If you receive any of my regular emails, you may notice a repetitive attention paid to leveraged funding opportunities, particularly as government agencies release new calls for proposal. Does anyone wonder what the heck I am talking about? It occurred to me that perhaps my casual way of communicating about leveraged funding presupposes that my audience actually knows why leveraged funding is so important to advancing our sustainable development goals (SDGs).
Let’s use the Millennium Challenge Corporation (MCC) announcement around their Annual Program Statement (APS) as an example. MCC prepares their APS to inform potential partners (companies, financial institutions, foundations, universities, non-governmental organizations, faith-based organizations, development agencies, and other U.S. government agencies) about priorities for the next year (or two). In this year’s APS, MCC indicated in its press release that its intent is to "co-create, co-fund, and co-implement partnerships that support MCC’s ability to achieve its mission and programmatic goals." Why is this important? It means that MCC’s funding (in the billions), which will be used for these (and other) programs: (enabling the use of data by and for women’s economic empowerment; enhancing analytical capabilities in various subfields of environmental and natural resource economics, including water resources, natural resource accounting, and climate change; working to help MCC successfully and sustainably address the barriers to women’s and ideally youth entrepreneurship and sustainable business growth) is available to ADD ON TO and advance. If a company with a vested interest in youth entrepreneurship in an MCC country, for example, wants to affect real change (i.e. build out physical and technological infrastructure, engage with governments to advance policy making, shift how market financing is developed, create effective safety nets for low income communities that may be future employees, customers or suppliers, etc) then what better way to do so than by partnering with a private government entity like MCC, which has billions of dollars to invest in these and other programs? Talk about long-term sustainability.
Collaboration is all about joining forces to impact change. Leveraging private sector funding with MCC investments allows for systemic change that is nearly impossible in any other scenario (i.e. a company investing in NGO activity without support of infrastructure that an MCC could help build as an example). Companies, alone, can’t invest at that scale. Governments alone can’t build out private sector investment without those partnerships. Finding economic engines to drive local production and consumption helps propel tax revenue, keeps engagement high and provides for a more satisfied population and workforce. Partnership and leveraged funding between government sources (in this case MCC) and the private sector is what can change the paradigm in impoverished countries. MCC reports on these successes often.
What about the Overseas Private Investment Corp (OPIC) 2X Women’s Initiative? I had not heard about the more than $1 BILLION being invested in women’s empowerment programs in developing countries until this week. How did I miss this? OPIC is looking to invest in women entrepreneurs, women-owned businesses and in partnership with the private sector. How many private sector companies have goals around supporting women entrepreneurs? There are dozens. Think about how beneficial it would be to partner with OPIC (and each other) to both address these goals each entity has in place, but also to scale and amplify the real impact that’s possible. This amplification of funds and impact is leverage.
Nowadays it seems every call for proposals, every challenge that addresses the SDGs, each impact investment, is looking for ways to engage the private sector. There’s a reason for it, though. With private sector ‘leveraged’ funding, other investors (public, impact investors, even NGOs) can be assured that perhaps with their investment there is more opportunity for long term impact. Companies’ investments in sustainability are about building long term returns that allow for future production, more dependable consumption patterns, more predictable supply, even assurance around workforce availability. Government donors and NGOs often operate on a much shorter time frame (think under 10 years). Adding private sector leveraged funding to the mix allows these partners to see a greater, longer-term impact with their dollars.
Collaboration between funding streams like those coming from MCC, or OPIC (or agencies like DFID, USAID, etc) and the private sector, nonprofit sector, academic sector, etc. helps advance economic development around the SDGs in a way that is more market focused, economically advantageous to the communities in need of large scale investment and better for competition of prices and supply. For these reasons (and likely more unmentioned) leveraging funding is critical to advancing our SDGs.
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What would it mean to ‘disrupt’ a sector to the point where we no longer recognize it? In the space of social impact and environmental sustainability, have we fully disrupted any sectors such that the new is now old?
Some may interpret disruption as simply using more advanced technology. Others, and I am in this particular camp, believe full disruption is based on advancement in all things social, economic and environmental. It takes a lot to get there.
To some extent the pulp and paper sector has seen full disruption, moving away from issues like illegal logging and poor labor practices to more sustainable land investments and a more circular economy centered around recycling for pulp. One could even argue that we are in the midst of chemical disruption, whereby individuals shy away from harmful chemicals, dyes, flavors or materials in their food, beverages, consumer products and even clothing. Would we notice a change in taste or flavor or utility if some of our favorite foods, clothing brands, technology were "disrupted"?
Take chocolate for example. Anyone working in or around the cocoa sector knows how challenging issues like deforestation, child labor, women’s rights and proper livelihoods are for cocoa farmers. What can we ‘really’ do about it? Are customers even aware of what's happening? How could full disruption both improve the status quo for cocoa farmers AND ensure the future for the sector (which is what consumers most care about)?
The reality is, behind the chocolate we eat and crave, farmers are largely suffering. Acumen, an organization dedicated to advancing social entrepreneurship to help eliminate global poverty, has been asking questions about disruption for years. According to Acumen’s latest report “COCOA INTERRUPTED: THE ROLE OF SOCIAL ENTERPRISE IN COCOA SUSTAINABILITY”, which I was honored to participate in, we learn that “70% of the world’s cocoa production lies in West Africa where farmers live on less than $1 per day.” This is not an unknown fact to anyone working in the cocoa sector. What may be unknown is the latest move by one of the largest chocolate companies, the Hershey Company, to explore the opportunities for social enterprises to join forces with the company in cocoa-growing communities to test new models and approaches to building out long term sustainability in cocoa.
The Hershey Company has been a leader in testing new methods for advancing social and economic impact for decades (you can read all about this in Purposeful Profits: Inside Successful Companies Making a Positive Global Impact, out May 22). Now, in partnership with Acumen, they are exploring how the emerging scope of social enterprise in agriculture can fully and truly disrupt cocoa in the way many of us define it – by changing the paradigm and success potential for cocoa farmers for generations to come.
My hope in working on this project with Acumen is that the cocoa sector, in full disruption, can both change the lives of its farmers for the better, and also help advance full disruption in other sectors where change is desperately needed. Watch this space. It's time for full disruption!
I spent the better part of last week facilitating a partnership workshop with a large company focused on accelerating its social impact goals. What surprised me about my experience with this inspired and talented group, was not the fact that coordination and communication was a challenge (that’s often true of all organizations, big or small), but how different they look at partnerships compared to the partners they were convening to discuss --- nonprofits.
I’ve been grappling for a while with the role of nonprofits as partners to companies, and shared recent thoughts about the emergence of social enterprise as a quasi-competitor to nonprofits as suitable partners for companies, but one comment during this convening stuck with me – a participant mentioned that he wants his leaders to understand the opportunity to ‘try new things’ and ‘test innovation’ by co-creating with nonprofits.
This fast paced company sees nonprofits as innovation partners. Are the nonprofits hearing this!?
What a great opportunity for them! Nonprofits are often chasing funding, focused whole-heartedly on their mission, as they should. But I wonder how many nonprofits see a role to play as being co-creators and idea generators with companies that are looking for opportunities to test new ideas, and ways to make a difference in the world at the same time? Is there a different mentality that nonprofits can take as innovation partners?
By the way I am not alone in wondering about the future of nonprofits. Check out this article I saw last week recounting a similar trend: thinking about social enterprise as the more innovative and higher ROI partners for companies: “A World Where Charities Are No Longer Needed.” I often say that a job of a nonprofit is to put itself out of a job. If the nonprofit is no longer needed, then the problem or challenge it is addressing has been solved, right? But in all fairness, the question about relevance needs to be addressed when thinking about the role of nonprofits as innovation partners.
What do others think?
The news that MacArthur Foundation is launching another $100 million challenge to find world-changing solutions to our planet’s biggest problems was not met with a viral sense of anticipation or jubilance to my utter surprise. It seems like no one is talking about it.
$100 million people!
Talk about transformational!
This certainly wasn’t the case for the first go-round of "100&Change". When the Foundation known for placing bets on innovative solutions to issues like climate change, racial inequity and revamping the battered U.S. criminal justice system, launched it’s first 100&Change competition in 2016, they received nearly 2,000 applications from every conceivable combination of organizations one could think of with the hopes of tapping into the monumentally sized purse. Several of our clients participated in the process, and shared that the experience of going through the application and interviews was very useful to their organizational strategy development, even if they didn’t win any money to carry out their bold new ideas.
The winners in the end, Sesame Workshop and International Rescue Committee, planned to use the $100 million to create television and education programming for children living in middle east conflict zones. I certainly can’t argue with the importance of teaching these embattled communities about the power of love, resilience and empathy from an early age. That said, the announcement, coupled with insight into which organizations were runners up, left me wondering about the 1,990 or so other applications. What emboldened, life-changing ideas were left on the cutting room floor? Turns out the Foundation archived each of the applications into a 100&Change Solutions Bank.
Perhaps feeling a sense of opportunity by the idea generation and potential for collaboration brought on by the first 100&Change, and recognizing that the power to leverage funding from an organization like MacArthur is what can truly change lives, the second 100&Change competition will take a different shape than the first. The new approach is to launch a standalone entity, called Lever for Change, which according to MacArthur “helps philanthropists source vetted, high-impact philanthropic opportunities and connects those opportunities to significant amounts of philanthropic capital.” Lever for Change will use its $100 million and more to match donor opportunities with appropriate ideas, taking some of the “cutting room floor” dilemma out of the picture. Minimum award amounts are $10 million and will launch some time in April. You can sign up for updates on their website.
Time to start idea generation and getting the word out!
I attended a meeting this week to discuss how stakeholder groups (civil society, governments, private sector and funders) can address Sustainable Development Goal (SDG) #2 (End Hunger) by engaging in climate smart agriculture, increased productivity and advancing food security for smallholder farmers. There was plenty of talk of government engagement via their commitments to various World Bank efforts, and of course civil society actors were keen to share the work they are doing to advance efforts around smallholders.
What was clearly missing was a strong sense of what the private sector is doing to advance SDG2. In fact one participant mentioned a poll his organization had led with some of the biggest food and agriculture companies. SDG2 was third to LAST in terms of priorities.
The entire room was concerned.
How can we advance SDG2 if the private sector isn’t engaged, nor do they see addressing food security and climate resilience through agriculture as pivotal to ending hunger?
As it turns out the same poll showed that private sector companies ranked responsible consumption and production (SDG 12) as one of the top priorities. To me, that is encouraging. See if businesses want to prioritize investments in responsible consumption and production, that means that they see value in sustainability commitments (social AND environmental) that positively impact their supply chains. To positively impact their supply chains, companies have to consider how their actions (read: investments) affect those imbedded within, which means for many brands, they must look out for smallholder farmers. Smallholder farmers produce almost ¾ of the world’s food. Without them, our food and beverages can no longer be produced. Ignore their needs and companies' ability to make and sell product is stymied in a big way. These companies must consider how to improve food security, productivity and resiliency for small farmers.
There's an opportunity here to take advantage of the efforts already made by some of the world’s biggest companies to advance the SDGs. Sure more is needed. But let's focus on what IS happening. For example, the United Nations Global Compact, the private sector faction trying to advance some of the world’s biggest problems in concert with members of the United Nations, is already working on efforts to align corporate reporting, calculation of return on investment, and programs like B Corp Certification with the SDGs. Seems we simply need more alignment between these efforts and those of the governments, civil society and donors supporting advancement of the SDGs through the broader UN and multi-stakeholder systems.
I’m ready to push for that engagement, and help the private sector advance their efforts in line with the SDGs, since I am a firm believer that without the private sector, our efforts will be more diluted.
Who’s with me?