Marrying NGOs with Business to Achieve Social Justice

CHOICE Innovations Symposium Warner Woodworth

February 24, 2017

Session Overview 1.  Why Corporate-NGO collaborations are

important 2.  Marrying Business & NGOs: The big why 3.  Pluses & Minuses: Marriage stories of

convenience, short term, long term, divorces, “eternal” partnerships

4.  How to structure the best collaboration 5.  Scaling up partnerships for greater social

justice (if time allows)

My Thesis: The NGO Future will Require Partnerships & Alliances: Need for a Shared Mind-Set

The Good News/Bad News p Good: Poverty globally is in decline (from

35% in 1990 to 11% last year p Bad: Extreme poverty is still horrendous

(According to the World Bank & UNICEF, nearly 385 million children –more than the U.S. population – live in extreme poverty on less than $2/day)

p Good: Growing number of effective NGOs p Bad: Lack of funding a huge problem p A potential source of funding: The private

sector of corporations

Why Partner with Business? p  Limitations of capital p  Lack of credibility/questionable non-profit history p  Charity mind-set p  NGO limitations: Small, autonomous, geographic

location p  Lack of awareness about the gap between for-

profit & non-profit p  Donor dependency p  NGO managers & practitioners lack business skills p  My eventual conclusion: Corporate-NGO

collaborations are more important than ever

Warner’s Conversion to the Idea of Business-NGO Collaboration

p Shift from highly ethical purist where love & caring reigns, to practical realist

p  It’s not all about the money, but $ are critical to leverage impacts

p  I was turned off & had criticisms of NGOs that became for-profits such as SKS India, Compartamos Mexico (greed, power struggles, lack of transparency)

p My wrestle with idealism vs. realistic existence

p Which is the greater good?

Mixing Non-Profit with For-Profit Paradigms Have Problems in Building Alliances

p Differing values p  Lack of trust p  Political games that dominate business p Do-gooder mind set (not efficient) p Unspoken assumptions p Organizational culture clash p Unclear expectations

Sustain Haiti Case: A Simple Example of Crisis Intervention

p  Following the 2010 Haiti Earthquake p Small group of BYU students designed a

response: Rebuilding orphanages & homes, microenterprise for jobs, clean water access, reopen schools, square foot gardens, etc.

Generating Short Term Donors to Launch Summer Volunteers (Pinnacle Security, Brent Brown

Toyota, Interlogix, blufin, Interstate Barricades, Rain, Truefitness)

For a While, Sustain Haiti Enjoyed Having Bus./NGO Mutual Support Systems

Sustain Haiti Today p  It was a short term marriage: Business

collaboration declined as crisis subsided p SH still functions as a mostly student-

operated NGO serving victims of Haiti’s terrible earthquake

p  The country of Haiti has still not recovered p We learned that a few individuals can

make an impact in short term p SH still needs long-term corporate support

to ensure efforts become institutionalized

Mentors International Case: A Long-term Bus./NGO Marriage

p  MFI we started in Manila 1990 focused on microfinance

p  Initial success: $250,000 annually

p  Donations depleted as the initial innovative idea of MFIs wore off

p  Shift to Business Partnership$

Mentors Began Business Partnerships

Business Models & Partnerships Helped Mentors Ensure Results: The Marriage Continues

p  With corporate assistance, we expanded from one little office in Manila to 7 throughout Phil., plus 5 other nations

p  From 3 Filipino staff to 400-plus in various countries p  From $250 K in 1990 to have accessed $72 million since p  Average repayment rate: 96% over 27 years p  Average retention rate: 97% p  Average loan size: $156% & Female Clients: 94% p  Ave. cost per client has dropped from $249 in 1990 to $43 p  Average % of 67% repaid in 4 months p  Average annual growth rate: Over 25% annually p  So far 2.9 million people impacted = Collaboration can have huge impacts

Unitus Case: “Our Big Fat Wedding” 1999 – Start-up: Two years of dialogue, search for models

& best practices, global analysis, Bangladesh trip 2000 – Awareness that only 80 million people can access

microloans (16%), but worldwide demand is 500 million 2001 – Decision to become a microfinance accelerator 2002 – Launch of Pro Mujer, Mexico, zero clients 2003 – Mexican learning & client expansion to 5,700 2004 – New SKS partnership: 21,900 clients in India 2005 – Began seeking MFIs with highest growth potential

in promising, yet underserved, markets; proven track record; strong management and board; exponential possibilities

2005 – Acceleration model: SKS 73,300 clients: Pro Mujer 10,100; New partners like Jamii Bora (Kenya) 87,000; BSS (India) 12,600; ASA-GV (India) 66,000 clients

Unitus Microfinance Processes

Unitus Case cont’d…. 2005 – Realization we need large donations (secured Omidyar,

Gates & other grants) 2005 – Scaling up strategy: SKS 151,200; Pro Mujer

13,000; Jamii Bora 112,800; BSS 23,600; ASA-GV 79,800; new partners Bandhan 131,000 and GK 34,000

2005 – Unitus India Microfinance Center established in Bangalore

2006 – Established Unitus & Dignity Trust Funds to solicit investments

2006 – Unitus/ACCION Alliance for India led to new synergy between big powerhouses

2006 – More potential partners in pipeline that total a million clients such as new partner FIS (Argentina)

Start-up Features of Unitus Business Collaboration

p  Marriage made in heaven, or hell? p  Brought in business & social innovators at launch

(Mike, Bob, Joseph from industry) & NGO experts (Tim, Louis, Warner, etc.) Lots of arguments….

p  Finally agreed on a laser focus p  Dreamed big, crazy objectives (from $10 M to

$100 M, to $1 billion!) p  Grew with top-rated entrepreneurs & investors in

as board members p  Tried to stay mission-focused while pursuing wild

growth & costly compensation p  Gained worldwide reputation as social innovator

Unitus Partnered with Business & Large Foundations to Scale-Up Strategies

p  Capacity-building within partner NGOs globally p  Expanding partner product offerings p  MFI transformation from NGO into commercial entity; from

unregulated MFI to regulated firm; from non-profit to for-profit institution

p  Equity growth through infusion of more capital -- Unitus as a microfinance investor -- Leverage resources through debt equity

with formal banks -- Investments to partners through two

funds: Unitus Equity Fund, Dignity Fund

Unitus in Recent Years p  Marriage made in heaven, or hell? p  Mixed outcomes included gaining huge funds,

tremendous clientele (5 million borrowers), but also unmanaged growth, missed warning signs (India suicides), costly overhead expenses

p  Eventual shift away from microfinance focus only p  Today: Unitus Group is a federation of enterprises

aiming to reduce poverty through market-based solutions

p  Includes Unitus Labs, (formerly Unitus, Inc.), Unitus Equity Fund, Unitus Capital & Unitus Seed Fund

p  “Eternal” marriage, or plural marriage?

We May be Witnessing a new NGO Model

Tips for Making the NGO-Business Marriage Work

p  Test the relationship out gradually p Add business executives to the board only

if they hold social values p Require significant funding from such

individuals & their firms p  Exploit their personal & professional

networks p Make the NGO operationally efficient

(using loan repayment monies in MFI cases, financing toward self-sufficiency, etc.)

Forces for Change That Mobilize

Businesses to Assist NGOs p  Rise of the CSR movement (from small 1970s to huge now) p  NGO growth – larger size needed, moving beyond one

country or region p  Boards of directors – greater sophistication p  New technologies – iPhones & PDAs to track services, enter

data, etc. p  Donor demands – to seek more beneficiaries, conduct

impact assessments p  Decline of welfare model in society – subsidies &

humanitarian paradigms less acceptable p  Greater business mentality – emphasizing efficiencies &

lower costs p  Government regulations regarding targets, results (USAID) p  NGO capital availability p  Result? Greater financial resources for poverty reduction &

social justice

NGO-Business Partnerships “Musts” p Requirement to integrate & leverage each

of the parts into a cohesive whole p Need to straddle divergent agendas p Design new mental & org’l models

Result Can be a New Organizational Ecosystem for Global Change

Model for NGO Scaling-Up (Based on Unitus Case)

-Traditional NGO -Microfinance Methods

Poverty as Driver: -Innovation

-Experimentation

Build infrastructure -Geographical expansion

Roll out: -New donors/capital

-More partners

-Standardization -Build MFI networks

Transformation: -Commercialization

-NGOs become banks

-Evaluation -Re-tooling

-Greater capital sources -Replication

-Acceleration

“Scale:” -Increased reach

-More speed -Larger market

-Growth of brand/reputation -Sustainability

Scaling Up Requires Speed Speed Capability:

What: Increase speed of change

How: Reduce bureaucracy; improve decision making; create sense of urgency

Individual Passion is Necessary for Happy Marriages (NGO or otherwise)

“The passionate are the only advocates who

always persuade. The simplest man with passion will be more persuasive than the most eloquent without.”

René Descartes

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Q & A?