Tuesday, March 1, 2005

For Nonprofits, Local Buy-In Creates Sustainable Value

STANFORD GRADUATE SCHOOL OF BUSINESS—Even though they're not always as efficient as cash grants, development initiatives that rely heavily on partnerships with local communities are far more likely to create sustainable value, four of the world's leading social entrepreneurs said during a March 3 panel.

"The reality is that partnerships are incredibly inefficient," said Martha Jimnez of TransFair USA, an organization that encourages fair-trade practices by empowering local farmers in developing countries. "Partnerships aren't efficient, but they are transformative." The other three panelists agreed that active engagement with local communities is critical to achieving sustainable social change. The four speakers, representing organizations selected by Fast Company and the Monitor Group as recipients of its 2005 Social Capitalist Awards, were presented by the Business School's Center for Social Innovation.

On a practical level, engagement with local communities helps to ensure that development initiatives actually work to improve the quality of human life in developing countries, said Christopher Elias, president of the Program for Appropriate Technology in Health (PATH). PATH improves health conditions in poor countries by focusing on innovation while relying on larger organizations to distribute its products and ideas. "Our goal is to take the best new science and get it into the hands of the weakest health systems in the world," Elias said. In addition, PATH's partnerships with local communities influence and inform the design of the products and technologies that he and his colleagues develop. "We have 19 offices in 13 countries, and these offices are staffed primarily by locally hired professionals," Elias said. "If we didn't have that type of engagement with the local communities, we would probably develop a lot of products and technologies that wouldn't work very well."

While the involvement of local residents and organizations certainly has practical value, it also promotes a sense of ownership among communities eager to assume an active role in development projects. "Local residents have the ability and the desire to contribute, but they simply aren't asked as frequently as they should be," said John Wood, one of the panelists. Wood is the founder and president of Room to Read, an organization that works with villagers in developing countries to build school libraries. Through his own experience, Wood has observed that development initiatives that are completed without the involvement of local communities are rarely sustainable.

"In the entire history of the travel industry, no one has ever washed a used car," said Wood, quoting the renowned Harvard Business School strategist Michael Porter to emphasize the important relationship between ownership and value creation. "Sustainable development works the same way," Wood said. "If we simply go in as outsiders and build a school without the community's involvement, then the community has no sense of ownership over that school." Instead, Room to Read operates under a challenge grant model. With this system in place, individual villages nominate projects, and Room to Read provides capital from donors in the United States and elsewhere as long as the villages themselves provide the land and the labor necessary to finish the work.

"On the day that a new school opens, you see the look of dignity on people's faces. They've done the work, and they can see that the community came together to complete the project. Hopefully, they'll still have that same sense of pride and ownership of that school or library 20 or 30 years down the line," Wood said.

Like Wood, Gillian Caldwell agreed that involving local communities in development projects offers benefits that simply can't be measured or quantified. "What's most potent is not captured by metrics," Caldwell said. "What's important is not just that you've opened 15 schools this week; what's important is that you've transformed people's lives and their sense of their own potential." Caldwell serves as the executive director of Witness, an organization that helps locally based human rights advocacy groups to improve their campaigns through visual imagery. Like Room to Read, Witness also relies on a "co-investment" model in which the local residents take an active role in improving their own communities. "In our case, Witness provides the video cameras, technical guidance, and tactical advice to help grassroots organizations leverage their voice and articulate their vision," Caldwell explained. "Core to our organization's work is the belief that you need vibrant, powerful local civil society to create truly democratic countries around the world."

Nonetheless, true partnerships with local communities remain the exception rather than the rule in today's development environment. And according to Elias, this situation will persist until the prevailing attitudes toward development change and evolve. "We need to devise new models in order to create true sustainability," Elias said, eschewing the commonly held view that development should be viewed solely as a charitable, humanitarian enterprise that doesn't require the active engagement of local communities. "For development to be truly sustainable, it's important to recognize that local communities actually have ideas; they have budding entrepreneurs who have the ability to create sustainable value—if they're simply given the opportunity."

Related Links

Philanthropy Discussion Series Speakers 
Sponsored by the Business School's Center for Social Innovation and the University's Haas Center for Public Service, the 2004 Philanthropy Discussion Series offered informal sessions with some of the biggest names in the foundation world.

Peter Hero
President, Community Foundation Silicon Valley
Community Foundations Are Looking Abroad Details

Kathleen McCarthy
Director, Center for the Study of Philanthropy at City University of New York
Inherited Wealth May Pay Bills, Not Do Good Details

Susan Berresford
President, Ford Foundation
Foundations Must Play a Role in Policing Themselves Details

Jim Canales
President and CEO, James Irvine Foundation
Aligning Needs and Goals Crucial to Nonprofit Groups Details

Bill Gates Sr.
Co-Chair, Bill and Melinda Gates Foundation
Mimi Gardner Gates
Director, Seattle Art Museum
Foundations Can Go Where Government Grants Fear to Tread, Says Gates Foundation Leader Details

Sally Osberg
President, Skoll Foundation
The Skoll Foundation Focuses on Social Entrepreneurship Details

Center for Social Innovation

Public Management Program

Fast Company Social Capitalist Award