The Way We Think About Charities and Companies is Dead Wrong

How out-of-date perceptions and expectations of NGOs and Companies are preventing progress

The title for this blog comes courtesy of Dan Pallotta and his thought-provoking Ted talk The way we think about charity is dead wrong from earlier this year. I finally got round to watching it the other week and it didn’t disappoint. Dan presents a very compelling argument, highlighting the fundamental contradiction between what we expect NGOs to achieve and what we allow them to achieve.  

In the same sitting, I watched Michael Porter’s recent Ted talk Why business can be good at solving social problems. This is a great introduction to the key principles and arguments of ‘Shared Valued’ and, again, it is a very compelling argument for changing our preconceptions of what companies are here to do.

The word that comes up again and again in these talks is scale, both in terms of the enormity of the social and environmental challenges we face, and the resources and capabilities required to solve them.

The problems we face in the world today, such as climate change, poverty, disease, are huge. Some of these challenges have been around for a number of years – in fact, as Michael Porter points out in his talk, it’s a bit embarrassing how little progress has been made considering how long we have been ‘tackling’ the problems.

And this is not going to change unless we rethink our approach.

Now you’ll have to forgive me, but to make my point, I’m going to turn to the wonders of PowerPoint shapes. In its simplest form (disclaimer), this is what is needed to get to transformative change:

When we think about solving social challenges, we commonly turn to NGOs but, in the way that they are set up today, they will struggle to move beyond incremental change:

As Dan Pallotta points out, whilst NGOs have specialist knowledge, expertise and a huge amount of passion, they lack resources – charitable giving has remained stuck at 2% of the GDP since the U.S. started measuring it in the 1970s (and, remember, this is the U.S. where philanthropy is big!). They also struggle to attract the best talent because they can’t compete with the remuneration packages offered by the corporate world, and the result is that they are unable to achieve the scale or reach that they really need to successfully tackle the social problems.

Think about the last time you gave money to charity? I imagine that you wanted every penny to go towards the beneficiaries, not to cover overheads. This is a real issue for NGOs – the expectation is that they are there to solve the world’s problems but without, God forbid, spending money on marketing, fundraising or salaries. Would you expect the same of a business?

The answer to that last question is no, however our expectation of companies is equally strange. A company has resources, talent, scale and reach but, in the majority of cases, these inputs are focused on generating profits rather than, and in some cases to the detriment of, solving social and environmental problems.

 What if…

·         Companies focused their energy on finding ways to sustain growth and profits through playing a role in helping solve some of the world’s big problems?

·         NGOs could invest in talent, fundraising and marketing and scale to the size where they could really make a different to the world’s big problems?

·         Companies and NGOs collaborated – bringing together different strengths and skills – to tackle the world’s big problems?

None of these ‘what ifs’ are impossible, in fact, some of them are starting to happen already. Look at the Gates Foundation, which is investing in talent, research and innovation. What is crucial is that we rethink our age-old perceptions and expectations of companies and NGOs. As a society, we need to allow these institutions the permission to evolve and change to meet the challenges of our world today. That is when we will see transformative change.

Challenging the Status Quo

A couple of weeks ago, I had the opportunity to attend the Conference Board’s Corporate Social Impact Conference. This annual conference brings together a varied audience comprising philanthropists, non-profits, foundations, companies, local government and consultants from around the U.S. It was a great chance for me to meet people and step outside my usual sphere of corporate work to understand and listen to the trends and challenges faced by different organizations across the social impact/sustainability community.

There were many interesting presentations and panel discussions but I’m going to single out a couple of speakers, who inspired me with what they said about the importance of focusing on solving problems – despite the discomfort and potential disruption - over maintaining the status quo.

The Heat and Warmth Fund (THAW Fund) helps Michigan residents who are struggling to pay their energy bills. Those who receive support include the elderly, the unemployed and the disabled and, according the organization’s website, "70% of the households assisted have a child or senior in the home". THAW Fund receives support from a multiple utility companies in the Michigan area – it’s a partnership that works insofar as both parties are able to achieve their existing aims; however, when you think about it, in many ways both organizations are merely circling the problem. THAW Fund CEO, Susan Sherer, wants to change this. Her team is now working with the regional utility companies to find ways to stop people getting behind in their energy payments in the first place. It’s early days and we’re talking about a complex problem that won’t be solved overnight, but at least both organizations are taking the first step towards tackling the root problem, rather than doggedly maintaining the status quo.

The other speaker I want to mention is Yasmina Zaidman, Director of Communications & Strategic Partnerships at Acumen Fund. Acumen invests in social enterprises, emerging leaders and breakthrough ideas to tackle poverty. Its model empowers local people to find ways to solve challenges facing themselves, their families and their communities, giving them the dignity to make decisions and take responsibility for their futures. Yasmina spoke about the opportunity for large corporations to learn from the innovative solutions developed by social entrepreneurs and their approach to finding solutions. Corporations will never have the agility of small enterprises; however, they can play an important role in supporting, mentoring and investing in social entrepreneurs and their ideas. Through doing this, they will have access to cutting edge innovation and, potentially, solutions to challenges that may threaten the long-term viability and sustainability of their business and the world in which it operates. Recently, the Acumen Fund convened a meeting between large corporations and social entrepreneurs in Nairobi to explore potential ways to bring social entrepreneurs and corporations closer together. There were a number of challenges raised by both sides – both real and perceived – but, the very act of being there shows a willingness to explore new paths and move away from simply maintaining the status quo.

What I admire is the courage of these different organizations – from THAW Fund to the corporations involved in the summit convened by Acumen – to look at things through a fresh lens. After all, as George Bernard Shaw put it, “progress is impossible without change, and those who cannot change their minds cannot change anything”.

Because there’s no... urm plan B

So Branson is back! Last week Richard Branson launched his B Team, a group of global business leaders
who have joined forces “to create a future where the purpose of business is to be a driving force for social, environmental and economic benefit”. In typical Branson style, the project was launched with a big media splash and, rather infuriatingly for people who work in this sector, he talks as though he invented sustainability. However, I digress…

Superhero?

For those of you in the UK, the irony of the name, considering M&S’s Plan A (“…because there is no plan B”), won’t be lost on you. The name has caused a stir in the US for different reasons given the recent moves by the Government, and associated media attention, to prevent teens from obtaining the morning after pill, Plan B, without a prescription.

What the B Team is actually going to do is still somewhat vague. The group is committed to tackling three initial challenges “to help focus business away from short-term gain and to balance the long-term benefits for people and planet”:

• The future bottom line: to include people and planet in business’ bottom line.
• The future of incentives: to catalyze incentives that benefit people and planet alongside profit.
• The future of leadership: to ignite a movement of leaders committed equally to people, planet and profit.

The details of how these challenges are tackled is still to be fully disclosed – and perhaps worked out – but,  crucially, the B Team will play a convening role, bringing together influential figures and decision makers from Governments, non-profits and the corporate sector.

Although Branson’s style is a little difficult to swallow, it’s early days for the B Team so we should give it the benefit of the doubt. However, for me, there are two key questions:

• Are we just preaching to the converted? As Toby Webb pointed out in his recent blog, our sector is becoming more like a ‘cocktail party’; people circulating and telling each other what they want to hear. Richard Branson has bought together ‘believers’; it’s a great line-up of sustainability greats, such as former Chairman and CEO of PUMA, Jochen Zeitz and Unilever’s CEO, Paul Polman. The question is, are these people going to be able to influence the non-believers? Or will they just be the same voices, preaching the same messages? They've been ignored in the past so what are they going to do differently to engage the skeptics going forward?
• What is Team B’s special sauce; what is it that will enable them to succeed where others have struggled? It’s not so long since everyone was talking about the revolution of Shared Value, and now it’s gone rather quiet. That’s not to say that Porter and Co. are not making progress but it’s not changing the world over night. Is the same thing going to be true of the B Team?

Just in case, is there a Plan C?

We need a Captain Planet to get rid of our Eco-Villans once and for all!

I went to my first Green Drinks Happy Hour the other week… no, not an event for people that like green cocktails, although that could be fun! It’s a monthly event that brings together sustainability professionals in the Boston area. It was fun evening and great to meet some fellow sustainability enthusiasts; however I had two conversations that really stood out and, if I'm honest, despair of humanity.

Number 1: it didn't take me long to track down the fellow Brit in the room, who was an academic from the UK, currently doing research at Harvard University. He is looking at the public policy implications and barriers linked to the climate change mitigation strategy of blocking the sun. My initial reaction was a mixture of incredulity and horror; for starters, ‘blocking the sun’ sounds like a plan from Captain Planet and, secondly, why would anyone want to make the world colder and darker? But immediate reactions aside, it is actually a very interesting idea. Some advocate the use of a giant mirror positioned hundred of km above the Earth’s surface to deflect some of the sun’s rays away from the Earth. However, the same effect could be achieved by shooting sun-reflecting sulfates into the lower stratosphere to create a barrier, which is, apparently, not very costly or difficult to do. Temperatures would be reduced by 1-2 degrees so we wouldn't be walking around in the cold and dark (or so I am led to believe) and, in only a couple of years, it could significantly slow down the rate of climate change.

The real barrier is not the science or individuals, like me, who like the sunshine; it is getting global consensus. In order to go ahead, the plan would need to be agreed by leaders all around the world, which is the final nail in the coffin as that is unlikely to happen. This is nothing new – Climate Change would have been addressed long ago if we weren't all so busy protecting our own interests. Maybe blocking the sun is not the answer but it still makes me sad that, in an ever more global world, we are still so far from being able to make rational, considered decisions for the greater good.

Number 2: I got talking to a lawyer, who had come to the event to find out more about ‘this sustainability stuff’ and, particularly, the business case as it relates to shareholders. I began my usual spiel about how, if done strategically, corporate responsibility is good for business and benefits all stakeholders. However, he stopped me and pointed out that many shareholders still think in the short term. If, as a result of running the business in a more sustainable way, there was any affect on the dividends they would receive for that year, even if the longer-term profit forecasts were bright, they would never agree and may even sue the company. Again, this is not news. I am aware of huge mindset shift that needs to happen worldwide to get more companies to adopt a more sustainable approach to business. Nevertheless, it still astounds me at the ability of people in the world to blindly act according to their own interests rather the interests of their communities, countries, or even the planet.

Maybe we need Captain Planet after all!

Don't forget about business

As we're new to Boston, we're being keen beans and doing all the tourist 'must sees'. At the end of last week we went to the Harvard Museum of Natural History, which has some amazing exhibitions and a huge collection of skeletons and fossils that will excite even the most sceptical visitor. One of the exhibits, put together in collaboration with the Harvard University Center for the Environment, is about climate change: how this has affected our planet in the past and what challenges we face in the future. The best bit of this exhibition was a video outlining the actions required to slow climate change and what this means financially for each family in the USA. At points, those watching the video are asked to vote as to whether or not they're willing to take these actions. Perhaps the most testing question is whether or not individuals in the USA are prepared for the government to invest in climate change initiatives in other less-developed areas of the world i.e. individuals in the USA pay for changes in their own country as well as funding initiatives in developing countries. Not an easy question to answer by any means, especially when the financial costs are made clear...

However, it's not just individuals and the government that need to take action. What is missing from this video is the role that business plays in tackling climate change. Whilst there are actions that individuals and governments can take, there are also ways that the business community can make a huge difference through their own initiatives and through collaboration with others. Real and lasting change will happen when all these efforts combine.

In a post on the BSR blog the other week, Solitaire Townsend, Cofounder of Futerra Sustainability Communications, talks about the critical role of brands in influencing and changing consumer behavior. As she puts it: "Brands carry promises and guide our behaviors—from doing laundry to buying a new car... As consumers struggle to balance their aspirations with reality, they will look to brands for answers. Right now they are asking, but soon they will be demanding.” Of course, the way that businesses respond to these demands will be very different - it might be through a transition to a new business model and, as Fiona Bennie describes it in her blog Same Brand, Different Business Model on the Sustainable Brands Blog, "[holding] customers' hands as they transition to and adopt new ways of consuming, of lending and borrowing, and ultimately of meeting their needs". Or through the adoption of more 'durable design' so that products change over time and continue to interest and inspire their owners. These are just some of the ways that businesses can work to make their own operations and the lives of consumers more sustainable.

What's important for consumers to understand is that they're not alone. Whilst this doesn't mean we should all sit back and do nothing; we shouldn't be daunted by the action that needs to be taken because businesses, governments and individuals are all in this together!