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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Social Contribution From: “Charity” to “Philanthropy”

Social Contribution From: “Charity” to “Philanthropy”

HONG Hyun-Min

June 26, 2013

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Social contribution activities among non-profit organizations are evolving from individual "charity" to systematized "philanthropy." Such developments have spurred non-profits to introduce the techniques of business management, with outstanding results. This report looks at the efforts of non-profits to use business processes, services, and customer relations techniques through the competitiveness theory of Michael Treacy.

Aravind Eyecare System is a new concept hospital that provides free treatment to poor patients, and is funded by patients who can afford treatment. Standardization of its operation process, and the construction of a manufacturing facility for core materials has allowed free treatment for over 1.2 million patients (around 48%) as of 2011. BRAC, which was established as a relief organization after Bangladesh's war of independence, has grown into one of the world's leading NGOs thanks to its provision of sophisticated services to alleviate poverty. BRAC has established one-room schools with flexible class schedules to accommodate the work schedules of farming families. It has also provided vocational training to women, and established a sales network to ensure that their products can reach the markets. Grameen Bank has improved the lives of the poor through its extension of collateral-free microcredit loans. One example of its innovation is that it requires borrowers to form groups of five people, who are th en required to help each other.

As is shown in these case studies, non-profit organizations can greatly increase their effectiveness by introducing management techniques from the business world. At the same time, non-profits need to ensure that their philanthropic spirit is not undermined by focusing on long-term and sustainable investment, rather than on short-term activities.

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