Family Foundation in Indonesia: Its Challenges and Development Opportunities to become a Modern Philanthropy Organization
Jakarta, January 28, 2016
- Hamid Abidin, Executive Director of Association of Philanthropy Indonesia
- Indra Cahaya Uno, Mien R. Uno Foundation
- Paulina Maria Dame Uli, Yayasan DEL
- Terzi Niode, Omar Niode Foundation
Moderator: Sita Supomo, PFI Executive Board member
The 3rd Philanthropy Learning Forum (PLF3) was held at Henk R. Uno, SBM-ITB, Jakarta, on January 28th, 2016. The topic was the Family Foundation in Indonesia, and the challenges and development opportunities it faces as a modern philanthropic organization. PLF3 was a joint event by PFI and the Mien R. Uno Foundation. The forum was opened by the Chair of PFI Executive Board, Timotheus Lesmana Wanadjaja, and the Chair of the Mien R. Uno Foundation Supervisory Board, Sandiaga Uno. Co-Chair of PFI Advisory Board, Erna Witoelar, was also present to give her closing statement and remarks.
Based on each speaker’s presentation, and the ensuing discussions and input from the participants, here are some of the takeaways from PLF 3:
- The increase in the size of the Indonesian economy has produced individuals whose income is way above the average (high net worth individual or HNWI). These individuals also have the initiative and desire to create change and help others by solving various social, economic and environmental issues. As time goes by, the demand to have evidence-based results that are sustainable in terms of financial contribution also increases. The HNWI shows that concern by establishing a formal legal entity such as a family foundation.
- In Indonesia, the evolution of family foundations has been influenced by the development of the non-profit sector and civil society, as well as social, political, economic and cultural influences. In their management, family foundations are most commonly managed by the second generation, even though the first generation still holds a role in the foundation governance, for example, as advisors. In programs, input from the second generation brings new dynamics and innovation. From this second generation grows the need to make sure that even though financial resources are limited, they must create a big impact. The management of family foundations is thus more focused and specific in terms of area, target groups, and type of programs which eases the impact measurement process. They also realize the importance of partnerships with various parties to accomplish their mission, and also as a cost-saving strategy.
- The background of these family foundation founders varies from businessmen, public figures, current or past government officials, scientists to celebrities. The reason behind the establishments also vary, such as to create a family legacy, to pass on philanthropic traditions to their grandchildren, to unite the family by focusing their attention on one problem, to share with the community, to instil a sense of independence, freedom and desire to create significant changes to their surroundings, or to capitalise on available tax incentives. According to Hamid Abidin, many family foundations in Indonesia show different traits: using the foundation to earn more money; lack of trust with other organizations as their partners; to advertise or to better their business position in the view of society.
- Mien R. Uno Foundation is one example of a foundation founded by a public figure, while DEL Foundation is a family foundation established by a former government official. Both foundations were established with a purpose to build a stronger and wealthier society through education and self-sufficiency. The Omar Niode Foundation, in comparison, was founded by the Katili-Niode family in memory of their son who passed away at a young age. This foundation dedicated itself to supporting agricultural and food issues which were Omar’s interests while studying abroad.
- Some challenges faced by family foundations are similar to other non-profit organizations, such as lack of financial and human resources and project management and fundraising issues. Many family foundations grow naturally utilising only current resources, expanding themselves with sustainable design and planning. More typical issues for family foundations are: values transfer from the first to the second generation; involving outside staff and professionals to manage and run the foundations; the redirection of programs from mere charity work to philanthropy work, especially by the second generation.
The philanthropists from these foundations hope that the government gives more attention to the philanthropy sector and treats it as fundamental to the development of society. Philanthropic acts, including by family foundations, have pulled many from poverty and helped them become self-sufficient in raising their family, simultaneously improving the community’s economy and, by extension, the nation’s. Issues that are often overlooked by the government have proven to have significant multiplicative economic effects.