The Intersection of Philanthropy: Shared Value – An NGO Perspective
Tags: Shared Value
Posted by John Holm on March 6, 2014.
This is the first article in a series entitled “The Intersection of Philanthropy.” The series will focus on the changing notion of ‘corporate social responsibility’ in the private sector and how businesses are moving toward a more integrative and strategic approach in their philanthropic initiatives — an approach that is supported by the concept of shared value.
In recent years the concept of shared value has gained significant traction in the international business development community. As we have highlighted on previous posts, innovative companies such as IHG and Coca-Cola have implemented shared value initiatives in emerging markets and have boosted economic performance while creating quantitative social outcomes that benefit local communities. As the concept of shared value moves from an early adopter phase to mainstream acceptance, and corporations begin the process of integrating corporate philanthropy into their day to day business operations, several key issues should be addressed:
1. What exactly is shared value and how is it different from ‘business as usual’ CSR activities?
2. Is buy-in from all business units and internal corporate stakeholders necessary for a shared value initiative to be successful? If so, what are key best practices?
3. How precisely can a company create financial value by ‘doing good’? What are the traits of corporations that can execute shared value initiatives successfully?
4. Why is measurement integral to shared value? How does a company measure both their financial impact and social outcomes simultaneously?
5. How does shared value creation change the dynamic of the relationship between the company and the NGO?
While issues 1 – 4 will be discussed in much more depth in future Intersection of Philanthropy articles, it is imperative to understand the role and scope that NGOs play in creating a successful shared value initiative. Traditionally, many companies view the nonprofit sector as not being integral to the company’s primary business objectives/goals. Whether siloed underneath the marketing department to generate PR CSR (Public Relations Corporate Social Responsibility) buzz or used merely as a tax deduction, not until recently have we seen the transformation of nonprofits playing a larger role in a company’s primary business strategy.
So what is the impetus for this transformation? Why are many corporations beginning to view NGOs as their ‘doing good’ distribution partners instead of merely as charities?
While there are several explanations, one key differentiator of companies strategically partnering with the nonprofit sector can be described in one phrase: Innovative Collaboration . Innovative collaboration is not creating a new product or patenting a new design. Collaborative innovation can best be defined as those companies that create a competitive advantage by unlocking new markets and customers through a deep understanding of external stakeholders (customers, nonprofits, civil society). Examples of innovative collaboration includes Unilever’s work with rural women in India via the Shakti Project and Cargill’s work with CARE fighting global poverty.
In next month’s post, we will highlight how innovative collaboration is changing the dynamic of the relationship between the corporate and nonprofit sectors and highlight how NGOs are using adapting in this shift to increase their philanthropic footprint.
John Holm is the Senior Director of Business Development, Marketing & Communications at CAF America. In 2012, John founded and served as Director of the Center for Shared Value and Social Impact in Bucharest, Romania. In the same year, he initiated and authored the Shared Value Action Learning Project at Maastricht School of Management in both The Netherlands and Romania, where he also serves as a Senior Adjunct Lecturer.