By David Zapol

The setting was a crisp winter day in January, in a stately congressional building on Capitol Hill. Forty leaders of government, business and nonprofits were convened to discuss the Obama administration’s broad new HIV strategy. FSG had been invited to participate in a consultation for this first-ever US National AIDS Strategy, hosted by the Global Business Coalition on HIV/AIDS TB and Malaria with the White House Office of National AIDS Policy.

The White House is big on strategy. In December the administration released a new five-year strategic plan for the US President’s Emergency Plan for AIDS Relief (“PEPFAR”). There is a new Global Health Initiative strategy due out in the next few months. However to this point, the US hasn’t ever had a national level AIDS strategy to guide the $17B per year that is spent on HIV prevention, treatment, monitoring and care.

$17B is a lot of money to spend without a strategy. This sum is roughly equivalent to HIV-directed funding for all low and middle income countries combined. As a funding requirement for these programs, the US government requires that countries draft an AIDS strategy before being supported in their AIDS work. The value of explicit strategy-setting in tackling global problems appears to be increasingly recognized by large funders, including the US government, as a way to catalyze focused and effective efforts for large scale social issues.

Listening to these brilliant orators on the Hill, I was struck by the great challenges in developing strategy at this scale. How can one funder, or even the White House, bring together nations, organizations, groups and/or individuals to tackle a problem as challenging as HIV?

Here in the US, HIV is the focus of a vast array of federal, state and local agencies, businesses, foundations and nonprofits--civil-society organizations in service of those at risk: the millions of people currently infected with AIDS, and the 50,000 who will become infected this year in the US alone. While a White House strategy for HIV won’t immediately solve the problem, or dictate the “correct” response, it is a platform for the White House to effectively lead this effort and to engage this broad set of allies building towards what we term “concerted action.”

"Concerted action" is a concept that FSG is developing, which acknowledges that in order to achieve the greatest impact on the world’s most difficult problems, government, corporations and social sector actors must come together in entirely new ways to affect large-scale change. In the coming months, FSG will surface more specific definitions and examples of concerted action. But whatever it’s called, the idea of using strategy-setting as a way to catalyze focused and effective efforts seems like the right direction.

And of course, I’m thrilled that FSG has a place at this table. I’d like to hear your questions or comments at insights@fsg-impact.org.

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A New Role in Accelerating Shared Value
by Kyle Peterson

As I sat in a cold conference room in an even colder Paris in January, the discussion was all about how to save seafood. Big distributors of seafood had come together with conservation groups, including members of the Conservation Alliance for Seafood Solutions, at the tenth annual “Seafood Summit.” The discussion was serious – many of our favorite seafood products are appearing on conservation groups’ “red lists.” Whether from overfishing in species such as bluefin tuna or environmental degradation associated with farmed species like salmon and shrimp, the big picture is dire:  63% of fish stocks worldwide require re-building, says the Monterey Bay Aquarium’s “State of Seafood” report. But as bleak as the seafood situation may be, the issue on my mind at this conference was less about fish and more about the people who eat them. Where were the customers at this Seafood Summit? And why weren’t more companies pulling customers into their efforts to make their businesses more sustainable?

As a field, we often forget the role of the customer in our sustainability plans and discussions. Attend a CSR conference and you’ll find all corporate stakeholders present with the grand exception of customers. A remarkable finding from a 2008 IBM survey shows the consequences of this missing voice: three-quarters of 250 business leaders surveyed confessed that they had no idea what their customers expected about their companies’ CSR efforts. And customers ranked fifth among six stakeholder groups--after employees, business partners, investors, and communities that companies collaborate with on CSR initiatives.

Past efforts involving customers in CSR initiatives offer some insight into the above findings. To date, customers have in many cases been the audience for CSR efforts. Companies tout their good works as a way to build rapport with their consumers. Or, customers are recruited into cause-related marketing campaigns (sometimes referred to, cynically, as “consumption philanthropy”). One recent example is Pepsi’s new Refresh Project that will donate $20 million to causes picked by the public. While well-intentioned, these initiatives are often fleeting, detached from the company’s critical touch points with society, do not expose the complexity of the real solutions needed, and ask little from customers beyond the purchase of a product. Surely, these campaigns provide education about important topics (breast cancer, HIV, etc.). But companies have missed an opportunity to pull their customers into helping them solve specific social problems that are also serious business constraints.  

Imagine a world where customers help deliver value both for business and society, and corporations help customers create such “shared value.” Actually, the sustainable seafood movement is one of the better examples where we have seen companies recruit customers to a shared value cause. In 2005, the food services company Aramark discovered in a nationwide online survey that 83% of its customers wanted more information about the food they were consuming at restaurants.

Subsequently, Aramark partnered with the Monterey Bay Aquarium’s Seafood Watch program to promote more sustainable seafood, including shifting purchases to more sustainable options (to be completed by 2018) and taking steps to better educate consumers on seafood issues. But while some seafood retailers and distributors inform their consumers about what might be certified or “green listed” to eat, it is remarkable how little is asked of customers to change their habits, pass on information or to talk to their elected officials about the critical state of many fisheries. Credit must also be given to the conservation groups that nudged the companies to change their buying practices and involve customers in the first place.

Customer involvement in shared value ventures can take many forms. Some companies move beyond cause-related marketing to shared value campaigns, where the business, customer and societal interests are well-aligned. Safeco’s FireFree program in Oregon educates homeowners about wildfires and how to create “noncombustible zones” circling their homes, thus preventing harm to customers and reducing claims to the company. Best Buy’s recycling programs encourage customers to recycle their electronics at nearby stores, thus reducing the company’s environmental footprint. Almost 20,000 tons of electronics were recycled in 2008.

PetSmart, a Fortune 500 retailer and the largest specialty retailer of services and solutions for the lifetime needs of pets, engages both customers and employees (in addition to vendors) in its shared value activities. For PetSmart, shared value means a lifelong, loving home for every pet – which creates business value in the form of loyal customers, and social value in the form of reducing the number of animals that end up in shelters each year. Customers partake by being able to adopt cats and dogs directly in PetSmart stores (PetSmart consciously does not sell these animals) and donate to PetSmart’s affiliated nonprofit PetSmart Charities upon checkout at the register.

The Grand Circle Foundation, the corporate foundation of Overseas Adventure Travel, a packaged travel purveyor for Americans over the age of 50, has started an innovative program: “Invest in a Village” where travelers contribute to the economic development goals of 60 villages in Africa. Travelers provide financial support and are encouraged to visit the villages and provide feedback on project status and impact. Visits to these villages are part of Overseas Adventure Travel’s trips so future travelers can benefit from a new experience. Call it “travel philanthropy:” creating shared value for the company and the villages themselves.

To engage customers in shared value initiatives, companies must first prioritize real, long-term business challenges and opportunities as the focus of sustainable business practices. Likewise, companies need to better understand what their customers want and how to involve them. In what might seem a turn-around of existing trends, companies can encourage customers to get involved in areas of policy advocacy. Imagine the acceleration of the seafood movement if companies, customers and nonprofits were aligned to press their cases on government regulations of worldwide fisheries?

Customer-oriented CSR is not a silver bullet. We have seen companies create CSR agenda based solely on what their customers want. As seductively democratic as this might sound, customers can pull companies to short-term, unrelated activities that are highly local and don’t add up to larger scale solutions. Innovations can be inspired by customers, but high impact CSR requires the long-term vision of corporate employees who think about business issues for a living.

Nevertheless, there is a bottomless sea of opportunity for companies to understand what customers want from CSR programs and how to engage them in powerful Shared Value initiatives. I invite your comments and feedback at insights@fsg-impact.org.

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By Valerie Bockstette

Community foundations and funders looking to develop or support effective community leadership programs have a lot to learn from the West Coast Community Foundation. And by West Coast we mean South Africa, not California.

According to the Worldwide Initiatives for Grantmaker Support (WINGS) 2008 Community Foundation Global Status Report, nearly 50% of all community foundations now exist outside the US. For example, there are now more than a dozen community foundations in Africa. These emerging organizations tend to have different origins, first in roles as relationship and knowledge centers within local communities, and often growing into a variety of roles as stewards of philanthropic funds.

West Coast Community Foundation (WCCF) is part of a growing movement of global community foundations. WCCF, which was founded a decade ago, has always had its roots deep in the needs and opportunities of the communities it serves. From its earliest days, the foundation has let the community itself drive its local capacity building agenda. At WCCF’s annual conference, community based organizations and local service providers, funders, local government representatives and other development agencies convene to discuss community development agendas for the coming year, to determine the related organizational development needs of local community and NGO organizations, and to chart a path for how the foundation can play a supporting role in addressing these needs.

Last year the foundation decided to shift gears in its approach to community development and move from a needs-based approach to an asset-based approach that stems from the belief that communities are built by focusing on the strengths and capacities of citizens. According to WCCF CEO Johanna Hendricks: “Previously we looked at all the needs existing in a community. But we found in our trainings and interactions that the community does not respond well to this approach. So we educated ourselves on asset-based development.”

Going forward, WCCF will develop its capacity building approach each year by mapping organization and grantee skills, creating trainings and activities aimed at developing existing skills and filling skill gaps, and conducting information sessions to make people aware of potential assets and how to access and mobilize these assets.

Not only has WCCF embraced this approach for its own work, but is working on expanding this approach in partnership with the members of South Africa Community Foundations Association (SACOFA), a community foundations network. Greater Rustenburg Community Foundation, a member of SACOFA, and the University of South Africa are helping to bring asset-based community development to other organizations in the region through trainings and a conference with the Coady International Institute next month.

On that note, WCCF sees building local partnerships, in particular with municipal government agencies, as one of its most important activities. For example, WCCF has recently partnered with the Department of Water Affairs and is in the process of formalizing service agreements with several municipal agencies. Says Hendricks about the role of WCCF and community foundations in general: “Community foundations are good vehicles for economic development. We can build support from the grass-roots up and thereby give government the opportunity to meet its constituents half-way.”

It is no wonder that WCCF has enjoyed tremendous success and wide recognition for its work. Year over year, it has increased both the number and average size of its grants and been able to diversify its funding mix to include 20% from local and regional donors. It has also garnered high marks from grantees in a recent evaluation of its effectiveness. And perhaps most tellingly, it receives visits from development organizations and funders around the world, wanting to learn about and emulate its model. Do you have an interesting story or comment to share about global community foundations? Please let us know at insights@fsg-impact.org.

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By Lalitha Vaidyanathan & Marina Pol Longo

We talk often of the concept of “Shared Value,” when a company aligns its commercial interests with societal needs. Companies create shared value by either pioneering innovations in the value chain, or by investing in social aspects of the company's competitive context. While the concept of shared value is gaining ground, the journey from traditional CSR to more authentic and strategic shared value can be fraught with challenges. How do you move beyond traditional philanthropy to a shared value approach?

Today we share Medtronic’s journey from traditional to shared value CSR. Medtronic, a $15B medical device company based in Minneapolis, is in the process of developing a shared value platform, expanding access to its chronic disease solutions for low and middle income populations worldwide that it does not reach today. Medtronic faces three critical issues in making this transition: the philosophical shift in moving from traditional CSR to a shared value platform, the cultural requirements needed to make this new philosophy stick, and the new governance structures necessary for success. 

New Philosophy
Traditional CSR typically involves corporate philanthropy and/or mitigating the company’s footprint – both areas of value, but incomparable to what a company can do when it puts its business assets, interests and competitive advantages in play as well.

Medtronic’s transformation has involved a philosophical shift on the part of philanthropy to being more willing to invest in areas that are aligned with the business, with the conviction that these investments are in line with corporate values. As Medtronic’s Vice President for Community Affairs, David Etzwiler highlights, “Our vision calls upon us to leverage all our resources on alleviating pain, restoring health, and extending life. By focusing our philanthropic efforts on areas where we have unique expertise as an organization we are fulfilling our vision and increasing our impact on society.” At the same time, it is very important to note that the Medtronic Foundation has been very diligent about ensuring that the benefits of such philanthropic efforts accrue to society at large (which could include competitors) and not just directly to the business – thereby avoiding conflicts of interest. On the business side, Medtronic has made a similar philosophical shift, by exploring non-traditional markets where its products and services can offer major social benefits, and by making the necessary investments in new products, delivery channels, and more to make this a viable economic proposition. 

In both cases, what was required was a willingness to think about the long-term business imperatives and social needs. For Medtronic, this is about increasing access to chronic disease-oriented medical devices, and strengthening the surrounding healthcare systems.

New Culture
To make these types of philosophical shifts a reality, Medtronic needed to engage and galvanize the entire organization to contribute ideas and resources to achieve this goal. To create this shift in culture and mindset, Medtronic is developing a corporate-wide “Greater Access Platform” that will inventory and celebrate existing efforts, stimulate new efforts, and scale the most promising ideas to create access to its therapies for populations further down the economic pyramid. This platform will be the cornerstone of Medtronic’s shared value strategy, serving both as an incubator and an accelerator of initiatives that can contribute to a meaningful reduction in mortality and morbidity in chronic disease.

New Governance  
Medtronic is creating a new governance structure to coordinate its shared value initiatives and report progress towards social and business goals. A new executive-level committee, the “Corporate Social Engagement Advisory Committee,” will oversee not only traditional CSR activities (like product donations, philanthropic giving, and environmental health and safety) but also the Greater Access Platform noted above.  

Making the transition to shared value is new and uncharted territory. If you have a shared value story to share, please send us your thoughts, ideas, and perspectives to insights@fsg-impact.org

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