CONNECTIVE IMPACT

Why Funding the Private Sector Makes Sense

6/24/2020

It was a blustery day in DC as I ran to meet a friend for coffee. My friend is a program director at an international funding agency in town. As I sipped my coffee and waited, I revised my notes. A client of mine at the time, a multi-billion dollar consumer goods company, was looking for funding to build out a pretty substantial social impact program in several countries, on the heels of an injection of funding from a well known family foundation.

My task during this meeting was to secure an interest on the part of my friend’s agency to pursue co-funding this project, and effectively supporting my client as an investor.
When my friend rushed into the coffee shop, he sat down and mentioned he had limited time. What was my ask? I shared with him the situation - this well known client of mine was testing a new social impact program, had received some substantial initial funding, but was keen to bring other partners on board, and in particular, wanted my friend’s agency to be a core funder in the replication and scale of the program.
My friend looked at me like I had told him a three-headed alien had landed in my driveway.
Why do they need us he asked?
It’s a fair question. Why would a multi-billion dollar company need more funding to advance a social impact project? Here’s what I shared with him:

Corporate investment in social sustainability or environmental projects is still a tiny fraction of other types of program investments. Why is that? As we progress from companies investing in social or environmental programs simply to save face or get ahead of regulation, to realizing the business benefit of doing so, there is still a cultural shift that must take place inside large businesses. Huge percentages of business budgets still go to marketing, operations, logistics and overhead just to ensure products and services reach consumers. The splice of funding that goes toward more corporate social responsibility programs is relatively small. That doesn’t mean the splice isn’t growing. It absolutely is. In 2018 corporations spent $20 billion on corporate social responsibility. That’s a fraction of the hundreds of billions spent on marketing each year, however. But given the fact that we still need $2 to $3 trillion to address all 17 UN Sustainable Development Goals in the next 10 years, and we need for businesses to be a big part of the market development necessary to do so, corporate funding will simply not enough. It’s an important start, but it’s just not enough.
There is growing recognition that corporate investment towards solutions that help bring jobs, resources and economic mobility to areas with environmental or social challenges is necessary if we are going to address the 17 SDGs. That said, corporations cannot operate in certain environments under current conditions without proper safety, disaster response, water, sanitation and health infrastructure, education, and other critical investments. While some companies do support programs that help with these issues, to truly shore up the right foundation for social and environmental programs to succeed, governments must be providing funding for programs that do the same. This allows for risk abatement on the part of corporations as well. Thus government funding matches toward corporate investment has become a critical piece of economic development.
Even for some of the most sophisticated companies, with complex global supply chains, the issues that corporations face working in the farthest reaches of our planet have become more challenging, nuanced and dynamic as issues like climate change, coronavirus, human rights and gender equity (not to mention access to basic necessities and income equality) plague global dialogue. It’s naive to think that companies, no matter how deep in ranks or technically savvy, could address any of these issues alone. Thus collaboration with other actors that have a technical ability to address these perplexing challenges is critical. These collaborations require outside funding. There simply isn’t enough funding currently inside a business’s coffers to pay outright. Should companies siphon off a small percentage of their marketing budgets to augment the money going into these programs? YES! Are they currently? Yes. In the meantime, though, with outside funding there will be an opportunity to show the value in building more collaborative, technically-based replicable programs.
Often a corporation wants to test a new social or environmental program in a geography where their track record is limited or nil. Collaborating with funders, particularly public funders or private investors that know the region better, allows for a bit of risk tolerance and can help ensure programs or projects get off the ground with the right footing locally. This is particularly important when dealing with indigenous communities or geographies where corporate investment may be fraught with skepticism or challenges. Obviously companies must be strong stewards of social identify and the environment at all times.

Because of these reasons, and a recognition that working in concert with the private sector will allow funders to make their investments go farther, funders across the spectrum have been ramping up their private sector engagement strategies. Collaboration in international development is no longer just about implementation or designing projects. It has developed into a method for identifying and deploying systemic solutions that promote long-term sustainability and lasting impact for the people and communities who need the support most.
As for the coffee date with my friend at the funding agency, we weren’t able to come to terms during that initial coffee meeting. But after several meetings with our corporate client, we helped build out a strong partnership that will bring opportunities for sustainable impact for decades to come. Want to learn more about private sector engagement to address the SDGs? You may find these resources useful
Why Funding the Private Sector Makes Sense
It was a blustery day in DC as I ran to meet a friend for coffee. My friend is a program director at an international funding agency in town. As I sipped my coffee and waited, I revised my notes. A client of mine at the time, a multi-billion dollar corporation, was looking for funding to build out a pretty substantial social impact program in several countries, on the heels of an injection of funding from a well known family foundation. My task during this meeting was to secure an interest on the part of my friend’s agency to pursue co-funding this project, and effectively supporting my client as an investor.
When my friend rushed into the coffee shop, he sat down and mentioned he had limited time. What was my ask? I shared with him the situation - this well known client of mine was testing a new social impact program, had received some substantial initial funding, but was keen to bring other partners on board, and in particular, wanted my friend’s agency to be a core funder in the replication and scale of the program.
My friend looked at me like I had told him a three-headed alien had landed in my driveway.
Why do they need us he asked?
It’s a fair question. Why would a multi-billion dollar company need more funding to advance a social impact project? Here’s what I shared with him:

Corporate investment in social sustainability or environmental projects is still a tiny fraction of other types of program investments. Why is that? As we progress from companies investing in social or environmental programs simply to save face or get ahead of regulation, to realizing the business benefit of doing so, there is still a cultural shift that must take place inside large businesses. Huge percentages of business budgets still go to marketing, operations, logistics and overhead just to ensure products and services reach consumers. The splice of funding that goes toward more corporate social responsibility programs is relatively small. That doesn’t mean the splice isn’t growing. It absolutely is. In 2018 corporations spent $20 billion on corporate social responsibility. That’s a fraction of the hundreds of billions spent on marketing each year, however. But given the fact that we still need $2 to $3 trillion to address all 17 UN Sustainable Development Goals in the next 10 years, and we need for businesses to be a big part of the market development necessary to do so, corporate funding will simply not enough. It’s an important start, but it’s just not enough.
There is growing recognition that corporate investment towards solutions that help bring jobs, resources and economic mobility to areas with environmental or social challenges is necessary if we are going to address the 17 SDGs. That said, corporations cannot operate in certain environments under current conditions without proper safety, disaster response, water, sanitation and health infrastructure, education, and other critical investments. While some companies do support programs that help with these issues, to truly shore up the right foundation for social and environmental programs to succeed, governments must be providing funding for programs that do the same. This allows for risk abatement on the part of corporations as well. Thus government funding matches toward corporate investment has become a critical piece of economic development.
Even for some of the most sophisticated companies, with complex global supply chains, the issues that corporations face working in the farthest reaches of our planet have become more challenging, nuanced and dynamic as issues like climate change, coronavirus, human rights and gender equity (not to mention access to basic necessities and income equality) plague global dialogue. It’s naive to think that companies, no matter how deep in ranks or technically savvy, could address any of these issues alone. Thus collaboration with other actors that have a technical ability to address these perplexing challenges is critical. These collaborations require outside funding. There simply isn’t enough funding currently inside a business’s coffers to pay outright. Should companies siphon off a small percentage of their marketing budgets to augment the money going into these programs? YES! Are they currently? Yes. In the meantime, though, with outside funding there will be an opportunity to show the value in building more collaborative, technically-based replicable programs.
Often a corporation wants to test a new social or environmental program in a geography where their track record is limited or nil. Collaborating with funders, particularly public funders or private investors that know the region better, allows for a bit of risk tolerance and can help ensure programs or projects get off the ground with the right footing locally. This is particularly important when dealing with indigenous communities or geographies where corporate investment may be fraught with skepticism or challenges. Obviously companies must be strong stewards of social identify and the environment at all times.

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How the UN Global Compact Leaders Summit Gives Me Hope for the Future Change We Need

6/15/2020

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Photo: Courtesy of Life Matters

The UN Global Compact, a collaborative initiative of global companies working together with UN member governments and affiliated civil society actors to advance societal goals, kicked off their Leaders Summit today. An annual gathering of the world's most vocal experts around the role business can and should play to affect change, the Leaders Summit is a who's who in the world of social impact and mission-driven business.

Originally, the event would have taken place at UN Headquarters in New York City. This year, of course, we were able to join virtually. The fact that the event was free to anyone who applied, and required no travel, nearly 20,000 attendees from all over the world joined in. The UN Global Compact team has made an effort to craft a robust 24-hour event that is accessible during all time-zones. It's been remarkable to see the effort in action.

The Summit has thus far focused on how business and purpose-centered leaders can coalesce to make global change, recover from the current COVID pandemic and associated economic slowdown, and address racial injustice while moving us into a place of equity and harmony. That’s quite a hefty task.

Whereas one may feel suspect of a coalition of businesses making much difference in our somewhat mad world these days, the sessions have brought me a sense of peace, hope and excitement.

For example during a brief networking round of speed chats, I met a 10th grader from Istanbul, Turkey, who had founded a women’s rights organization and was CEO of a girls’ education organization promoting gender equity in Turkey. In 10th grade! I met a human rights advisor who was working with the United Nations on equal rights for laborers in global supply chains. He was also an architect. Imagine that combination of talents! I also met a student from Poland who was studying international business, while advising the UN as part of their Youth Network. The young among us are truly not sitting idle. They are making change all around us. I heard from a young woman management consulting who in her spare time helps advocate against child labor and modern slavery. The problems our world faces are not insignificant, but if these are our future leaders, we are in good hands.

What was another element of the discussions I was encouraged by? How many companies, across a very diverse range of sizes, global footprint, industries and leadership, spoke out about their commitments to the UN Sustainable Development Goals, a suite of 17 social, economic and environmental goals that the United Nations has set out to acheive before 2030. Commitments around issues like responsible consumption and production, water and sanitation, quality education, access to healthcare, no poverty, and gender equity were extensively discussed in each of the breakouts I was in, as well as in plenary. Companies were honest about what makes them responsible stewards of the planet (or not) and suggested we call them out on their commitments. The CEO of beauty brand Natura, a Brazilian company that owns its own brand, plus those of Body Shop and Avon, even went so far as to say that companies must be held accountable. That we, as consumers and stakeholders, must push companies to be honest about what’s feasible and where there are gaps in their actions. That companies must set targets, no matter how small, and work towards making bigger goals and taking bigger action.

One of the most persuasive arguments for companies taking a leading role around the SDGs is actually imbedded in SDG 17, which calls for all global actors, businesses, civil society, governments, and individuals, to partner and work together to advance the other 16 goals in collaboration. In fact the Summit even held a “SDG Power Hour” towards the end of Day 1 dedicated to brands, UN agencies and civil actors coming online and sharing their partnership aims, goals and efforts underway.

SDG 17 is obviously the most pertinent to us at Connective Impact, given our work on effective partnership building to solve the world’s most pressing problems. And as it is happens, we’ve spent the last few weeks talking to nearly 40 companies about their partnerships to advance SDG commitments. We’ll share results during our webinar this week "Finding the Right Partner to Effectively Deliver Your Sustainable Development Goals", as well as the research we are working on for later this month.

The timing could clearly be no better than now. Our planet needs us. And what’s more, our people need us. Change is indeed afoot and based on what I’ve seen among the leaders of our future, of our businesses, of those I heard from today, and of those working in international development more broadly, change is absolutely possible.

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Which Donor-Partner Type is Right For Your Fundraising Strategy?

6/3/2020

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If you are relatively new to fundraising, or question how to reset your business development or fundraising priorities given COVID, trying to find the right type of donor-partner to activate your programs may seem daunting. There are so many types of donor-partners to prospect, and it’s unclear what type of donor is best for your program’s needs.

Do you take steps to engage all potential donor-partners, or do you segment?

How do you prioritize?

Hearing these concerns from our community, we often clarify that not every donor-type is right for every organization. Start-ups will require a different type of funding to scale operations than a nonprofit that’s focused on testing solutions for societal problems, or scaling a research pilot. Corporates looking for match funding to advance social impact or sustainability programs are also in a very different scenario than nonprofits, start-ups or social enterprises.

So how does one differentiate? What are the factors to consider?

Below are five different donor-partner types, along with their traditional methods of engagement. Included are recommendations about how to identify whether each donor type is right for your fundraising and business development needs.

1. Family and philanthropic foundations: These more traditional donors represent pooled funds (or family endowments) that are allocated to causes identified as a priority by the family or operators of the foundations. These donors tend to range in size from very small, niche, local donors, to global philanthropic thought leaders that give sizable sums of money (think Rockefeller or Ford Foundation). Consider engaging with family and private foundations if your program or project matches their priorities only. Most foundations do not accept unsolicited proposals, so building relationships is a critical element to getting noticed by these donors. There won't be much opportunity for engagement if your priorities don't overlap. Building a strong partnership with foundations is a great way to stay under their radar when funding becomes available. At times foundations will issue proposal requests, so following as many whose priorities align with yours is important. Keep an eye out for news. These proposal requests are highly competitive, which also makes building a relationship with these potential donor-partners a critical element to successful fundraising.

2. Public/government agency donors: Government funding programs are meant to engage partners for delivering on policy aims, while in the case of international development programs, promote global goodwill. For example in the United States, agencies including the U.S. Agency for International Development (USAID), Millennium Challenge Corporation (MCC) and Development Finance Corporation (DFC) have countless programs in place, and many developing and progressing at once, to work with implementing partners all over the world to deliver support around infrastructure, access to basic necessities like water, housing, medical care, jobs and technology. These programs are large in size and cumbersome to engage in. Also once you receive funding from a government agency, you are locked into their reporting requirements, which can be quite onerous. The dollar values are quite high, however, as is the potential for large-scale collaboration with bigger contracting firms that are used to working with these agencies. These donor-partnership opportunities are often more robust, broad and somewhat flexible in scope. Geographies are often pre-determined. To engage with public agency donors, it's best to find a partner that is used to receiving funding from the agencies. They are well poised to manage the reporting requirements, and have a good sense of how priorities are determined. Government donors often issue requests for proposals, and smaller, more nimble grant programs are becoming more attainable given interest by these agencies to work with social enterprises, smaller private sector actors and smaller nonprofits.

3. Corporate foundations: Corporate foundations are funding programs set up by corporations for social impact and/or sustainability programs that are often in line with a company’s business aims, but that deliver on a more philanthropic set of goals. These programs are often in conjunction with the company’s corporate social responsibility (CSR) priorities. Funding from corporate foundations may come in the form of a request for proposal, or be unsolicited. Similar to private foundations, forming strong relationships and building partnerships with a corporate foundation should be a high priority if your program or projects align with the priorities. These may be around education, environmental sustainability, social issues or employee giving for various causes. As more corporations imbed social impact and sustainability in their business goals, corporate foundations are more limited in their giving potential compared to decades’ past. Finding a way to make your program relevant as a business benefit can help here. Also considering how to engage with a company’s decision makers outside of the foundation may also be worth your partnership-building effort and time given the opportunity for long-term and more targeted impact if geographies and program priorities are in line.

4. Accelerators and innovation programs/awards: Seemingly popping up everywhere, and around every issue, accelerators, innovation programs, awards and challenges offer teams with very specific solutions to ongoing social or sustainability problems an opportunity to test, refine, compete and submit proposals for funding, resources, mentorship, recognition and more. It seems nearly every big company, global agency (i.e. United Nations Development Program, for example) and even governments (see the UK’s TRANSFORM initiative) have developed these targeted funding and/or competition programs for social entrepreneurial ideas/solutions to global problems. Engaging with these programs are pure bilateral plays. In other words you submit a proposal and hope to win the award. Building partnerships or engaging in relationship building may not help your chances as well as in other donor-partner funding opportunities. The competition is high. Funding tends to be on the lower side as well, but the prizes are very attractive, especially for start-ups or nascent program developers. Technology and innovation projects tends to be well suited for these awards/programs.

5. Collective action networks/partnerships for impact: As opportunities to engage in collective action become more standard practice, donors are getting involved as well. Over the last year, collaborative donor programs, like that of Co-Impact, a "global collaborative for systems change", are encouraging out of the box thinking, systems change level solution development, and attaching big dollar values to their funding accordingly. Since building collaborations is in the DNA of these groups, partnership engagement is one element of engaging these groups, but not essential, as requests for proposals pop up every few months. These donor networks/partnerships are most suitable for organizations that have systemic solutions (i.e. widespread, community-led, big picture, global in view or scalable).

Want more guidance on how to find the right partner to advance your Sustainable Development Goals? Join our webinar on this very topic June 16, 17 or 18 to learn more. If you have questions about any of these donor-partner types or approaches to engage, please reach out to us for a chat!

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Getting Clear on Your Fundraising Strategy for Post-COVID Resiliency

5/14/2020

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Being a fundraiser or business development professional is challenging enough as it is. A global pandemic makes your job even more complicated,. Now you must adjust your fundraising goals to incorporate urgent, emergent needs for your nonprofit, social enterprise or company. It seems the only funding out there is for COVID-related projects. There’s emergency grants, loans, and countless free resources, short term funds, funds for COVID cures, innovation or equipment.
Where does this scenario leave organizations keen to invest in post-COVID rebuild or continuous resiliency measures? How do you, as a fundraiser, get clear and focused on your fundraising process for the longer-term resiliency of stakeholders?

Here are 4 simple steps you can take to stay intentional around your fundraising objectives and drown out the noise:

1. Review priorities. You likely had your 2020 fundraising strategy developed well before COVID. Now is the time to adjust your priorities. Your funding needs have changed, or will need to evolve as the COVID crisis continues to play out. Start with a simple prioritization exercise. You need to differentiate between what's emergency "fill the gap" priorities versus what your medium or longer term strategic needs are. Clarify your absolute must haves. Those urgent needs should be the focus of your fundraising for the next 3-6 months. Luckily, donors are shifting some of their restricted funding towards more urgent recipient needs given COVID. This will help dramatically ease the way in which organizations implement emergency, stop-gap programs, and the usual burden of reporting or systematizing funding for donors’ needs. Hopefully this trend will continue even beyond COVID.

2. Think next about "nice to haves". Once you have confirmed what your most urgent, short term, “fill the gap” needs are, consider what “nice to haves”, or medium term projects will slowly allow you to rebuild your post-COVID pipeline. I cannot emphasize enough how important it is to be past your state of emergency before thinking about some of the more medium term needs. Otherwise you’ll find yourself playing catch up down the road after some of the emergency funding sources have dried up. Donors may not be as accessible then. Again, these nice to haves will help set the foundation for your longer-term planning which comes next.

3. Begin longer-term planning. After completing your priorities around medium term needs or opportunities, revisit your two, three, five and ten year goals. Go back to your original fundraising plan and eliminate which objectives will not be achievable over the longer term given any changes you’ve made in your organizational structure or approach. Then shift your gaze towards the future. Redevelop the priorities for your organization’s mission and goals (ideally with leadership buy-in). Just like in any strategy process, consider what your time-bound commitments are to your stakeholders, versus what’s more idealistic and forward looking. You’ll need to make assumptions about what the world may look like in two, three or five years, but as a fundraiser, it’s your job to find the resources to position your organization or company in the space to craft part of that future. That’s what the post-COVID environment will depend upon.

4. Consider dollars ONLY after steps 1-3. Only after you have your emergency/short-term needs, medium term operational needs and longer-term needs defined should you start putting dollar values to them. Consider timelines as well. Some donors (i.e. public funders like governments) will have longer timelines than some of the emergency funding sources available for COVID. Make your matches with both funding needs and those differing timelines in mind. Be cognizant of where your objectives truly match what donors are looking for. It’s a waste of your time and the donor’s if you prepare proposal materials and you are simply not the right fit. Make evaluating whether you are a good recipient for the donor’s requirements a key element in your funding process.

Wondering how best to evaluate that fit? We're holding a webinar June 16, 17 and 18 (take your pick of which days) around how to find the right partner to advance your sustainable development goals. The webinar is free. Join us!

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What Really Is "Cross-Sector Collaboration" for "Systems Change" and Why Does it Matter?

4/28/2020

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If you have heard or seen the terms “cross-sector partnership”, “multi-sector partnership”, “pre-competitive collaboration” or “systems change” and weren’t completely clear what each of these terms meant for your business, you are not alone.

When partnership practitioners talk about each of these concepts, they are talking about ways to encourage businesses to work with each other, in some cases outside of their comfort zone or with competitors, to address a systemic (i.e. widespread) problem that is bigger than the challenges one business faces alone.

Take, for example, access to clean water in areas where water sources are effected by changes in weather patterns, agricultural activity, industrial processes or government regulation. For a company working in this region, or sourcing products or human capital, inconsistent access to water can be devastating. Individuals without consistent access to water suffer health challenges, disease and instability that can lead to violence and even death. This is even more pertinent now, during the time of COVID.

So, how does cross-sector partnership, or pre-competitive collaboration create “systems change” or address systemic problems that threaten to undermine an entire population’s stability?

I’ve often turned to the picture below to explain.

Imagine a community in a semi-arid, somewhat rural location in the foothills of the Andes Mountains. This community benefits from access to water when the rains are predictable. When they aren’t, the water sources dry up. From this community, an international food company sources a special kind of corn that they use in canned vegetable mixes. A globally known retailer works with a small cooperative of women artisans to source jewelry that is sold in their stores. The local government manages the safety of the local water access point, and in partnership with a conservation nonprofit, helps manage downstream water availability and water health from the local mountain range. A regional restaurant sources meat from the livestock farmers nearby. Finally, a seed company works with farmers keen to try new techniques to diversify their land use and hopefully their income. The actors involved in this community are diverse and represent local, regional and global interests.

The point about cross-sector collaboration comes in when we ask whether any of these actors are engaging with EACH OTHER. For example, does the international food company consider how sourcing corn may or may not take away from land suitable for diversification, or grazing by livestock? Does the retailer know if the artisans from whom they are sourcing jewelry also grow corn that is sold to the food company? Do the government actors and seed companies communicate to ensure that regulations don’t impact sustainable land development or that land development doesn’t interfere with safe water usage? Is there an efficient way for each of these actors to engage with each other to support sustainable land development, production AND safe water supply? THAT’s the key behind cross-sector collaboration for systems change.

Communication among actors in a certain geographical region should be consistent, regardless of sector, positioning or interest. Only by coordinating investments, actions, policies and programs can true systems change be effective. This is hard enough as it is when times are good, food is plentiful, water is available and communities are at peace and harmony. When markets are stable, and systems are operating to positively impact communities, businesses, governments and civil society, it is almost easy to get actors to collaborate, listen and engage. Though not always. This effort of collaboration is made even more challenging, and one would argue near impossible, when systems are breaking down. When water isn't available, or incomes are unstable, civil unrest is a concern or markets don't function, collaboration is absolutely essential in order to ensure resources are being used appropriately and for the right reasons.

In certain "shock" scenarios, for example in our diagram, when water is in short supply, actors may act hastily, and make decisions that impact only themselves. The corn sourcing company may pull out of the region entirely, looking for a new place to source that is water abundant. The conservation nonprofit may need new funding to help pump more water in from the mountain communities, without engaging with the government on their plans. The local artisans may decide to focus on a new business around water pump distribution, and leave retailers without their orders. That is NOT systems change collaboration. Instead, if these actors work in partnership, and collaborated with each other to advance systemic solutions that help all of them and the communities too, addressing economic, environmental or social shocks could be made marginally easier. This is no small task, but with the right backbone coordination, whether from the local government or external actors, it's doable.

Finding ways to work together pre-competitively, cross-sector, and to advance systems change, will be especially critical as the global economy tries to work itself back from the current COVID crisis, while keeping all of our people safe and healthy. Providing access to basic necessities will be in urgent demand. As will relying on governments, companies, civil society and individuals to communicate with each other, and work together to advance programs that have positive economic and social outcomes.

Cross-sector collaboration will also be needed more and more as we approach 2030, the year the current UN Sustainable Development Goals (SDGs) will be evaluated. Will we have reached a point where our actions have allowed for greater systemic change by then? If corporate leaders, government actors, civil society decision makers and others engaged in regions where there are complex needs, business interests, markets and resources at play in development contexts, work together in coordination, significant change is not only possible, it’s inevitable.

If you wonder what role you are playing in your system, or how you can better collaborate with those around you (yes, even competitors) to make change lasting and sustainable, contact us today to discuss your partnership paradigm.

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