Getting Business on Board in the Big Global Society
DEA Conference: Big Global Society: unlocking social action on global issues
I’m going to start by stating the bleedin’ obvious: in the current financial situation there is a strong imperative to find new and imaginative ways of funding services; the public sector cash cow which has fed the third sector with full cream milk for a decade is on its last legs.
We know that public funding through third sector organisations will be at risk or under pressure for the foreseeable future; any organisation which maintains current spending on publicly or voluntarily funded projects will be doing very well.
Within international development the situation is no less serious. Despite government assurances about ring fencing, and a very welcome commitment to achieving both the MDGs and the 0.7% target, we are seeing both quantitative and qualitative changes in government funding.
- DfID is cutting funding which stays in UK – such as for development education, a policy which will impact directly on the work of DEA.
- DfID is putting new emphasis on outputs and outcomes. ‘Payment by results’ is a real challenge as there are no clear, agreed or universal criteria for comparing time scales or sustainability or measuring intangible outcomes. But ‘payment by results’ requires a radical change in the approach of NGOs to financial risk, which they may be physically and psychologically ill-equipped to make.
- DfID has argued recently that development should be ‘business-led’. This suggests a laissez faire approach as we wait for ‘market solutions’ to deliver economic benefit to the poorest countries; whatever the merits of this argument, it cannot work on any timetable related to realising the MDGs by 2015.
- Finally, DfID has announced a reduced emphasis on the relief of poverty as its guiding priority towards issues of conflict and security. This may mean that the ‘UK national interest’ will have a stronger influence on development spending in future than at any time since the Pergau Dam.
So, if government funding for development NGOs is to wane, how can it be replaced? I am assuming there is no will to ‘give up and go home’ as the bad weather arrives; this is not cricket, after all.
Well, it’s a problem.
- At times of recession and deficit reduction belts are so tight that voluntary donations to charity are likely to fall, as development charities are subjected to Daily Mail-type attacks and insinuations of the “charity begins at home” variety.
- Not only does the third sector face a non-recoverable increase in VAT, in the New Year but in April the three year protection of Gift Aid runs out, meaning that income from every Gift Aided pound will be about 3p or 10% less than the 28p it is worth today.
- Philanthropy (excluding Gates’ style megaphilanthropy) and Corporate Philanthropy are both susceptible to wider economic influence. Philanthropy may not be well-targeted development-wise; and even if philanthropists are not hit by recession, fear of being so may delay the giving of money or reduce what is given.
So where is the next wave of development funding going to come from?
Well, perhaps DfID does know what it’s talking about. Within the ‘business role in development’ it is accepted that local economies can potentially generate more wealth through trade than aid can. With fewer large corporations based in the South, we look to either the local SME sector or to multinational corporations to create opportunities for generating the fuel for development.
Whilst there is little that we can do in the short term about that SME sector in the poorest countries, other than by practising fair trade an advocating a wider ethical approach to the supply chain, we must not write off multinational corporations as a source for good.
Many have already engaged positively in development, through enlightened self interest; good examples exist of NGOs influencing and even co-delivering projects alongside business partners.
In 2008 I visited a Nestlé factory in South Africa. The company was investing in training and skill development but too many young employees were dying from AIDS and other diseases of poverty within a handful of years. Investing in employees who might only work for the company for a short time, in a country lacking in robust public services, was not sound. So Nestlé funded charities, social enterprises and voluntary groups to improve preschool and school education locally and raise levels of nutrition and health education both in the community and the workforce.
Almost immediately, the life expectancy of young workers started to rise, the company had a more stable workforce – and the training bill was reduced. Utilising this holistic approach, which Nestlé calls Shared Value, this was win-win-win for company, community and NGO partners.
Elsewhere, Anglo American is one of the biggest distributors of antiretroviral drugs in Africa since it decided that investing in the health of its workforce was justified on commercial grounds.
The prospect of utilising the Coca Cola distribution system to deliver medicines throughout Africa, provided free by northern pharmacists, used locally by trained third sector volunteers, is also an exciting one: the private sector contributes much more than cash to development.
Current interest amongst companies and charities in finding new ways of working together is neither fad nor whim. One can barely move in the third sector for conference fliers promoting ‘win:win partnerships’ or ‘new ways of working’.
It is no longer enough for companies to do the odd good deed in the community to enhance their image and reputation; Red Nose Day is not the only opportunity to build a team ethos. Unless a business is predisposed towards corporate philanthropy, and most aren’t, then in the 21st century corporate social investment requires as much bottom line justification as its commercial counterpart: just ask those companies for whom VSO is now an important part of their senior management HR programme.
Back in the 20th century such partnerships were almost unheard of. Private and social capital were the twain that could never meet. Private sector motives were cynical, according to third sector activists, whilst volunteers were regarded by business as amateurs lacking professionalism.
Three things happened as the century turned:
- As local and central government looked increasingly to the voluntary sector to provide services in partnership – in care, tackling re-offending, youth and community services and elsewhere – the sector was obliged to behave in a more professional and businesslike manner.
- Second, the private sector started to find itself providing those same ‘public’ services, either where local government had failed or where the scale was beyond the capacity of the third sector, such as DWP back to work schemes. This meant that third sector input – cost effectiveness, local variation and added value – became as attractive to private sector providers as to public ones.
- And thirdly, values like Corporate Responsibility and business sustainability (which should mean so much more than ‘going green’) took off in the business world.
Business accepts that charities ‘do conscience’ better than they do and that rationally forged partnerships can bring benefit.
- RBS supports financial and benefit advice amongst Macmillan’s cancer patients.
- Age UK’s telephone befriending programme for elderly people living alone started as an employee volunteering scheme within Zurich Insurance.
- The Post Office has not only upped the profile of its fundraising efforts for Barnardo’s; but by working with young people in care and reserving apprenticeship places for them it is acquiring knowledgeable and committed employees in return.
Whilst the values which drive these partnerships are not new, there are no rules for private / third sector partnerships.
- There is no memorandum of understanding between the sectors,
- no ‘Compact’ like that which has guided the the best partnerships between public and voluntary organisations for ten years now;
- no centrally directed funding;
- no cross-sector body to issue guidance, uphold good practice or advocate this particular breed of matrimony.
And yet they work: perhaps because the hard-nosed business community will not enter into relationships that won’t.
Perhaps neither rigid infrastructure nor external funding is necessary; the market in partnerships may regulate itself. But guidance, advocacy and agreed minimum standards are essential.
Let me tell you a bit about my work. I am a former MP who was an aide to the International Development Secretary for four years and I have a deep and wide knowledge of civil society in Britain (I understand we’re not allowed to call it the third sector any more).
Today I am a freelance consultant on charity / business partnerships, called Sector 4 Focus, advising charities on diversifying their funding streams by linking up with employers; and advising employers on how to engage in charity partnerships to give substance and sustainability to their CSR policies, without compromising charities’ historic missions.
One way in which this is expressed is through my role as an Associate to Tomorrow’s Company, the ethical business think tank. Together we are embarking upon a major study of how business and UK NGOs work together in the developing world, how such sustainable relationships can be promoted and how UK can learn from that best practice.
Finally, a word about the Big Society, which includes the Big Global Society of which Andrew Mitchell has spoken. If this phrase means anything, it must distance itself from the ‘chaos and disorder’ that ministers like Francis Maude are boasting about. “You cannot impose structure on a capitalist economy,” he told the Conservative Party conference.
It is estimated that the Comprehensive Spending Review has removed up to £5 billion form the third sector; compensated by a ‘crisis fund’ of £100 million, or just 2% of the loss.
The idea of a Big Society without money taxes the imagination; but it has its roots in Victorian Values, in balancing rights and responsibility and even in the philosophy which says there is no such thing as society, only families and individuals. I do not hold to that philosophy but I think I understand it.
But a Big Society
- without structures,
- without incentives to co-operate, innovate and engage;
- a Big Society not run by the state but without the state as a partner;
- a Big Society which cannot protect the weakest from exploitation or the poorest from destitution, and which cannot bring opportunity to the disadvantaged,
…is not a society at all.
The Government has said that it wants business to be part of the Big Society but it has not said how.
In short, the currently vague concept of a Big Society contains threats but also opportunities. It is up to the sector, both in development and elsewhere, to make sure that a genuinely inclusive and productive society emerges.
That means sticking to our historic missions and taking initiatives ourselves to make sure that the Big Society runs on Big Values which we can all share.
Tom Levitt, Sector 4 Focus
DEA Conference 2010