| The Changing Landscape of Business
- NGO Relations : beyond CSR to Business Partnerships Jeb Brugmann
Arecent report entitled The 21st Century NGO: In the Market for Change (The Global Compact, Sustain Ability & The Global Compact, 2004) focuses on the evolving roles of NGOs in shaping markets and business practice. "How can we civilize capitalism through markets?" the report asks. It identifies five main areas of response: "anti-business campaigns; market intelligence; market engagement; intelligent markets; and market disruptions." Jeb Brugmann, President of Globalegacy International Ltd., argues that sustained civil society impact now requires matching and well-developed NGO capabilities in research and market intelligence, anti-business campaigning and market disruption with the delivery of market-based solutions to the social and environmental problems that NGOs were established to address. His current work explores and supports the emergence to that calls "NGO Inc." In response to the recent success of NGOs as effective, surrogate regulators of business practices, businesses have started to invest considerable resources in the study of NGO practice. One part of this investment has been corporate social responsibility (CSR) programmes. But CSR partnerships often fail to satisfy their corporate and NGO participants. For NGOs, they fail to instigate reforms in core business practices. For business often fail to deliver the desired market intelligence or protection from further civil society attacks. One obvious corporate benefit derived from CSR investments, however, has been the opportunity provided to study and develop traditional NGO capabilities. As a result, argues Brugmann, Increasing numbers of companies are developing the capabilities to challenge established NGO operators in their traditional roles as researchers, advocates, and development and service providers. In other words, Brugmann also see the emergence of what he calls "MNC.org". The co-optation of self-help groups by Indian companies HILL and ICICI, for instance or the more recent co-operation of Fair Trade models by large western food manufacturers and retailers are examples of this trend. This convergence of traditional NGO and MNC concerns and capabilities opens the door to a new category of business-NGO partnership, which offers the opportunity to more deeply influence core business practices and to scale longstanding NGO innovations. "Co-creation" and "nodal companies" are catchwords in a new management jargon developed to describe the creation of new business models, harnassing both business and NGO capacities and competencies, that deliver bundled solutions to sustainable development problems. These solutions will offer the emerging low-income consumer convenient, affordable access to packages of innovative products, services, income generation and educational opportunities, and community development activities, that are delivered via financially sustainable and scalable business model. Brugmann argues that a number of conditions in the operating environments for both large corporations and NGOs are encouraging this business partnerships approach. These include: | l | The saturation of growth opportunities in high-income markets that forces companies to seek growth in low-income or "bottom of pyramid" markets where the competencies and credibility of NGOs may be key to success; | | l | The steady reduction in public sector/ODA funding over the last 20 years-and the increased funder micro-management of remaining funding-that has driven many NGOs into market-based income generation activities; | | l | The challenge confronting large companies as they seek to fulfill consumer and social expectations associated with their ambitious brand promises, which may only be viably delivered through broad-based alliances. | | l | The intensification of a shared motivation, among both NGO and business practioners, to achieve significant social impact. Many NGO professionals are impatient to get beyond negative campaigning and the limitations of innovate but small pilot projects and to achieve greater impact at scale. At the same time, many in the current generation of middle-to-senior level business managers are restless to focus their careers on more than wealth accumulation. | | l | The recent re-engineering of many societies according to market principles has disrupted long-standing divisions of labour between private, public and charitable sectors. All sectors have expanded their activities into the market in response to new political economic realties. | These trends, argues Brugmann, require NGOs to better understand the market value of their own competencies, capabilities and credibility, and to better devise organizational interfaces that allow them to engage effectively, consistent with their missions and core values, on a commercial basis. Civil society Organisations that lack a clear strategic perspective vis a vis these trends may face unexpected challenges to their traditional roles and credibility as leading practitioners in their fields. q The author is the President of Globalegacy International Inc., a new company that supports diverse experiments in how to use and scale enterprise to reduce poverty and deliver sustainable development. In 1990, he founded the International Council for Local Environmental Initiatives (ICLEI). He also founded the 'Local Agenda 21' movement and the Cities for Climate Protection Campaign, which involves more that 500 cities and towns in more than 50 countries in a cordinated effort to quantify and reduce their local greenhouse gas emissions. q Back to Contents |