Feature Stories

18.10.2017

The Outward-looking Family Philanthropy

Since Mr Sukanto Tanoto founded RGE in Indonesia in 1973, the business has grown into an international resource-based group of companies with assets exceeding US$18 billion and a workforce of over 60,000. Alongside the development of the business, Mr Tanoto has been very keen that he, and the members of his family, actively give something back - both to the communities his companies operate in and to the wider society.

Many successful family businesses have established foundations with goals to solve social issues. Beyond the obvious valuable impact the work of these bodies can have on individuals and communities, they also offer a way to embody a family’s values and serve as a unifying project that will engage family members who may be less active in the business.

Mr Sukanto Tanoto established his first company in 1967, serving as a supplier and contractor to the Indonesian oil industry. Six years later he founded RGE as a plywood business, and since then he and his family have developed it into a global, resource-based group of companies with manufacturing operations in China, Indonesia and Brazil, and sales offices worldwide. The business has five key operational areas: pulp and paper, palm oil, specialty cellulose, viscose fiber and energy.

“Our family’s philanthropy work began in 1981, in Indonesia, to provide quality education to employees’ children in our areas of operation,” Mr Tanoto explains. “Education as a cause is particularly close to the hearts of my wife and I because we did not get to complete our formal education when we were young.”

Though they were later able to study independently, this experience sharpened Sukanto and Tinah Bingei Tanoto’s appreciation of the value of learning. “Every child should have the opportunity to get quality education, and with that, realize his or her full potential,” Mr Tanoto says. “This belief is at the heart of our passion for education.”

As the business has grown, so has the scope of the family’s philanthropic and community development work. Mr and Mrs Tanoto officially established the Tanoto Foundation in Singapore in 2001, and the reach of its activities now stretches to mainland China, Hong Kong, Singapore and the US. Its donations also support the work of HKUST’s Tanoto Center for Asian Family Business and Entrepreneurship Studies.

Alleviating poverty through 3Es

“Our focus is on alleviating poverty through the 3Es – education, enhancement and empowerment,” says Mr Tanoto.

The Foundation’s numerous educational initiatives include the funding of teaching training and the provision of over 700 scholarships a year. “We believe that education can help one break out of poverty and improve lives, and we want to create new opportunities for young people to be able to do so,” Mr Tanoto explains.

In the area of enhancement, the Foundation helps deliver basic amenities such as clean water and sanitation, as well as healthcare. Meanwhile, through the provision of access to productive assets, startup capital, technical skills, and links to markets, it also helps empower families to develop sustainable livelihoods.

The Foundation and the family

The work of the Foundation has become not only an expression of Mr and Mrs Tanoto’s personal concerns and interests but also those of younger family members.

“My children are busy in the business but also allocate a reasonable amount of time for philanthropic work. My daughter is driving the Foundation, and my younger son also participates. Professional managers run the Foundation, with family members and external advisors sitting on the board,” Mr Tanoto explains.

Mr Tanoto points to gratitude as one of his family’s key values. An appreciation of the importance of sharing with those less fortunate was inculcated into his children at an early age, a process that included visits to orphanages on their birthdays.

Now they’re grown up, he sees them bringing a new vision and awareness to the Foundation’s work. “The next generation takes the lead in identifying areas of societal need and impact that are aligned with the family’s goals, beliefs and passions.”

Through philanthropy, family members also find ways to work for a shared goal outside of the business. “When we make business decisions, we are different. But when we as a family do philanthropy, we are united together.”

The process also helps nurture collective decision making of the next generation, in Mr Tanoto’s view. “The problem is not to compromise, but how my children can dynamically make optimal decisions.”

The rigor exercised in RGE’s business dealings is also brought to bear on the family’s philanthropic activities, with no more than 10 per cent of the Foundation’s funding permitted to be spent on admin and supervision costs. Despite this rule, the foundation does not shy away from capacity building in its 3E initiatives.

“It is also very important to measure the impact that our philanthropy has on the community around us,” Mr Tanoto adds.

The foundation has hired international consultants to research and help implement new education initiatives, and second-generation members have visited some of the most prestigious foundations in the US to benchmark their work and study best practice. They are thinking of ways to maximize the social impact.

The 5Cs of the Tanoto business philosophy

“Anything we do must be good for the community, country, and only then will it be good for the company,” Mr Tanoto explains. “And my second generation bring in two new dimensions here, climate and customer, and we turn from 3Cs to 5Cs.”

Given the scale of its activities, the business has a major impact on the communities in which it operates, and these communities must benefit from RGE’s presence, he says. “We have a very simple model: we want to be a part of the community, not a guest of the community.”

Mr Tanoto adds that RGE also feels a great responsibility to run an environmentally sustainable operation. “Globally, we are planting one million trees every day – day in, day out. We’re mapping out our carbon footprint and looking for any way we can to reduce it.”

“When you’re talking about succession, or sustainability, in a family business, it’s a question of continuity. As a family business, you have patient capital and can take a very long-term view.”

Sukanto and Tinah Bingei Tanoto's philanthropic work began in 1981 in Indonesia with the opening of a kindergarten in Besitang