In December, the World Economic Forum (WEF) released a report titled “From Ideas to Practice, Pilots to Strategy - Practical Solutions and Actionable Insights on How to Do Impact Investing.” Although the report is a follow-on from a previous version released in September, it is one of very few ‘to-do’ manuals on how to make social impact investing more actionable and meaningful. Not only does the report target already existing and beginner impact investors, it also targets “intermediaries, policy-makers and development finance institutions whose support is vital for the sector’s growth” especially given their ability to fund the causes that lead to greater social impact. As it turns out, many of these “other” institutions are centrally located in our Nation’s Capital. Starting with the U.S. Government, which has allocated $20 billion to sustainable development activities via the U.S. Agency for International Development (USAID). The World Bank provided an additional $52 billion in loans, grants, equity investments, and guarantees to its members and private businesses for development assistance. Having access to these two organizations, alone, justifies DC as a priority location for a company's attention. There is more to the story, however:
1. Show me the money: In addition to government spending and public investments of the World Bank, Inter-American Development Bank, etc, the Washington DC area has surpassed New York and Los Angeles as the home to wealthy investors. These newly minted dollar kings are “the entrepreneurs attracted to the capital by its aura of prosperity and its super-educated workforce. They are the lawyers, lobbyists and executives who work for companies that barely had a presence in Washington before the boom." Tapping into these new pools of money is a priority for any organization interested in social impact, especially given the prowess for big thinking and innovation attached to many of the newer start-ups springing up across DC.
2. Every street is now K street: Lobbying was once the DC region’s single biggest draw, but nowadays it’s our city’s burgeoning entrepreneurial energy that is fueling political and economic movement. According to Entrepreneur.com, “In recent years… a new breed of mover and shaker has emerged -- the entrepreneur. Many of the city’s startups have ties to the federal government, whether because the founders once worked for Uncle Sam, have a potential solution for a big government problem, or both.” This means that as the entrepreneurial spirit floods the previous lobbyist-lined street of downtown, more opportunity to tap into new ideas that have broader political ties is possible.
3. BINGOs: I am not referring to the game. Instead I am referring to the multitude of “Big” Non-Government Organizations (NGOs) that pervade Beltway dialogues on everything from gun control to human rights to economic development. While some may think the BINGOs (or even SMINOS if you include the smaller NGOs) get in the way of progress around social impact and sound investment, having worked for a BINGO for the past five years I implore anyone considering engagement in social and economic development to not ignore these folks. They offer a unique expertise unmatched by the public and even private sector. DC may house the largest number of BINGOs in the world. Perhaps London is a close second.
4. Where Is Mr. Bill(s)?: Sure a legislative agreement gets signed once in a blue moon here in Washington but what is more critical is the presence of some of the most critical Bills in social and economic development: Bill Gates and Bill Clinton. Some might argue that Bill Gates (via his Foundation) and Bill Clinton (via his network AND foundation) may be some of the most critical initiators of action in the space of social and economic development. For now I will agree that both Bills are pivotal in name and presence for impact investing to move from talk to action. DC is the place both Bills interject much of their funding for strategy development and prioritization around issues like global health, education, climate change and food security. Tapping into some of those strategic dialogues is a critical step in impact investing.
5. The U.S. = Power and DC = Center of it All: The United States is still seen as the most powerful nation in the world and with that power comes responsibility. At the heart of power lies the U.S. Government, and ultimately it is inherent in the role of our Government to do right by the rest of the world. This means our Government NEEDS input from organizations that know what the rest of the world is grappling with. In order for our planet to regain some of its footing and grapple with some of our biggest challenges (climate change, water access, food shortages, market failures) sound social impact investing is a critical piece of that and the U.S. Government, even with its inefficiencies, is one of the most powerful players moving the needle in the social impact space.
While impact investing has become the CSR pie wedge within the financial sector, it is becoming increasingly clear that to truly measure social impact, we must evaluate all opportunities to make societal change across our planet. By engaging the decision makers and budget-owners within public, private, NGO and foundation organizations, entities looking to tap into impact investments are following the WEF advice and diversifying. And don’t fret if your organization is not set up with offices and a lobbying license just yet. Folks like me are here to help.
Making the world a better place is simply difficult. Transformation happens over a time horizon that many of us lose sight of and we rush to achieve our outcomes. There is a better way if we approach action together and with the right preparation. In my work on sustainable food and agriculture, I have seen collaboration run stagnant. I have also seen the results of a more comprehensive approach to partnership that respects preparation and adaptive management. It is this approach that I argue is the key to our successful future.
Lessons from Sumatra
Take my visit to the coffee-growing community of Simalungun in Northern Sumatra, Indonesia. I was there to monitor climate adaptation training for a collaboration of partners seeking climate solutions for the coffee industry. Having attempted various farmer survey methods in the past, I decided to prioritize face-to-face meetings with the farmer(s) and their families, facilitating a deeper conversation and discussion. Thanks to the relationships built between my local partner organizations and the farmer communities, the farmers had trust in me, and shared with me honestly about their experiences using our trainings. I spent hours with each family, sitting in their living rooms on tattered rugs, sipping coffee from their fields and furiously taking notes. I listened intently and asked few questions. For some it took a while to open up, but I noticed a more relaxed demeanor when they understood I was simply there to learn and respect their needs as a growing community.
It took me a short time to realize that these farmers’ knowledge ran way deeper than university models or desktop research upon which we based our methodology. I found that our donor dollars were being spent spinning our wheels on hypotheses and research questions when in reality our collaboration needed input from these farmers the most. We were far from achieving our goals and miles from the results we hoped for. My feedback to the collaborative team was that we must adjust our curriculum and tailor it to each farmer’s need. We simply had to listen. We needed a different vision and approach to collaboration.
Collaboration is so 2013
Collaboration is a word I am hearing a lot of within the sustainability space. This means actors in business, government and NGOs are willing and able to work together for the benefit of a joint mission or action brokered by governments, community leaders and NGOs. Some approaches, however, are not always built on honesty, trust and integrity. Under an ideal collaborative scenario, the roles, responsibilities, needs and perceptions of each actor are made clear before a partnership is formed, thus ensuring greater efficiency and productivity in the collaborative work. Additionally, knowledge share must remain simple and beneficial for both sides early and often.
In my case, I took my lessons learned from Indonesia back home and proceeded to undertake the same listening exercise with my corporate partner. Similar work was done with our government partner and within our own organization. This process of ultimately including the farmer groups in our collaboration and engaging each partner independently made the development of the training curriculum more robust and more impactful for the farmer group.
So what can be done to make collaboration equally beneficial and ultimately more impactful? How do we move away from traditional one-sided communication into more of a closed-loop, collective feedback based approach?
The Power of Preparedness
I would argue that any combination of actors can and should work together if the outcome leads to greater social, environmental and economic impact. What is needed for effective collaboration is a process for stakeholder engagement and strategy development that is based on (1) preparedness, (2) critical listening, (3) role identification and (4) quality measurement.
1. Finding the right partnership and collaborative team is essential. Before committing, actors must take the time to understand their own priorities, develop goals and set an achievable. This should be facilitated by an unbiased stakeholder engagement leader.
2. Once each actor is clear of its own goals and outcomes, a process of group priority mapping must take place. This is critical to ensure each partner has similar goals, timetables and expectations. Alignment may not be perfect but if missions do not overlap, there is a large risk of imbalance and ultimately failure. Crucial here is listening to each other and ensuring a level of honesty and direct communication.
3. Niche identification and role assignment ensures a level of clarity and efficiency in the collaboration. Not every actor has the same strengths, and tasks must be distributed to ensure the appropriate use of resources and for effective delivery of outcomes.
4. Finally, no partnership, project or collaborative program is effective without the right measurement of progress, impact and adaptive management. This should take place on a regular basis and based on agreed methodology so all actors are prepared to make adjustments where and when necessary.
Consistent throughout is the right preparation and consistent communication. That and a central organization or leader to guide the collaborative group down the path of strategy development. Taking my experience in Simalungun for example, my time was better spent one-on-one with the farmers rather than in a workshop or facilitated setting. Relationships built on this direct dialogue allow for more frequent touch points and recalibrating. For our team, we realized our impact would take longer in the end, but we recognized the value of its ultimate strength.