by Andrew MacLeod | 11:00 AM December 2, 2013
Big trends in business and society tend to march along at a measured pace. When change happens fast in some area, it’s usually because multiple trends are converging to accelerate the process. This is what is going on now in community development. Three lines of progress are crossing, and rapidly reshaping how businesses and nonprofits together strengthen the locales in which they operate.
From the non-profit side, the trend is toward measuring outcomes, not process.
First, there is a growing realization that the not-for-profit sector has, over the last 50 years, been neither as effective nor as efficient as required by either the communities they serve or the donors (from government, philanthropy, and the private sector) that fund their efforts.
Recent studies of the efficiency and effectiveness rates of leading international NGOs and UN agencies have revealed the shortcomings of a system that, over the last half a century, has measured itself on process and not outcome.
Take the example of child sponsorships, highly popular as a marketing tool for many NGOs. Child sponsorships have been operating since 1953, and all of them share the high-level objective of breaking the cycle of poverty. By now, three generations and at least three million children have passed through such programs. Have they been effective? It’s a valid question, but disappointingly, almost no NGO can point to evidence of impact. Most haven’t identified measurable proxies such as how many former recipients went on to become leaders in business, community, or government – or how the served population’s employment and wage rates differ from the general population. Instead, the NGOs fall back on process measures, like how many schools have been built or teachers hired.
To a business person, think how absurd this would seem. I can’t imagine, recalling my days at Rio Tinto, the managers of a copper mine measuring and proudly reporting how much dirt was moved, how deep the hole was, and how many trucks they had procured – while staying mum about how much copper was produced.
But all this has been changing. There is a growing global awareness that we are not measuring developmental or humanitarian impacts correctly. There are many efforts underway to define better outcome metrics and track them over time. And there is a growing resolve to talk honestly about what is working and what is not.
From the private sector, the trend is toward recognizing the business value of community progress.
Meanwhile, a second trend is the growing eagerness of the private sector to play a genuine and substantial role in community development. What began as charity-minded Corporate Social Responsibility (CSR) programs have evolved into pursuits of “shared value.” The term was coined by Michael Porter to denote a broader goal for businesses than shareholder value; companies operating with a shared value mindset prioritize business investments that also produce social value – and prioritize social investments that also produce business value. Managers have embraced this kind of thinking not because they have taken a “be nice” pill, but rather because they see that truly effective community programs reduce community risk, and thereby increase the net present value of their assets in developing and fragile states.
For example, BHP Billiton, the world’s largest mining company, runs one of the world’s most effective anti-malaria programs in Mozal Mozambique. The company’s program has reduced adult malaria infection from above 90% of the adult population to below 10%. That’s great for the community, but it’s also quite valuable for the company. Improved community health has lowered absenteeism in the work force and increased productivity by a measurable amount higher than the cost of the program itself. Beyond this initiative, BHP Billiton has a program addressing sustainability issues along three dimensions: environmental, social, and financial. And when companies collaborate, even further value can be created – a point I discussed in a previous post.
From the talent side, the trend is toward choosing work based on social impact.
The third trend unfolding is the growing expectation and even demand on the part of professionals (especially given the influx of Generation Y) that their work will have positive social impact.
This point has gone relatively unheeded in the US and Europe as the economic cycle’s impact on the job market has left people willing to accept any paid work. Look, however, at the job market in any developed economy that had no recession following the financial crisis, such as Australia, and you see a different story. Human resource managers in Australia will tell you that one of their greatest challenges is the recruitment and retention of high-quality staff. Top graduates from Australian universities are not hired and fired. The top graduates hire and fire their employers. If an enterprise does not give them what they want in terms of remuneration and satisfaction, the employer is dismissed and a new one found.
The point of convergence should be clear: genuine community development programs can respond to Generation Y’s wish for social and “feel good” components of their work. And their impact can be observed in better outcomes in recruitment and retention of high quality staff.
This balance-sheet-positive, three-trend convergence explains why, for those of us who have worked in community development for years, the past few years have been so energizing – and it predicts that the transformation will only continue.
But the speed of change also means that people not directly involved in community development are not aware of how much is different now. Businesses might not appreciate how outcome-focused nonprofits are becoming; NGOs might be too inclined to accuse companies of “greenwashing.” Policymakers might assume that the two sides are too far apart in their agendas to work in collaboration.
If this is true in your organization, do what you can to open people’s eyes to the new reality. The convergence is happening, and it’s time for leaders in every sector to recognize the common ground. Otherwise, opportunities to improve trade and tackle poverty alleviation in emerging and fragile economies will be missed, and both corporations and communities will suffer.