• Strategic Alliances between Business and NGOs

    Friday 23rd January 2004 - 2:45pm - 4:00pm

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  • Strategic Alliances between Business and NGOs


    Annual Meeting 2004

    As responsibility for solving global problems shifts from governments to the private sector, corporations and non government organizations are creating a rich tapestry of partnerships to deal with issues such as global warming, poverty, AIDS, microfinance and others. But this trend itself raises a number of questions. Can the for profit and non profit sectors with their very different cultures and incentives work together effectively? Can they really make a difference?

    Gordon Conway, President, Rockefeller Foundation, USA, said strategic alliances can only succeed if the parties develop trust, strike explicit deals laying out what each side hopes to gain from the partnership, and define acceptable outcomes. In the past, some partnerships were little more than cash transactions in which "a company would say Here s some money, now shut up and go away. " But recent alliances have tended to fall into two camps: Those designed to foster a dialogue or create a forum for multiple stakeholders, and those formalized through the creation of a separate entity, such as an institute.

    John Elkington, Chairman, SustainAbility, United Kingdom, discussed his group s efforts to facilitate a dialogue with the Ford Motor Company. Although the effort included 16 different groups, participants were able to agree on a three point agenda combating global climate change, promoting human rights and persuading Wall Street analysts to include social criteria in their company evaluations. "We showed you can get a diverse group of stakeholders together and boil their demands down to a manageable set of strategic priorities," Elkington said. But the project also taught a less positive lesson when Ford joined a coalition of automakers seeking to ease federal gasoline mileage standards. "Many NGOs saw it as an absolute betrayal," Elkington said. "It showed how important it is not to make commitments you can t keep."

    Such traps are easier to avoid when corporations can see the tangible benefits of partnership, said Paul Rice, President and Chief Executive Officer, TransFair, USA; Social Entrepreneur. He cited the case of Green Mountain Coffee Roasters, a fast growing US maker of gourmet coffees. When the firm switched its organic coffee line to Fair Trade certified beans, it saw sales jump 37% in six months thanks in large part to favourable media publicity. "From an NGO perspective, achieving that kind of success means being entrepreneurial," Rice said. "Market mechanisms can be used to effect social change."

    Malcolm Williamson, President and Chief Executive Officer, Visa International, USA, provided a similar example, describing the association s efforts to bring informal lenders and money changers within the orbit of its member banks in the developing world. Helping non bank institutions improve their record keeping and comply with regulations curbs money laundering, and may, in time, create growth opportunities for Visa.

    But such efforts won t solve the more fundamental problems facing the world s poor, argued Michael W. Garrett, Executive Vice President, Asia and Africa, Nestl窠Switzerland. For that, more ambitious efforts are needed. The OECD countries, he noted, currently spend more than US$ 1 billion a day on agricultural subsidies at a time when 800 million people in the developing world are living on less than US$ 1 per day. "Those kinds of distortions need to be removed through trade negotiations," he said. "We need bigger solutions."

    Markku Niskala, Secretary General, International Federation of Red Cross and Red Crescent Societies, Switzerland, discussed the challenges of forging cooperative relationships with private companies (a relatively new experience for the Red Cross) while still safeguarding the organization s reputation. "We ve understood the need to be careful about protecting the [Red Cross] emblem," Niskala said. "We have some fundamental principles and we need to be sure our partners share those values." Brizio Biondi Morra, President, AVINA Foundation, Costa Rica, stressed the importance of recognizing that companies have a legitimate need to turn a profit and incorporating that awareness into the NGO s own programmes. "Our working assumption is that there can be no successful companies in a failed society, and that no society can be successful if its companies all fail."

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  • Brizio Biondi-Morra Brizio Biondi-Morra
    President, AVINA AMERICAS, Costa Rica

    PhD in Business Administration, Harvard University; PhD in Economics, Bocconi University. Formerly: ...

  • Paul Rice Paul Rice
    President and Chief Executive Officer, Fair Trade USA, USA

    BA, Yale University; MBA, University of California, Berkeley. Formerly: 11 years of field work in Ni...

  • Sir Malcolm Williamson Sir Malcolm Williamson
    Chairman, Friends Life Group, United Kingdom

    Over 30 years in banking. Former Regional General Manager, Greater London, Barclays Bank; Managing D...