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Accountable, Bill Gates, charities, Donors, Impact, Outcomes, philanthropy, Strategic
This discussion has been happening for many years and shall continue for many years. There is no clear answer and opinions on both sides are based on sound arguments. Bill Gates, one of the most vocal proponents of the ‘like a business’ meme understands that
“….to have a sustained and strategic impact, philanthropy must be conducted like business—with discipline, strategy and a strong focus on outcomes. Organizations receiving your support should be as accountable to you as a company’s board is to its shareholders. You are a stakeholder. And that means, above all else, that you have to know your return on investment.”
Let us unpack this position:
- Sustainable & strategic impact: No one denies that charities need to deliver sustained and strategic impact. The nature of ‘sustainability’ and ‘impact’ will however differ on whether one is evaluating ‘life saving humanitarian’ interventions or the more longer-term ‘development interventions’. Humanitarian interventions deliver outcomes for shorter-term impact over a time horizon measured in weeks or months. For instance, reduction in risk of disease through sanitation and clean drinking water interventions, alleviating starvation through food interventions etc. The sustainability of these outcomes is limited; take away the food intervention without an improvement in the underlying conditions and the risk of starvation returns. Development interventions are expected to be more robust and bring about changes in behaviour and policy. The impacts live well beyond intervention phase but also take time to materialise, often years.
- Discipline / strategy / focus on outcomes – I know of no good charity which meanders along in an undisciplined, ragtag manner aimlessly doing some activities. Most charities are built on the foundation of a strong vision and have systems in place to ensure its progress towards the goals. There are of course charities whose internal governance systems are weak. They are poorly run and work opportunistically. Thankfully, their influence on development thinking is rather limited.
- Accountable to donors – There is absolutely no doubt that this accountability is required. However, let us be clear that it is not a question of accountability only to donors who are seeking return on investment. Charities have a larger accountability to their stakeholders namely the communities they work with, the local organisations they partner and the governments in host countries. These are at least as important as the donors. In an ideal world the priorities and demands of all these stakeholders would be aligned and life would be easy for the charities. In real life it seldom works that way. Many a time charities struggle to align priorities of communities, governments and donors with their own vision, and to design sensible programmes where every stakeholder sees an advantage.
This is not all it takes to ‘operate like a business’. There are other things that charities do like businesses.
- They lobby governments – A key difference is that most lobbying by charities is to help the underprivileged and the voiceless. Rarely do charities lobby for themselves or for appropriating profits of shareholders, sometimes at the expense of the stakeholders. How often does one hear of an agitation led by a charity asking for favourable tax breaks or waiver of oversight or curtailing competition?
- They manage people – The pool of people that charities can access is severely restricted. Being an aid worker necessarily means that one is forced to choose between making a difference and making money. There are few challenges to businesses on how much they pay their staff and CEOs, at least so long as they are making profits. However most donors, individual and institutional, expect charities to operate on shoe string budgets, not pay staff well and yet deliver fantastic results. This creates a different kind of challenge in recruiting and retaining staff.
In my view the question whether “Charities should operate like businesses” is a pointless one to keep raising. Charities do run like businesses. Or rather in a ‘business-like’ manner. At least the good ones do.
The only issue is that it is a different business. The rules of the game, the objectives and the priorities are different. For instance, a business may outsource its business operations to off shore entities so they can be more economically delivered. Charities have no such option. In fact the worse the situation in their ‘business environment’ the more the need for the charity to work there. After all aid to the starving Somali people cannot be delivered in India just because it is easier to operate there from the security point of view.
It is important not to confuse ‘operate like a business’ with ‘follow the rules of businesses’. If the playing field is not the same, the rules of the game cannot be the same. In this case it is not even the same game. That means metrics for measuring success need to be different.
From my experience of 18 years as a development professional in India, Afghanistan and Africa, I find that
- Most good charities know what ‘business’ they are in.
- They know that they need to deliver on sustainable change in lives of people.
- They know they need to be accountable to stakeholders.
It is time that the ‘business’ proponents understood this too.
Makarand
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Personally, I find that NGOs are too much like businesses. The language of ‘service-users’ or ‘clients’ sets up a transactional frame that misses the wisdom of this quote,
“If you have come here to help me, you are wasting your time. But if you have come because your liberation is bound up with mine, then let us work together.” Lilla Watson
This relates to the questions around the professionalisation of social change – for which I can highly recommend this reading: http://www.incite-national.org/index.php?s=89
Thanks Casper. Agree that any narrative that uses ‘service-users’ or ‘clients’ is not necessarily a great idea. I would go a step ahead and say that I find that even using ‘beneficiaries’ a mite pejorative. Most NGOs, at least the good ones, look at working with the disadvantaged and not for.
The quote is very nice, thanks for that. Will try and source the book you have referred to. Seen the blurb and seems interesting.
Dear Makarand, good debate topic. I’d like to add another dimension to the point that charites are different kinds of businesses – it’s about who benefits from what is done: Essentially, a for-profit business has econom goals INTERNAL to the organization. A charity has social goals EXTERNAL to the organisation. That’s the key difference. Then you can go on and manage/administer as a for-profit business, that doesn’t change this fundamental distinction. Rgds
Jens
Well put Jens. Agree completely. The confusion also arises because these goals are often misunderstood or poorly understood by players on both sides.
Good post – thanks! I find the assertion that charities should be ‘more like businesses’ annoying too, but on the other hand think that charities need to up their game.
Sustainable and strategic impact – Charities face a conflict between the requirement to deliver ‘sustained impact’ and the fact that sustained impact will never be delivered by ‘aid alone’. Sustained impact comes from changing the behaviour of government, the private sector and banks, who are often the people funding the charities in the first place. There seems to be a conflict of interest at the heart of our work, which is getting bigger as more and more funding comes from institutional sources, and as more and more agencies realise that they’ve focused too much on in-country ‘endogenous’ factors and not paid enough attention to the ways the international system keeps people poor (e.g. tax evasion, climate change).
Focus on outcomes – Most organisations struggle to demonstrate the impact of, say, the advocacy and campaigning work needed to achieve sustained impact (as opposed to unsustainable service delivery). Many have only recently started doing/measuring this kind of work – as a result of pressure from donors, unconvinced by enduring poverty despite a charity narrative of never-ending achievement and progress.
Accountability – I have to disagree with you (and the quote) about stakeholder accountability. Sadly in my view, most charities ARE accountable mainly to their donors, with local government/partners coming second, and beneficiaries/participants/clients (whatever you want to call them) a distant third. Also, many donors (e.g. the UK public) are so far removed from the services delivered by charities in developing countries, and have so little understanding of what sustainable development means (i.e. not just service delivery), that meaningful accountability is impossible. Donors are nothing like customers – they don’t directly experience what they pay for.
Lobbying government – when you say ‘most lobbying by charities is to help the underprivileged and the voiceless’ I think you’re conflating the interests of charities with the interests of poor people. A lot of charity lobbying is about asking for more and more funding for charities. Many charities remain quiet on issues which matter enormously for their beneficiaries, but which would upset their donors.
I think charities need to do more to figure out how to engage with other sectors – both to get funding and to influence governments/companies – whilst avoiding the conflict of interest which is making people more and more cynical about our work. We can’t all ‘do a greenpeace’ and reject government/corporate funding entirely… and the sector definitely will not achieve this by become ‘more like businesses’!
At the outset, thanks Charlie for taking the time to write a detailed comment and keep the discussion going.
It is rather difficult to argue against any of the points that you are making. Not that I want to simply because I agree with most of what you say.
Yes sustained impact has huge number of other factors involved and the best that charities can do is to contribute to positive impact and try and avoid interventions that Do Any Harm. In the increasingly complex world where factors like trade tariffs, subsidies in developed countries and political issues determine extent of aid charities are facing increasing challenges. For instance, there is hardly any point in intervening in agricultural production if the market systems or other forces conspire to keep the farmers at subsistence level. It is easy to forget that it is the huge subsidies that are given by the American Government to cotton farmers (more than the value of the crop produced) that keeps cotton prices artificially low and keeps cotton farmers of Mali and Niger in poverty.
Over the last 7-8 years I find that charities are increasingly focussing on demonstrating impact. We are not yet there, far from it actually, but there are clear signs that donors and governments are increasingly demanding results. It is a good sign. It also forces charities to be alert for changes in the environment and adapt as they go. Business as usual, as defined by casting a Log Frame in concrete for a 3 year programme, no longer works.
Charities are answerable to donors and government no doubt but they are, at least the good ones are, increasingly accountable to beneficiaries. In the more aware societies of South Asia and Latin America, I have seen beneficiaries demanding to be involved in the planning, implementation and monitoring. Africa is a long way away from that but will get there, I am sure. May be individual donors don’t easily get ‘sustainable development’ or ‘empowerment’ as easily as they get ‘service delivery’, but is it not the duty of the charity to also educate the donor? There is a huge opportunity there, IMO.
I would like to think that the lobbying that charities do for themselves with governments, mainly donor governments, is in the best interests of the poor they work with and not to make life easier for themselves.
Yes we cannot all be Greenpeace / Amnesty / human Rights Watch. they have an important role no doubt but not all charities can afford to go that way and ignore private sector and government. I find that charities are engaging with private sector and increasingly co-creating programmes with them and government. However, there is a fine balance that demands the skills of a tight-rope walker. How deeply you engage and thereby compromise your ability to act as a watchdog and voice of the poor is tricky. One cannot be bashing a multi national corporation for unfair and exploitative practices in one breath and trying to work with them on a Markets for Poor Programme. It is tough. Working with governments also causes issues in places where the civil society space is limited.
Thanks once again for engaging. Was a pleasure to read your thoughtful comment.
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