Why Change is Coming Fast in Community Development

Introduction

Note: This blog was also published at Harvard Business Review here: http://blogs.hbr.org/2013/12/the-big-trends-changing-community-development/

Article

Three trends are
converging to transform the world of community development.
Big trends in business and society tend to march along at a
measured pace. When change happens fast in some area, it’s usually because
multiple trends are converging to accelerate the process. This is what is going
on now in community development. Three lines of progress are crossing, and
rapidly reshaping how businesses and nonprofits together strengthen the locales
in which they operate.
                                                       
From the non-profit
side, the trend is toward measuring outcomes, not process.
First, there is a growing realization that the not-for-profit
sector has, over the last 50 years, been neither as effective nor as efficient
as required by either the communities they serve or the donors (from
government, philanthropy, and the private sector) that fund their efforts.
Recent studies of the efficiency and effectiveness rates of
leading international NGOs and UN agencies have revealed the shortcomings of a
system that, over the last half a century, has measured itself on process and
not outcome.
Take the example of child sponsorships, highly popular as a
marketing tool for many NGOs. Child sponsorships have been operating since 1953,
and all of them share the high-level objective of breaking the cycle of
poverty. By now, three generations and at least three million children have
passed through such programs. Have they been effective?  It’s a valid question, but disappointingly,
almost no NGO can point to evidence of impact. They haven’t identified
measurable proxies such as how many former recipients went on to become leaders
in business, community, or government – or how the served population’s
employment and wage rates differ from the general population. Instead, the NGOs
fall back on process measures, like how many schools have been built or
teachers hired.
                                   
To a business person, think how absurd this would seem. I
can’t imagine, recalling my days at Rio Tinto, the managers of a copper mine
measuring and proudly reporting how much dirt was moved, how deep the hole was,
and how many trucks they had procured – while staying mum about how much copper
was produced.
But all this has been changing. There is a growing global awareness
that we are not measuring developmental or humanitarian impacts correctly.
There are many efforts underway to define better outcome metrics and track them
over time. And there is a growing resolve to talk honestly about what is
working and what is not.
                                                  
From the private
sector, the trend is toward recognizing the business value of community
progress.
Meanwhile, a second trend is the growing eagerness of the
private sector to play a genuine and substantial role in community development.
What began as charity-minded Corporate Social Responsibility (CSR) programs have
evolved into pursuits of “shared value.” The term was coined by Michael Porter
to denote a broader goal for businesses than shareholder value; companies
operating with a shared value mindset prioritize business investments that also
produce social value – and prioritize social investments that also produce
business value. Managers have embraced this kind of thinking not because they
have taken a “be nice” pill, but rather because they see that truly effective
community programs reduce community risk, and thereby increase the net present
value of their assets in developing and fragile states.
                   
For example, BHP Billiton, the world’s largest mining
company, runs one of the world’s most effective anti-malaria programs in Mozal
Mozambique. The company’s program has reduced adult malaria infection from
above 90% of the adult population to below 10%. That’s great for the community,
but it’s also quite valuable for the company. Improved community health has
lowered absenteeism in the work force and increased productivity by a
measurable amount higher than the cost of the program itself. Beyond this
initiative, BHP Billiton has a program addressing sustainability issues along
three dimensions: environmental, social, and financial. And when companies
collaborate, even further value can be created – a point I discussed in a previous
post
.
From the talent side,
the trend is toward choosing work based on social impact.
                                                                                        
The third trend unfolding is the growing expectation and
even demand on the part of professionals (especially given the influx of
Generation Y) that their work will have positive social impact.
This point has gone relatively unheeded in the US and Europe
as the economic cycle’s impact on the job market has left young people willing
to accept any paid work. Look, however, at the job market in any developed
economy that had no recession following the financial crisis, such as Australia,
and you see a different story. Human resource managers in Australia will tell
you that one of their greatest challenges is the recruitment and retention of
high-quality staff. Top graduates from Australian universities are not hired
and fired. The top graduates hire and fire their employers. If an enterprise
does not give them what they want in terms of remuneration and satisfaction,
the employer is dismissed and a new one found.
The point of convergence should be clear: genuine community
development programs can respond to Generation Y’s wish for social and “feel
good” components of their work.  And
their impact can be observed in better outcomes in recruitment and retention of
high quality staff.
This balance-sheet-positive, three-trend convergence
explains why, for those of us who have worked in community development for
years, the past few years have been so energizing – and it predicts that the
transformation will only continue.
But the speed of change also means that people not directly
involved in community development are not aware of how much is different now.
Businesses might not appreciate how outcome-focused nonprofits are becoming;
NGOs might be too inclined to accuse companies of “greenwashing.”   Policymakers might assume that the two sides
are too far apart in their agendas to work in collaboration.
                              
If this is true in your organization, do what you can to
open people’s eyes to the new reality. The convergence is happening, and it’s
time for leaders in every sector to recognize the common ground.  Otherwise, opportunities to improve trade and
tackle poverty alleviation in emerging and fragile economies will be missed,
and both corporations and communities will suffer.
Andrew Macleod is a
Board member of Cornerstone Capital Inc (New York), advisor to Gane Energy
(Australia), Critical Resource (UK) a former General manager at global giant
Rio Tinto and a former senior official of both the United Nations and the
International Committee of the Red Cross.  He is the author of ‘A Life Half Lived’ by New
Holland Press and can be followed on twitter @andrewmmacleod

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