILE MILLS LTD. *
55.1
2.5
4.6
9
LIBERTY MILLS LTD.
198.2
8.2
4.1
10
CRESCENT STEEL & ALLIED PRODUCTS LTD.
326.7
12.9
4.0
11
PAKISTAN SYNTHETICS LTD.
47.4
1.7
3.5
12
1
FIRST HABIB MODARABA
71.3
2.3
3.3
13
PAKISTAN SERVICES LTD.
235.1
7.4
3.1
14
JANANA-DE-MALUCHO TEXTILE MILLS LTD. *
36.7
1.1
3.0
15
BABRI COTTON MILLS LTD. *
39.5
1.1
2.7
16
QUETTA TEXTILE MILLS LTD. *
85.6
2.2
2.5
17
GULISTAN TEXTILE MILLS LTD. *
58.6
1.2
2.0
18
JAHANGIR SIDDIQUI INVESTMENT BANK LTD.
447.7
8.8
2.0
19
GHANI GLASS LTD.
231.1
4.3
1.9
20
FAZAL CLOTH MILLS LTD. *
180.8
3.3
1.8
21
INTERNATIONAL INDUSTRIES LTD.
524.2
9.6
1.8
22
PAKISTAN PETROLEUM LTD.
9063.5
165.5
1.8
23
BESTWAY CEMENT LTD.
929.8
16.6
1.8
24
PREMIER INSURANCE COMPANY OF PAKISTAN LTD. z
158.4
2.8
1.8
25
GUL AHMAD TEXTILE MILLS LTD. *
250.6
4.25
1.7
In 2004 the only companies that are
common in the rankings using both
criteria are Shakerganj Mills Ltd and
Crescent Steel & Allied. In 2005, the
same two are common again.
z
December year-end
* The financial year changed from September to June
__ All figures rounded to one decimal place whereas,
rankings were made on actual percentages
Rankings
23
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Table 13
Top 25 PLCs by Aggregate Donations as % of PBT (2004 & 2005)
PKR Million
RANK
1
z
COMPANY
SITARA ENERGY LTD.
AGR PBT
50.3
AGR DONATIONS
7.4
PERCENTAGE
14.7
2
ISLAND TEXTILE MILLS LTD.*
3
SHAKARGANJ MILLS LTD
4
MOHAMMAD FAROOQ TEXTILE MILLS LTD.*
5
KARAM CERAMICS LTD.
6
BABRI COTTON MILLS LTD. *
7
SERVICE INDUSTRIES LTD. z
111.5
5.1
4.6
8
FATEH TEXTILE MILLS LTD.
372.6
16.7
4.4
9
JANANA-DE-MALUCHO TEXTILE MILLS LTD.*
27.3
1.1
4.1
23.2
2.2
9.3
389.8
35.8
9.2
16.4
1.2
7.5
103.5
6.4
6.2
23.0
1.1
4.7
10
CRESCENT STEEL & ALLIED PRODUCTS LTD.
747.6
30.6
4.1
11
CRESCENT TEXTILE MILLS LTD.*
224.9
8.6
3.8
12
LIBERTY MILLS LTD.
423.1
15.7
3.7
13
TATA TEXTILE MILLS LTD.*
14
BANK ALFALAH LTD. z
15
135.8
4.6
3.4
4217.0
134.7
3.2
FIRST HABIB MODARABA
173.1
5.1
2.9
16
QUETTA TEXTILE MILLS LTD. *
199.3
5.5
2.7
17
CHERAT PAPERSACK LTD.
110.4
3.0
2.7
18
PAKISTAN SERVICES LTD.
692.2
17.9
2.6
19
PARAMOUNT SPINNING MILLS LTD.*
53.4
1.4
2.5
20
NESTLE MILKPAK LTD. z
3040.6
72.8
2.4
21
DEWAN SALMAN FIBRE LTD.
413.3
9.2
2.2
22
GUL AHMED TEXTILE MILLS LTD.*
372.6
7.5
2.0
23
JAHANGIR SIDDIQUI INVESTMENT BANK LTD.
24
INTERNATIONAL INDUSTRIES LTD.
25
GULSHAN SPINNING MILLS LTD.*
z
December year end
* The financial year changed from September to June
__ All figures rounded to one decimal place whereas,
rankings were made on actual percentages.
818.3
16.1
2.0
1026.9
19.9
2.0
65.1
1.3
2.0
Table 14
Sub-Sectors by Average Volume of Donations (2004&2005)
Number of Companies by Year and Category
SECTOR
AVG. NO.
OF COMPANIES
AVG. DONATIONS
BY SUB-SECTOR
(PER FIRM PER YEAR)
PKR Million
RANKING BY
AVG. DONATIONS
RANKING
IN 2005
RANKING
IN 2004
OIL & GAS EXP. COS.
4
44.5
1
1
1
FERTILIZER
4
19.1
2
2
2
20
14.3
3
3
9
TRANSPORT
3
5.7
4
4
11
OIL & GAS MKT. COS.
7
5.3
5
5
3
REFINERY
3
4.9
6
6
4
TOBACCO
5
4.2
7
7
6
AUTO ASSEMBLER
12
3.8
9
9
5
FOOD & PERSONAL CARE PRODUCTS
19
3.6
8
8
10
INV. BANKS/INV. COS./SEC. COS.
21
3.0
11
11
7
ENGINEERING
10
2.8
12
12
8
8
2.5
10
10
15
CEMENT
21
1.8
13
13
14
SYNTHETIC & RAYON
16
1.3
17
17
16
POWER GENERATION & DISTRIBUTION
12
1.3
16
16
17
CHEMICAL
22
1.1
15
15
19
7
0.9
27
27
13
INSURANCE
31
0.9
18
18
23
TEXTILE COMPOSITE
48
0.9
19
19
21
SUGAR & ALLIED
36
0.7
21
21
22
COMMERCIAL BANKS
PHARMACEUTICAL
GLASS & CERAMICS
5
0.7
22
22
20
AUTO PARTS & ACCESSORIES
10
0.7
23
24
18
PAPER & BOARD
11
0.6
24
20
26
MISCELLANEOUS
23
0.4
14
14
12
5
0.5
25
23
24
LEATHER & TANNERIES
JUTE
7
0.4
26
28
25
TECH. & COMM.
12
0.3
27
25
27
TEXTILE WEAVING
11
0.3
28
26
31
LEASING
20
0.2
29
29
30
TEXTILE SPINNING
99
0.2
30
30
29
2
0.1
31
32
28
31
0.1
32
31
32
7
0.0
33
33
33
CABLE & ELECTRIC GOODS
WOOLLEN
MODARABAS
VANASPATI & ALLIED
Rankings
25
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
Table 14 shows the average aggregated
donations per sector per firm for the
year 2004 and 2005 as well as the
individual years’ average sectoral
performance. The rationale for taking
averages to analyze sectoral
performance lies in the fact that by
averaging, the 'size bias' is removed.
The 'size bias' in the statistical analyses
occurs when one company in a
particular sector gives significantly large
amounts relative to other companies in
the same sector. By averaging this effect
is removed.
4
Conclusion
“I did something that challenged the banking
world. Conventional banks look for the rich; we
look for the absolute poor.”
M. Yunus, Founder Grameen
Bank,
An understanding of why firms give and
what influences the level of giving is
important to both the recipients of
corporate philanthropy and policy makers
who wish to encourage giving among
firms. Pakistan has had a strong tradition
of philanthropy. Many feel it is now time
to move forward and explore new ways of
doing business and engaging in
philanthropy for social investing. A new
approach should be adopted through
which various stakeholders participate,
policies are inclusive such that they take
account and value differences and the
impact on society is positive and effective.
The difficulty arises in attempting to
identify a universal definition of CSR and
CP.
necessary to contextulise the practice of
philanthropy within the country’s
economic and social environment.
The year 2005 particularly shows the
colossal capacity and huge potential of
Pakistani PLCs to give as witnessed by the
response to the October 8, 2005
earthquake. It now remains to harness
this potential and channelise it through
institutionalized means so as to make CP
an effective social safety net.
A weakness associated with global
comparisons and measures is that the
agenda is set by the developed world with
highly sophisticated financial markets yet
with little understanding of the assortment
of approaches, local indigenous solutions
and track record of achievements in
lesser developed economies. The
information on global corporate giving
reminds us that there is an international
perspective. But at the national level it is
Conclusion
27
C O R P O R AT E P H I L A N T H R O P Y I N PA K I S TA N: S U R V E Y O F P U B L I C L I S T E D C O M PA N I E S
The Future
In the next decade we can expect to
see our own business community
becoming more proactive in their
responsibility towards society and in
fact going beyond, to be active players
in the drive for sustainable
development. With recognition of these
actions and time bringing the effects
and accruing benefits, they must be
prepared for civil society's call for
transparency, accountability and
ethical practice moving away from
Corporate Philanthropy (CP) alone and
towards the broader spectrum of
Corporate Social Responsibility (CSR).
interesting social research questions.
From a civic and social development
point of view, further research may
shed light on how national PLCs in a
developing country like Pakistan are
adapting to local pressures to play a
civic, as well as commercial, role in
their communities. From an economic
perspective, studying CP in Pakistan
may inform us how Pakistani firms are
adjusting to global competition, as it
threatens their market share, profits
and the dominant position that they
have traditionally enjoyed in their
national markets.
What is heartening is the evidence that
shows a shift of CEOs and policy
makers from a curtailed vision of CSR
and CP to an integrated and holistic
model encompassing stakeholders that
is being reflected through broadened
business vision and innovative
processes. To develop this pattern
further, our future business leaders
need to expand their understanding
and practices and current leaders need
to share innovative and best practices.
Razi-ur-Rehman Khan, Chairman,
Securities and Exchange Commission
of Pakistan (SECP) comments, “The
SECP is to introduce codes of good
governance in all sectors and is
committed to evolving a strategy for
CSR.” The goal for future leaders will
be to ensure shareholder satisfaction
along with improving the quality of life
for employees and local communities
who help them generate their wealth.
In the last decade, we have seen
numerous successful business initiatives
undertaken to combat environmental
issues. Thus, we have working proof
that business coupled with civil society
make an effective team.
Will CP in Pakistan increase, decrease
or remain the same over time?
Pressing economic inequities and
deteriorated social conditions suggests
that the public sector will solicit
assistance from the private sector for
resources to help meet the needs of
the population. As the Government of
Pakistan moves towards privatization
and a free market economy, its scarce
resources will become scarcer still,
making the task for the state meeting
social and economic demands of the
public more difficult. The country may
increasingly look to private sector
philanthropy to fill the gap, particularly
as philanthropy is progressively more
being recognized as a safety net.
The presence of CP raises several
There is a probability that globalization
and the resulting global competition
may significantly affect the degree to
which Pakistani PLCs pursue CP. The
rankings by volume of donations
suggests that there is a positive
correlation between the level of a firms
involvement in CP and the level of
market share held by that firm in its
industry. Evidence reveals that firms
that are the most active and generous
corporate contributors are also very
wealthy firms that are dominant players
in their industries. Moreover, we see
that the top 25 companies account for
the bulk of total corporate giving.
What would happen to CP if these
firms were to lose their dominant
positions? One observation could be
that CP in Pakistan may reduce as we
move towards a freer economy with
liberal trade policies. The resulting
lower barriers to entry may allow
competing firms both domestically and
internationally to challenge the
position of many Pakistani PLCs,
putting a squeeze on their profits. The
result could be fewer donations by
Pakistani PLCs to charitable causes,
and an overall reduction of CP.
On the other hand, a competing
argument exists where access to
foreign markets would mean greater
productivity through opportunities for
Pakistani companies to compete
globally. In this case the Pakistani
business sector would wish to cement
relationships with the markets and
communities they engage with. In an
attempt to achieve this, and appear to
be legitimate, modern businesses from
an international perspective, they might
in fact engage in larger amounts of CP.
Conclusion
29
About the Centre
The Pakistan Centre for Philanthropy
(PCP) is an independent nonprofit support
organisation licensed under section 42 of
the Companies Ordinance 1984. Located
in Islamabad, it is led by a Board of
Directors comprising eminent citizens and
leaders from business and civil society
organisations.
PCP was established in August 2001 as a
direct outcome of the Conference on
Indigenous Philanthropy held in October
2000 in Islamabad. The Conference,
attended by the President of Pakistan and
His Highness the Aga Khan,
recommended the setting up of a
“permanent institutional vehicle to
promote philanthropy for social
investment”.
Rather than engaging in direct
philanthropy, PCP seeks to help others in
their philanthropic efforts through
meaningful support services:
Corporate Philanthropy for
Education; a flagship initiative
implemented through Public Private
Partnerships mobilises corporate
philanthropy for improving rural area
schools. The tripartite partnership includes
government, private sector and civil
society organisations to manage inputs
and produce outputs beyond the
magnitude of those that are possible
through a singular effort.
Certification of Nonprofit
Organisations sets standards in critical
areas of internal governance, financial
management and programme delivery for
NPOs so that they can enhance their
credibility and transparency. Certified
organisations are then promoted through
PCP's website to enable donors and the
government to identify credible partners
for social development. Certification also
provides NPOs a fast track to tax
exemption.
Research Studies aim to explore factors
that affect/have the potential to affect the
quantum of philanthropy resources that
may be made available for development.
Recent studies include ‘Creating an
Enabling Legal Framework for Nonprofit
Organisations’, ‘Philanthropy and
Leadership: A Study on the Giving
Practices of High Networth Individuals’,
‘Philanthropy by Pakistani Diaspora in the
USA’ and ‘Corporate Philanthropy in
Pakistan: The Case of Public Listed
Companies’.
Information Dissemination and the
General Promotion of
Philanthropy
is an essential underpinning function that
involves PCP in promoting knowledge and
philanthropy best practice across
boundaries; generating informed
discussion; catalysing interaction; and
voicing issues concerning the growth and
development of civil society to address the
challenge of poverty.
The Philanthropy Portal (2P) is a virtual
platform to link grant-makers and certified
nonprofit organisations to promote
effective collaborative philanthropy. 2P will
operate as a reservoir of information and
assist donors and NPOs in making
informed decisions and help build
functional relationships between the two.
For more information visit www.pcp.org.pk
Pakistan Centre
for Philanthropy
1A, St.14, F-8/3,
Islamabad
Tel. (9251) 2855903-4, 2855078-9
Fax. (9251) 2855069
[email protected], www.pcp.org.pk