During a meeting organized by the Asharqia Chamber
The endowments are the choice of family businesses to overcome the generational “dilemma” and achieve sustainability
A member of the Endowments Committee in the Asharqia Chamber, Musa bin Muhammad Al-Mousa stressed the importance of the endowment being included in the activities of family businesses, that the endowment contributes to helping companies to overcome many of their problems in achieving sustainability with the succession of generations, through the direct impact of the endowment on individuals, companies, and families itself.
Al-Mousa said in an interview organized by the Asharqia Chamber represented by the Khafji Business Council on Monday, May 3, 2021, under the title (Endowments and their Role in Family Businesses) that the Islamic endowment is defined as the confinement of the asset and the monetization of the benefit, meaning that the original remains while the same remains as real estate, financial governorates, and the like, and is usually divided into Waqf The subtlety of any endowment of the benefit on the offspring itself, and the charity which is the benefits that are used for it, and a common one that combines the two types. He explained that the endowment represents an artery and a tributary to development, so you find that the best entities, universities, schools, and hospitals in the world are endowment, and some of them started small, but very small, and became valued in millions and billions, so the endowment is a "strategic sector" and its market share is estimated at hundreds of billions and requires attention to the size of its power and its impact. With good risk management, structuring and monitoring of the change movement, resilience to crises, digital transformation, innovation, and the like.
During the meeting moderated by the Chairman of the Business Council, Marzouq Al-Balawi, Al-Mousa pointed out that endowments have become intertwined with family companies that have also produced endowment companies. The endowment is no longer far from the financial, investment, and profitability process as well, explaining that family companies are the companies that are owned and managed by the family, and they are often described. It has several advantages, the most prominent of which is the ability to act administratively and financially, the speed of decision-making and freedom from the procedures specified by the regulations, the limitation of revenues and profits to family members, which strengthens their financial position, the presence of a high-profit margin, high evaluation rates, as well as the presence of the incentive to face the great challenge to survive And the continuation of the family. Therefore, these companies were characterized by great economic importance, sufficient for representation. The percentage of family companies reached 95% in the Kingdom and the same in Italy, 90% in Sweden, 85% in Switzerland, 80% in Spain, and 75% in Britain.
In this regard, Al-Mousa pointed out that family businesses continue at a rate of more than 30% into the second generation, this percentage drops to 10-15% in the third generation, and continues to decline to 3-5% in the fourth generation, and non-continuation occurs if they do not have a specific plan. The succession, the lack of separation between ownership and management, the lack of transparency, in addition to family disputes and conflicts of interest occurred. He believes that entering the endowment status in family companies creates solutions to all these observations, and may regulate the process of continuing family businesses.
He added that there is an effect of entering the endowment on the family business in many respects (individuals, companies, and families), as the endowment achieves the purification and purification of money for the hereafter and brings blessing to the livelihood, by emphasizing the issue of assignment in money as it is a trust from God Almighty. At the level of "companies, the endowment places them in front of their social responsibility, improves their reputation and enhances their market share, and the sustainability of their stay in the market due to the survival of the benefit and interest, and opens up opportunities for volunteering and work. As for the family, the endowment contributes to bringing the family together for good and strengthening its role in society and preservation." On the values of the first founder of the family business.
