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Business – donor relationships – why the purpose can’t just be about the dollars

Collaboration between businesses and donors – both governmental and private – has become a feature of development in recent years. Injections of funding from donors have without a doubt played an important role in many initiatives that may not otherwise have seen the light of day. But I have also seen too many examples of the proverbial tail wagging the dog. In other words, the dollars lighting the way. And the more gilded the tail is, the more it can dictate where the dog runs to – even if the destination was crystal clear before the new money came into play.

I have spent the past decade working for Cadbury, then Kraft, and SABMiller on sustainable development – a lot of the time focused on agriculture, water and livelihoods. During that time I have been involved in a number of donor-supported initiatives, and observed many more.  

And my number one learning is this: successful donor-business collaborations are founded on a clear shared purpose, and that purpose is not the funding.

The best examples of collaboration that I have seen have come about following a reasonable period of strategic discussion between donor(s) and business(es) before any money came into play. For example, The Bill and Melinda Gates Foundation has tried and tested a match funding model where it sets a strategic goal, for example related to farmer livelihoods from a particular crop, and assembles a set of business actors who share that goal. They then work out what approach to take. Of course, the intent is that the donor will provide funding to address some of the things that need to be done, and of course the donor will have a strong point of view on the approach, but at the heart of the model is an ongoing collaborative discussion. It may well be that no funding actually flows to companies. The Cocoa Livelihoods Program was an example of this, and it was far from perfect – mistakes were made, and there was plenty of lobbying for favoured initiatives. But at least the principles were clear – a partnership is built around shared objectives, and all partners must contribute to achieving those.

On the flip side, I have encountered many problematic donor-business relationships, often when donors have established a fund to support a particular objective, and then sought applications against a defined set of criteria. The objective and the approach that the donor has defined may be extremely sensible. The problem is that the lure of the funding can be great, and often tempts applicants to retro-fit their initiatives to the criteria, even if sound analysis has informed their existing objectives and approach. Money carries weight, and it is easy to slip into over-crediting the logic of the donor – whereas businesses and other actors who have been embroiled in a supply chain or a local context for years may have a much stronger understanding of what needs to be done.

While I was at Cadbury, on one occasion we turned down a major offer of donor funding – following a successful application process – because we couldn’t reach agreement on how the funds would be used within our Cadbury Cocoa Partnership. We had developed and adapted our approach over several years based on learning how to best improve the sustainability of cocoa growing communities – and we were still learning and adapting. So we were not willing to establish a new, ringfenced programme, with separate objectives and parallel reporting structures.

Of course, efficiency dictates the need for donors to have standardised structures and criteria governing much of their funding. But businesses should only apply to these funds when there really is a strong fit with their objectives and approach – not just because it looks like there is money available.

Otherwise, it is better for business – armed with clear objectives – to engage with multiple donors to determine with whom they have a strong convergence of objectives, and to then work with them to build a shared approach and a funding model that supports it. In any business-donor relationship that involves funding, there must be a commitment to full accountability for how funds are spent. However, removing some of the straitjackets of pre-defined criteria and structures, and introducing flexibility to meet shared objectives, can lead to much greater results, even if it may initially feel less efficient.

The lesson about clarity of purpose goes beyond business-donor relationships. My biggest learning about building a successful partnership with any organisation is to invest time and effort upfront in establishing shared purpose, shared objectives and shared approach. When the partnership discussion is between vastly different organisations, who may instinctively mistrust one another, this can take a long time. But it is essential. And if the shared purpose isn’t there, the prospective partners should walk away. If it is, there are two key things to be worked out: who is doing what, and who is paying for what. Make sure it is clear on both sides what the financial relationship is at the outset, and what both parties aspire for it to be. Is one partner funding the other’s work? Are both partners funding themselves? At SABMiller, we worked with Carol and Oli from Powering Partnerships to think these things through for some of our key existing partnerships – and it was time well spent.

I will finish with a couple more examples of donor approaches to business collaboration that I think have legs.

I made the point previously that donors should listen to businesses and other actors with local knowledge. However of course they should also challenge. Hard. Often what is needed is an injection of innovation and new thinking. Many businesses are great innovators, but sometimes not in relation to development challenges. An innovation challenge is a great way for donors to focus attention on one of their core development objectives – by throwing out a well-defined problem, and offering funding to organisations with the best potential solutions. The Rockefeller Foundation uses this a smart way, for example with its 2016 challenge to develop novel approaches to increase cassava shelf life and therefore reduce food waste. It may be hard for a donor to use this approach at scale, because of the resource required to evaluate and manage initiatives, but it can accommodate novel approaches that make a lot of sense when you hear them, but wouldn’t fit any set criteria! And it is also oriented towards creating new business opportunities as well as to addressing development issues – which plays to businesses’ strengths.

Finally, I have seen the Ford Foundation use interlocutors in an interesting way to build more flexible collaboration with business. As part of their Inclusive Economies grant giving, they have worked with Technoserve, itself a trusted adviser and implementing partner for many businesses, to identify strategic value chain projects that have the potential to catalyse major change, but would be unlikely to happen immediately without some technical input (in this case from Technoserve), and some funding support. They have then provided match funding to enable Technoserve to do the strategic work for the companies.

So there is much for business-donor collaborations in the future to learn from. But most importantly of all, before any discussions start about the funds or the funding model, make sure the purpose is clear, and make sure it is shared.

This blog is part of the January 2017 series on how, and why, donors and businesses work together for development impact. For more candid opinions on what works, and what doesn’t, read the full series on demystifying donor-business collaborations.

Anna Swaithes
Until November 2016, Anna was Sustainable Development DIrector for SABMiller. Having decided to leave the business following the acquisition by AB InBev, Anna is currently advising a number of organisations in an independent capacity. Anna joined...

2 Comments

  1. Hi Melina – It is great to see the briefing note and hear about progress in the direction of strategic partnerships with business. I will take a closer look and let you know if any specific comments. Anna

  2. Profile photo of Melina Heinrich-Fernandes Melina Heinrich-Fernandes says:

    Thank you for sharing these really useful insights, Anna. I think they are particularly timely, given the most donor agencies are looking ways to build more equal, strategic and longer-term relationships with business. As you point out, however, many traditional, transactional models for initiating joint work don’t really allow for an ongoing collaborative process and co-developing solutions that make both business and development sense.

    This is something we have also documented in a new DCED briefing note on ‘How donors can make the transition to strategic private sector engagement.’ It summarises programming innovations and organisational change processes in development agencies to facilitate the ongoing shift from bilateral to successful donor-business collaborations. Like you, we have found that innovation challenges and longer preparatory discussions with business before entering partnerships may be part of the solution. Several agencies are also making changes to staff roles and team structures, training and recruitment, as well as incentive structures and the organisational culture more broadly to facilitate new ways of working with business.
    Comments on the briefing note and any additional insights are still very welcome. A consultative draft can be downloaded at: http://www.enterprise-development.org/wp-content/uploads/DCED_Making_the_Transition_to_Strategic_Pivate_Sector_Engagement.pdf

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