THE 21ST CENTURY NGO IN THE MARKET FOR CHANGE
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- THE 21ST CENTURY NGO IN THE MARKET FOR CHANGE
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01
02
Forewords
Chapter 1
NGOs in the spotlight
06
Chapter 2
Paradigm shift
20
^io2';$i:Ce:iiLiryNGO Is perl, of on ongoino
ieaming prucessJov SusLa'in/Tbiiity. The
extensivi; research that went into the.
.production of this report t.as only been
possib/e With (he active he5u and support o!
a •/.- do variety of organizeilons had
individurds. Iqp of this group, have bean our
;n i nei s. namely Gavin Powe; arid
Vivien Smith ol the UN Giobal Compbct
team one JadgneiB}.; Aloisi de lardr .>■’ v‘
C'orneiN van dor Lug! from the- Umred
Nanons Environment Pi egramme (UNI: Pi.
Executive Summary
04
10
Acknowledgements
vVe are extremely grateful for the fmanciai
suoi'Of; c; out, strewg c pannm >,,No .<)
Nordivk and vanf ity Savings f/eo. d'^cu
and ar'- wa n y (hank cm other ^,'onso "
UuPont, I dorr, jnd tnu Inhc'c-tu- c,;
I n.iiicc Coipo.ut.on (Ifq for the' ge.jcreus
suppoi t lor the prrjject.
Chapter 3
The business of NGOs
Chapter 4
Agenda 21: NGO governance
Novo Nordisk
VanCity
It's right here.
Vark'iJy Savings Crc&l Union
|
The four workshops that pfevided acldkinoal
26
Chapter 5
From market intelligence to
intelligent markets
36
Chapter 6
Bringing change to market
46
Chapter 7
Conclusions and
recommendations
52
Appendix 1
.Centres’of Exccdcnce
material for the project involved a wide
range of actors. Here we would panjcuhrb
.! c
’’'-•’nk Vivian and .Gavm for their
ip'p'cn; in co- n ■ss ing the Po« to Alegre V/prk:
Social rorum and New York U’-ty wurk.shc-o?.
Rita Clifton at h’iterhrand for co-hosting our
I nndn; worksni)p.'and Pnsr«Ila Beuelim n:
VanCiry and Suzanne Hawkes ol Impact; for
i'lerf. iva nab e he!p in organ.zing lb. ' md
Vancouver workshop.
Weyire deeply iniJobted. to our Project
Advisoiy Gloup nic.'ue^ Pn < li/t'hi s ;e
(Varsity Crcd t Sayings Un-on). Jed F.nr. son
{ife-vioti Foundation). Barbara Rorito
USA). Vernon Jes inimp (Novo Nordiski. Miklos
Marschall fFransparency Interii3Uqr!a!); Vif;•?
f/cr-M (Griner, n Cnangei arv S-mo i /s ’•'k
(AccouniAbiliiy), They comm •-.••riled On enfiy .
drafts of oqr white paper ancktTieri pp tm/
firiih rep.)n..
:;3,5 Appendix 2
Ihterv’eyyecs end .
WohdbopRjfiicipaiTts
55
novo nordisk
Appendix 3
'Notes
FinaHy, we would like to thank Infonis for
Ihor lesearch suppo;x Catalyses ic the
hesp A’-th ouheacb «s well > > o^ner
ol the ’Sustain AtHity Core ream, inck.dfng in
pfirtipular bdie Fhorpe.. Kavita Pmteh-Mani.
Te?l Mufinzing. Oliver Dudok van Heel Judy
Kus/tv-ski.. Yasin-n Crowthyr znd.GeiJi Lv-i,
for their hok>
r undediikinqj
,
early straffs.4
The r.esbsrch i
this report ha
by the suppor
above) and r.c
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rentajning em
SustahiAbTity
us know.
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e-mail : chc@sochara.org
j
The 2d st Century NGO
01 ,
SustainAbility foreword
UN Global Compact foreword
UNEP foreword
The 21st Century NGO represents the first
The strategic move by many non
phase in a new round of our work on the
governmental organizations to become active
agenda driven by NGOs - and on the
players within market systems has profound
emerging strategic, accountability and
implications for multi-stakeholder initiatives
governance agendas for NGOs themselves.
that seek positive social and economic
The report is partly an updating of work
change.
SustainAbility has been doing for more than
a decade on evolving relationships between
For some civil society actors, confrontation,
business and civil society — and, in particular, which has proved a highly effective means
between business and NGOs. But it is also
for raising awareness of critical issues, is
intended as a provocation, as an
beingjoined by cooperation with other
encouragement to NGOs to challenge their
_____ __________
stakeholders, including
business, to produce
own thinking, sense of mission and strategies, solutions to pressing global challenges.
As we wrote the report, we imagined
ourselves talking to NGOs and those who
fund them, but we would hope that public
and private sector readers will also find
useful guidance on where the agenda may
now be heaced. This is no longer a simple
matter of reoutational risk for such sectors,
but of potential market drivers. As NGOs'
expertise and contacts evolve, so they
themselves will come to be seen by
thoughtful companies, investors and
government agencies as a source, direct or
indirect, of market intelligence. The logic:
if NGOs shape markets and markets shape
companies, then companies that understand
where key NGOs are headed may get me
jump on the r competitors.
The report is based on a wide literature
review, interviews with nearly 200 key people
around the v.orld, and four workshops held in
Brazil, Canada, the United Kingdom and the
United States. In addition to thanking those
who took pa't in the interviews (pages 5354), we are enormously grateful to the UN
Global Com-act Team, the United Nations
Environment Programme, our sponsors (Novo
Nordisk, Van^ity, DuPont, Holcim ano the
Internationa Finance Corporation), cur
NGO partners and the wider project team.
Thank you a1
Seb Beloe
Director, Research & Advocacy
John Elkington
Chair, Susta-.Ability
Much of this shift stems from the realization
that many of today's problems require
multi-stakeholder responses. Moreover, the
ascendancy of markets demands that societal
actors come to grips with today's market
fundamentals in order to reach their goals.
The UN Global Compact is an ambitious
experiment in multi-stakeholder
collaboration intended to embed global
markets with universal principles around
human rights, labour, and the environment.
The findings of this report are important to
the Global Compact, which can succeed only
if business, labour and civil society work
together. Dozens of international NGOs are
now actively engaged in the Global Compact,
in addition to numerous local NGOs - all
working as part of the Compact's worldwide
network of stakeholders.
In addition, this report will help inform
a high-level UN panel that is currently
examining the interaction between civil
society and the UN system as a whole.
We would like to applaud SustainAbility
for once again stretching the boundaries
of current thinking and thereby provoking
new debates and discussion. We are certain
that this new report will lead to a better
understanding of the critical trends and
dynamics that are unfolding v/ithin the
civil society movement.
Georg Kell
Executive Head, UN Global Compact
The first UN conference on the environment
in Stockholm in 1972 highlighted that
pollution knows no borders. Twenty years
later at the Rio Earth Summit, the link
between environment and development was
made. The Johannesburg Summit last year
reinforced the concept of sustainable
development, highlighting the need for a
new development model in our globalized
world. It also emphasized the social and
environmental responsibilities of the
corporate world.
UNEP has been working with business and
industry for many years to engage different
sectors in an effort to advance sustainable
production and consumption. We have been
hosting annual consultative meetings with
trade and industry associations since 1984,
involving increasing numbers of NGOs and
labour organizations. These dialogues raised
awareness among associations of new
challenges and equipped them to catalyse
change in their own ranks. UNEP helped
bring many key stakeholders to the table,
providing a neutral platform for the
discussion of major issues. On many
occasions, however, questions were raised
from various sides about the role and
representivity of different partners.
In this publication SustainAbility builds on
the tradition develooed in our Engaging
Stakeholders series of tackling the big issues
head on So for example: how do NGOs go
about working with business? There is no
one-size-fits-all' solution. We are all
confronted with complex societal roles:
the diversity of sustainable development
requires a diversity of approaches from all
actors including NGOs.
During sixteen years as head of UNEP DTIE.
I have learned that we need to evolve our
shared vision, while keeping our feet on the
ground This is why over this time I have so
enjoyed the partnership with SustainAbility
which I hope has brought new ideas and
new light to the sustainability debate.
Jacqueline Aloisi de Larderel
Assistant Executive Director, UNEP
Director. UNEP DTIE (Division of Technology,
Industry and Economics)
T
II®*- • ■
Seb Beloe
2
John Hiking’c-'-
Katie Fry Hester
Sue Newell
Georg Kell
Jacqueline Aloisi
de Larderel
The 21st Century NGO
02
Executive summary
'Old' and 'new' NGOs
The not-for-profit sector is now worth over
SI trillion a year globally.0' As a result, it
attracts growing attention, not all of it
comfortable. For example, McKinsey &
Company - the management consultancy -
20th Century 21st Century
Issue
—. .
Comment
_________________ ____________________ ____
Status
Outsiders
20C NGOs spent the second half of the
Insiders
••
u /...^Cfinturv as nuKiriPrc rhaflcnnirin tho cuctom-
The 21st Century NGO
CM
Introduction: why NGOs?
When SustainAbility first investigated the
world of non-governmental organizations
(NGOs), in 1987,os the scale and influence of
the movement was already considerable —
but its subsequent evolution, fuelled by the
processes of globalization, has been
extraordinary. The 21st Century NGO project
represents our seventh survey of the NGO
landscape,but is the first to have been
supported by a consortium of NGOs and
public and private sector partners. All our
previous surveys have explored aspects of the
interactions between NGOs. business and
markets, but this latest project has detected
early tremors which we believe represent
warning signs of seismic shifts in the
landscape across which NGOs operate.
But why focus on NGOs - and why now?
One key reason: there is growing interest in
the role and impact of 'civil society', usually
defined as representing that set of
institutions, organizations and behaviours
situated in the space between the state, the
market and the family. Appendix 1 spotlights
a number of centres of excellence in this
area. The way in which civil society
researchers view NGOs is well summarized
by Michael Edwards of the Ford Foundation:
'If civil society were an iceberg, then NGOs
would be among the more noticeable of the
peaks above the waterline, leaving the great
bulk of community groups, informal
associations, political parties and social
networks sitting silently (but not passively)
below'07
Activist NGOs are the shock troops of civil
society, but there are many others forms of
NGO, focusing — among other things — on
analysis, networking, behind-the-scenes
lobbying or service delivery. Whatever they
do, the roles and responsibilities of NGOs
have been thrust into the spotlight in the
wake of the profound changes that followed
the collapse of many communist bloc
regimes.
The globalization of capitalism has seen
successive waves of market liberalization and
privatization sweeping around the world.
These trends, in turn, have provided a rich
variety oi issues for civil society, in general,
and NGOs, in particular, to confront.
The research
Our research ran from September 2002
through May 2003. A key component of the
work involved interviews with leading NGOs
from different world regions (page 53-54). In
total, we involved nearly 200 people in the
Globalization may have been on its back foot research either as interviewees or workshop
in 2003, but our research suggests that we
participants.06 Each was selected on the basis
may be seeing a structural change in the
of such criteria as geography, issue focus,
'business environment' within which NGOs
peer referral and size of the organization they
operate. The primary focus of this work has
represented.00 The primary focus has been on
been on the large, international, branded
understanding NGO perspectives, but we have
NGOs, though we have also interviewed a
also talked to key individuals in foundations,
range of national groups operating in
governments, businesses and academia in
countries around the world. We have
order to better understand the context within
explored both the emerging priorities
which NGOs operate. Based on these insights,
promoted by these NGOs as well as critical
we have attempted to extrapolate out,
challenges they themselves are beginning to
reading between the lines of our interviews,
face. As indicated by the involvement of key
to generate a perspective on where
NGOs both as supporters of the project and
international NGOs and the agenda they drive
as members of our project advisory group
may be headed.
(see inside front cover), our explicit aim
tnroughout has been to map the emerging
We readily acknowledge that the
agenda, with a view to helping NGOs respond organizations covered here are predominantly
to the new challenges efficiently, effectively
northern-based — and biased towards welland in time.
known 'professional' membership-based
In highlighting NGOs and emerging trends in
their operating environments, our logic runs
as follows:
— First, international NGOs powerfully shape
and drive the corporate responsibility and
sustainability agendas.
— Second, as a result, NGOs represent lead
indicators of where political and business
agendas are likely to go in future.
— Third, given the scale of the changes
needed in the world to ensure sustainable
development, their role is likely to grow
in importance.
— But, fourth, they face growing competition
for public, political and business ’mind
share', as other actors adopt their
perspectives, language, campaigning
style and tactics and work at how to
deliver change.
NGOs. In part this is because we believe that
such models help describe how other parts of
the world may develop. But. at the same
time, we realize that NGOs operating in
emerging markets face very different
opportunities and constraints. Our insights in
these areas have also been integrated into
this report, but we do recognize that further
research is needed in order to more fully
address these emerging market issues.
Clearly there is a world of NGOs and beyond
that a broader civil society that is not fully
represented in this report. Nonetheless,
though still small, our interview pool does
represent a significant community of NGOs
and other leaders. It is on the basis of this
group that our conclusions are drawn.
Fifth, as some NGOs build major brands
and move into the mainstream, they face
growing calls for greater transparency and
accountability.
— And, sixth, as the landscape tilts around
them, some of the more thoughtful NGOs
are recognizing an increasingly urgent
need to revisit and refine their roles,
responsibilities and business models.
■I’'’V1'.
The 21st Century NGO
05
The report
,
Panel 1.1 f |
V
Definitions
The 21st Century NGO is designed for a mixed
readership. Primary target audiences are
NGOs and their funders, with specific
recommendations for each in Chapter 7.
We also believe that the study will be of
interest to people from the business
community who want to better understand
what tomorrow's NGO will look like, and
where their agenda is headed. The report in
particular gives guidance on NGO-business
partnerships and how these can be most
effective (Chapter 5). The structure of the
report runs as follows:
Chapter 2 looks at market and political
changes that are driving a 'Paradigm Shift’,
which in turn is transforming the NGO
‘market’.
- Chapter 3 focuses on 'The Business of
NGOs' — addressing ten key questions
about their role and operations.
- Chapter 4 then describes in detail four
challenges facing NGO boards.
- Chapter 5 explores a fifth challenge in
greater depth, investigating how NGO
engagement with business is shifting
'From Market Intelligence to Intelligent
Markets’ and analyzing some of the
implications for NGOs.
- Chapter 6 applies a standard business
SWOT test to NGOs, asking the question
how successful they are likely to be in
‘Bringing Chance to Market:
— Chapter 7 sets out our key conclusions
and recommendations and provides a set
of 21 internal and external challenges
for international NGOs, including a set
of wild cards'.
___________________________________________________________
■.
__________________________________________________________________________ ■
'
___________________________________________________________________ _________
Accountability
An actor (whether an individual or an
organization) is accountable when that
actor recognizes that it has made a promise
to do something and accepted a moral and
legal responsibility to do its best to fulfil
that promise.10
Civil Society
Civi society is the set of institutions,
organizations and behaviour situated
between the state, the market and the
family. Specifically, this includes voluntary
and non-governmental organizations of
many different kinds, philanthropic
institutions, social and political movements,
other forms of social participation and
engagement and the values and cultural
patterns associated with them?1
Corporate Social Responsibility (CSR)
CSR implies continuing commitment by
business to behave*ethically and contribute
to economic development while improving
the quality of life of the workforce and their
families, as well as of the local community
and society at large?7
Emerging Markets
Developing countries recognized as having
access to international capital markets,
thereby creating opportunities for
attracting private,capita! flows?3.
Market
Conditions affording individuals or croups
the opportunity for buyinq or sellinq Goods
__________
NGO
•__________________ _
belt-governing,'private,
'
Self-governmg.
private, not-for-profit
nor-for-proht
organization
organization geared
geared toward
toward improving
improving the
the
Clf
lr> 'IS;
quality nf
of lifp
life nf
of disadvantaged people?
5
Partnership
A partnership is a cross-sector alliance in
which individuals, groups or organizations
agree to: work together to fulfill an
obligation or undertake a specific task;
share the risks as well as the benefits; and
review the. relationship and revise the . G
agreement regularly?6
Social Enterprise
A business whose main aim is to generate
a social benefit, 'with the secondary aim of
generating a fair return to investors?7
Social Entrepreneur
A change agent in the social sector who
devises new ways to meet unrriet social or
environmental need through the market?9
Sustainable Capitalisr
J------ sm
A system of capitalism which maintains the
long-term health of the diverse economic,
social and environmental systems on which
it depends.
Sustainable Development
Development is sustainable where ’it 7
. meets the. needs of the present, without
compromising the ability of future
generat ions to meet their own needs'.19
. .
Triple Bottom Line
A framework for measuring and managing
economic, social and environmental value,
added or destroyed.
For more information see
A/'tivist NGOs are
trie shock troops of
civil society.
1
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The 21st Century NGO
07
Challengers challenged
Like it or not, NGOs are experiencing a
paradigm shift. The environment in which
they evolved — and boomed — is now
mutating. Some trends are in their favour,
others not. Anti-globalization protests,
underpinned by a groundswell in public
support, have come to define the latest
wave in public concern for social and
environmental issues.20 But as 2003 dawned,
much of the world was distracted by more
pressing fears around security' and the
global war on terror' led by the world's
new hyper-power, the United States.
In many ways globalization, if not actually in
retreat, appears to be very much on the backfoot. The failures of multilateralism in Iraq,
political schisms in the European Union, a
backlash from many world regions including
the Islamic world, the faltering Doha Round
of trade talks, incipient protectionism, SARS:
these have been just some of the factors
undermining confidence in our economies
and in globalization.21
In spite of such anxieties, however,
few interviewees believe the process of
globalization has actually ended. Most
indicators of globalization continue
to increase.22 Indeed, paradoxically
perhaps, many NGOs now argue for more
globalization, not less. In the process,
however, they stress that it needs to be
refocused on ’globalizing human rights,
justice and accountability for those that
abuse those rights'.23 In the build up to the
2003 G8 Summit in Evian, for example,
the talk was of ’humanised globalization'
and we began to hear of alternative
(rather than anti) globalization activists,
or ’altermondialistes'.
Instead of simply confronting globalization,
many NGOs we spoke to are actively working
to understand how these processes can be
guided to create and distribute greater social
and environmental benefits. Consequently
the new agenda promoted by international
NGOs straddles a range of issues, among
them: new definitions of security, global and
corporate governance, accountability in
financial markets, access to basic necessities
in emerging markets (e.g. clean water,
affordable energy, and drugs for HIV/AIDS
and other diseases) and the role of social
entrepreneurs.
Not everyone is comfortable with the
increasingly central role of NGOs, however.
Mike Moore, the WTO's former directorgeneral, is far from alone in calling for ’new
rules of enoanempnt'
engagement' between riwii
civil cnHotw
society,
international institutions and governments/4
’NGOs have had too much of a free ride in
identifying themselves with the public
interest,' agrees Jeffrey E. Garten, Dean of
the Yale School of Management. 'They have
ACmiirPri the
the hinh
acquired
high nrnnnd
ground of public opinion
without being subjected to the same public
scrutiny given to corporations and
governments?5 Garten concludes: 'It is time
that companies and governments demand
more public examination of NGOs.'
Not surprisingly, some NGOs see such
challenges as attempts to muzzle critics.
Instead, they argue that membership NGOs
derive their legitimacy from their supporters,
often numbered in millions. But these calls
for NGO transparency and accountability
can only grow as these organizations go
mainstream and, in the process, handle evergreater financial flows and exert increasing
political influence.-”1
Panel 2.1
r'-’
The Cardoso Panel
________
.In February 2003?UN Secretan^Geheral :
|Ko« Annan announced the f0rmat|0n t
,
■
■
'
■
■
■
■
of the'Cardoso Paner to assess the
.
luttl
chaired by former Brazilian President
Fema^o CfLdoijiGuifes a nwte
governments,
governments, NGOs,
NGOs, the
the private'sectom
private sector.. ■■
decade in the number and influence of
NGOs, Jnd their increasing interaction in-r
-formal
formal deliberations of UN bodies and
— »t------ 'innnMr’A,
conferences. TrizJrt..
Today, more
than 2,000 NGOs
have consultative status withthe UN
.
Economic and Social Council, and about
1,400 with the UN Department of
Information.
While NGOs have been instrumental in
directing international attention to the ■
importance of poverty reduction and
human rights, there have also been signs of
strain within the UN system. As Kofi Annan
noted: ‘Many Member States are wary.oft
the constant pressure to make'room for'
This trend was a key reason why
SustainAbility decided to embark on this, our
seventh NGO survey. But, we soon concluded
that if we were to simply focus on NGO
accountability, we would risk missing a much NGOs in their deliberations, whil^NGOs
more significant trend for NGOs and civil
reo| they are not allowed to participate'
society. This is the accelerating paradigm
: meaningful ly'. One of the objec&s of theshift from a late 20th Century focus on
.‘panel wilt be to examine the ways in which
governments and regulation, to an early
-participation of NGOs from developing .
21st Century obsession with markets as the
countries can be facilitated.
'
principal channel for delivering sustainable
development.27 This shift is the central focus
of The 21st Century NGO.
..................................
-
■.
The civil society boom
Early in 2003, SustainAbility and the Global
C_
Compact
team co-hosted a workshop at the
World Social Forum (WSF) in Porto Aleqi
jre,
”
• (Panel 5.9).
—The sheer number of people
Brazil
at the Forum (120,000, according to some
estimates) suggests that the civil society
sector is still booming. This assumption drives
most of the centres of excellence (page 52)
tracking civil society and NGO trends, many
projecting further growth in NGO numbers.
Key drivers they spotlight include:
Like it or not,
NGOs are experiencing
a paradigm shift.
The 21 si Century NGO
Panel 2.2
Membership growth in international NGOs 1990-2000
120 000
120.000'
100,000
100/000
80,000
80,000 '
60,000
60,000
40,000
felts
■
,40.000:
ra
i&si...
H toL
pl
20,000-
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1
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£
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§
Source: Union of International Associations
— the opening up of ex-communist and
other emerging or transition economies to
markets, democracy and civil society
models.28
- the communications revolution, with
the internet and other information
technologies linking and empowering
individuals and groups worldwide.
the withdrawal of government from many
areas of service provision, especially to
vulnerable communities.
— falling trust in traditional institutions
(governments, church, business).
— ongoing social inequality and continued
environmental degradation.
work with NGOs.' Strongly stated, but many
NGO people would probably accept the idea
that they still have much to learn about
business and markets. Significantly, however.
many we interviewed are now investing
growing efforts in this area.
Beyond growth in numbers, several
interviewees predicted other changes in the
focus of NGOs. 'We're seeing a sea-change in
Inevitably, like mainstream markets, the
_ market' has its own 'bulls’ and ’bears'
NGO
Take Chris
Rose, who has’had seni'w rotes
‘
.sin
terms of social change.’ says Australia-based
Ecos executive chairman Paul Gilding, a
former executive director of Greenpeace
International. 'Market forces are seen as
increasingly legitimate. And NGOs are
starting to smell changes in the relationships
between corporations and society. The big
thing to watch for is NGOs switching on to
market transformation, and being more
deliberate and strategic in such approaches'
Friends of the Earth, WWF and Greenpeace.
He wonders whether a 30-year golden era
of NGOs is now ending, and suspects that
there is a real risk of a major downturn in
the prospects for advocacy NGOs.29
One possible outcome: some activist
networks and NGOs will begin to use market
forces more consciously and aggressively to
undermine particular companies or sectors.
But, Gilding notes that, ’when it comes to
how to achieve market transformation, the
problem is that NGOs are almost completely
ignorant on how markets and business work
while business is largely ignorant of how to
NGOs focused on service-prowsion, including
many of the world’s largest NGOs such as
CARE and Global Vision International, are also
being subjected to intensifying competitive
pressures. Declining government funding,
more demanding beneficiaries and donors,
and new market entrants increasingly require
these groups to ‘perform or perish', in the
words of Kumi Naidoo of Civ:cus, a speaker
at our New York workshop on NGO
accountability.
As the new paradigm evolves, some
interviewees fear that NGOs that once
pushed out into open space' — that hadn’t
been previously defined or co.onized - will
find they are increasingly reduced to mopping
up, filling in voids left by markets and
governments. But others insist that NGOs
and other elements of civil society will
mutate to adapt to the new conditions.
The 21st Century NGO
09
Either way, these trends have major
implications for NGOs. Indeed, in contrast
to those who claim that NGOs have had
their day, some see NGOsJust entering their
golden age. With public opinion research
consistently showing NGOs enjoying high
levels of trust,30 both governments and
companies have no option but to take notice.
NGOs have even been described as the 'Fifth
Estate in Global Governance', with NGO
super-brands' now enjoying much higher
levels of trust and influence than global
companies.31 In emerging markets, some
governments are also turning to NGOs for
advice on key issues. Vladimir Putin, no less,
was recently involved in a Civic Forum for
NGO leaders aimed at providing input on
Russian government policy.
Other voices also argue that there are
inherent weaknesses in current forms of
globalization, with market dominating elites
guaranteeing dysfunctional outcomes.14
If globalization continues, we would expect
a continuing relative disempowerment of
governments — with power and influence
migrating to businesses, the financial sector,
multilateral organizations and, inevitably
NGOs.
Holding capitalism in tension
Once, many business people and political
leaders thought of NGOs as communistinspired. Today, as many civil society
organizations go mainstream, such
accusations seem almost quaint. But there
may be an interesting historical parallel in
the making.
as communism,
fnrmc
bn! dJust
b m
■ .•
■ in all its
Finches, not dodos
forms, helped hold capitalism in tension and
spurred social progress in the marketNo need to worry, then, that NGOs will go the
dominated world, so in a world where the
way of the dodo. Of course, as they enter the
market is becoming the dominant paradigm,
NGOs and other civil society groups are
mainstream, it will become harder for any
> are
one NGO to stand out from the crowd, which
evolving to play a similar role of holding big
is why we have focused on NGO branding
business (and big government) in check.1'1
(Panel 3.6). But, on current evidence, far from
NGOs may come under growing
being on the slippery slope to extinction their While
While NGOs may come under growing
numbers, scale, reach and influence are all
competitive pressure both from existing and
likely to grow in the coming decade. Panel 2.2
new actors, the people who found and drive
illustrates the significant growth in NGO
these organizations are an entrepreneurial
numbers between 1990 and 2000.12
bunch. They will come up with new ways to
Remember, though, that evolution also
involves natural selection. A significant
number of NGO people we spoke to expect a
shake-out' 'There is a need for — pz.
'._r- the
perhaps
imminence of - a market correction in the
NGO sector,' says Bob Dunn of Business for
Social Responsibility (BSR). So, instead of
dodos, maybe we should think in terms of
Darwin's finches, mutating to occupy highly
diverse ecological niches? Certainly
globalization is throwing up plenty of new
issues, opening out new niches for both
activism and service delivery.
’Globalization', argues Kumi Naidoo of
Civicus, ’is exacerbating global inequality, and
its "rules" - to the extent that we can call
them that - appear to be driven by the rich
at the expense of the poor.'13 He notes that:
’Globalization, and the forces driving it, is
throwing up a set of intractable challenges
that brazenly cross national borders and
which, by their very definition, defy national
level solutions. The spread of environmental
degradation, HIV/AIDS, human trafficking, the
drug trade and terrorism are all enabled by
globalization.'
drive social change and deliver social and
environmental value to their clients,
beneficiaries, funders and other supporters.
That said, they could still prove to have been
a transitional stage in social evolution. Think
back to Martin Luther pinning his 95 theses
to a church door in Wittenberg. Was that so
very different from Greenpeace hanging
banners off factory chimneys or nuclear
reactors? The values that drove Luther in
the early 1500s spawned the evolution of
proliferating forms of Protestantism which,
in turn, helped drive the processes of wealth
creation and accumulation now labelled
capitalism'.
Panel 2.3 ■
NGOs in emerging markets
Democratization, globalization and the
rise of new market economies .are, having
profound impacts on NGOs in these ‘
countries. In Latin America and South
Africa, where civil society was often ■
focused on the struggle for democracy,
NGOs have been able to refocus on
development and the environment.
In China, Russia or Central Asia where
there is little tradition of NGOs, there
has been a growing recognition of the
positive contribution they can make.
Paradoxically, however, democratisation
•can also weaken civil society if NGO
leadership moves into government. ■
.Mokhethi Moshoeshoe of the African
Institute of Corporate Citizenship observed:
'Until 1994 NGOs in South Africa were
focused on the political agenda and
confrontation. Post-1994, their main cause
Wple^oX'^oWn^
rudderless and without leadership.'
scephcaljo^meZh^b^n' ■
sceptical governments have begun :
consulting NGOs. Daniel Taillant of the
Center
Rinhfs and
Center for
for Human
Human Rights
and Environment
in Argentina comments that: ‘NGOs were
seen to be people at.the margins pulling
at chains they 'shpuldn't be pulling at questioning authority. However, there .
have been advances and some recognition
that others outside the state also have
..expertise and can contribute.'
u , < d
d.
c£T2enSh‘P
Center for Human Rights and Environment
,y. cedha.orp,..-r
It seems certain that values introduced by
NGOs will play a similar role in the 21st
Century, but where will today's NGOs be in
2020, let alone 2100?
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The 21st Century NGO
11
Like most social movements, many of
today's best-known international NGOs
emerged from the fringes of society. Over
time, however, their issues — be they
environmental protection, poverty alleviation
or human rights - have begun to come in
from the cold. But for many people they still
remain something of an unknown quantity.
So here are answers to the ten questions
we were most frequently asked by those
outside the NGO world who have to work
out how to relate to these organizations
and their agendas.
Who are these people?
We were recently asked this question by
senior executives of a major international
energy company which has been hounded by
NGOs. ’Who are these people?’ they wanted
to know, and ‘Why are they so different
from us?’ Big questions — and strikingly
reminiscent of the film Butch Cassidy & The
Sundance Kid, when the outlaws are finding
it impossible to shake off the pursuing posse,
Those who work in NGOs, be they ecological
campaigners or program officers delivering
humanitarian relief, have always been
different from those who run the powerful
institutions of the day. This is only in part an
issue of wanting to see change in shorter
time-scales than those inside the system feel
is possible. The values that many of those
who have gone into NGOs hold are also
significantly skewed when compared with
those working in the mainstream worlds of
business and government. They prioritize
ethical, social or environmental issues in
different ways and feel a stronger sense of
outrage when these values are offended.
That said, however, we have seen a striking
convergence between the values of those
in the NGO or CSO sectors and those
(particularly younger people) working in
mainstream institutions. Indeed, this is one
of the factors now driving the growing
interest, on all sides, in partnerships. It is still
true, however, that NGOs and CSOs attract
people who are driven by an urgent sense of
social, economic, environmental or political
injustice. And this, in turn, can lead to forms
of organizational schizophrenia as some
people in a given NGO promote partnerships
with business or others actors, while others
oppose such relationships, either as a matter
of principle or because of specific concerns
about a particular potential partner.
Managing such tensions is becoming a
central challenge in many NGOs pursuing
the path of engagement.
Also, at least in the early stages of the NGO
life-cycle, NGOs often have little knowledge
of the processes of wealth creation and
distribution they challenge. So these
people, unlike politicians, businessmen or
bureaucrats, are typically outside the welter
of pressures and drivers that lock business
and government into well-established and
potentially problematic ways of operating.
Many international NGOs are decades,
if not centuries old. The international
Committee of the Red Cross for example,
was set up in 1863 by a Swiss citizen,. ■
horrified by the lack of adequate medical
services for the thousands of wounded
.folloyving the battle between France and
‘Austria at Solferino, Italy.
As these groups become more established,
they may blend into the mainstream,
sometimes because they sell out (’watchdogs
becoming lapdogs’, as UK environmental
activist Jonathon Porritt once put it), and
sometimes because the mainstream itself
has shifted. Development groups, for
example, once mere gadflies, are now major
institutions in their own right. Definitional
problems make estimations of the size of the
sector problematic, but by most measures
this is a large industry - so large that almost
by definition it is ’mainstream’.^ Valued at
over SI trillion a year, and employing 19
million paid employees, it’s an extraordinary
fact that the sector could now' rank as the
world's eighth-largest economy.
‘
.........................................................................................................................................................................
.
.
Indeed wars — and their aftermath — were
often the catalysts for the formation of
:NGOs. Save the Children was set up in
1919 by two sisters campaigning against
the injustice of the economic blockade
on Germany and Austria, and CARE (the
'Co-operative for American Remittances
to Europe j was formed after the second
world war to provide relief to impoverished
communities in Europe.
................................................................................................................................
Some environmental NGOs also have their
roots in the distant past. The US Sierra
Club, for example, was founded in 1892 by
John Muir-to protest proposed reductions
fin the boundaries.of Yosemite National
Park, while the Royal Society for the
Protection of Birds (now Europe's largest
wildlife conservation organization) was
:set up in 1889 to campaign against the
V.™ trade in W,ld b,.d «
;
Where did they come from?
NGOs did not spring into existence fully
formed in 1961. even though that was the
year that Amnesty and WWF were first
launched, as illustrated in Panel 3.2. Social
activism has long roots. For example, the
movement in the early 1800s to ban slavery
in the British Empire was partially driven by
the British and Foreign Anti-Slavery Society,
and some of today’s best-known NGOs also
have their roots in the late 19th Century/
Red Cross
.www icrc.org
Save the Children
jw^^scv/^evhiidren.ord
CARE
- -- • <
* yzww.caraoig •
In the early years, religious groups often
played a Key role, including providing recruits
to work in these new organizations. The links
between the anti-slavery movement and
religious groups such as the Quakers are-.veil
documented. But churches were also very
active in supporting the emergence of a new
wave of NGOs founded to provide aid to
communities devastated by World War 11. as
well as in supporting the independence and
pro-democracy movements in Europe and
elsewhere.
’The Sierra Club
■
'
RSPB
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The 21st Century NGO
Panel 3.2
Growth in numbers of international and national NGOs with key founding dates
50,000 . c "
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c: SustainAbility 2003
t
np i
based on information from the Union of Internationa
Northern (developed market) NGOs
Southern (emerging market) NGOs
1
Well researched (page 52)
Poorly researched
2
Broadly accepted part of national and
international governance
Variously banned, tolerated or neglected
players in governance
Many big, international brands; often
franchised internationally
Few brands, mostly national and smaller;
brands rarely franchised
4
More individual giving
5
Foundation support (and agendas)
’central / ' .
6
Skew towards campaigns; advocacy,
S'Skew towards service provision, though
though there is a vast — if less visible — there are some very powerful activist
world of service providers
movements
7
Professionalization well'advanced
Professionalization early stage
8i
Growing capacity to engage business..
Weak.capacity.to engage business
9..
Highjeverage NGO-business :
.High.leverage NGO-business partnerships
partnerships fairly well established :
still fairly rare
10
Often speak'for ’South'
■
~
§
'Panel-3.3
Ten North-South differences
•
2
.
,
Fewer, larger supporters
Multilateral aid agency support
(and agendas) central
■'
Hardly ever speak for ’North'
’
■
•
....
.
.
■
'
•
-
.■
■
/
.
’
;
4
The 1960s and 1970s, however, saw the
emergence of a new, largely secular and
increasingly activist wave of NGOs. Amnesty
International, for example, was formed in
1961 to be a permanent international
movement in defence of freedom of opinion
and religion'. The US Natural Resources
Defense Council (NRDC) followed in 1968.
Friends of the Earth a year later (1969),
splintering from the Sierra Club over the
issue of nuclear power, then Greenpeace
(1971) and Human Rights Watch (1978).
A generational shift was under way in the
NGO world. Previously, many longestablished organizations were run by
people who were broadly positive — or at
worst neutral — to business, whereas new
groups were often launched by younger
people who were anti-business, anti-profit
and anti-growth. In some cases, their line
has softened, in others not.
Recently, we have seen an ‘echo boom' of
indigenous, independent NGOs in many
emerging and transition markets, with the
fall of the Berlin Wall in effect signalling
the dawn of a new era for CSOs. In many
of these former Soviet countries, as well as
other emerging markets, there has been
explosive growth in NGO numbers.
ZD
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The 21st Century NGO
13
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But in contrast with the situation in the
developed world, the larger national NGOs in
these countries are sometimes set up by
business leaders to deal with urgent social
problems. For example, Philippines Business
for Social Progress was set up in 1970 in
response to the Marcos regime; in South
Africa the National Business Initiative was
aimed at facilitating dialogue between
business and political players towards the
end of the apartheid regime; and in Brazil the
ABRINQ Foundation was set up by business
people to address child labour problems.
See also Pane! 3.3 for other differences
between 'Northern' and 'Southern' NGOs.
What do we call them?
That's a tough one. NGOs have been called
all sorts of things over the years, but as the
roles and issues they address have grown —
and as others have sought to mimic their
language and structure — the labels have
also proliferated. So what do we call them?
NGOs, NPOs (nonprofit organizations)
or CSOs (civil society organizations)?
Or should we use terms like BENGO. BRINGO,
ENGO, GONGO, MANGO, PONGO, RONGO or
SONGO?K It all depends, but these semihumorous labels raise real issues.
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BENGOs, for example, are ‘Bent NGOs',
offering sweetheart deals to founders,
staff or others. ENGOs are focused on the
environment, MANGOs are ’Mafia NGOs',
providing cover for money laundering or
protection services and GONGOs —
government organized NGOs' — are an
important element of civil society in
countries like China and Russia, even holding
government itself to account in some cases.
The most widely used term for organizations
that are neither run by government nor
profit making has been non-governmental
organization (NGO). Increasingly, however,
the term CSO is also used. This embraces not
oniy fixed address organizations with paid
staffs, but also the whole range of groupings
and associations that make up civil society.
If we stand back from this proliferation
of acronyms, however, one thing is clear.
Organizations that are primarily defined
by their labelling as non- (e.g. non
governmental. nonprofit) or ant/- (e.g. antiglobalization, anti-war) organizations, have
a communication challenge to address.
Some of them, at least, recognize the need
to emphasize more positive, pro- messages.
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That's a key reason why we are seeing at
least some anti-globalists, for example,
beginning to reposition themselves as
promoting alternative forms of
globalization. In short this isn't simply
a rebranding issue for individual NGOs or
CSOs, but for entire sectors. Making tne
switch won't be easy, out it has to be done.
The 21st Century NGO
14
Panel 3.4 '
/
Sharks, Orcas, Sealions and Dolphins
Integrators
Aim to achieve change
through constructive
partnerships with businesses,
governments and other
stakeholders
Polarizers
Aim to achieve change by
disrupting the status quo
through confrontation
Bl
Discriminators
Study targets to
understand how best, ?
to engage them
-
Non-discriminators
Do not discriminate
between targets
'
Orca
’
- Highly intelligent
- Strategic
: - Independent
- Unpredictable’
Eats both sealionsand
some dolphins
,
•
.■
■
■.<
'
Shark
— Acts on instinct
— Tactical at best
— Attacks any target
■
in distress
- Often attacks
in packs
'
— Feeding frenzies .
■
A sealion NGO
would not. think
of biting the hand
that feeds it.
Dolphin
- Great capacity to learn
_ Adapts strategies and
behaviour to context
— Creative
- Fends off sharks
■■
.
'
.
Sealion
— Keen to please
— Professional and
we 1.1 trained
— Prefers the mainstream
— Uneasy if separated
from its;group
I
What do they do?
These days, there is an incredible diversity of
NGOs and NGO-like activity. In 1996,
SustainAbility carried out an assessment of
the ways in which NGO-business
relationships were developing/0 In the
process, we introduced a new set of labels
for NGOs: Sharks, Orcas" Sealions and
Dolphins (Panel 3.4). The language was
widely picked up, but now, seven years on,
we wanted to check whether the
classifications still held up.
The answer is a qualified yes. While the
categories still work well, there have been
substantial changes in the composition and
character of each of the different categories,
for example:
— Shark
A key trend here has been the surfacing of
a considerable number of groups within
the broader ’anti-globalization' movement
that oppose globalization and consider
violence legitimate against a broad range
of targets.
— Orca
Greenpeace was one of the most obvious
players in this area back in 1996-7, but
has now been Joined by others like Global
Exchange, The Corner House. People for
the Ethical Treatment of Animals (PETA),
and the Sierra Club. In addition, this
category has been bolstered by groups
migrating from other areas.
— Sealion
A key characteristic here is that an NGO
wouldn't think of biting the hand that
feeds it. There are still plenty of NGOs
happy to adopt this role, even though
Sea I ions have been coming under attack
from more aggressive NGOs. As a result,
some Sealions are cleaning up their act.
NGOs operating in emerging economies,
for example, often have little choice in
where their funding comes from, but
many that would have fallen into this
category in 1996 are now stricter about
who they allow to support their work.
Oxfam's refusal to accept funding for
development work in Iraq from the
’belligerent countries' has been a recent
case in point*2 Interestingly, a number of
NGOs are now developing criteria for
when they will and will not accept money
from companies (Panel 5.4}.
— Dolphin
Migration into this area continues apace
as more NGOs recognize that businesses
and market frameworks have to be
addressed for significant change to be
achieved. It is important to note, however,
that many new entrants in this category
are not NGOs. Socially responsible
investment groups like Sustainab e Asset
Management (SAM), as well as social
enterp'ises or ’campaigning companies',
display many Dolphin characteristics. Our
research also suggests that this area will
continue to evolve significantly in the
coming years (see Chapter 7).
Like pioneer species of plants that specialize
in colonising new areas, 'pioneer' NGOs also
colonise new issues For example, the
involvement of NGOs in issues like access to
essentia medicines for poor common ties
generaliy follows a ’life cycle', with the
identifies: on of an issue at the grass roots
level first, after which other actors weigh in
to generate a critical mass that drives the
issue up the agenda of decision-makers.
Panel 3.5 illustrates the life-cycle of the
campaign to promote access to essential
medicines, in particular access to AIDS drugs
in emerging economies,
The 21st Century NGO
SPanelSS
'
'
'
'
Life cycle of an issue — access to essential medicines
’ -
...
.
'
The mainstream media
•If .-ills of public exposure
... J-"'.....
The public
Politicians and regulators
e.g. The. Doha Declaration
'on'tfie Trip$"Agreement'r--"^"r”
George Bush’s AIDS Initiative
(MandelarBono)
and foundations
.(Bill.Gates)
Local activists
and networks
e.g: Third World Network,
Health Action International,
Treatment Action Campaign.. i_.
• ; ---- ---- --- ------- ------International NGOs
and UN agencies
e.g. MSF, OxfamrUNDP,
WHO
■
Embedding phase
Emergence phase
Source: adapted from Peter Winsemius ' : urg University
How are they organized?
Inevitably, given the range of issues NGOs
address, their geographical diversity, varying
sizes and cultural context, there is an
enormous variety of organizational forms
Nonetheless. Helmut Anheier of the London
School of Economics (LSE) Centre for Civil
Society43 has suggested that there are tnree
basic organizational forms: the unitary
(or U-form), ‘multidivisional' (M-form) and
'network' (N-form) varieties.
— U-form organizations include traditional
unions, the Catholic Church, the Red
Cross and Red Crescent Societies.
Socialist International and the
International Chamber of Commerce
These organizations are hierarchical,
stable, predictable and centralized. They
also tend to be somewhat conservative.
— M-form organizations include NGOs like
CARE, Human Rights Watch, National
Business Initiative (South Africa), and
Philippines Business for Social Progress.
Some may incline to conservatism over
time, but they can also be extremely
challenging. In some ways, perhaps,
they have had less time to be tamed
and co-opted by the system.
— N-form organizations are different
again; their primary characteristic is
network structure. Global public policy
networks like the World Commission on
Dams, the International Action Network
on Small Arms and the Coalition for an
International Criminal Court would be
considered N-form NGOs as would
Climate Action Network, Friends of the
Earth International, Reclaim the Streets,
the World Social Forum and many other
anti-globalization movements.
I- t -j
The 21st Century NGO
16
inel 3.6, b.
What .future for NGO brands?
k
\
........................................
■;„■■■»
In March 2003, a SustainAbility-Interbrand .
workshop in London explored the
• importance of’brand', to NGOs. Our instinct
was that the increasingly crowded NGO
marketplace would be leading NGOs to
focus on the clarity of their identity, values/
message and brand. The workshop
^attracted major NGOs such as OneWorld
^International Amnesty International, andFriends of the Earth as well as smaller players such as the Fairtrade Foundation,
Traidcraft and the Soil Association. In
broad summary, we found that:
- Yes, NGOs are Uiinking.hard about their/
brands, with many engaged in brand
j n^ag^erk^t^^^^pgh'^f^;^^
describe it as ’cla.rityjofjdentity or . •
’communicatiWbfwalues'- both felt *■ f
to carry less' of the baggage of corporate’
jargon and business speak.
Is there an NGO life cycle?
Do they compete or collaborate?
The
answer io
is »»
no, not
.. .w simple unovvci
iwv a predictable
uuiuiauic
one. but organizations of all types go
While it is rarely openly acknowledged.
NGOs in their more developed markets
of the north clearly compete for media
attention, members, money and other
resources. What's more, market pressures
favouring competition appear to be
building. Karen Suter of the UK Royal
National Institute of the Blind argues
that: ’There is a lot more competition
between charities, and we are increasingly
competing for a smaller cake of
donations'.
through life cycles: they are born, learn,
mature, reproduce44 and, in some cases,
enter a period of senility before they die or
fall into a coma. So what can we say about
NGO life cycles? The first thing is that there
are ‘flushes’ of NGOs, just as flowers bloom
in the desert after rain, NGOs thrive on
upwellings of issues and there are periods
-- like the 1960s in Western Europe and the
US or the 1980s in Eastern Europe - when
a new generation wakes up to a new set of
issues and decides to take action.
Focusing on international NGOs, most have
emerged in response to a specific set of
____________________________
needs
and issues, but often these needs and
issues have evolved over the years. In the
—
'Anr they u
------shifted
case of -------groups- like rCARE,
have
from delivering aid packets to Europe to
helping to address the root causes of
poverty in communities around the world.
- Many NGOs have recruited professional
’brand managers' to enhance the clarity’Wise heads' might argue that N-form
of thinking and communications behind
organizations will eventually 'grow up'
NGO brands.
'
and adopt many M- and even U-form
characteristics. Certainly, such networks
- NGOs recognise thatlhey have become are likely to crystallize out into a cluster
a medium in their own right for
of new, semi-permanent or permanent
. business communication of corporate .
organizations. The largely N-form World
responsibility, hence some of the
Social Forum, for example, may need to
demand for partnership, and that this
become more institutional over the years
brings both risks and rewards.
if it is to translate the energy that it has
rallied into effective change.
p Theyjmow that credibility is
fundamental to their success, and that
But there is no inevitable migratory path
their brands must stand for integrity
from N- to U-forms. and many U- and Mas a minimum;They arc grappling.
form organizations may well adopt aspects
J*
imight
Miy t
withi
how uujii
business partnerships
of the N-form 'business model’ to ensure
1
..i.x-L
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challenge
.
w.
v. this 'integrity'
uivuyi IVJ with
...III the
1.1 >,y. . .
IQ I ly 11 ly Cl
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success IIIin UIICII
their V-lchanging
environments.
‘consumers’of their causes.
For example, established groups like
:
Environmental Defense, or World Vision
- They increasingly see steps to bang '
International have adopted the
transparency and accountability, into
campaigning techniques of the hugely
their sector as fundamental to the -:effective internet campaigns or 'dot-causes'
logger term success oftheir brands, and
which are often no more than loose
all they aspire to stand for. Among the
networks of 'hacktivists'.
NGOs that have invested heavily in their
brands.are the7a5rt?ade foundation;
: Oxfam and WWF.
L,;- ..
■
vivi
j
il
■For further information on the ‘workshop
see
- bi < i tyxom/omqrairhy
This competition powerfully influences
how NGOs are run. Some groups specifics ly
design their fund raising strategies to avo;d
competing with important stakeholders,
including other NGOs. The US Center for
Environmental Leadership in Business, for
example, in its initial stages chose not to
compete for foundation money because
it did not want to compete with other
environmental NGOs. Equally. UK
development groups coordinate the timing
of fund .raising activities so tney do not
compete with one another. So. for examp’e.
Christian Aid Week’ is scheduled for
a different week from 'Save me Children
Week'.
While fundraising has been the primary
area of competition, increasingly the larger,
branded NGOs are also competing for
mindshare among target audiences
including with governments, the media and
business. Several interviewees said that at
least some NGO communicatons
departments are actively d scouraging
collaborative engagements with other
NGOs because they are thought to
introduce confusion into stakeholders'
minds about a given NGO's brand platfcm.
Indeed the importance of developing ano
maintaining a powerful brane is someth ng
that NGOs are increasingly conscious of
with several using branding PR agencies to
assist them in developing a strong and
coherent ’brand message *
Mllll UH
ii
■ ii
The 21st Century NGO
But, while competition undoubtedly exists,
many leading NGOs are also able to
collaborate effectively. This is particularly
true at an individual level, where field staff
often collaborate by sharing resources and
working actively together where their
missions overlap. In company-focused
campaigns, individuals in different
organizations often take the approach that
one NGO will adopt a confrontational
attitude, while — in a pincer movement —
another adopts a more collaborative
posture. As Jules Peck of WWF-UK
explained: 'Different NGOs have different
skills. The good cop, bad cop routine works
really well. Where we agree on the overall
objective. WWE will often go in the back
door to work with companies behind the
scenes, while other groups create the
pressure by banging on the front door'.
Panel 3.7
No silver bullet for NGO accountability
1 Drivers for accountability
Four drivers for NGO accountability
emerged from a team workshop43 on
the subject: morality (accountability
is ,right
v in principle), performance; '
(accountability improves effectiveness),
political space (accountability increases
credibility and thus influence), and
wider democratization (accountability
of NGOs strengthens democracy in the
general political environment). Beyond
meeting basic moral and legal norms,
NGOs need to establish an appropriate
balance between the resources required
for additional accountability and the.,,
benefits that might accrue from this ’
(e.g. how it supports an NGO's mission).
Organizationally, collaboration is often
easier between ’non-traditional' partners
operating across different sectors. ’Five
Year Freeze’ in the UK, for example, is a
coalition including environmental NGOs.
development groups, farmers, religious
groups, unions and women's groups
campaigning against genetically
modified crops.47
Collaboration is also a strong feature of
NGO activity in many emerging economies.
So the East-East program, sponsored by the
Open Society Institute, links NGOs in the
former USSR and Central and Eastern
Europe. Groundwork in South Africa has
partnered with NGOs in India on health
issues, while Grupo Puentes is a new
network of Latin American and Dutch
NGOs which seeks to share information
on corporate social responsibility.
'Do NGOs speak as
the poor, with the
poor, for the poor or
about the poor?'
3 Legitimacy
NGOs are often challenged on their
legitimacy (e.g. ’Do NGOs speak as the
poor, with the poor, for the poor, or/about
the poor?')?1'Among other things,,-■
legitimacy can be based on: moral and
. legal sources, membership base, technical
expertise, and/or effective performance.
Some NGOs feel that a membership-based
organization operating in a democratic
: society is by definition legitimate.
However, in other areas, where there are
weaker legal and regulatory structures,
certification schemes,and seif-regulation
of the NGO market are emerging to
.
‘ provide this legitimacy — for examplezth'e"
Philippines Council for NGO Certification
(PCNC)s, and the Credibility Alliance
in India.
So how should an NGO handle the
accountability agenda? This question was
the subject of a SustainAbility-Global
Compact workshop held at the UN
.headquarters in New York in April 2003,
Given the variety of NGOs operating
globally, there is no one-size-fits-all
approach, no silver bullet. But at least five
elements are generally considered
important:
4 Stakeholders
NGOs must answer to competing demands
from a variety of stakeholders for the
results and wider impacts of their
performance. Stakeholder mapping for
NGOs is increasingly a management,, . ...
necessity as they must understand and
balance their accountability to at least
three sets of stakeholders: clients, staff
I associates, and supporters (see page 19)/’
2 Geopolitical context
Expectations and mechanisms for
• accountability
_ vary
_ enormously'
5 Implementation
depending on the flaws; culture, funding
A number of mechanisms are available to. patterns and location of an NGO’s
. assist in implementing the chosen level of
operations: for example, transparency
accountability. The Global Accountability may represent a great risk in countries ■'
Project (GAP), for example, identified four
where human rights are not fully
dimensions of both interna? stakeholder - ■
protected. Similarly, accountability for
accountability (member control,
funding is very different for NGOs
appointment of senior staff, compliance
dependent on large numbers of local,
mechanisms and evaluation processes)
individual donors than it is for NGOs
and externa! stakeholder accountability
dependent on philanthropic funding ■
(external stakeholder consultation.
from international organizations.
■ complaint mechanisms, corporate social
Furthermore, in areas where civil
responsibility, and access to information)
society is relatively young, sophisticated
that are important for International
and onerous demands regarding
NGOs to consider?4 .
accountability may be unrealistic, even
strongly counter-productive at this
For further information on this workshop see
stage. Interestingly, as was stated at our .,
rstninabihty.coij
n
ire workshop on the issue:‘There is no word >frontAvorfcshop$
-'
for accountability in Portuguese.'45
■
•
;
a.®
■
■
■
.
■1
-
•-
-
..
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■
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.............. u.
The 21st Century NGO
18
Panel3.8
•
7 .
Who funds them?
Real changes in NGO revenue by source 1990-1995
J
L
Bi ’
Bk
X
r
.
»
Illi
aill
t.
'
,.
'
w
X
IF
in the UK, for example, has an annual budget
of
million, of which nearly half comes
J;
From individual donors. CARE International,
on the other hand, based in Brussels and the
C T
largest of all international NGOs, received
almost 70% °F its USS420 million budget in
Ohm frnrr.
2001 from government contributions.
llll
9
‘
•
■
I
‘
. .
- <
For many NGOs, the honest answer to this
question is still virtually nobody. According
to the Regional Environment Center in
Hungary, there are over 900 NGOs in Poland,
over half of which survive on an annual
budget of less than € 500. However, for
the larger international NGOs that are the
primary focus of this study, the main sources
°F funding are governments, foundations and
individual contributions. Save the Children
The importance of large donors in NGO
business models is even more inflated in
emerging economies, where local awareness
of NGOs may be low and local donors
are few and far between. In such cases,
international donors ere often the only
significant source of funding. This fact can
raise issues of divergent priorities, political
I
Source: The Johns Hopkins Comparitive Non-Profit Sector Project
- 1
to stimulate local philanthropy, and the
International Finance Corporation is
helping transform nonorofit initiatives
into commercially viable micro-finance
banking institutions.For NGOs dependent on money invested
in stock markets, recent losses around the
world are proving particularly difficult.
In 2002, for example, major US foundations
were experiencing sign ffcant losses, with
The Packard Foundation reportedly losing
almost 70% of its value In the UK. too,
the value of UK charities' and voluntary
organizations' equity investments has fallen
sharply. According to a study published in
early 2003, these investments have lost
nearly a third of their value (£8.6 billion)
since the beginning of 2001.56
For NGOs dependent
on money invested in
stock markets, recent
losses around the
world are proving
particularly difficult.
Some interviewees argued that these
pressures will mean many NGOs ’end up
going to the wall'. But even for those that
survive, major changes are likely with several
interviewees acknowlecfcing that they are
actively looking to diversify sources of
funding, including developing 'fee for service'
offerings, a source of funding that has
increased markedly in recent years (see
Panel 3.8).
/
■lim i, .ii iii
1
The 21st Century NGO
19
Who are their stakeholders?
How effective are they?
ttsunng WGO effectiveness"
Although different NGOs are. likely to answer
this question very differently, ultimately
most international NGOs recognize their
accountability to three primary stakeholders:
In many NGOs this is a long standing issue,
v/hereas for others it is only now surfacing.57
Given the nature of their work, however, it
is often hard to say, but recent research
suggests not very'. Now. with less money to
give, large donors are increasingly cfocuseds
One indicator of how the NGO world is /
becoming mere competitive: the number
of agencies and consultants helping
funders target the most ’effective' NGOs ?
with thejr SUppOrt Thjrc{ p2fty investors
— Clients
In basically the same way that companies
are accountable for the quality of the
products and services that they supply to
their customers, so NGOs are accountable
for the quality of the services that they
provide to their 'clients'. While in some
cases this relationship is clear (for
example the beneficiaries of the services
they provide), in other cases the ‘clients'
may be more abstract like ’future
generations' or justice', or marginalized
voices like wildlife or children.
— Staff and Associates
A significant share of NGO power and
influence comes from the skills and
expertise of their staff, as well as the
wider networks of supporters and
volunteers they attract and mobilize (e.g.
including other members of federation
NGOs). Like companies, NGOs are clearly
accountable to these communities for the
way that they operate, for without their
support (in the form of money, energy or
time) they could not achieve their
objectives. NGOs often work in coalitions
and so also owe some accountability to
their coalition partners. And NGOs
working towards the same goal as other
NGOs, local communities or grass roots
organizations share at least some
accountability for their actions across
this network.
on ensuring that their donations provide
maximum value. New foundations launched
by the new breed of entrepreneurs — like
the Gates Foundation, and a new slew of
corporate foundations - rare 1keen to apply
business metrics to the philanthropy
world.
lanthrnnv u/nrH
’like Venture Philanthropy partners in
'the US, or independent consultants like .
New Philanthropy Capital in the UK, are ... ,
developing methodologies that, they 'v
'
believe, enable them to identify and
support the most effective NGOs
NGOslargeting
targeting
key social or environmental issues.
;
•
They see themselves as making'investments'.
m projects rather than grants, working with
NGOs themselves are resending by
partners' not ’grantees'. They talk targets andI developing more systematic approaches to
milestones and are interested in concepts
measuring effectiveness. ActionAid
like ’blended value', where the idea is that
recently implemented ALPS (Accountability,
the social and environmental value created
Learning and Planning System) to provide a
by NGO projects are assessed, valued and
iframework for reviewing and assessing the
rewarded.5'5
performance of the organization, and the
,US-based Foundations of Success has'
NGOs increasingly are also being ranked on
-recently started working vdth conservation
aspects of their performance. In the US, for
organizations to develop metrics .
example, both Worth and Forbes magazines
for measuring the, effectiveness’ of
iconservation efforts
.
"
now run annual features assessing the
efficiency and effectiveness of different
NGOs.*0 Consultants specialise in giving
guidance on which NGOs are most effective
and groups like the American Institute of
Pnilanthropy provide annual ’Charity Rating
Guides and Watchdog Reports'.65 As the next
chapter explains, such trends signal new
pressures for NGO trustees and directors.
•'As a conservation industry, we have to
prove we are effective in achieving what
we can’t show that, the attention and
resources of society will shift to.other
problems. That realisation, and pressure
from donors is forcing conservation to
wake up and face this issue.'
*•
■
Venture Philanthropy Partners
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— Donors and Supporters
Traditionally, NGOs have not had the
forms of legitimacy or financial support
typical of true markets, in that many of
their ’clients' are unable to pay, or
cannot pay enough to support an NGO's
operations. So that's where a third group
of stakeholders have also been recognized
for NGOs. This group includes major
donors and other resource providers such
as foundations and governments, the UN
and sometimes companies.
While one might assume that this makes
NGO accountability relatively straight
forward, complications arise because
conflicting demands are often put on NGOs
by their different stakeholders. Their boards
and managers must ensure that there is
balance between these competing demands
(see page 17).
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The 21st Century NGO
■Panel 4.1
Risk mapping tool for NGO boards
.
...
.
...
■
.
.
.
Accountabihty
■
—’Responsible'(TBL) campaigning
— Competitive positioning
— Brand exploitation
- Corporate co-option
Transparency
— Financial & ethical disclosures
— Director & staff compensation
Q>O^erna%
■■
s
funding
— Adequate for current needs
— Adequate for future needs .
*' — Sources of funding
— Fundraising methods
— % allocation to ’cause'
Standards
— Professional standards & targets
— Position on CSR frameworks. .
e.g. GRI. AA1000
— Stakeholder benchmarks ,
— Stakeholder satisfaction
; — TBL standards required of '■
suppliers & partners
TBL: Triple Bottom Line
Source: Sustain Ahi lily 2003
Times, they are a-changing. As Charles F.
Dambach of BoardSource argues: ‘There
was a time when service on many nonprofit
boards was perceived mainly as an honorary
role. Today, nonprofit boards are expected to
govern — to determine the direction of the
organization, to make plans and policies,
to employ, support, and evaluate the chief
executive, to approve budgets and monitor
expense, to raise funds and promote the
organization's cause.'02
On the basis of our interviews, we see a
cluster of emerging issues that NGO boards
must now address. The overarching challenge
is the need to come to grips with the
paradigm shift identified in Chapter 2. The
entire landscape in which NGOs operate is
tilting towards market-based thinking and
solutions. Linked to this shift, we see four
areas of risk and opportunity. A ‘beta version'
of a tool for mapping these risks and
opportunities is shown in Panel 4.1.
NGO trustees and directors need to be clear
on where they stand in relation to this new
landscape of risk and opportunity. They need
to actively review and audit where the NGOs
they are responsible for are currently
positioned — and how they might best
move forward.
The four areas of tension fall into two main
areas: governance (specifically accountability
and transparency) anc performance (funding
and standards). We will work through each
in turn. Although these are tensions, or
paradoxes that NGO trustees, directors and
managers will increas ngly have to address
and resolve, clearly they are also false
dichotomies. Most NGOs will not nave
a choice of either/or: instead, it v. . be
a matter of both/and.
1 Accountability
Exclusive or Indus ve?
This issue, often linked to NGO trensoarency
(see section 2 below) surfaced time snd
again in interviews. In one case, a US NGO
even asked us to drop the whole irne of
inquiry. In effect, they could see the issue
coming, but wanted to postpone the day of
reckoning. The reaction was strongly
reminiscent of corporate responses to the
whole reporting agenda a decade a so ago
when the triple bottom line agenda began
to emerge. But, as Panel 4.1 suggests, there
are real issues about the extent to which
campaigns are ’responsible', the oegree to
which NGOs allow their reputations and
brands to be used and stretched in
relationships with ron-NGO actors, and —
an ongoing danger — the risk of capture and
co-option by partners, private or public.
Probing deeper, we founa two broad
approaches to NGO accountability. Some
NGOs and their supporters oelieve that
concerns aoout accounted i;ty are directly
addressed as a function cf their make-up.
Stephen Tindale, Execut: /e Director of
Greenpeace UK, argues tr^i as a
campaigning organizatic" that is both
transparent about whatdoes, and gets
ail its money from indiv oja s. ‘the question
of accountability does net really arise.u
Others see membership cumbers as a proxy
for accountability. ‘Anc me more members,
the greater their legitimacy as Barbara
JnmuBig o*' the Boell Foundation in Germany
out it. Such groups see a major tension
between greater accounts^ ly
and their desire to be fie» c e and nimble.
Many northern NGOs also worry about
the implications of accountability demands
for southern NGOs, whicn are politically
more vulnerable. In some oases, greater
transparency may pose reaf personal risks
(Panel 3.7). This is a crucei <ssue — and one
we hope to explore as pen of our ongoing
21st Century NGO program
.'
The 21st Century NGO
22
Most mainstream NGOs, however,
particularly those in our ’Dolphin’ category,
value the extra legitimacy provided by clear
accountability processes more highly than
they do any flexibility lost. Some, such as
Amnesty, Friends of the Earth, Oxfam the
Sierra Club and Transparency International,
for selecting leaders and/or identifying
campaign priorities and positions
Meanwhile, another growing tension in
the NGO community is between v/hat Steve
Viederman of the Initiative for Fiduciary
Responsibility calls membership-based
NGOs’ and ’constituency-based NGOs'.
Membership NGOs are the professional
campaigners and activists working in
the branded NGOs, typically operating
internationally. Constituency groups, by
contrast, operate locally and are composed
of grassroots individuals motivated to take
action by issues that they face in their own
daily lives.
Major NGOs clearly need to proceed with
caution. As Mario Raynolds of Canada's
Pembina Institute puts it, with a degree
of understatement: ’The gap that I see is
between the bigger brand-name NGOs and
the local grass-roots groups. These bigger
groups do not have the time to work with
local communities by and large. Tne grass
roots in turn can get a bit frustrated by this.'
Even where there is interaction the potential
exists for major ’brand' NGOs to act as a
’dominant species', restricting the space
available for small local NGOs to evolve.
Jeanne-Marie Gescner of Beijino-based
Claydon Gescher Associates Susta nable
China notes that: Chinese NGOs are growina
up in a very sophisticated world, ’hey will be
judged by the same standards as developed
world NGOs — which may limit tneir natural
growth (or their ab.i.iy to grow naturally).'
The strategic dilemma for the international
NGOs that are the main focus of this study is
how to value and responsibly manage their
relationships with local constituency groups,
One interviewee argues that NGOs
increasingly need to ‘think locally anc act
globally’, bunging the knowledge ano
authenticity of local experience to bear on
global issues and policy-making. Groups like
the Polaris Institute in Canada are proving
adept at this by coordinating an informal
network of community groups from around
the world, m an ongoing battle against the
privatization of water.
Simultaneously, local groups must ensure
that they stay true to their own
constituencies. A key challenge facmc
indigenous NGOs in Central and Eastern
Europe, according to Robert Atkinson at the
Budapest-oased Regional Environment
Center, is to get back to their roots. Having
often refocused on the needs and prior ties
of international donors, including the main
branded NGOs, some of these local O'cuds
have drifted away from their membersn.p
base. These gaps must be bridged if such
groups are to remain legitimate.
2 Transparency
Sica"
Goldfish
The element of surprise has often sehec
campaign ng NGOs well. So even
organizations that accept the accou^taoility
trend (w th growing demands for financal
and even ethical disclosures) have res
problems around just haw far linkec
transparency pressures should go. Tn-s s not
simply a question of whether the ove-rchmg
strategy should be steaimy or open tut of
which bits of an NGOs operation sho_ - be
subject to which rules
That saic one thing is c ear: the
transparency element of the NGO
accounted';:ty equation will attract
greater interest and effort. Miklos Ma-schall
of Transparency International (Tl) aro_es that
the ‘natural accounted1 ty deficit' o; hGO
work car- he overcome wth an appmacn he
calls ’Transoarency +'. Appropriately ercugh,
this approach requires 71 to ’provide -ere
informa’.cr than is neeoed on who we are,
what we co. and where out money co-es
from.' Interestingly too. T? is also plarr.ng
to focus more of its work on the who.?
issue of ?iGO transparency.
One way in which at least some NGOs are
trying to address such issues is via reporting
uujimcn>«i
«
(Panel 4.2), with groups
like VAVF (UK)
now
producing
their own environmental
'
’ .
....J reports,
v/nile others like Amnesty International are
under pressure from members to produce
their first reports. It will be interesting to see
v/hether growing numbers of NGOs sign up
to new transparency and stakeholder
engagement standards like the Global
Reporting Initiative (GRI) and
AccountAbility's AA1000 standard — not
simply to pressure the corporate world,
but to ensure that they, too comply with
emerging best practice.
Funding
> mplicity or complexity'
T^ third tension reflects the growing
complexity of many of the issues that NGOs
are now confront ng. Fundraisers must ra se
the • unds needec for NGOs to function
NGO program staff, by contrast, are usual y
focused on delivering the ultimate product or
service associated with the organization's
mission. The tensions here are obvious.
In addition, there are thorny issues arounc
now money is ra sed from the public, which
co'oorate sponsors are invo-ved and on v."at
te'ms, the extent to which a ; such funds end
up addressing tne issues promoted durinc
■ und'aising, and the degree of wider (e.c
t' pie bottom line; leverage aznieved by
\GOs with all re resources at their dispose .
The 21st Century NGO
23
As the most dramatic problems are
addressed, real 'shock-horror’ (and funder
friendly) stories may be harder to find in
some areas. As Tony Juniper of Friends of
the Earth puts it: 'It isn’t easy to find
pictures of chimneys with orange smoke
coming out of them any more!'w So an
ongoing dilemma for many NGOs will be how
to migrate their supporter bases away from
easily understood issues towards the more
complex issues that ultimately are where
future action is likely to be most effective.
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Further complexity is added as NGOs
increasingly have to think in ’3-D', ensuring
that their own activities are coherent from
an environmental, social and economic
perspective. As one interviewee put it: 'NGOs
vci y flaky,
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be very
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and
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that they may be having on employment!'
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Jobs may be particularly sensitive politically
in a recession, but there are many other
potential political landmines that NGOs
can unwittingly step on. Mainstream NGOs
are increasingly attuned to these risks. For
example, initial support for boycotts aimed
at banning child labour, supported by NGOs
like Save the Children, have been replaced
with more sophisticated responses
recognising the trade-offs that must be
made. As Save the Children (UK) argue in
their report Business Benefits: 'In an ideal
world, no child would w'ork unless they
wanted to. but families who are struggling
to survive don’t have many choices’.65
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NGOs that fail to effectively address these
wider concerns not only risk public resistance
to their proposals, but may also attract
attacks from other NGOs. WWF, for examp'e.
was recently criticized by Sir Pau! McCartney
on behalf of PETA (People for the Ethical
Treatment of Animals) for supporting a new
EU chemical testing regime which will lead
to an increase in the number of animal tests.
Growing NGO transparency may even
increase the challenges for NGO boards and
managers in such areas, as the reporting
trend has in the corporate sphere
'Today, nonprofit
boards are exoected
to govern.'
The 21st Century NGO
Panel 4.2
NGO report benchmarking
Many readers will be aware of
SustainAbiiity's regular surveys of
corporate sustainability reporting, which
rank company reports on the quality,
credibility and usability of information
provided. As an experiment, we decided
to do the same with a handful of recent
NGO reports.
;Many NG0§ provide annua^ Sports of .
'some sort, normally a basic yearly review
of finances. In many countries, these
reports are required by law,just as they
.are for companies,..
But a-handful of organizations are now
beginning to issue more sophisticated
reports. These tend either to. examine
the organization's own environmental
management
and performance (CERES
. , .
and WV/Fi; or/-in the case of Oxfam GB, to
assess how their main stakeholders view
their operations and effectiveness.
The role of NGOs.in society is different
from that of companies, of course, so the
basic thinking behind our assessment
methodology had to be modified.
We considered three main spheres ofinfluence for NGOs:
Panel 4.3
NGO report scores
—' Impact and effectiveness of programs
(including campaigns, projects,
public policy initiatives, consumer
education, etc.). . f
These are relatively early days for NGO
reporting in these areas, so we would
expect a wide range of scores. In Panel
4.3 we present the results.of our quick
assessment of a sample of NGO reports.
It's worth noting that these groups vary
widely in size and available resources,
so direct comparisons are difficult.
With a.top score of only 45% and an
average ofjust 29%, this small sample
suggests that NGOs currently lag
considerably behind"their corporate .
counterparts in both the quality and
coverage of reporting. We would stress,
however, the huge variation in size and
resourcing between organisations like
Oxfam, Save the Children or WWE and tiny
outfits (if influential) like the One World
Trust. And, having recently completed
SustainAbility's own latest accountability
report, we are also acutely aware ofjust
how time-intensive such reporting
exercises can be.
But we believe that the pressure is building
bn NGOs to demonstrate accountability
and.earn trust. Given the critical
importance of trust and perceived integrity
to the whole NGO and CSO sector, we
‘ expect growing activity in this field and
Internal operations (including
’ particularly among organizations (including
employment and compensation issues,
■CERES and SustainAbiiity) that pressure
efforts to manage.the sustainability . . others (e.g. governments and businesses)
impacts of everyday operations and . .
to come.clean. <
, ....
development of performance indicators /
for programmatic activity). . .
For more information see '
— Organizations' mission, purpose and
basic design (including governance,
stakeholder relationships, principles and
codes, and main issues and impacts). <
Organization
Score (%)
CERES
45
Oxfam GB
42
WWE (UK)
41
Save the Children (UK)
. . 38
Environmental Defense
28
Civicus
25
Global Action Plan
24
World Vision
Friends of the Earth (UK)
18
One World Trust
9-
The 21st Century NGO
25
4 Standards
Passion or professionalism?
The final area cuts across all the others.
NGOs, whatever issues they address, tend
to be fuelled by a sense of injustice, even
outrage. Passion is their fuel. But the
mainstreaming of much of the NGO sector
means that NGO boards have to manage a
growing tension between a '24/7' approach
to work, characterized by raw passion and
100% commitment, and the '9-5' approach
that commonly characterizes more
'professional' work environments.
While not unique to the NGO community,
this tension is particularly acute in a sector
where many staff members are driven less
by the traditional benefits of salaried work
than by a deep personal commitment to the
issues. As already mentioned (page 22),
this leads to a set of tensions that have to
be managed — and often managed with
exquisite sensitivity — as these organizations
evolve partnerships where there has been
a history of mutual hostility.
As the NGO sector has matured,
professionalisation has made major inroads.
Many NGOs have introduced strategic
planning to give the organizations more
structure and direction. Oxfam, under their
Strategic Change Objectives, has set out a
more structured process for selecting
campaign priorities. And WWF International
has developed a 'WWF College' to promote
networking and career advancement
opportunities.
Even where civil society and NGOs are
relatively new, we see an intensifying push
towards greater professionalization. The
NGO Development Center in Russia has
moved from providing basic advice to
NGOs to helping with more specific skills
such as managing effective meetings,
time management and training for
administrative staff.
In addition to traditional funder
requirements, growing links with business
in the developed world are driving greater
professionalization among NGOs and
community groups in emerging economies.
So Future Forests, a UK-based business that
helps companies minimize their climate
impacts, is working with Women for
Sustainable Development66 to develop carbon
storage capacity. Such relationships mean
that NGOs are having to become more
focused on managing and measuring the
impact of their operations.
Indeed, a key assumption in our 21st Century
NGO program is that many of the most
successful international NGOs wili undertake
strategic reviews of their activities and plans,
using some variant of the tool illustrated in
Panel 4.1. Having done so, they will aim to
meet new accountability and transparency
requirements by moving towards fuller, triple
bottom line disclosures and reporting.
NGO boards have to
manage a growing
tension between
a '24/7' and a '9-5'
approach to their
work.
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The 21st Century NGO
27
Panel 5.1
Five NGO responses to the market
NGOs respond to markets in five main ways (Anti-Business
Campaigns, Market Intelligence, Business Engagement, Intelligent
Markets and Market Disruption). The first four responses are usually
additive with each additional response growing in sophistication,
building on the experiences of die previous one and working in
parallel to drive business and market change.
rigure A
As markets evolve, however, tensions are created that ultimately
are released through 'market disruptions'. Often driven by
regulatory cfiange or new liability regimes, such disruptions can
Jump market frameworks to higher levels of sustainability (Figure A)
but can also knock them back down to lower levels (Figure B).
Figure B
HI j
:• uslainAbiliiy 2003
Influencing markets
Meanwhile, levels of trust in companies and
die private sector continue to fall. ‘People
are angry with corporations and distrust
their power. This is not the exclusive view
of incorrectly named "anti-globalization''
protestors. This is the view of the public
at large,' said one of our interviewees.
Supporters of NGOs, and possibly society
more widely,69 want NGOs to work as
watchdogs holding corporations accountable
for dieir impacts.
Currently, very few NGOs spend much
time thinking about business, let alone
markets. Even so, they have had a
profound influence on both.67 They act
as forms of distributed intelligence and
conscience in the market place. In
retrospect, many of the market outcomes
of NGO pressures have been incidental,
unplanned, even accidental. Which makes
it surprising that so few people have stood
back from all this effort and considered in Some interviewees accepted that a new'
detail the system-level changes needed to
focus on markets was already changing the
build
.m sustainable economies — and
.. how
way they operated, but argued that the
NGO efforts could best be deployed to
media or consumers should still be the
this end.6*
primary targets for NGOs. The evidence
presentedI in The 21st Century NGO. however,
This is changing; for example, in key markets, suggests that we are seeing a fundamental
notably the United States, new government
shift in die landscape over which NGOs
administrations have allied themselves more
operate, with market influence emerging as
closely with the business community than
a key feature. That said, for better or worse,
with NGO activists. In such circumstances, as there has been no master plan for the
one interviewee put it, NGOs are ‘having to
transition to sustainable capitalism.
make a virtue out of die necessity of running The closest we have come to such a global
market and business campaigns' because of a
strategy was probably 1987’s Our Common
lack of traction with these administrations.
Future.73
So, particularly given what happened to
communism with its manifesto does this
lack of a grand vision and plan really matter?
It does, we believe, and will come to matter
even more. Much of what has happened
because of NGO activity has been the
result of what complexity theorists term
emergence'. Complex systems under pressure
produce surprising (and sometimes
unwelcome) results. As NGOs become part
of the system they are trying to change, the
likelihood of unintended consequences grows
and, in parallel, so does the need for
strategic reflection, planning and- action.
To be socially and environmentally
sustainable, capitalism needs forceful,
ongoing external challenges. The communist
experiments may ultimately have been
disastrous, economically, environmentally
and from the perspective of human rights,
but the underlying concerns about the
dynamics of capital are being rediscovered
by the anti-globalization movement and
others.
The 21st Century NGO
28
:D'
.
'
___ ______________
Estahiished in 2001 Empowering < ? A
»U —
.DemocracyhaprglectoftDeCorporate
Campaign Working Group, a coalition of
. . .
environmental, humani rights and labour
>
organ^trons.rnclud.ngAFL-piOfrhe
r I Fan
n rat,On 0 La?Tnd Con9ress
iExxoSl XZCoZ A™™"9'1
i our assumption that the global
market paradigm will powerfully shape the
first decades of the 21st century, how can
,_ l Inmrxr'rnr.y .r- n
porpWatch; Friends of the Earth,.Global: :. S
i '
W'Sorest
Action NetyvorkJJte Texas Sustainable
' r
Energy and Economic Development (SEED) '
Coalition and others.
response: anti-business campaigns; market
intelligence; business engagement; and
inte||igent
A fjftyhymarket
“H- - '’acknowledges
— —yBi that
mar markets
marKets
disruptions,
“ 3 t001
aChieVin9
change. Let’s look at each in turn,
recognizing that there is nothing
) cast
ir°n ab°Ut theSG 'eVelS °r stages.
Sta9eS' They can,
and often do, run in different sequences —
or in parallel.
Anti-business campaigns
The iriitiaiive involves an annual
conference for corporate campaigners
The default setting of many NGOs when
J'SafafcWXu, <
which NGOs and activists can use in
corporate accountability campaigns*
i
'
■
'
'
.........................
'
(Participants
get to hone their newlyi
iPart i ci pants also
also-get
newly ’acquired skills by focusing their attention
on a single company's annual meeting •i
g
with a. Day of Action.
Empowering Democracy •
''■' ■
'Www,ya}powcrjrK]dernocracy.org
■
:
If
__ .bi
m'-w <■
’.
'
®
.. ...
’[Focusing on brands]
was like discovering
gunpowder for
environmentalists'
Indeed, many NGOs evolved out of what
were originally single-issue campaigns.
In this role, NGOs act as a ’distributed' or
’delegated' conscience for society, with
individual citizens ’sub-contracting' parts
of their ’citizenship' (e.g. concern for
human rights) to NGOs. Over time, the
scale and sophistication of such campaigns
can evolve into an ’arms race' with the
targets of their campaigns.
Some interviewees suspect that the golden
era of campaigning may be over. Whether
or not this is true, there are reasons for
believing that campaigning will become
tougher. But in addition to the forces driving
more general engagement with markets.
we are seeing
a number
trends that make
:---------......of......................
anti-corporate campaigning more likely,
not less:
— Globalization, liberalization and
privatization are bringing corporate
players, particularly big brand companies,
into the spotlight.
- In many emerging economies too,
there has been a strong growth in
consumer movements targeting
companies and educating consumers
to help them make choices, especially in
new market economies where consumer
choices previously were limited.
— Key activist groups, including many of
the anti-globalization groups, increasingly
recognise that anti-corporate campaigns
can be more powerful than anti
government campaigns.
Whether or not driven by globalization,
many issues that confront society are now
so complex and intractable that they are not
solvable without multisectoral approaches.
Most major international NGOs recognize,
for example, the important role that trade
plays in development within emerging
economies. As Save the Children stated in
its evidence to the UK's House of Commons:
’the issue is not whether to have global trade
rules, but rather what kind of rules, and how
they should be balanced to ensure they do
not have adverse impacts on social, health
and education provision within poor
countries'
Meanwhile, many of the world's best known
and most successful NGOs - ATTAC, the
Clean Clothes Campaign, Free Burma, Friends
of the Earth, Global Exchange, No Sweat!
and PETA - have focused their campaigns on
companies and brands. Some NGOs have
been so successful with this strategy that
using a corporate brand to leverage an
issue onto the public is now generally
viewed as a campaign staple. As one
Greenpeace activist noted: ’[Focusing on
brands] was like discovering gunpowder
for environmentalists',
So influential have these campaigns become
that it is often sufficient for a well-known
and trusted NGO simply to threaten action
for corporations to reverse controversial
plans. One recent example: Oxfam's criticism
of Nestl6 when the company tried to recover
£6 million in debt from Ethiopirea^'in"
2003 causing the company to reverse its
policy.
Effective though they may be, such
campaigns tend to be relatively simplistic.
To generate a powerful public response,
issues have to be framed as far as possible
in black and white. While this was fine for
single-issue campaigns or exposes of child
labour or seal clubbing, it is becoming
increasingly difficult to communicate
contemporary issues in this way.
Additionally, these types of campaigns
are often only effective against companies
with well-known brands. Furthermore, in
emerging markets NGOs do not have the
clout to challenge businesses in an
adversarial way, ______
and campaign techniques
honed in the developed
worldJ are often
. ____
not appropriate in these regions. Which
brings us on to market intelligence.
%
■■wniiHn
ii
i
The 21st Century NGO
29
Market intelligence
Where NGOs do switch on to markets,
an early step involves building market
intelligence about companies and other
key market actors. While still antagonistic,
NGOs operating at this level have
developed a more sophisticated
understanding of the drivers of business
and market behaviour, targeting key
stakeholders in their attempts to change
business behaviour.
Campaigning models that require the active
support of the media are limited both in
terms of the complexity of the message
and the receptivity of audiences. While
they can be extremely powerful,74 ultimately
additional — and more sophisticated —
tools are usually needed to drive more
fundamental changes within companies
and value chains.
The approaches NGOs have developed to
supplement traditional media-focused
campaigns now address a range of
stakeholder groups likely to have a more
specific interest in a particular company.
These stakeholders, who are often able to
assimilate more complex intelligence on
corporate behaviour, include:
— Employees
Existing company employees are often
targeted, but potential recruits are also
a critical stakeholder group for companies.
People and Planet, a student activist
group, recently hijacked a series of
graduate recruitment fairs run by
ExxonMobil, aiming to dissuade potential
recruits from joining the company.
— Customers and suppliers
A striking strategy adopted by some
NGOs involves ’secondary' and ‘tertiary’
campaigning up and down a company's
supply chain. The campaign to stop the
Three Gorges Dam focused on the
financial backers of the project, including
Citigroup; the efforts to stop Monsanto
marketing genetically modified products
in Europe focused on targeting
supermarkets supplying the end product;
and SHAC's (Stop Huntingdon Animal
Cruelty) attempts to close the animal
testing company Huntingdon Life Sciences
involved the aggressive targeting of
customers, banks and consultants.
— Investors
The use of shareholder resolutions has
been growing in the US, with some signs
that the trend may spread to parts of
Europe. Somb resolutions are filed by
individual NGOs, but often a coalition
forms. Friends of the Earth International,
for example, joined forces with
organizations from communities
neighbouring Shell facilities in Nigeria,
the Philippines, South Africa and the US
to raise issues with shareholders at the
company's 2003 Annual General Meeting.
— Boards
In the past, NGOs have tended to
engage professionals in companies:
lawyers, PR people and more recently
staff in corporate social responsibility
or sustainability departments. But
recognizing that many of these people
have problems engaging their own top
management, a few NGOs are trying to
go direct to corporate boards. CERES
(the Coalition for Environmentally
Responsible Economies), for example, has
launched a campaign on ‘sustainable
governance', targeting corporate boards
on the fiduciary risks for directors raised
by climate change.75
— Peers
Some parts of the wider business
community have also been allies or (as
some business people would probably put
it) accomplices' in driving higher
standards on social and environmental
performance. Leading companies
supporting groups like the World Business
Council for Sustainable Development
(WBCSD), CSR Europe and the Ethos
Institute in Brazil have helped build
pressure on their members and other
companies. The UK's Business in the
Community and Argentina's Centre for
Social Responsibility have both developed
rankings of corporate engagement with
social and environmental issues, which
have proved extremely potent, driving
competition between companies.
The amount of business data potentially
available to NGOs is exploding — through
the internet, newsletters, socially responsible
investment funds or new legislation providing
access to information.76 This"will likely drive»a
growing sophistication in market intelligence.
As one interviewee said, one powerful trend
is likely to be the shift towards ’distributed
market campaigning', whereby thousands of
individual actors — through purchasing,
investment and career decisions — put
pressure on a company or industryjo change
its behaviour. If such behaviour could be co
ordinated on a sufficient scale, some
campaigners argue, it could change the very
nature of the market with key NGOs working
in concert to actively ’kill companies’.
MarkeVatk
.___________
While regulators have traditionally held
the keys to market approval, products
sector with government support in the
European Union, met massive and
coordinated resistance from NGOs - an
approach that ultimately denied the
industry access to much of this lucrative
market.
•
Similarly, many pharmaceutical
applications, including therapeutic cloning
-and the new technologies associated with--nanotechnology, are aiso experiencing
resistance that is reminiscent.of the
early days of agricultural biotechnology.
‘Several of the companies promoting the
new technologies are the same/ says Pat
Mooney of the ETC Group, a Canadian
NGO. ‘And, remarkably, most have not
learnt from their experiences.'
’companies promoting renewable energy or ‘
organic food. ’We are the best consultancy
the industry never had to pay for!' declares
Tim Lobstein of the UK Food Commission,
which has been actively promoting new
products that have strong social or
environmental credentials. Companies that
understand this new market reality
recognize the value in testing new
technologies and products with critical
audiences, hoping at worst to avoid
hostility, but at best tn get some very
effective — and inexpensive — marketing.
■
ETC Group
r =
.
'
The Food Commission
dT’"
.
.
The 21st Century NGO
30
Panel 5.4
Rules of engagement
Business engagement
:NGOs with experience of business •
engagement beyond simply accepting
money from the private sector have "
developed 'rules' to help limit the risks
and maximize the opportunities of this ■
.engagement. Based on a survey of several
organizations” the following four main
rules appear to be widely supported.
Beyond the relatively limited number of
black and white decisions, many leading
groups score companies on how well they
meet these criteria in order to determine
the appropriate level of engagement,
varying from:
- ensuring beneficiaries (e.g. local
- communities, biodiversity, etc.) actually
benefit from the relationship;
— consulting other parts of the
organization (e.g. national groups
checking with the international
secretariat);
— ensuring the partner company is not the
target of criticism (e.g. by other NGOs,
•shareholder resolutions, UN reports etc.);
- requiring transparency in key aspects
of the partnership (e.g. requiring.a report
to be published on the partnership
outcomes).
— no engagement;
- one-off consulting;
- collaborative/retainer relationship;
— partnership based on a shared sense
of mission and objectives.
The company must be well placed to
drive change in its own sector and across
the business community more generally.
Rule 1
The company is likely to be viewed as
well placed if;
Rule 3
The company must be serious in
its intent to change its behaviour
or take action.
The company is likely to be viewed
as serious if:
r- the leading individual is central to
decision-making (e.g. is not in HSE,
marketing or communications);
- the leading individual has the capability
(position, mandate) to implement
recommendations;
— it is willing to accept 'risk' in the
relationship (e.g. that the NGO can
withdraw from/criticise the company,
and/of there is transparency externally
about the relationship);
— the.scope of the work goes well beyond
communication;
- it has a strong track-record on SD .
issues (e.g. ISO 14001 certification,
commitment to the Universal
Declaration of Human Rights, etc.).
Rule 2
The NGO must be able to maintain
clear accountability to its own key ;
stakeholders? ?
NGOs maintain clear-accountability by:
- consulting their staff on relationships,
with companies (though final decisions
lie with NGQ management);'
—
*
— theoretically the business can be
pursued 'sustainably';
-- it is willing to have the learning from
the relationship disseminated more
widely to 'inspire change within and
beyond the sector’;
. 1
— it is involved in issues that are
important to the NGO's priorities; - ■
— it is a sector leader (in terms of size,
innovation, etc.);
— the sector is strategically important
(e.g. high environmental/social impact);
~ it has a history of leadership on
SD issues.
Rule 4
The NGO must be able to maintain its
independence from the business partner.
NGOs maintain independence by:
- closely scoping the project and explicitly
stating that either organization is free to
criticise the other in other areas of
activity not part of the partnership;
— limiting (or in some cases prohibiting)
financial payments between the parties;
— strictly limiting co-branding;
- maintaining confidentiality on some
, - aspects, but requiring transparency in
other areas of the relationship;
-..ensuring there is an ability to withdraw '
at any time. '
Many major NGOs have backed into
the market space, some because their
merchandizing operations provide an
additional source of funding, others
because they have had no choice —
alternative sources of funding have dried
up. But for others — like Business for
Social Responsibility (BSR) in the US, the
International Business Leaders Forum
(IBLF) in the UK or the Ethos Institute
in Brazil — it is their mission in life.
One major weakness in the responses
outlined in stages 1 and 2 above is that
they are overwhelmingly negative. The
campaigners clearly articulate what they do
not want, but are less forthcoming in terms
of positive changes they would like to see.
As one interviewee put it: 'Ask the average
campaigner: "Where do you want the
industry to go?'' and you won't get a good
answer. Instead you will get a list of specific
things which are wrong with the current
business operations'
Increasingly, no matter how sophisticated
these negative campaigns become, they only
get us so far. In the end, a proportion of the
NGO world will decide that the best way of
leveraging corporate and market change is
to get directly involved. As Randall Hayes,
founder of the Rainforest Action Network
put it: 'If you [as an NGO] are not talking to
business, you are just preaching to the choir.
The real change to protect the environment
is going to come from the business sector;
we can't depend on government regulation
to solve our problems.'78
Oxfam, for example, already has a 'virtual
team' of 'private-sector engagement
consultants', while PACT offers a range of
services to companies and local communities
that are aimed at 'creating win-win
partnerships for business and communities'
through its 'Engagement to Action Process'.
Coalitions of NGOs are also beginning
to work across different sectors. The
Collevecchio Declaration, for example,
signed by over 100 NGOs. sets out a
vision for a sustainable financial sector.'5
JBBlUBBiULLL—
The 21st Century NGO
Working collaboratively with the private
sector is an increasingly popular route for
NGOs. As early as 1998, a survey of 133 US
NGOs found that while many rated their
current relationship with corporations as
’antagonistic' or ’nonexistent', most foresaw
the development of cooperative relationships
in future?'
Major environmental groups like
Conservation International have longestablished corporate partnership programs,
but even traditionally more hostile groups
like Environmental Defense in the US and
Amnesty International in the UK have
established collaborative relationships with
leading businesses. Greenpeace, often seen
as one of the more hostile groups, declared
at a London conference in 2002 that
’Greenpeace is a company's best ally,' able
to help ’bring companies into port before
the storm. Companies need Greenpeace in
order to win."'’
There is also anecdotal evidence that
growing numbers of companies are keen to
engage in strategic dialogue with NGOs, both
in western developed countries and in other
parts of the world where NGOs have not
traditionally had a strong role (e.g. Japan).82
That said, and while 'partnerships' between
NGOs and business are an evolving trend in
the world of corporate social responsibility,83
not everyone is convinced that NGOs get a
good deal from these relationships. As one
interviewee warned: ’Businesses are basically
interested in buying trust through these
partnerships. Do [NGOs] really appreciate
the costs and risks of doing this?'
Several NGOs felt many types of NGObusiness engagement sold their interests
short. ‘Too many ’stakeholder fora' focused
on high-level generalities without delivering
practical change on the ground,' said one
interviewee. Others were highly critical of
particular NGOs for not demanding enough
of business in their partnerships/4
Panel 5.5
Business benefits
From a business perspective, the drivers
for corporate engagement with 'NGOs
— at least initially — tend to focus on
generating a better understanding of NGO
perspectives.on key issues, and then, all
•being well,“building’relationships with key
individuals. However, over time, more
tangible business value can be realized
from these relationships. Companies with
experience of NGO engagement tend to
recognize four main areas of value:
1 Generating business intelligence and
avoiding or reducing risks
For example, the Norwegian oil .
company Statoil worked with Amnesty
Norway to train Statoil employees to
identify and solve business dilemmas in
connection with human rights issues,
thus reducing the company's exposure
to human rights related risks. In
addition, Statoil collaborates with
Amnesty International on a.UN project
in Venezuela training the country's
.
judges and public defence lawyers in
human rights — ultimately helping to
.
provide a more stable environment for :
society and business.
3 Building brand equity and reputation
'Choose Positive Energy' was a
partnership between The Body Shop
International and Greenpeace
International aimed at promoting
renewable energy. The combination
of the two brands was important in
assuring the credibility of the campaign
among key audiences including
customers, and other NGOs.
4 Bringing diverse perspectives together
for creativity and innovation
FedEx partnered with the Alliance for
Environmental Innovation (part of
Environmental Defense) to reduce the
environmental impact of their vehicle
fleet. It is hoped that the new hybrid
electric vehicles - which are being
introduced in 2004 — will ultimately
replace the company’s 30,000 strong
fleet, leading to significant reductions
in environmental emissions.
Amnesty Norway
y/Vj/vzaninestyw
Statoil
corr 1
2 Developing and expanding markets
or opportunities
DuPont,.for example, has convened a
stakeholder panel on biotechnology to
help the company articulate positions
on important issues, and guide as well
as challenge the company's actions in
. the development, testing and
communications of hew products
. based on biotechnology.
Others also question the validity of talking
about partnerships when most current
relationships are reallyjust that —
‘relationships'. As Sir Geoffrey Chandler, who
founded and for ten years chaired Amnesty
International UK's Business Group, put it:
‘While partnership is a word much in vogue,
the cuddliness of the term tends to seduce
rather than lead to cold analysis'. Others
suggested that the notion of partnerships
had become ‘trite before it had been tested'.
DuPont
lyww.dupontCGrn
Positive Energy
wwv/.c I loose - pc s? 1 i v e- energy.ory
Alliance for Environmental Innovation
'Businesses are
basically interested
in buying trust
through partnerships'
Nqo - I TO
09848
The 21st Century NGO
Panel 5.6
Success factors
What it takes to make an NGO/business
.partnership succeed was one subject
that our Canadian workshop addressed
The table below combines the outcome of
this workshop with the insights of other
interviews on this question.63 For more
information on the findings of this
.workshop see v/ww sustpinabditycbmif
Insights
Examples
Balance of power
Each partner needs to benefit directly from
the partnership, and understand how the
other party benefits. Money is often a
critical factor in this regard and it is for this
reason that many NGOs refuse to accept
money for partnerships beyond what is
Environmental groups and energy
companies in Alberta. Canada both benefit
from early agreement on ways to reduce
environmental impacts associated with
new project developments. In particular,
companies get a more effective and quicker
(and less expensive) ‘hearing process’ with
the regulatory authorities, and NGOs get
the opportunity to provide input into the
planning process.
Agree the rules of engagement
Roles, rules and risks of partnerships need
to be crystal clear to all partners. Agreeing
the scope, expectations, codes of conduct,
objectives, decision-making, evaluation and
conflict resolution processes is a critical
stage at the beginning of the partnership.
US-based Alliance for Environmental
Innovation has a standard ‘partnership
agreement' setting out the objectives of
the partnership, as well as what is expected
from each partner. The Recycling Council
of British Columbia agreed to give partner
companies three days advance warning of
any advocacy work they were planning
against partners.
Mandates
Individuals participating in partnerships
need to be senior enough to take decisions
on behalf of their organizations, and
must have the mandate of their own
organizations and partners to ’step out
of the comfort zone'.
Linda Coady (formerly of Weyerhaeuser),
when negotiating with environmental
NGOs, was given the mandate to speak on
behalf of the timber industry as a whole
when discussing how to reconcile pressures
for access to old growth forests in British
Columbia in Canada.
Trust is a key ingredient ensuring that the
. partnership can rise above the inevitable
snags and complications that these
■ relationships experience. Trust can be built
up institutionally between organizations
with common values, but more often
requires personal chemistry between the
individuals involved.
Greenpeace International and The Body
Shop International have built up a history
of positive collaboration through a range
of partnerships. In addition, the two
organizations share similar values in
promoting positive social and
environmental change. These values
provided a solid foundation for a recent
partnership promoting renev.'sole energy.
When miscommunications threatened the
campaign, the strong sense of trust
between the two organization's ensured • .< ■«
that the partnership remained on track.
Trust
hili
The 21st Century NGO
Nonetheless interest in partnerships endures,
indeed grows. One reason: pressure from
funding sources. For example, the Avina
Foundation in Latin America has programs
that provide matching funding to NGOs
that can raise money from the private sector,
And Oxfam America was only able to access
funding from the Ford Foundation with the
involvement of Starbucks in a project helping
a community cooperative in Mexico to
improve the quality of fairly traded coffee.
Government departments, including the
Department for International Development
in the UK and the Canadian International
Development Agency, also now have
programs specifically promoting NGObusiness engagement.
Development NGOs, such as Oxfam,
Amnesty International, Save the Children
and CARE, are also expanding their remit
from addressing human needs and political
and civil rights to include a greater focus on
human, economic and social rights. This
requires such organizations to engage the
underlying power relationships that result
in these unmet needs, leading them into
greater engagement with other powerful
actors, including the private sector.'
Good case studies of the dynamics and
outcomes of such engagement are rare,
however. One reason is that seldom is there
a real appreciation of where converging
interests lie between NGOs and businesses.86
Assessments or audits of partnerships are
still atypical, although SustainAbility
conducted one for The Body Shop
International and Greenpeace International
in 2OO3.B?
Based on experience to date, it appears
that a number of preconditions are required
before genuine partnerships can be
established. Panel 5.6 lists some conditions
and gives examples of how they have
been applied in practice. Relatively few
'partnerships' to date have been able to
meet these preconditions. Even fewer
have been able to demonstrate genuine
improvements in practices or impacts.
Intelligent markets
’This is a huge system!' the late Donella
Meadows argued when confronting the
WTO. ’We're cranking the system in the
wrong direction and the control measures
are puny!' she warned.89 The point
Meadows and others have been making is
that in order to get effective change in
systems, NGOs need to intervene ’higher
up' in the system, reframing markets to
reward positive behaviour and penalise
negative behaviour. So expect the next
decade to see growing efforts to make
market mechanisms more intelligent,
providing a huge opportunity space for
some NGOs and other actors.
Panel 5.7
Making business cents
In order for'NGOs to really harness the
power of markets in changing business
behaviour,. NGOs need to develop a deep
understanding of how businesses create
and capture value. Sue Hall, founder of the
US-based Climate Neutral Network (CNN)
has developed a methodology that does
just this for climate change.
The original idea behind the CNN was to
develop a system that enabled companies
to capture the full commercial value of
moving towards a net-zero impact on
climate change. According to CNN. the
'value proposition' exists at four levels: *
To date, most NGO engagement with the
1 Operational efficiencies
private sector has been at the level of
Saving energy saves money.
individual companies. Increasingly however,
a new (or perhaps reinvigorated) model of
campaigning is emerging. As Michael
2 Marginal efficiencies
Shellenberger
from Lumina
Strategies
put it: - Participation in carbon trading enable^ ■■
----------------------------------------a
,------'This is notjust about going after an issue or
efficient companies to make money
—after
r.__.the
.-----by selling carbon credits' to other a--------------------------------company, it is about going
whole
companies who can't reduce carbon
market, and trying to guide the market in
a particular direction by shrinking it in one
emissions as efficiently.
area, and actively trying to expand the
3 Minimizing contingent liabilities
market in other areas at the same time.'
If carbon comes with a cost (as it
In the same way that NGOs have had to
increasingly does) companies can save
ramp up their ability to understand complex
. by reducing exposure to these future
trade legislation to better influence
. costs.
governments and multilateral institutions.
NGO campaigners interested in market4 Differentiation
driven changes are going to have to switch
Many companies believe that ’carbon
from a culture of critique', as Suzanne
coof® products or services will be
Hawkes from the Canadian NGO IMPACS
popular with consumers, helping the
calls it, towards a better understanding of
company positively differentiate the.
business pressure points, motivations and
company brand or product.
culture.
Climate Neutral Network
One area where NGOs have made significar.c
progress is in developing certification
standards for specific industry practices
that help to frame and guide market
developments. Campaigns by NGOs such as
Greenpeace Canada, the Rainforest Action
Network (RAN), the Natural Resources
Defense Council (NRDC) and others against
the forest products industry in the Pacific
Northwest were particularly effective
because NGOs could point to legitimate
standards for industry practice that clearly
addressee environmental and social concerns
in the form of the Forestry Stewardship
Council (FSC) certification.
■
■
e;--
'This is notjust aoout
going after an issue
or a company, it is
about going after the
whole market.
The 21st Century NGO
34
Panel 5.8
What's hot, and what's not in
stakeholder engagement?
As more companies begin to recognize
the value of engagement with the NGO
community, those same activists — subject
to ever-growing
demands from the
, ......
jcorpo.ate sector - are becoming much
.
1
more discerning
in terms of the types of
engagement they are willing to offer. .
Five years ago, the novelty of talking to
-'"J
major corporations was often sufficient to
enoaoe
NGOs in a dialogue on nenerai
engage^NGOs
general CSR
issues. Today, many activist groups that we .
talked to shun these types of interactions,
^preferring
preferring jnstead
instead to
lo spend
spend tljeir;.ljmited
their limited i||
.
resources on one-to-one discussions with
.business
leaders
addressing
u
'
- core business.. .
dpn\inn-maHnn;
decision-making.
For many, the involvement of EHS or
. ■
communications professionals is a real
turn-off, as are initiatives where the
agenda
is set exclusively by business.
’Dialogue is a necessary preliminary step,’.
•sajlys Raymond van Ermen of Brussels-based
European Partners for the Environment
;(EPE). ’But there is stakeholder fatigue
•(EPE).
Mhere the dialogue is not action-oriented
enough'.
53
European Partners for the Environment
. . -
• I:
I /.
-x. -
-
■
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•
I
' X'.
.
."vV;.-- -
As Jonathan Shopley of Future Forests
argues: ’The 21st century economy is going
to have to be one where business can sell
services which repair and protect the
environment'. Future Forests describes itself
as ’a campaigning business' and the coming
decades will likely see the emergence of
many more.
Market disruptions
Whether or not particular NGOs decide to
embrace certification standards, it is building
strongly in some areas. ’Fairly traded' foods
(as certified internationally by the Fairtrade
Labelling Organization International) have
more than tripled in three years in the UK
... .represent
_r
and now
£58 million of annual
sales. A small proportion, but approximately
where sales of organic food were in 1986,
before they went stratospheric90 and, we are
told, ’consumers, producers and retailers are
told,'consumers,
convinced that fairly traded food will develop
in the same way.'51
However, some of those we interviewed
warned against an over-proliferation of
standards. Viraf Mehta of India's Partners for
Change cautioned: ’The past three or four
years have seen a proliferation of interest in
CSR in the Indian business community. This,
combined with a multiplicity of voluntary
codes has caused confusion amongst
companies or unwitting endorsement of
CSR activities without evidence of serious
engagement. The risk is that the needs of
the most vulnerable among India’s poorest
are getting lost, especially when corporate
philanthropy is permitted to masquarade
as CSR.
5 "I
■
Equally, having a credible standard for
organic food in Europe has enabled the
farming and retail industry to engage
constructively in delivering higher social
and environmental value through the market,
It also enabled Greenpeace to passionately
advocate increased industry investment in
this sector, in effect becoming an additional
(and very valuable) marketing arm for
organic food.
Standards, at best, are only part of the
process. Really intelligent markets will
emerge — potentially at least — from the
convergence of a range of factors, including
better market intelligence, socially
responsible investment, market incentives,
the internet, satellite remote sensing,
increasingly transparent supply chains and,
inevitably, the growing engagement of NGOs
and NGO-like actors in markets. One example
of the evolution of an intelligent market is
the Chicago Climate Exchange, which is a
voluntary system for reducing and trading
greenhouse gas emissions.92
The question here is whether NGOs will be
content simply to catalyze the new market
order, or whether some at least will aim to
become players. Either way, NGOs may find
themselves competing - at least for mind
share — with NGO-like businesses,
’conscience commerce' and social
entrepreneurs.
Though far from perfect, markets are
the best wealth creation and distribution
mechanism available to us. In some cases,
markets change slowly and predictably, as
a geological landscape might. In the
process, however, huge strains can bUild
up, which demand release. The resulting
eruptions or quakes can create impacts on
a shocking scale, levelling the layers of
market engagement or jumping them to
a higher level of effectiveness.
While market campaigning is a growing
focus for many NGOs, markets can fail us
for a number of different reasons. Natural
monopolies do not lend themselves to
market-based solutions, and even where
markets may be appropriate, they can
still be ineffective if they fail to price
resources properly.
When mis-pricing continues over extended
periods, it can build huge potential
overhangs of financial liability, and NGOs.
of course, are increasingly active in working
to direct and apportion these new liability
regimes. A coalition of NGOs led by Friends
of the Earth International, for example, is
trying to apply the lessons learned in tobacco
litigation — sometimes working with the
same lawyers who tackled Big Tobacco - to
challenge companies on issues ranging from
climate change to obesity. Ultimately, in the
same way that smoking is increasingly
banned from public spaces, so the market'
may also become constrained for fast-food
outlets and other services and products that
are deemed hazardous to human or
environmental health.93
Experience also shows that markets can
cramp the ability of pioneers to do the right
things. While relatively few companies are
likely to support legislation that limits the
overall extent of the market, a growing
number of companies do recognise that
regulations aimed at shaping the market in
favour of social and environmental goals
can be beneficial.
The 21st Century NGO
Bjorn Stigson of the World Business Council
for Sustainable Development (WBCSD) has
rejected the notion that business has a
minimalist regulatory agenda. ’Businesses
can do much to encourage eco-efficient
practices, but they need an enabling
framework from society if they are to move
forward with any greater speed. It is the
role of governments, in consultation with
business, to create the conditions that allow
business to contribute fully to sustainable
development.'
Too often, markets operate on the basis of
limited information, So NGOs, too, are
increasingly Joining forces in a range of
initiatives aimed at raising the regulatory
floor. The 'Publish What You Pay' campaign,
founded by George Soros and the Open
Society Institute, and involving over 27 NGOs
from 30 countries, was originally focused
on getting oil companies to publish the
payments they make to host governments
so that voters can hold their governments
to account. But this approach back-fired
when leading companies were excluded
from lucrative new negotiations. So the
campaign, with backing from companies,
’ is now attempting to gain the support of
governments in order to provide a level
playing field.
Competition frequently favours business-asusual strategies, until something major gives
- and/or governments step in. Ultimately as
Barry Coates from the World Development
Movement (WDM) has put it: ’Campaigning
has been crucial in creating the pressure for
business to take social and environmental
issues seriously, [butj few companies have
been willing to sacrifice their competitive
position for an ethical stance. This highlights
the need for governments to regulate, in
order to create the incentives for companies
to do the right thing and to sanction those
who breach acceptable standards.'94
In short, however sophisticated the market
intelligence, however active the NGO
engagement in markets and however
intelligent aspects of the market become,
wh are still dealing with an imperfect world.
The cycle between stages one to four loops
back on itself, repeatedly, but stage five
’market disruptions' is often needed tojump
the overall sustainability of the system to a
higher level - often through some form of
regulatory intervention (see Panel 5.10).
Next, we present a SWOT analysis for NGOs
in terms of their capacity to achieve change
through market frameworks.
Panel 5.9
Is CSR a 'rich world' issue?
Panel 5.10
Governments and regulators
One of our research workshops was held
during the 2003 World Social Forum in
Porto Alegre, Brazil and focused on NGObusiness partnerships, looking in particular
at the potential for such partnerships in
emerging markets. 'Is CSR is a "rich world"
issue?’ asked one of the participants.
Our focus is primarily on the relationships
between NGOs and the private sector, but
politicians, governments and regulators’
remain critically important. This is true at
rail stages in our five-stage model (page
27), but particularly so in Stage 5, the
■ market disruptions' phase, where political,
government and policing functions grow
in importance.
While participants emphasized the fact
that the vast majority of NGOs in emerging
economies are focused on addressing the
basic needs of their beneficiaries, the
overall trend is for NGOs to be increasingly
aware of — and active in - driving
improved company performance on social
and environmental issues often with the
active support of leading businesses on
these issues.
x- .
One word of frustration though: southern
NGOs argued forcefully that often the CSR
debate is seen as being framed in the north
with inadequate space given to southern
voices. Child labour, for, example - initially
seen as a 'black and white' issgg by. '
northern NGOs - is now understood to
involve complex trade-offs. .
For more information on the findings of
this workshop see www.^^tcdnabinty.cou:/
^ressum-frqnt
Getting even leading businesses to open
up on their lobbying and policy positions
is still very tough, and building business
support for new laws, regulation and
enforcement regimes remains almost asdifficult as it ever was. Too often, deeply
wired business reflexes produce knee-jerk
reactions when exposed to the merest
whiff of proposed regulation.
Government involvement comes in many
different forms, though. The International
Institute for Environment and Development
(IIED), for example, has mapped different
types of 'public sector engagement' around
:the CSR agenda,96 leading to four broad
categories of intervention:
1 Mandating, in which governments
define minimum legal standards for
performance and behaviour.
:2
Facilitating, involving public sector
agencies enabling or incentivizing .
improved performance.
3 Partnership, including acting as
convenors or facilitators.
4 Endorsing, which covers attempts to
promote the CSR agenda through
ministerial speeches, policy documents,
\ demonstration projects and/or
procurement policies.
In some cases, of course, political leaders,
governments and public officials will start
with the 'softer' options (e.g. endorsing)
and progressively move towards the
’harder’ ones (e.g. mandating). Done right,
.this can spur private sector innovation.
If mainstream NGOs are to optimize their,
impact in the new market paradigm, they
-must shape their campaigning,' advocacy
ss’sz"’
efficient, effective and crucially politically
sustainable.
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The 21st Century NGO
Panel 6.1
Who does the public trust?
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:! : dolman ■Rebuilding Public Trust through Account ability and Rcsponsibiliiy.' Ethical CorpOi ^Uon conh.-mnce. NYC 20I
Strengths
1 Values
2 Expertise
3 Communication
4 Networks
5 Momentum
So how well equipped is the average
NGO to achieve change through markets?
To better understand NGO capacities and
limitations, we applied a SWOT (Strengths,
Weaknesses, Opportunities and Threats)
framework. We identified 20 themes, five
for each of the four main SWOT headings.
Weaknesses
6 Culture
7 Asymmetry
8 Professionalism
9 Timeframes
10 Capture
Opportunities
11 Gatekeeping
12 Differentiation
13 Mobilization
14 Globalization
15 Enterprise
T hreats
16 Babel
17 Counterfeiting
18 Stagnation
19 Alienation
20 Succession
Strengths
First, leading edge NGOs are remarkably well
positioned to exploit the new opportunity
space (page 42), subject to a number of clear
weaknesses (page 40) and emerging threats
(page 44). From a wide range of potential
strengths, we selected five: Values,
Expertise. Communication, Networks
and Momentum.
1 Values
Even in the world of value creation, values
play a central role. Despite their enormous
variety, NGOs share a core strength: a
strong values base. Whether this focuses
on 'improving the quality of life of
disadvantaged people'n/ or 'advancing social,
economic (and environmental) goals',
values probably represent the NGO sector's
single greatest asset.
While NGOs have no monopoly on values,
this dimension of their positioning accounts
for much of the public trust in which they
are held.
This is confirmed in research by a range of
different organizations over the past few
years who have consistently found that — at
least in the developed world - NGOs are far
more trusted than most other actors in
society, particularly on key issues such as
human rights and the environment.9;1
But, while there has been a lot of research
on how much different institutions are
trusted, relatively little research effort has
gone into why NGOs and their leaders should
be so trusted. One study that looked at trust
in leaders of different institutions found that
’honesty’ and vision’ were particularly
important factors in encouraging people to
trust, while 'not doing what they say' and
'self-interest' were two factors leading to
distrust.’00
High levels of trust have also enabled NGOs
to. incubate successful new relationships and
institutions. Consider the role that NGOs play
in building community links across ethnic
and culture divides.
The 21st Century NGO
In terms of relationships, think of Friends of
the Earth in both Jordan and Israel, where
they are working together on the ’Good
Water Neighbors Project', addressing water
issues and trying to rebuild trust and
understanding in the two communities.
Wil--
In terms of new institutions, think of
the role played by the US Coalition for
Environmentally Responsible Economies
(CERES) alongside UNEP in spawning the
Global Reporting Initiative (GRI), or that of
the New Economics Foundation (NEF) in
incubating initiatives like AccountAbility
and the Ethical Trading Initiative in the UK.
3 Communication
Sour-..*’ Diane Cohen, PETA
In summary, NGO values are key to their
ability to attract expertise, to create
momentum, to communicate powerfully
and credibly, and to build robust local,
regional and global networks.
2 Expertise
In a compiov. fast-moving marketplace,
expertise is critical. The evolving expertise
of NGOs on the plethora of issues on which
they campaign is another vital asset. NGOs
are regularly consulted by the media on
stories related to their areas of interest
and expertise.
In the same way that
the printing press
served to drive the
growth of the early
Protestant Church,
so the internet is
supporting the
capacity of NGOs
and civil society to
network and grow.
As a result, other organizations, including
socially responsible investors, have come
to rely on the expertise of NGOs. Walden
Asset Management, for example, works
with ’Healthcare without Harm' to
better understand the issues facing the
pharmaceutical sector NGOs like Amnesty
International and WWF routinely supply
data on corporate performance to socially
responsible investors. That said, much of
the expertise now embedded in the NGO
universe is to date more readily available to
the public sector than to the private sector.
Even well-publicized failings simply serve to
underline just how important a role NGOs
have come to play in providing expertise on
these issues.w Some NGOs. indeed, provide
lists on their website of individuals with
expertise on key issues that the organization
works on. One example is the Union of
Concerned Scientists (UCS) in the US.
founded in 1969 by faculty members and
students at the Massachusetts Institute
of Technology (MIT).
Development groups have also built up
enormous amounts of expertise and capacity,
not just on technical issues of delivering aid
to remote communities, but also yi helping
communities understand and articulate their
needs and rights. Relationships between
these NGOs and the communities they serve
are often long term, with individuals or
institutions embedded in communities for
decades — potentially giving these
organizations a deep appreciation of
the problems communities face and of
potential solutions.
The bigger the community, the more
important communication skills become.
Some NGOs are a match for any advertising
agency, with the added advantage that their
messages tend to be believed. Leading NGOs
often have a symbiotic relationship with the
media, providing appealing stories, expertise
and background information, but also
depending on media coverage for much
of their impact.
In some cases the connections go deeper
In Canada, the name Pollution Probe'”1, was
originally coined by journalists covering the
activities of protesting students in the 197Cs.
Only later did it become a formal NGO.
A significant proportion of NGOs see their
primary objective as getting issues and
stories onto the meoia agenda and have
found creative ways of bridging into the
media world. In Brazil, for example, the
Ethos Institute has for the last three years
awarded a prize for journalists recognizing
their contributions in raising awareness of
corporate social responsibilit. ssues.
A key strength of NGOs has been tneir at- ty
to recruit support from celeb' t.es and hignprofile public figures. Whether ft is Paul
Newman doing the voice-ove' for an
environmental group's new F/ campaign
or Jade Jagger ano Martin Sreen protesting
the war in Iraq, many NGOs have been very
skilled in winning celebrity support and.
thereby, media coverage for tneir issues
and campaigns.
The 21st Century NGO
Panel 6.2
Climate Action Network
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o Regional Members
— Global Links
— Regional Links
Source: Environmental Systems Research institute inc (ESRI)
4 Networks
In an increasingly networked world, success
depends on the strength of your networks.
Indeed, few parts of global society have
moved more rapidly than NGOs to adopt and
adapt what Kevin Kelly dubbed the ‘New
Rules of the New Economy’. •0' Much of the
'New Economy’ may have gone down in
flames, but many of the basic principles will
prove central to sustainable 21st Century
wealth creation.
And. consciously or not, activists and NGOs
pioneered many of these principles before
most others. In turn, New Economy
technologies — among them the internet and
mobile telephones — have powerfully fuelled
activism with some interviewees suggesting
that in the same way that the printing press
served to drive the growth of the early
Protestant Church, so the internet is
supporting the capacity of NGOs and civil
society to network and grow.As Sabine
Leidig of Attac Germany put it, ‘We are the
Linux model NGO.’
The Economist has acknowledged the
importance of this capacity to network,
pointing out that: '[In Seattle] NGOs built
unusual coalitions — environmentalists and
labour groups, for instance, bridged old gulfs
to jeer the WTO together’. 'K' NGOs, too. are
acutely aware of the vital importance of
networks. Robert Napier, CEO of WWF-UK,
told us that ’WWE is only as strong as its
network’, and particularly emphasised the
importance of building strong connections
with NGOs operating in emerging economies,
This last point was reiterated in many of
our interviews with developing world NGOs.
Grupo Puentes, a network of 19 NuOs in
Latin America and the Netherlands, works
together to promote CSR. Isabelle van
Notten, involved in setting up the network,
argues that: 'There is a strong sense that
organizations in the South want to set their
own agenda. At the same time, businesses in
Holland are starting to ask Dutch NGOs what
legitimacy they have to speak for the South.
It is important for Dutch NGO legitimacy
5 Momentum
A prime concern in the heady days of the
New Economy, but always a key focus in
campaigning and politics. But momentum,
be it political or economic, is a perishable
commodity. Luckily for the NGO movements,
while some parts of the movement may
falter, others inevitably pop up to fill gaps.
Opportunism, in fact, has been a key strength
of many NGOs. Often, they operate like
opportunistic viruses, exploding into life
when the conditions are right, fading when
they change.
When brainstorming this section, there were
a number of NGO characteristics we sensed
were not adequately captured in the SWOT
framework. Contributors felt that many
NGOs had 'raw energy’, a point underlined
by a number of interviewees, who
acknowledged the huge amount of energy’
that they had gained from the anti
globalization movement. NGOs are also often
prepared to take risks. They want to push
that southern NGO voices are louder and
boundaries, are comfortable with change
better channelled into this debate.’
and generally future-oriented.
The 21st Century NGO
We struggled to find a way to capture these
characteristics before someone suggested
that what we had described reminded him
of teenagers. Overall, this is a major strength
and NGOs wanting to ensure a strong
positioning will need to ensure they don't
lose that energy, that 'teen spirit’. But, to
fully engage the mainstream, major NGOs
must consistently blend their teenage energy
w:th a dose of adult experience and wisdom.
Weaknesses
NGO strengths outweigh their weaknesses,
as their success indicates. But, inevitably,
they also suffer from weaknesses that
potentially render them vulnerable to
impending threats (page 44) and could
mean that they fail to capture emerging
opportunities (page 42). Here we look at
five actual or potential weaknesses:
Culture, Asymmetry, Professionalism.
Timeframes and Capture. Inevitably, some
are the flip sides of strengths.
6 Culture
‘Organizationa’ culture', they say, is what
employees do when supervsors are not
looking over their shoulders. And shared
cultures also suppress friction, allowing
shared solutions to evolve faster. In most
pans of the world, however, a yawning
cultural gap separates NGOs from business.
Pa'tly, this is an issue of language.
—
Murray Culshaw of Murray Culshaw Advisory
Services106 in India believes that this creates
a major psychological barrier. 'The NGO and
business sectors are not speaking the same
language', he stresses. But the roots of the
problem often run much deeper.
For many watchdog NGOs, whether in
developed or emerging economies, close
partnership with business is profoundly
uncomfortable, particularly if their
involvement is in any way linked to the
commercial success of the business — a
situation they feel compromises their own
integrity. In a chicken-and-egg process, there
is a lack of business acumen among most
NGOs, which both reflects their philosophical
positions and hinders attempts to bridge
divides. To date, precariously few NGOs have
the skills to work with business managers in
creating initiatives of real mutual value.107
For some NGOs, the biggest cultural barrier
to progress in leveraging change in markets
may be their shared history. Successful
confrontational campaign strategies have
meant that these groups have developed
independent, often uncompromising
approaches. There is also a common
perception that business actors have
betrayed the trust of NGOs and other
stakeholders, a fact that helps make business
among the least trusted institutions in
society.This 'bad history' makes it difficult
to engage in productive partnerships.
Even where there have been successes, the
confrontational approaches of NGOs have
sometimes prevented greater progress.109
As Ernst Ulrich von Weizsacker put it,
'In order to persuade governments and
corporates into action, [NGOs] have to pay
the price of cultural change.'
7 Asymmetry
Again this weakness reflects an NGO
strength. Being small and relatively
unencumbered by tradition, NGOs can be
more flexible than the companies and other
organizations they target.10 But this very
asymmetry in scale and resourcing can also
play against NGOs. Indeed, scarcity of
resources is something that is often pretty
much hard-wired into NGOs. Ano this can
be a significant weakness when attempting
to engage businesses m dialogue
Sara Parkin, once a leading Green politician
in Europe and then a co-founder of Forum
for the Future, stresses that the asymmetry
is particularly evident when participating in
consultations and working groups. Many
NGOs have to work to project-funded
budgets, with this kinc of business or
government engagement done for free.
For business participants, by contrast,
engagement tends to be in their job
descriptions'
For NGOs operating in emerging economies
and attempting to engage companies in
dialogue, these problems can be even starker.
Often enabling legislation is not yet in
place and few foundations or donors
recognize the sustains:*Iity or CSR agenda,
‘Even until recently, donors and funders did
not really know about the concept of
sustainability and so were not funding it,’
notes Mokhethi Moshceshoe of tne African
Institute of Corporate Citizenship
More worryingly, talented and experienced
activists who might have the experience to
engage constructively with business are
often lured away by ocner sectcrs. including
business. This has beer, true in many central
and eastern European countries, and also in
countries like South Africa — where regime
change has meant that NGO leaders have ’
moved into governmencal positions
8 Professionalism
GIFT'
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2.002.
d
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Source: ZapiroGroundWodc
This is a central challenge for NGOs (page
25). But while many NGOs are pushing
through p-ograms to professionauze their
operations, the vast msbrity still operate in
a more ad hoc manner This is particularly
true in emerging economies, wnere new
initiatives to work wen local NGOs and
communities often come up acanst issues
of professionalism.
11.1 .in
I n. JI
lll.l I.. I
'I
The 21st Century NGO
41
Working with local partners is critical to
the Rainforest Alliance, for example. These
’local' NGOs are trained to do-auditing for
the Alliance's sustainable agriculture
certification program and provide essential
grounding in local technical issues and
stakeholder concerns. However, while an
integral part of the Rainforest Alliance's
business model, we were told that some of
these local groups ’do not think like
businesses — and often fail to appreciate the
importance of financial management and
client service in the relationships the NGOs
have with businesses'.
Furthermore, donors and the general public
often experience ’compassion fatigue'
when faced with an ongoing set of problems
which never quite seems to be resolved.
Foundations and other large donors also
suffer from what one interviewee called
’projectitis’, a key symptom of which is ’a
lack of patience with projects lasting more
than two years' Many NGOs recognize this
problem — and noted that they suffer from
’project churn,' limiting overall effectiveness,
Related to this problem is the enduring issue
of accountability, particularly the need to
ensure that key stakeholders are informed —
and supportive — of decisions to collaborate
with business. Several NGOs cautioned
colleagues to ensure that decisions to work
with business are shared with key
stakeholder groups. This is especially difficult
for NGOs working as part of large federations
or networks, where there is often great
variation in the appetite for engagement
with business among different groups.
The most successful NGOs tend to have a
fair degree of independence. But political
scientists know that systems under challenge
try to capture or co-opt the forces arguing
for change. As parts of the NGO agenda
come into the mainstream, this challenge
is becoming increasingly urgent.
Some organizations engaging business have
developed processes to manage this
challenge. Both Canada's Pembina Institute
and the US World Resources Institute (WRI)
ensure that key staff have an opportunity
to comment on proposals for business
engagement. WWF have also set up a global
steering group to assess particularly
controversial projects where these involve
business participation.
‘
Panel 6.3
Building NGO capacity to engage with
business in emerging economies
______________________ ___ _______
In early 2003, SustainAbility facilitated
a conference call between several NGO
leaders working in emerging economies.
The purpose of the call was to explore
the issues facing NGOs in these countries
that are keen to engage with the business
community on sustainability issues. A :
number of key themes were established:
■
10 Capture
In the 2002 version of the Shell Global
Scenarios, one scenario involved the
evolution of a so-called ’Business Class', a
’global elite' of highly educated, high earning
individuals living in megacities in regions
across the world. ’In Business Class' we
were told, ’it's not uncommon to belong
to a circle of employees in an extractive
industry, for example, while also belonging
to a circle of those protecting nature from
the environmental effects of such extraction.i.
But the leaders of both the industry and
the environmental organizations belong to
the same larger circle of interconnected
global elites’112
While engaging with business and rubbing
9 Timeframes
shoulders with the rich and powerful may
well bring opportunities for influence, the
Time is central to the corporate responsibility risk is that gaining membership of the
and sustainability agendas. That said, it's
business class undermines connections with
something of a paradox that corporate
local communities and the constituencies
timeframes may be significantly longer than
that NGOs were formed to represent and
those of many NGOs, despite the public
defend. ’Corporations breed out diversity'
perception that NGOs stand for long-term
observes Jean Horstman, chief learning
values. A key reason: donor funding is often
officer at Boston-based BELL (Buildkig
project- rather than program-based, forcing
Educated Leaders for Life). ’Global NGOs
NGOs to focus repeatedly on raising funds,
have learnt to do the dance-steps
whereas many companies are able to invest
[with corporations], but local NGOs and
for the long term. Worryingly, for many
community groups don't even know there
NGOs, this is also a trend which many say
is a dance, aren't invited, or can't afford
is getting worse.
the dance lessons!'
■
— Some NGOs in emerging economies
were set up by business to tackle .. - .
sustainability challenges affecting the
private sector, for example the Ethos,
p Institute (Brazil), NBI (South Africa) and
Phiiijjp’ines Business foijgocialProgress.
Yet for many NGOs, engagement with business is still mostly about funding.
’
;-
This can pose a risk - for example if
young NGOs receive philanthropy before
they have the capability to manage it
productively - but may also te a lost
opportunity for more meaningful
engagement with the private sector.’
Capacity was seen as a big barrier, but
suggestions on how skills for business :
engagement could be enhanced included:
r NGOs set up by or otherwise already . .
engaging with business can work with
?
-
NGOs can draw on international
experience, best practice and tools to
develop competence on the corporate
social responsibility agenda end - more .
importantly — develop local models
(or localise global models).
■
- Build a better understanding of the
NGOs-businesscase' for NGO-business •
engagement - in other words establish
how the NGO agenda is served by this
r engagement.
For. more information see
-
■
The 21st Century NGO
42
The danger for international NGOs is that by
engaging in this dance, they may jeopardize
their own ability to genuinely represent the
interests of their stakeholders. During the
1999 round of climate talks in Bonn,
Germany, the head of an Indian NGO blasted
US environmental groups for being so eager
to preserve access to the White House.
He warned that they were turning their
backs on the climate issue — as well as on
those donors who assumed the groups would
be acting on behalf of the planet. ’You
are supposed to be the conscience of the
global environment,' the leader told US
environmentalists, ’but instead you are more
concerned with acting likejunior cabinet
ministers.'113
Opportunities
Third, whatever the balance of strengths and
weaknesses in particular NGOs, a vast new
opportunity space is opening up, in part
because of their campaigning efforts to date.
Based on our interviews, it is clear that a
significant minority of NGOs are increasingly
aware of the unprecedented opportunity to
reshape markets in favour of sustainable
development. Here we focus on:
Gatekeeping, Differentiation, Mobilization,
Globalization and Enterprise.
11 Gatekeeping
As anyone involved in branding knows,
there is a powerful appetite among citizens
and consumers for interesting, trustworthy
opinion-leaders. Central to many
opportunities now opening up for NGOs is
the enormous stock of public support they
enjoy. Being trusted clearly provides NGOs
with a strong foundation on which to build,
but how should they proceed? Among the
ways in which they could further evolve
their roles:
— Working with governments as honest
brokers in shaping new institutions for
global and/or corporate governance — and
helping to co-evolve new market tools
and performance standards.
— Acting as watchdogs, monitoring
corporate and governmental performance,
and further building on their role as 'civil
regulators' in applying the soft law' of
various CSR standards and codes of
conduct.
Working as guide-dogs with leading
businesses, helping them negotiate the
new landscape and developing new
approaches to generate social,
environmental and economic value.
As Calestous Juma, Professor of the
Practice of International Development
at Harvard University, put it: ’I envisage
a new model of nongovernmental
organization, bristling with technical
know-how, that could play a major role
working with companies to tackle the
problems on the ground.'115
Others, though, suggest that powerful NGO
brands can - even should - house multiple
activities side by side. Whatever strategy
they adopt, NGOs will need to recognize
the business wisdom of 'sticking to their
knitting'. Diversification can lead to over
stretch and loss of focus. Given the widely
differing roles now possible for NGOs, any
single organization would be hard pressed to
maintain credibility in every sphere. ‘Don't
be all things to all people,' cautioned one
interviewee. ’Select a niche and go for it.'
An interesting question, whichever route a
given NGO takes in tackling markets, is
whether, very much as Intel has developed
the concept of ‘Intel-inside', it could build
truly value-added ‘NGO-inside’ types of co
branding and relationships with business
and other market actors.
12 Differentiation
13 Mobilization
One of the great strengths of the NGO
world is its very diversity, which in turn
opens up a multitude of opportunities. This
diversification has generally been a natural
phenomenon, though in some cases it has
been managed. In the environmental field,
for example, much of the conservation
agenda in the US was once carved up
between WWF (focusing on parks), The
Nature Conservancy (purchasing land for
protection) and the Sierra Club (conducting
advocacy).
Momentum is one part of the formula for
mobilizing a critical mass of support. While
NGOs have been phenomenally successful
at catching the public imagination, their
ability to mobilize supporters outside a
narrow range of issues is generally limited.
That said, groups with powerful brands like
Amnesty International are beginning to
target companies and markets more actively.
While recognizing the limited resources
available to research corporate performance,
Amnesty are now poised to follow the lead
set by Oxfam and environmental groups
in targeting a small number of companies
each year to leverage change across industry
more generally.
Interestingly, a number of interviewees
suggested it was time once again for groups
to de-merge and differentiate. So will we
see more de-mergers? Some think so. For
example, Chris Rose (formerly of Greenpeace,
WWF and Friends of the Earth) argued when
at Greenpeace that the organization should
split into three parts: one part focusing on
entertainment and media, appealing to
supporters through music concerts supported
by big name artists; a second continuing
in ’classic Greenpeace’ style, based faround
a community of risk-taking activist?;
generating high -profile, media-friendly
direct-action campaigns; and a third,
‘business-solutions' part, working closely
with business to develop solutions
generating value for Greenpeace, the
company and society.
Often the major challenge for NGOs
operating in this area is to balance a
commitment to core principles, with the
inevitable compromises that are required in
going mainstream. Both the Forestry
Stewardship Council (FSC) and the Marine
Stewardship Council (MSC) — products of
initial relationships between WWF and
various industry groupings — have sometimes
been criticized in recent years for missteps
in their enthusiasm to scale-up these
approaches.116
_
The 21st Century NGO
Other NGOs are hoping that the power of
the market will drive their practices into the
mainstream. Groups like Canada's Pembina
Institute explicitly aim to hand over aspects
of their work to mainstream consultancies
when the market is able to attract and
support their involvement. Equally groups
like Social Accountability International (with
its SA8000 certification system) and the
Climate Neutral Network (with its ’Climate
Cool’ logo) are configuring their offerings to
make them readily adoptable by mainstream
consulting organizations with the capacity
to drive these standards into the market
mainstream.
More positively still, the capital markets —
often the targets of campaigning groups —
are also now being employed to help raise
capital to address social and environmental
issues. Traidcraft and the Ethical Property
Company in the UK have both had success
in raising over £7 million of new capital
through ’Alternative Public Offerings'
(APOs).’1’ If the mainstreaming process is
to build further momentum, such funding
mechanisms must evolve rapidly.
Perhaps the greatest opportunity for
NGOs working with business, however, is
to capitalize on their support in — and
connections to — grassroots communities,
particularly in emerging economies. These
local NGOs are not looking for involvement
just in terms of monitoring. As Azay Guliyev,
of the National NGO Forum of Azerbaijan,
put it: ’We also want to build our own
capacity to work with business'
International NGOs can play a vital role in
the development of the CSR agenda in
emerging economies, ’as long as they are
sensitive to constraints, and don't come with
a partisan agenda,' says Matthew Murray of
the St Petersburg Center for Business Ethics
and Corporate Governance. In summary,
there is a huge opportunity space here for
NGOs because companies are looking for
authentic local stakeholders, both because
they are required to and because they
recognize the value of having effective,
legitimate relationships in communities
where they operate.
15 Enterprise
Markets reward enterprise more than dissent.
The biggest opportunity for NGOs, as a result,
Few organizations have been as successful in may be to stop being pure not-for-profit
globalizing their operations as leading NGOs. ventures and, instead, to dive into the market
The success of the anti-globalization protests itself, developing for-profit business models,
is a case in point and as Naomi Klein put it
While the market will continue to need
in her book No Logo: 'Anti-corporate malaise watchdogs that hold it in tension, as more
intelligent market frameworks are developed
is so widespread that it even transcends old
so the opportunities to create value across
rivalries within the social and ecological
the triple bottom line agenda will also grow.
movements. Since when did grocery-store
workers' unions weigh in on indigenous land
A key problem here; it is deeply ingrained
claims? Since puncturing Wal-Mart became
within the NGO community (and perhaps
a cause in and of itself."’‘'
beyond) that not-for-profits are
These campaigns are powerful partly because automatically good and for-profits
automatically bad. ‘It's a fundamental
they engage groups in generating 3-D
paradigm that has to shift in our heads' says
solutions to complex problems. Whether the
Paul Gilding of Ecos. Several ’campaigning
network involves bringing environmental
businesses' that we spoke to claimed that
groups together with childcare campaigners
they were often faced with the criticism
to tackle chemicals in the environment, or
that: ’It doesn't makes sense to mate money
connecting community groups around the
out of an environmental [or social] problem.'
world to challenge water privatization,
Ultimately, however, the market may be the
tackling issues from multiple, triple bottom
only route through which many of our most
line perspectives is proving a powerful
intractable problems will be solved.
campaign tool.
14 Globalization
Trading in Credibility
r •
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Indeed, if people like Jed Emerson from
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in redefining what value' means in the
marketplace by developing methodologies
for capturing, rewarding and trading
‘blended value',”” then many NGOs might
find that they can make more of a difference
on social and environmental issues by
becoming part of the market than they
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So fourth, and finally, what are the key
threats that NGOs face in attempting to
drive change in businesses and markets?
We spotlight: Babel, Counterfeiting.
Stagnation, Alienation and Succession.
<X
16 Babel
Background noise drowns out messages.
Too many voices confuse audiences,
particularly when saying different things.
Even apart from obvious temptations to
divide and rule, there are already plenty of
excuses for governments and business to
dismiss the NGO agenda. Wars on terrorism,
economic downturns, and the complexity of
competing CSR and sustainability standards
and languages all distract from the perceived
need to address the underlying social and
environmental issues. ‘My main concern is
around the macro issues' says Gwen Ruta
from the Alliance for Environmental
Innovation. ’Current macro forces are making
it much more difficult for me to do myjob.'
Source: Suzy Becker / Grist magazine
Corporate Average Fuel Economy (CAFE )
standards are government - imposed
standards, requiring overall levels of fuel
economy from car and truck fleets
opeiating in the United States.
I
But a real downside of the NGO world's
diversity is the growing confusion over
multiple standards, something that Andre
Fourie of the National Business Initiative in
South Africa identified as a significant
threat. 'Too many competing voices' was how
he put it. ‘Corporations may be put off by the
variety of competing standards or may use
this as an excuse to do nothing. NGOs need
to show more consistency and integrity in
how we deal with the business community.'
No wonder some NGO people see the need
for a ’shake-out'
The 21st Century NGO
45
17 Counterfeiting
19 Alienation
For NGOs, it is all too easy to alienate
supporters. Many of us switch off when
problems become too complex, so one of the
challenges facing NGO leaders described in
Chapter 4 is that between the complex
nature of many sustainable development
issues and the need to be simple and clear
when communicating. 'Very little is really
black and white now — mostly we are
dealing with shades of grey,’ as one
To takejust one recent example, President
interviewee put it. Getting supporters to
Bush's adoption of the language of
’corporate responsibility' to describe fiduciary ’migrate' from the clear black and white
issues and into more complex, but ultimately
responsibility to shareholders has potentially
more important, areas is not easy and risks
outflanked the NGO communities that
had been using these terms to describe
alienating supporters, members and other
' funders.
a wider agenda, also involving social and
environmental responsibility. Of course, the
But the biggest risk relates to trust.
upside is that if business starts using the
As Joel Fleishman, chairman of the Markle
language of ’corporate responsibility'. NGOs
might be able to stretch it back out to
Foundation, warns: ‘The greatest threat to
the not-for-profit sector is the betrayal of
include the wider agenda.
public trust, and the disappointment of
public confidence.'’22 Interestingly, leading
18 Stagnation
Indian NGOs, recognizing the importance
of promoting good practices within the
voluntary sector, have formed a network to
Even the most powerful social movements
stall. Too often, success sows the seeds of
develop and promote a set of concepts,
principles and norms to enhance the
later failure. As NGOs have become more
institutionalized, so they become more
credibility of the sector.123
’mature’ and, often, more conservative.
’Pioneer’ activists are joined by organizing
20 Succession
’prospectors’, then by increasingly change
phobic NGO ‘settlers' — generally bringing
Times change, new people enter the game
a lower appetite for risk.120 ’Big brand NGOs,
and innovative business models evolve.
like big brand companies, often see their
Ultimately, the greatest threat to the ability
strategic agenda through a set of risk
of NGOs to survive and thrive may be an
management goggles' said one interviewee.
inability to move fast enough as new
Some parts of the environmental community entrants muscle into their market. NGOs
may find themselves caught in a pincer
in the US accuse the ’beltway green groups',
based in Washington D.C.. of having lost
movement between ’civil corporations which
are both willing and able to take greater
their edge on the climate change agenda.
account of their social, environmental and
Too often these organizations are at the
mercy of funders whose agendas range from
economic footprints’124 and social
entrepreneurs who are able to demonstrate
protecting wetlands to keeping disposable
(and win rewards for) the triple bottom line
diapers out of landfills. ’These groups are
running around putting out all of these fires,’ value they create. This is an area rjbe for
innovation and the successful innovators
environmental journalist Dianne Dumanoski
will be disproportionately rewarded.
has written, ’but nobody's going after the
pyromaniac.'121
Success breeds mimicry. We have already
looked at the risk of NGOs and their leaders
being captured by the system, but there is
a more subtle threat — that their language
itself might be co-opted. NGO-business
partnerships also possibly allow businesses
to define the language of debate, potentially
muzzling or muffling NGO critics.
Under such an 'ethical squeeze',125 when
consumers can buy anything from life
insurance to lipstick and feel they are
creating real social and environmental value
in the process, some may begin to ask why
they need NGOs? But. we would still need
watchdogs, advocates will insist. Indeed, but
the risk to NGOs is that this would be the
niche to which, in the long term, they might
be confined. And even here we find that
mainstream NGOs are under pressure.
As Ross Gelbspan argued in Grist: 'Out of
the vacuum of national leadership [from
the major environmental groups] on climate
change, a new climate movement has
emerged. It is scattered in pockets
throughout the country: in Olympia. St. Paul,
Boston, Portland, New Orleans, Austin, and
San Francisco, and in countless churches
and campuses where dedicated activists,
impatient with the lack of activity on the
national front, are taking matters into their
own hands.'126
It would be a deep irony if. just as they earn
a place at the table. NGOs find that their
space is occupied by innovative networks of
local activists, by social entrepreneurs, by
NGO-like actors less constrained by NGO
values, or by business organizations focusing
on CSR and sustainability issues. But these
threats shouldn't surprise us. Ecology tells us
that ecosystem succession often sees pioneer
species driven out by colonizers better
adapted to the territory that the pioneers
opened up.
'The greatest threat
to the not-for-profit
sector is the betrayal
of public trust.'
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The 21st Century NGO
Probably the most-quoted line in the 1967
film The Graduate was the moment when
the Dustin Hoffman character is advised to
get into 'Plastics'. These days the advice
could just as well be 'NGOs' or 'CSOs'. These
organizations stand on the edge of a huge
opportunity space which we expect to evolve
rapidly, in turn driving a further expansion
in the spectrum of NGOs, NGO-like
organizations and CSOs.
It has been striking to find the extent to
which NGO people now see the agenda —
and the opportunity space — as global.
People like Kumi Naidoo of CIVICUS see
this trend as inevitable, with globalization
leading to a new scale of problems in such
areas as environmental degradation,
HIV/AIDS, human trafficking, the drug
trade and terrorism.127 In some of these
areas, NGOs will be part of the problem
identification, strategic prioritization and
solution-development processes. In others,
they will be adversely impacted by the
responses of governments or other key
actors.
Also remarkable was the amount of positive
feedback that we received from contributors.
’What an interesting and timely study,'
interviewees would often say. Even MBA
students — exposed to early research
findings — were keen to know how they
could get involved in the NGO sector.
They did not plan to spend their entire
careers in this area, but recognized that it
now powerfully shapes politics and the
economy, so that a period of NGO experience
is now seen to be a real asset on a CV
or rdsumd.
But it was clear, too, that different people
had very different reasons for being
interested:
Panel 7.1
External agenda
Trend
Implications
T Pro-globalization
Anti-globalizers will still challenge
energetically, but expect pro-globalization
arguments from a growing number of
mainstream NGOs.
2 Security
Security will be seen as having strong ethical,
social and environmental dimensions, not
just political, military and economic. Expect
targeting of ’military-industrial complexes',
and growing concerns about ’Big Brother'
implications of surveillance (e.g. activities of
the American Civil Liberties Union;
3 Governance
A hugejump, but both global and corporate
governance are now on the NGO aoenda
(e.g. CERES).
4 Climate change
Along with emerging health challenges (e.g.
HIV/AIDS, malaria, SARS, TB), this challenge.,
.: straddles environmental, social and economic
concerns. Huge implications for future
, develop me nt patterns, both in developed and
emerging economies. Existing initiatives (e.g.
Carbon Disclosure Project) will take root.
5 Human rights
As signalled at 2OG2's World Summit on
Sustainable Development, the agenda is
expanding to include such issues as access
to clean water, affordable energy and life
saving drugs.
■
6 Emerging markets
Even developed-world NGOs with no operations
in emerging markets are increasingly sensitive
to their agenda. One key focus: trade justice.
The Doha Round of trade negotiations may
have stalled, but many NGOs no/, see reform
of the whole IMFA-.TO system as essential.
7 Market mechanisms
The 2003 World Social Forum sa.v a call for
.more targeting of high profile corporate brands.
Expect growing interest in liability regimes
and class actions (e.g. Friends of the Earth
International)., But NGOs are a.so showing
interest in positive use of market mechanisms,
such as emissions trading (e.g. Chicago
. Climate Exchange).
— Business people typically wanted to
know where activists and NGOs might be
headed next.
Government people wanted to know
about the political momentum of different
parts of the movement.
8 Transparency
— Media people wanted to know what
impact 'wild card' developments like
recession, the 'war against terrorism’ or
SARS might have on the NGO agenda.
— And NGO people, well they had all sorts
of questions. Like politicians and business
leaders around the world, they sense the
ground moving under their feet. They
know change is coming — and it makes
many of them uneasy.
-
_
They may not see much value
current
company reports, but growing numbers of
NGOs are focusing on corporate transparency (e.g. CORE, GRI,Publish What Yc<u Pay, Tl).
' ■ ■' '
We see a convergence of interest between
NGOs. business and governments, with efficent
- - < markets depending on good inftxrnation.
Closely linked to trade, health and environfeit
-, concerns, a number of new technoiogies
' (e.g. GM foods, human genome ¥*ork.
nanotechnology) v/HI continue to spark major
controversies.
9
k
.
. ...
..
The 21st Century NGO
48
Panel 7.2
Wild cards
Based on our research and interviews, here
are six trends which would significantly
affect the NGO opportunity space.
Of course some wild cards could be more
positive than those identified here.
Trend
Implications
1 Recession, slump, deflation
The globalization project begins to unravel.
Recession turns into slump in some areas.
Entry of China into WTO depresses world
prices. Deflation takes stronger hold in
Japan, spreads to Germany NGOs massively
squeezed financially. From a business
perspective, the current cost of future
liabilities soars as inflation slows.
2 War on terrorism
The global policing needed to combat
terrorism produces political .fallout for
NGOs. Economic problems encourage
governments to take harder lines on major
issues.like climate change; many NGOs
marginalized. Spiral of reputational
'deflation' hits NGO world.
3 The 'Enron' NGO
Trust is a highly perishable commodity. The
elements of a 'Perfect Storm’ build with
discovery that a leading NGO has misled
the public for years. The 'Enron' effect leads
to tougher accounting rules for NGOs,
squeezing capacity to leverage funds.
4 Donor fatigue
With little evidence that NGOs are able
to drive major changes in political and
economic systems now under pressure, key
. foundations adopt different investment and
funding patterns. Social entrepreneurs
benefit, many NGOs miss early warning
signals and suffer.
5 Ethical squeeze
The opportunity space grows, but is
colonized by a range of existing and new
actors, many for-profit. Consumers and
voters take comfort in the mistaken belief
that something is being done, throttling
back on support for activists.
*
6 Biters bit
Where NGOs successfully build partnerships
with companies and other actors, they •.
attract fierce attacks from NGOs that have
failed to do so, or want to pump up their
own profile, Result: further dents in the
credibility of .the sector.
.
■
•jv: v. >
.. :•
We didn't specifically ask NGOs to identify
their likely priorities over the next few years,
but pointers quickly emerged during the
research and interviews. Here we identify
21 issues or trends, not as a definitive listing,
but as a provocation for NGOs and those
that are affected by them. Panel 7.1 focuses
on nine dimensions we detected in the
external agenda driven by NGOs. Panel 7.2
highlights six wild cards' mentioned by
interviewees, or which surfaced in our
research. Panel 7.3 looks at some of the
implications for NGO funders, and Panel 7.4
spotlights six elements of the emerging
internal agenda for NGOs.
The future starts here
Paradoxically, our work on what we might
call the ’NGO industry' does not end with
The 21st Century NGO, but starts here. As
one reviewer responded to a late draft of the
report: ’to present a truly holistic picture of
the status of NGOs moving into the 21st
Century,' we would need to ’investigate,
integrate and synthesize much more
comprehensively the organizational interests,
perspectives, behaviours and circumstances
of NGOs from developing countries' And this,
inevitably, ’would entail meeting with a
wider variety of NGOs and other civil society
groups in emerging economies.'
Key areas that would certainly benefit from
further work include: the specific constraints
and opportunities for NGOs operating in
emerging economies; how to build NGO
capacity for more effective engagement in
transforming markets; identifying key
barriers to the scaling-up of NGO market
based approaches; and undertaking a
scenario building exercise on the future
options for the World Social Forum.
For the moment, and accepting these
qualifications, let's draw out a few key
trends. In particular, we will look at
implications for the external agenda driven
by NGOs and the internal agenda they now
face, plus - as already mentioned — a
number of potential ’wild cards'.
The 21 si Century NGO
The first point to make is that recent decades
have seen what we might call a civil society
boom'. Those involved may still find it hard to
see this phenomenon in market terms, but
this area has its 'Bulls' and 'Bears'. The Bears
argue that the golden days of activism are
over, while the Bulls counter that the scale
of the political, social and economic
transformations needed over the coming
decades mean that we 'ain't seen nothing
yet'. Oddly, both Bears and Bulls may be right.
The Bulls because the future, we believe,
will see an explosion in the number and
scale of opportunities for the sort of changes
that NGOs have long called for, the Bears
because new entrants to the market could
marginalize even some of the best-known
NGO brands.
As described in Chapter 2, it is clear that —
at least in the OECD world - the agenda is
moving on from the anti-globalization 'peak'
of a few years back. The challenge now will
not be simply to attack the agents of
globalization, but to work out practical ways
in which the processes of globalization can
be made more humane, more accountable
and, ultimately, more sustainable.
Though the 'radical fringe' may strenuously
deny and resist this impending shift, our
interviews suggest that a significant number
of mainstream NGOs are headed in this
direction — or are planning to do so.
And one inevitable problem they will face
in the process is that this more positive,
constructive work tends to attract fewer
headlines. This potentially raises a major
issue in terms of attracting and holding
members, and in sustaining (let alone
building) funding levels. However. NGOs
investing in market-based change may also
find alternative sources of funding emerging,
including service relationships with
governments, companies, SRI funds and
social entrepreneurs or eco-preneurs.
Funders should
support NGOs that
are active in trying
to achieve change
through markets.
Panel 7.3
Implications for NGO funders
The stock market's downturn, recession
and reduced government budgets are just
some factors making it a very difficult
time both for NGOs and those that fund
them. So what do the survey results mean
for foundations, governments and other
large funders of NGOs?
Possible Foundation Actions
Area
Market paradigm
The market paradigm applies to NGO
funders, too (Chapter 3).
— Maximize the total performance or ’blended
value'178 of both philanthropic investments
as well as of financial assets.
— Work to develop frameworks for ensuring
the accountability and effectiveness of
foundation activities.
— In addition to traditional grant-making
activities, consider providing venture capital
to companies and social enterprise working
to provide social and environmental benefits
in addition to financial return.
NGO capacity
Funders can help NGOs build capacity
to engage with business and markets
(Panel 6.3).
— Provide organizational funding for the
development,of business engagement skills,
— Raise the profile of sustainable market and
CSR agendas with local NGO players and
governments — particularly in emerging
economies, where the issues may not be
mainstream.
Market stages
Funders should support NGOs that
are active in trying to achieve change
through markets (Chapter 5).
- All stages (1-4) of NGO engagement with
business and markets are required for
. effective market change. Funders should
support both NGOs that create the ‘heat' ■
that encourages companies to-engage with ;
the CSR agenda, as well as NGOs that create
the space' that enables businesses, NGOs
and other stakeholders to collaborate in
reshaping market frameworks.
— Fund NGOs active at Stage 5 (market
disruptions) to work out how to spur the
necessary market evolution.
Accountability
Funders of NGOs should provide core
funding in this'area (Panel 3.7).
|
- Provide support to NGOs developing
accountability mechanisms and systems.
- Fund bridging between new transparency
and accountability initiatives (e.g. Global
Reporting Initiative) and the wider world
of NGOs.
- Allow resources for evaluation of
effectiveness at the project level.
Opportunities
Funders should encourage NGOs to
explore and move into high-leverage.,
niches or opportunity spaces (page 42).
— Promote opportunities for proactive market
' engagement - beyond remediation and .
tail-pipe solutions.
- .Look for-.NGO.ideas.and?proPOsalS with real
potential for scale-up
— Help NGOs co-evolve new market tools and
performance standards.
- Include NGOs as ‘honest brokers' when
developing new institutions for global or :
corporate governance.
'
.
r-vr v
■- ■
p
,
The 21 st Century NGO
Panel 7.4
Internal NGO agenda
The gulf remains
Trend
Implications
1 Scaling
As problems grow, major NGOs must learn
to scale up their impact, although not
necessarily their own organizations.
Networks and partnerships will be crucial
multipliers as we have seen with global
policy networks. The most successful.NGOs
will be the best networkers, the most
reliable partners.
2 Competitive strategy
NGO boards must evolve new strategies to
cope with new risks and exploit emerging
opportunities. Successful NGOs will
experiment with new business models
and with 'co-opetition', learning to work
with organizations they also sometimes
challenge or compete with - both businesses
and NGOs.
-3 Funding
Key to any plans to scale up, all the evidence
suggests funding is becoming tighter. Expect
the position to get worse. NGOs must build
a better 'business case' for funders, but will
also need to explore new funding/business
models. Partnerships with selected social
entrepreneurs and/or SRI funds could help.
Branding
As competition builds, so the necessity (and
value) of strong branding will grow. This is
an area where strong brands have already
. evolved, with lessons learned that should be
better known. New brands will be co-evolved
by NGOs with public and/or private sector
partners. The wider risk: they create virtuous
cycles that disadvantage non-branded
competitors.
5 Accountability
That said, high profile, branded NGOs are
increasingly vulnerable to accountability
challenges. Few feel in control; those that do
probably shouldn't. NGOs must decide which
accountability and transparency standards
to adopt, whether’and how to report, and
' what form of assurance to embrace.
As with companies, these increasing!^
6 Governance
complex issues will drive the agenda up to
board level. Also, expect more watchdog and
rating reports on NGOs forcing them to more
actively manage their risks and exposures.
A reassuring finding was that our ‘Strange
Attractor’ analysis still works well. Even
greater numbers of NGOs and NGO-like
businesses are headed into what in 1996 we
dubbed the domain of the ‘Dolphin’ (page
14). But what surprised us seven years on
was to find signs of a counter-trend. Some
parts of the ‘Orca’ community look set to
evolve in unexpected directions.
While many NGOs increasingly want to work
with business and through markets, a small
number of activists are working on new ways
of using market mechanisms to damage —
and in some cases destroy — companies.
We have seen this trend in embryo 'with the
attacks on Huntingdon Life Sciences (HLS).
Whatever the legality of such campaigns,
there is a growing sense that they can be
very effective in ending perceived abuses.
‘The number of activists isn't huge.' said
HLS managing director Brian Cass in mid2003. ‘but their impact has been incredible.
There needs to be an understanding that this
is a threat to all industries. The tactics could
be extended to any other sector of the
economy.'1™The risk here is that business
people will see such tactics as little more
than terrorism and. therefore, something for
governments to sort out. The real excitement,
however, is going to come when activists and
NGOs work out how to use mainstream
market mechanisms against vulnerable
companies and markets
Meanwhile, though we see continuing
convergence between the interests of some
leading companies and some mainstream
NGOs, we also see a continuing gulf between
mainstream economic thinking and the
emerging positions of the radical fringe
elements of the civil society world. This was
strikingly evident in the positions taken early
in 2003 by the rival World Economic Forum
(WEE) and World Social Forum (WSF) events
in Davos, Switzerland, and Porto Alegre.
Brazil. In addition to the more obvious
differences between WEF and WSF in terms
of gender, age and outlook.’10 there are more
substantive differences m attitudes, not least
around the role of globalization.
IIIWII
The 21st Century NGO
51
For WSF, if globalization is seen as positive
al all. it is often because it is seen as an
opportunity to globalize conscience and
consciousness. For V^EF, in contrast, it is
primarily about globalizing capital flows
and economic opportunity.
All sorts of things could happen to narrow
or widen this gulf, out at present it looks
difficult to bridge. The wild card factors
spotlighted in Panel 7.2 arejust some of the
forces that could inject additional volatility
into the situation These conditions, as some
interviewees signal ed. are likely to drive
some form of ’shake-out', or ’market
correction' as Bob Dunn of BSR put it.
It seems inevitable that many NGOs will
be forced to become more accountable.
We will also see more ratings and benchmark
surveys of NGO effectiveness. The problems
that have hit US-oased The Nature
Conservancy131 underscore just how
damaging the emergence of a full-blown
’Enron NGO' scandal could be.
The shockwaves that have hit major
companies in recent years also show how
risky it can be to count on past reputation
and trust-based relationships. This is
particularly true or' NGOs, as Oxfam America
Chair Barbara Fio'ito puts it because they
demand so much oublic gooe will and
attention'. That good will needs active
management and renewal. In India, for
example, the Credibility Alliance (page 52)
is working extremely hard to rebuild social
trust in the NGO community after a series
of controversies focusing on different
forms of fraud.
Worryingly, the implications of this seismic
shift are not clear, at least in our experience,
to many NGO people we spoke to during the
course of this project. They may be interested
in aspects of the emerging agenda, for
example the challenge of NGO branding
(page 16), social enterprise (page 43),
business partnerships (page 30) or the
concept of ’blended value' (page 19), but to
date most haven't been able to pull together
all the pieces of the puzzle.
Our ten headline conclusions are that:
1 although by no means universally popular,
NGOs, NGO-like organizations and CSOs
play an increasingly vital role in
democratic and democratizing societies.
2 the challenges they address are
growing — and will continue to do so.
So. beyond the mirage, what is it that we
are arguing NGOs should do? The first thing
is to recognize that markets are central to
their future. As Paul Gilding of Ecos argues,
markets are becoming legitimate channels
for social change — and they are also likely
to be, on balance, more efficient and
effective than many traditional approaches.
But the rules of the game, clearly, will be
very different.
3 governments and business may resist
their advocacy, but there is now real
interest in the potential roles NGOs can
play in developing and deploying
solutions.
To make a success of this new order,
mainstream NGOs — and innovative pioneers
— will need to understand how the new
forms of competition are going to work.
NGOs will need to get a better sense of the
emerging competitive challenges from
companies, business networks and social
entrepreneurs that have adopted elements
of the NGO agenda.
5 this represents a challenge even for most
mainstream NGOs, so public and private
sector partnerships are increasingly
essential in leveraging change.
To compete effectively for mind share and
their share of society's resources, mainstream
NGOs will need to:
- establish where they are against the
five-stage model outlined in Chapter 5
(page 27) — and, equally important,
where they would be most effective
a few years on.
Beyond the mirage
We always knew the notion of the ’21st
Century NGO' would prove to be something
of a mirage. Nor do we think that the^e is
going to be one successful business model
for NGOs. In different circumstances,
individuals and groups will exploit U-form,
M-form. N-form and others forms of NGO
not yet invented to great advantage (page
15). But the key point-here s that the whole
NGO landscape is t Iting not just towards
partnerships with business, which many
NGOs still see as a slightly more
sophisticated form of philanthropy, but
towards market-based solutions, market
mechanisms and. for better or worse,
market dynamics.
Conclusions
— explore aspects of the internal agenda
highlighted in Panel 7.4. perhaps
supplemented with a review of their
performance in respect of the strengths
and weaknesses spotlighted in our SWOT
framework (Chapter 6, page 37).
— evolve and apply custom-tailored
versions of our risk mapping tool
(Chapter 4, page 21).
09846
4 as a result, a new market-focused
opportunity space is opening up, but this
often requires solutions that are not
simply based on single-issue responses.
6 in the process, new forms of competition
are evolving in the ’NGO market', with
new entrants like companies, business
networks, NGO networks and social
entrepreneurs blurring traditional
boundaries.
7 both national and international NGOs.
as a result, are having to pay more
attention to the whole area of branding
and competitive positioning.
8 in parallel, the mainstreaming trend is
exposing established NGOs to new
accountability demands.
9 but, problematically, all of this is
happening at a time when traditional
sources of NGO funding are
increasingly squeezed.
10 finally, we sense an urgent need to
review — and further evolve — NGO
’business models'.
■he 21 st Century NGO
Appendix 1
Centres of Excellence
Far from being comprehensive,
the following list.aims to provide
readers with a taste of some
organizations (academic, NGOs
and other) we found particularly
helpful in our research.
Civil Society Research
Capacity Building
Partnerships
Accountability & Governance
London School of Economics
Institute of Development
International NGO Training
One World Trust, UK
Centre for Civil Society, UK
Research, USA
and Research Centre, UK
v^vwonewgddftust prgwwwjsi.c-ornAd!' ■
www I'-e'Hc.uk
vyww.inti'ac.org
Formed in 1951 by members of
The Global Civil Society Yearbook In 2002,1 DR merged with World
the British Parliament; One World
INTRAC is an NGO supporting
is a joint project of the London
Education, a Boston-based
other NGOs with the aim of
Trust aims to promote a greater
School of Economics Centre for
nonprofit organization dedicated improving civil society
sense of world community.
Civil Society and the Centre for
to improving the lives of the poor performance. Part of their
The Global Accountability
the Study of Global Governance.
Project's report Power Without
through economic and social.
• research program focuses on
It provides a wealth of inform
Accountability is a comparison of
development programs. Much of whether NGO-private sector
ation and data — and each year
their research revolves around.
partnerships are more effective in 18 organizations’ accountability,
provides a useful barometer on
strengthening and managing civil bringing about sustainable
focusing in particular on
the current issues and debates
■ society. Critical Cooperation: An . development than are adversarial transparency and governance.
in the sector.
.
Alternative Form of Civil Society- campaigns, fair-trade initiatives
Business Engagement suggests
or company self-regulation.
BoardSource, USA
Hauser Center at Harvard
that civil society-business co
University, USA
Business Partners for
Formerly the National Center for
operation is possible even when
Development (BPD), UK
Nonprofit Boards, BoardSource
important interests are in
The Center aims to understand
conflict.
yvwvv.bpdweb.org
enables organizations to fulfil
the role that the nonprofit sector
BPD was launched as a threetheir missions by helping build
strong and effective nonprofit
and nongovernmental
Pact, USA
year program designed to study,
organizations play in aiding
www. pac twor Id .org
support and promote strategic
boards. It provides useful
societies to discover and
resources giving practical
Founded in 1971 with support :
examples of partnerships
accomplish important public
involving business, civil society
from USAID, Pact is a member
information, tools and best
purposes.
ship organization of US private
and government working
practices, training, andlesdership
development for boarc members
and voluntary organizations
together for the development of
The Center for Civil Society
of nonprofit organizaGens
aiming to 'help build strong
communities around the world.
Studies of the Johns Hopkins
worldw'ide.
communities that provide people Putting Partnering to Work
institute for Policy Studies, USA with opportunities to earn a
provides the results and
w wvyj hired! 1/ - ccss
recommendations from this work. The Credibility Alliance, India
dignified living, raise healthy
WWW Cj Pdibnity?Tii;.r\:t; "g
Global Civil Society: An Overview families, and participate in
gives a broad comparative
democratic life'. Pact focuses on
The Centre for Innovation in
Formed in 2001, The Credibility
description of civil society in
strengthening the capacity of
Management, Canada
Alliance is working towards
35 countries, examining the ■
creating a self-regiFatory
; grassroots organizations, and
■ www.CKn.sfu.ca
geographic patterns and
■ creating coalitions and networks Based at Simon Fraser University framework for NGOs that allows
characteristics of the sector
amgncig government, business and in Vancouver. CIM was set up
for the establishment of norms,
and analyzing its scope, size
their promotion and adoption;
citizen
n sectors to achieve social,
to help bustiess and other
and financing.
and certification that
organizations create social and
economic and environmental
shareholder value through
organizations meet these norms
justice., . in an effort to promote the
productive stakeholder
voluntary sector's credibility.
CIVICUS, South Africa
engagement.
vvww.ci’vicus.Oig
Founded in 1993, this inter
national alliance of NGOs aims to
nurture the foundation, growth .
and^protection of citizen action .
.. throughout the world, especially .
in areas where participatory
c';.:
democracy and citizens' freedom
of association are threatened.
Their values include courage, . '? ■<• k
justice and equality, which are . '
reflected in their cutting-edge • ■ •■
'/'/ programs, ■addressing issues such - ''
...
.
as transparency and legitimacy of . ’v
•
CSOs (civil society organizations).
■
The 21st Century NGO
Appendix 2
List of Interviewees and
Workshop Participants
W1
NGO-Business
Partnership Workshop
WSF. Porto Alegre, Brazil
Emerging Markets
Conference Call
NGO Accountability &
Governance Workshop
NYC, USA
NGO-Business
Partnership Workshop
Vancouver, Canada
NGO Branding Workshop
London, UK
Susanne Stormer W3
Novo Nordisk
Sheila Saraiva W1
Independent
Joe Sellwood W1
Pact
Vivian Smith .(W1 and W3)
UN Global Compact
Bruno Rebelle
Greenpeace France
Gita Kavarana
Centre for Science and
Environment
Ashok Khosla
Development Alternatives •. ■• •:
Malini Mehra
Centre for Social Markets
Viraf Mehta W2
Partners in Change
Sonia Shrivastava
Georgia
Canada
Priscilla Boucher W4
Nino Saakashvile
W3
VanCity Savings Credit Union
Horizonti
Linda Coady W4
Shankar Venkateswaran
WWF-Canada
Germany
..W4
American India Foundation
Christoph Bals
Elizabeth Everhardus W4
Vijaylakshmi
Pollution Probe
Germanwatch
Rainer Griesshammer
Development Alternatives
Suzanne Hawkes W4
W5
IMPACS
Oeko-lnstitut
Lindsay Keenan W1
Kenya
Dianne Humphries W4
Michael Clement W1
Suncor Energy
, Greenpeace International
Argentina
Rob Kerr W1
Dr Ansgar Klein
AFCAP
Victoria Arbamouich W1
Bundesnetzwerk
Environics International Ltd
Burgerschaftliches Engagement
Malaysia
Independent
Myrna Khan W4
Andrew Ng
Cristna Catano W1
Canadian Business for Social
Sabine Leidig
Fundacidn SES — Br. AR. Arq
Responsibility
WWF Malaysia
Attac-Germany
Christopher Johnson
Patrick Mallet
Jurgen Maier
If People, consultant to
Forum Umw'elt & Entwicklung
ISEAL Alliance
Mexico
. Grnpo Puentes
Andrew Mallory W4
Miklos Marschall
Margarita Almoddvar
Delfina Linck W1
Small Potatoes Urban Delivery
Transparency International
Fundacidn del Emp'resariado
AVINA Foundation
Andrew McAllister W4
Jens Martens
Chihuahuense
Jorge Daniel Taillant
McAllister Opinion Research
World Economy, Ecology and
Centro de Derechos Humanos y
Donna Morton W4
Development (WEED)
Netherlands
Medio Ambiente (CEDHA)
Professor Edda Muller
Integral Economics
Gemma Crijns
Pedro Tarak W1
Dave Mowat W4
Federation of German
Institute for Responsible Business
AVINA Foundation
VanCity Savings Credit Union
Consumer Organisations
(ElBE) Nyenrode University
Helmut Roscheisen
Harry Hummels
Robert Penrose W4
Deutscher Naturschutzring (DNR) Institute for Responsible Business
•Australia BC Hydro
Paul Gilding
Dave Quigg W1
Barbara UnmliBig
(EIBE) Nyenrode University
Ecos Corporation’
Heinrich Boell Foundation
Isabelle van Notten
North American Social Forum
Planning Process
Professor Ernst von Weizsacker Independent
Azerbaijan
Member of the German
Bruce Ralston W4
Farda Asadov
VanCity Savings Credit Union
Peru
Parliament
The Open Society Institute
Mario Raynolds W4
Michael Windfuhr
Guida de Gastelumendi
Independent
Azay Guliyev
FoodFirst Information and
Pembina Institute
Action Network (FIAN)
National NGO Forum of
Nicole Rycroft W4
Azerbaijan
Philippines
Markets Initiative
Elvie Ganchero W2
. Nicole Salmon W4Greece
Belgium
'■
' • ‘ ■
Maro Evengelidon W1
Oxfam Canada
Philippine Business for Social
Raymond van Ermen
Progress
George Scott W4
Greek Social Forum
European Partners for the
VanCity Savings Credit Union .
Hungary ■
Environment
Yalmaz Siddiqui W4
Russia
Vyacheslav Bakhmin V/2
IBM Business Consulting Services Robert Atkinson
Brazil
Tamara Stark W4
Regional Environment Center
The Open Society Institute
Matthew Murray
Nelmara Arbex W2.
Greenpeace Canada
India
St Petersburg Center for Business
Institute Ethos
Coro Strandberg W4
Fabio Feldmann W3
Strandberg Consulting
;■ Priya Anand W3
Ethics and Corporate Governance
Murray Culshaw Advisory Services Elina Tchizhevskaya
Forum Brasileiro de Mudancas
Denise Taschereau W4
. NGO Development Center
..Climaticas
A-Mountain.Equipment Co-op. .. > Chandra Bhushan
Neissan Monadjem.
-- ---------- - ------------------ - ------ ---. Centre for Science and
^.Environment^
. South.Africa
>.
itan>pa-6nciaBr<)s;i.
- Cristina Murachco'Wi
Jeanne-Marie Gescher W2
^Murray Culshaw
Dr David Fig
.Murray Culshaw Advisory Services Biowatch South Africa
Institute Ethos
,
Claydon Gescher Associates
Dr Vikas Goswami
Andr6 Fourie W2
Valdemar de Oliveira Neto
Michelle Oilett
' Business and Community
National Business Initiative
AVINA Brasil .
Claydon Gescher Associates
Foundation
Tracey King
Rebecca Raposo
__
______
. Aditi Haidar
SABCOHA
Grupd de Institutes Fundacoes : . 'Denmark ’
' / Development Alternatives
Mokhethi Moshoeshoe '
e Empresas (GIFE)
Lise Kingo W5
Ashok Jaitly
African Institute of Corporate
Maria A. P. Ribeiro W1, -■ -; ■'■ ■ Novo Nordisk
• '■
TERI
■
Citizenship
’
;
Associate Saude'da Familia*’' -' - V ’ ■ • - • •• : ; X
W2
.....
.... .
.
■'
■
■
The 21 st Century NGO
$4 -
Kami Naidoo W3
CIVICUS
Mary Kaldor
Evan Bloom
Center for the Study of Global
Impact Alliance
Tribal Link Foundation
Bobby Peek
Governance (LSE Seminar)
Joan Boyle W3
Stephanie Kurzina
GroundWork
Fiona King
International Schools Association Oxfam America
Richard Sherman
Save the Children Fund UK
Michelle Chan-Fishel
Aryeh Neier
GLOBE. Southern Africa
Paul King
Friends of the Earth
The Open Society Institute
WWF-UK
Professor Gordon Conway
Clare Nolan W3
Spain
Hetty Kovach W3
Rockefeller Foundation
Congregation of the
Cristina Garcia-Orcoyen
One World Trust
Elizabeth Cook
Sisters of the Good Shepherd
FundaciOn Entorno
Harriet Lamb W5
World Resources Institute
Kate Pearson W3
Fairtrade.Foundation
Erik Curren
BoardSource
Sweden
Miles Litvinoff W1
Lumina Strategies
Gavin Power W3
Mans Lonnroth
OneWorld International
Sister Pat Daly
UN Global Compact
Mistra :
Ann Longley W5
Tristate Coalition for
Glenn T. Prickett
OneWorld International
Responsible Investment
Conservation International
iSwitzerland
Dr Chris Marsden W5
Ramu Damodaran W3
Janet Ranganathan
Jem Bended
Amnesty International
Civil Society Service,
World Resources Institute
United Nations Research Institute Business Group
United Nations DPI
Dawn Rittenhouse W3
for Social Development
Robert Napier
Pat Daniel
DuPont
Barbara Dubach W5
WWF-UK
CERES
Michael Rodemeyer
Holcim/WBCSD
Aly Nazerali
Don Doering
Pew Initiative on Food and
Pamela Hartigan
Aga Khan Foundation (UK)
World Resources Institute
Biotechnology
Schwab Foundation for Social
Amy O'Meara
Bob Dunn
Laura Roper
Entrepreneurs
Pact
Business for Social Responsibility \ Oxfam America
John Palmer W5
Michael Edwards
Gwen Ruta
UK
Oxfam GB
Ford Foundation
Environmental Defense
Cathy Anderson W5
Stuart Palmer W5
Jed Emerson
Nick Salafsky
Greenpeace
Traidcraft
William and Flora Hewlett
Foundations of Success
Kirstie Arnould W5
Sara Parkin
Foundation
Judith Samuelson
Friends of the Earth
Forum for the Future
Michelle Evans W3
Aspen Institute Initiative for
Stella Bland W5
Jules Peck •
International Service for Human . Social Innovation through
Forum for the Future
WWF-UK
Rights
- Business
Simon Burall
Kate Raworth
Catherine Ferguson W3
Peter Sandman
One World Trust
Oxfam GB
Franciscans International
• Independent
Henk Campher
Tanya Reed W5
Barbara Fiorito W3
Sarah Severn W4
Oxfam GB
WWF-UK
Oxfam America
Nike
Rita Clifton W5
Chris Rose W5
Catherine Fitzpatrick W3
Michael Shellenberge
Interbrand
Campaigns Consultant
Physicians, for Human Rights
Lumina Strategies
Craig Cohon
Rory Stear
Alisa Gravitz
Timothy Smith
Globalegacy
Freeplay Energy Group
Co-op America
Walden Asset Management
Martin Cottingham W5
Sophia Tickell
Sue Hall
William J. Stibravy W
Soil Association'
Oxfam GB
Climate Neutral Network
International Chamber of
Jane Cotton.
Karen Westley
Professor Virginia Hodgkinson
Commerce
Oxfam GB
Shell Foundation
The Georgetown University
Yasmin Tayyab W4
Kel Currah
Sarah Wykes
Public Policy Institute
International Finance Corporation
World Vision International
Global Witness
Sarah Horowitz
Alice Tepper Marlin
Chris Davies
Working Today
Social Accountability
Save the Children International
USA
.
Jean Horstman W3
International
Secretariat
Barbara Adams W3
Building Educated Leaders for Life Lloyd Timberlake
Deborah Doane W5
United Nations NGO Liaison
(BELL)
AVINA Foundation
New Economics Foundation
Patricia Armstrong W3
Lisa Jordan W3
Dr Chris Toppe
Chloe Evans W5
Human Rights Consultant
Ford Foundation
Independent Sector.
Interbrand
Matthew Arnold
Calestous Juma
Steve Viederman W3
Peter Frankental
World Resources Institute ?
The Kennedy School of
Initiative for Fiduciary
Amnesty International
Stella Arthur W3
. Government,
■. Responsib'hry ■<
Business Group •
United Nations NGO Liaison
Harvard University
lain Watt W3
Lynne Franks W5
Alan Atkisson
'
Adrian Karatnycky
CERES
Sustainable Enterprise and
Atkisson and Associates
Freedom House
. Eric Whan Vv'3
Empowerment Dynamics (SEED)
Stuart Auchincloss W3
Eileen Kaufmann W3
Environics international Ltd
Mark Griffiths W5
Sierra Club
Social Accountability
Tensie Whelan
Branding Consultant
Zehra Aydin W3
International
Rainforest Alliance
Gavin Hayman
United Nations CSD Secretariat
Channapha Khamvongsa W3
Sister Pat Wolf
Global Witness
Margorie Berg Daniels
Ford Foundation
; Interfaith Center on CorporateJeremy Hobbs
International Society for'
Jackie Khor
■•’Responsib/.ity (ICCR)
Oxfam International Secretariat
Third-Sector.Research
. ____ ____
Rockefeller
Foundation
Simon Billenness
Scott Klinger
Oxfam America
Co-United for a Fair Economy
The 21 st Century NGO
-5h
31
See, for example, NonMichael Edwards, 'NGO Rights 2 Paradigm shift
Governmental Organizations:
Our
research
suggests
that
the
and Responsibilities — a New
the Fifth Estate in Global
first wave peaked in 1969Dear for Globa! Governance',
Governance,’ Edelman PR and
1973, the second 1988-1991,
The Foreign Policy Centre,
Executive Summary
Strategy One, presented to the
and
the
third
(first
visible
in
2000.
Recent work by the Center for
’■06
World Economic Forum. New
the streets of Seattle during
See Appendix 2.
Civil Society Studies at John
York, 2 February 2062.
: M For more information on
1999’s anti-WTO protests)
Hopkins University suggests
32
While NGO numbers have
1999-2002.
For
more
our
methodology,
see
that even excluding religious
increased significantly over
information see SustainAbility
wwvi/. sustainebl Iily.com/ ■
congregations, the ‘non-profit
the past decade, several *
/
UNEP,
Good
News
and
Bad:
proqrams/pi
essu
!
c-frontz
sector is a $1.1 trillion
interviewees pointed out that
21C- NG0'proposal
The Media, Corporate Social
industry', employing 19 million
low transaction costs mean
io David Brown and Mark Moore,
Responsibility
and
Sustainable
fully paid employees and
that, while technics5:/ still
Development,
SustainAbility
/
‘
Accountability,
Strategy,
representing the world's
existing, up to 40% of these
UNEP, London, 2002.
and International Non
eighth largest economy (John
21 For example, US-based The
groups are actually inactive.
governmental
Organizations',
Hopkins Center for Civil
.33 Http:7/1 nwebi
Nature Conservancy is under
Nonprofit and Voluntary Sector
Society Studies: Global Civil
org/essd/essd-niJ
federal investigation following
Quarterly, Vol.30, No.3.
Society - Dimensions of the
34
Amy Chua. World on F:re:
exposes
in
The
Washington
September
2001
pp.
569-587.
Non-profit Sector, John
How Exporting Free ^fsrket
Post over its handling of
" The Centre for Civil Society,
Hopkins, Baltimore, 1999).
,
Democracy Breeds Ethnic
donations
and
New
York
State,
London School of Economics. ;
Bill Bradley, Paul Jansen and
Hatred and Global instability,
Attorney General Elliot Spitzer
and Political Science (LSE).
Les Silverman. ‘The Nonprofit
12
Doubleday, 2002.
is
also
calling
for
increased
World Business Council on
Sector's $100 Billion
35 See for example Jesn-rram;ois
NGO
accountability.
Sustainable
Development,
Opportunity,' Harvard Business
. Rischard High Noor.: 20 Globa!
Stakeholder Dialogue on CSR, 22
2 For example, the LSE's Centre
Review, May 2003, pp.94-103.
Problems. 20 Years to Solve
for
Civil
Society
looks
at
a
The
Netherlands,
1998.
03 See, for example, Views of a
Them, Basic Books, New York
'13 Susta i n Ab i lity/l FC/Ethos
range of indicators for
Changing World, The Pew
2002.
www.’ischarc-^el .
globalization,
including
Developing Value: The Business
Global Attitudes Project, June
numbers
of
students
studying
Case
for
Sustainability
in
2003 which suggests that
3 The business of NGOs
abroad, levels of global trade,
Emerging Markets,
people around the world share
35
Op. cit01
levels.of
air
travel
and
SustainAbility,
2002.
a desire for democracy and
See for example E. Ainternational
tourism,
and
14 The Oxford English Dictionary,
free markets - and also
Nade’man, ‘Global Prchibition
growth
in
communications
1995/96 adapted.
generally ‘acknowledge and
. Regimes: The Evoli£ on of
15 A. C. Vakil ‘Confronting
(e.g.
numbers
of
English
accept' globalization.
Norms in Intematiacai
speakers, access to
the Classification Problem: a
ww. people prqss.org
| Society’, Internatior^.information
technology).
Taxonomy
of
NGOs',
World
w Op. cit."’
23 Amnesty International, quoted
Organisation. yolA-, no.4.
Development, vol.25, no.12,
1990. Discusses the cole of
in
Terraviva.
the
independent
p.2060 (1997). Capturing some
1 Introduction
NGOs in the develGenent of
OS
daily
of
the
World
Social
environmental
issues
through
John Elkington and Tom Burke,
international regimes to
Forum, 24 January 2003.
viewing future generations as .•
The Green Capitalists. Victor .
24 Mike Moore, A World Without
combat piracy, slavey.
‘
disadvantaged
people
’
,
this
Gollancz, London, 1987.
prostitution (’whits oavery’) . .
Walls: Freedom, Deyelopment,
06 Other surveys were: Green
definition does not address .
and
the hunting of eepharits.
Free
Trade
and
Global
groups which ascribe intrinsic
Pages: The Business of Saving
38 Some of these labe s are from
Governance.
Cambridge
value
to
organisms
or
eco
the World, by John Elkington,
Wiseman Banda, "Ahst types/
University Press, 2003.
systems which would be
Tom Burke and Julia Hailes,
a Jeffrey E. Garten, Globalization.
an NGO is your NGO'?'. Unites
included
in
our
definition
of
Routledge, London, 1988; The
Nations Chronicle. -cc-XXXV.
without
Tears:
A
New
Soda:
NGOs.
Sub-groups
of
NGOs
Green Wave: A Report on the
no.1,1998.
Compact
for
CEOs,
Harvard
are described in Chapter 3.
1990 GreenWave Survey,
39 Formore formal der nations
16 Jane Nelson, Business as
.
Business
School
Press,
20Q2.
:
SustainAbility with British Gas,
it
see our glossary on page 05.
Op. cit. “
Partners in Development,
London, .1990; The Corporate.
W See, for example, Jcnn
Zi This shift has been under
Prince
of
Wales
Business
Environmentalists: Second
Elkington and Sheiiw Fenneii.
way for some time, with
Leaders Forum, 1996.
Green Wa ve Survey:
‘Shark, Sealion or Co.phin?L
Greenpeace
UK
and
others
For
additional
definitions
see
.
.
> SustainAbility with' British Gas, 17
Tomorrow, March.-~cr:l 1991:
adopting a market focus invvv^.sociaienterprisemagazirie
London, 1991; The Green
and
Chapter 9, ‘Aftsr the
the
early
1990s.
,org This definition would .
Keiretsu, John Elkington and
28 See vyww.fr^GornriQUsex-r;
Honeymoon', in jcrr.
also
include
terms
like
Anne Dimmock, special
. Elkington. Cannib&S'with
for numbers of 'free' and
’campaigning companies'
Tomorrow survey supplement,
Forks. Capstone Publishing,
‘
partially
free'
societies.
and ‘conscience commerce'.
1994; and Strange Attractor:
2S
Oxford, 1997.
18
sstcinab:
■ ity.c6nvf
For
a
more
extensive
Thb Business-ENGO
*’ Better known as tre
definition see Gregory Dees,
Partnership. A Strategic Review
‘kiHer whale.'
;
.
<
.network/ctfc-JS-FQse,
golder.
‘
The
Meaning
of
Social
of BP's Relationships with
'
Nick Carter, ‘Oxfam: to Shun ,
bge-of-groups '
.Entrepreneurship',
Environmental NGOsi
30 See for examp’e data from
Iraq Funds from Be.'igerent
SustainAbility for BP, see John r www.gsD.slanford.eiiu/
Appendix 3
Notes
! 07 :
j.’
-
Elkington and Shelly Fennell,
’Shark, Sealion or Dolphin?',
Tomorrow, March-April 1997.
csi'SF.Defiuition '
19 World Commission on
Environment and Develop-
Oxford University Press, 1987.
MORI, Environtcs, Gallup and
Independent Sector.
-
""..............
ofc/CieFacts/rei: e^sourcev
602345?version *
“
'
The 21st Century NGO
13 Anheier and Themundo,
56 ’Charities face crisis over
Quoted in P. J. Simmons,
'Organisational Forms of
drop in gifts from wills',
of excellence in Appendix 1,
'Learning to live with NGOs',
Global Civil Society', LSE
William Kay, The Independent,
plus people like Stewart Brand,
Foreign Policy, Fall 1998,
Global Civil Society Yearbook,
26 April 2003.
Buckminster Fuller, Jeff Gates,
pp.82-96.
5?
LSE, 2002.
See, for example, David
Paul Hawken, Bill McDonough 81 John Pascantando, speech to
■<4 A point we come back to in
Rieff, A Bedfor the Night:
and Michael Braungart, and
Greenpeace Business ;
Chapter 6.
Humanitarianism in Crisis.
Donella Meadows.
Conference, 0ctober2002. <
53
William Kay, 'Charities Face "
Simon and Schuster, 2002.
82
Op. cit.30
SustainAbility / Centre for
58
TO
Crisis Over Drop in Gifts from
For example, Aventis, Cisco,
Our Common Future,
Active Community / Cable &
Wills', The Independent.
Nike, Novartis, Schlumberger
The World Commission on
Wireless, Corporate
26 April 2003.
and Shell are setting up
Environment Development
Community Investment in
.4£ Some commentators have
foundations focused on
(Brundtland Commission),
Japan. SustainAbility, 2003.
suggested that there is a more ■
sustainable development
Oxford University Press, 1987. 83 The notion of partnership
71
insidious form of competition
issues.
For a similar framework on the
approaches received a major
M
in the NGO sector, in which
See Jed Emerson, 'The Nature
role of markets see Brody,
boost at the World Summit on
community groups around the/
of Returns: A Social Capital
Weiser, Burns, 'Corporate
Sustainable Development in
world,vie with one another, to
Markets Inquiry into Elements.
InvolvementInitiative',
Johannesburg^September ..
gain access to international ”<
of Investment and the Blended
prepared for the Ford
2002, where they were hailed
NGOs. See, for example,
Value Proposition,' Social
Foundation Grantee
by governments, business and
Clifford Bob, 'Merchants of
Enterprise Theories No. 7 7,
Convening, 2-4 June 2003.
some NGOs.
Morality', Foreign Policy,
n Training includes: researching
Harvard Business School,
To takejust one example,
March/April 2003, pp.36-45.
2000.
corporations, influencing
Kathryn Fuller, WWF-US's CEO,
60
See www.hveyearffeeze.org/
Reshma Memon, 'To Give Well,
boards, direct action, legal
is also a Board Director of
gmleafiet
Give Wisely'. IVo/th, February
tools, corporate citizenship,
Alcoa, and has been criticized
<K 'Protecting the Rights and
. 2003 and 'What's the.Charity
countering greenwash,
for not doing more to prevent
Addressing the Responsibilities
Doing With Your Money?',,
- shareholder activism, .
the siting of a new Alcoa plant
of Non-Governmental
Forbes.com. 2002.
globalization, divestment and
in a sensitive ecological area
.61
Organizations', Workshop
American Institute of
grassroots power.
in Iceland.
73
sponsored by The Ford
Philanthropy Charity Rating
'Empowering Democracy' final 85 NGOs are partly leading and
Foundation and Sawarung,
Guide and Watchdog Report.
conference report, 27—30
partly responding to others in
Bandung, Indonesia,
AIP, 2002,
May 2001, Dallas, USA.
addressing the underlying
M
6-8 January 2003.
The Stop E$$0 campaign
rights of impoverished
4a Workshop Summary Report,
4 Agenda 21: NGO Governance
claims that regular petrol
communities. For example,
’Who Guards the Guardians?' - 62, Charles F. Dambach, Structures
buyers at Esso stations in the
the Ford Foundation has a
SustainAbility, April 2003.
and Practices of Nonprofit
UK have dropped by 7% as a
program aimed at supporting
www. susta inabi I ity.com/
Boards. BoardSource, 2003.
result of the boycott of Esso
NGOs active on economic,
6.1.
pf- fr on< / '
Anthony Perret, ’Interviewon account of their position
social and cultural rights, and
worksliops
Stephen Tindale', Elements
on climate change (though
other institutions such as the
w Hugo Slim, 'By What"
Magazine.June 2001.
this is disputed by
UN Committee on Economic,
M
Authority? The Legitimacy
A counter-point that Was
ExxonMobil).
Social and Cultural Rights and
and Accountability of NGOs,'
raised suggested that ’orange 75 VA7Xv.ceresort|/6tir_ worL'sgp
the World Health Organisation
76,
Working Paper presented at
smoke' is only controversial
For example, the UNECE
are actively advocating the
The International Council on
because of NGO campaigns —
Aarhus Convention.
existence of such rights.
Hufnan Rights Policy
• 8b
previously it would have been
wwvZunece.org
’ .
Jane Covey and David Brown,
77'
International Meeting on
seen as an indicator of
The approaches used by over
’Critical Co-operation: An
’Global Trends and Human
economic success.
20 NGOs were reviewed
Alternative Form of Civil
Rights — Before and After
“. Business Benefits - How
■ including The Alliance for
Society-Business Engagement'.
September 11', Geneva,
i Companies Can Take Positive
Environmental Innovation,
IDR Occasional Papers, .vol.17,
January,10-12, 2002.
. Action on Education. Child
CERES, Forum for the Future. .
no.1f.2DQl„
.
51
For more information see
67
Labour and HIV/AIDS, Save the
The Pembina Institute, Pact,
See
.?jsi.ainabiihy/;op'
wv/w.pcnc.com.pl’.
■
88
Children/DFID, 2003.
Save the Children and the
Our thanks to The Body Shop
www.credibiHty.'Ui!anc6’.orcj
See www.c11mateindia.com/
World Resources Institute.
International and Greenpeace
78
53 Op. cit..'10
about for more information.
Erb Environmental
International for their insight
54 Hetty Kovach, Caroline
Management Institute and
on these issues.
Neligan, and Simon Burall,
83
5 From market intelligence
Green Business Network,
Done'‘a Meadows, 'Places to
Global Accountability Report 1:
to intelligent markets
Intervene in a Systerri| Whole
Collaboration fora Change:
Power without Accountability?
Previous anti-business •
A Practitioner's Guide to
Earth. Winter 1997The One World Trust,
90
■ campaigns include 19th
Environmental NonprofitIn 2001. organic food and
2002/2003.
century anti-slavery
Industry Partnerships,
drink sales were worth £8.3bn
* The IFC has worked with
movements and the campaign
August 2003., Available at
■ (USS12bn) across Europe (see^ <
Accion, SEWA and Profund
against companies operating
wwwgreenbi z ;com/
’From Green into the Black'.
in this way.
in apartheid-era South Africa
: .partnerships ;
Brans Strategy November
. wvAv.accion.org
>
frpm the 1960s.
”.3(vvAV.fp^prg//carY!ps/jnti/
2002 pp.26-27).
91 John Vidal,'Retail therapy',
. vAvwsevvb.org
■
declaration,html
.... vAVwp-i Qtu.ndinterruU ional.
The Guardian, 26 February
2003.
92
•
- .V-'
■-
:■>
wvv-.'./;' ■ oagocnmatedx.com
• 3
The 21st Century NGO
The 21st Century NGO
.IO!'For example, some
Quoted in Ross Gelbspan,
The use of litigation is
In the Market for Change
commentators have suggested
'The Big-Name Game'. Grist,
something that many NGOs
■:. ■
2003
31 July 2002.
that if the International
we talked, to identified as a.
ISBN 1;9Q3.168;.08-Z
Campaign to Ban Landmines . 122 Quoted at www.independent
growing trend. See, for
SrisminabHity 2003 sector-Grg
had been more patient and
example, Susan Ariel
m Op. cif9'
willing to compromise, they
Aaronson, ‘Courting
124 Simon Zadek, The Civil
AH rights reserved- No part of this
might have had more success
International Business',
Corporation: The New Economy publ ication may. be reprodi.iced,
in winning US support for
The International Economy,
stored in a retr ievai system or
of Corporate Citizenship,
their proposals, (see P. J.
Spring 2003.
transmitted in any form by any
Earthscan Publications, 2001.
■ Simmons, 'Learning to live
Quoted in the article by Lola
moans, electronic; v3edro$&|tic,
'zs We thank Chris Rose for this
with NGOs,' Foreign Policy
Okolosie, 'When Does Protest
magnetic rape, photocopying,
phrase.
Work?’, The Observer,
Fall 1998, pp.82-96).
110
recording or cAI’^rwise. without
As illustrated earlier, although 126 Quoted in Ross Gelbspan,
2 March 2003.
pi!‘.rmission in writing frbm the
'The Big-Name Game’, Grist,
smaller than the corporations
‘Climate cool’ is the
copyright holders?
31 July 2002.
they target, sofne NGOs are
- certification mark of the
major: multinationals in their
Climate Neutral Network
Research and Writing
7 Conclusions and
denoting products and services
own right.
recommendations
Set
. .
For example in Croatia NGOs
that are carbon neutral.
06
John Eikington .
;127 For more on these issues see
Tom Fox et al.. Public Sector
are still taxed as businesses,
the writing of Moises Naim in Katie Fry Hester
and even in developed
Roles in Strengthening
Foreign Policy, particularly 'The Sue Newell.
countries regulation is still
Corporate Social
Five Wars of Globalization,
evolving. In Japan nonprofits
Responsibility: A Baseline .
Information Design
www. foreii i
com
were not recognized in law
Study, The World Bank, 2002.
www; board/iivewam
RuxH Bassett
until 1998.
w‘ Jed Emerson, 'Horse Manure
112 People and Connections:
6 Bringing change to market
and Grantmaking' Foundation Print
Global Scenarios to 2020,
97 Op. cit.15
L&S Printing
News & Commentary,
Shell International, 2002.
98 Kolmut Anheier and Lester
May/June 2002.
”3 Quoted in Ross Gelbspan.
Salamon, eds., The Nonprofit
ww^foiindatioiinews.org
'The Big-Name Game', Grist.
Sector in Developing Countries,
129 Mark Huband, ’Activists pose
31 July 2002.
New York, Manchester
114 Jem Bendell,''Civil Regulation:
• big threat, bosses warned,’
University Press, 1998.
.99
Financial Times, 30 May 2003.
a New Form of Democratic
See, for example, work by - f
130 John Elkington and Seb Beloe,
Governance for the Global
Edelman Public Relations,;..
.‘WEE versus WSF: Who Will
Economy?’* New Academy of
Environics, Harris Interactive,
Win the Fight?’ Radar,
Business, in Terms of
The Independent Sector and
February 2003.
Endearment: Business, NGOs
- others. '
,1t10 Declining Public Trust Foremost
and Sustainable Development, .131 The Washington Post recently
ran a series of exposes on The
edited by Jem Bendell,
a Leadership Problem,
Nature Conservancy, alleging
Greenleaf, 2000.
:
Environics International for,
115
mismanagement of resources
Calestous Juma, 'How Not to
World Economic Forum,
(see David Ottaway and Joe
Save the World', New
14 January 2003.
Stephens, 'Nonprofit Land
Scientist, vol. 175, issue 2362,
;,th For example, Greenpeace UK’s
Bank Amasses Billions',
p.24, 28 September 2002.
mistakes — later admitted — in
lit
4 May 2003).
Penny Fowler and Simon Heap,
■ estimating levels of toxic
'Bridging Troubled Waters: The
' chemicals in the Brent Spar.
Marine Stewardship Council',
w A major environmental NGO
Intrac, in Terms of Endearment:.
based in Canada.
Business, NGOs and
■,0?’ Kevin Kelly, New Rules for the
Sustainable Development,
New Economy, Fourth Estate,
edited by.Jerri Bendell,
London, 1998.
Greenleaf, 2000, and 'Trading
,w We thank Gavin Power for
in Credibility. The Myth and
• this insight.
Reality of the.Forest
105 'The non-governmental order'.
Stewardship Council', The t
The Economist. 9 December.
Rainforest Foundation UK,.
1999.
November 2002.
/,ft’ Murray Culshaw is Chair of
117
Andrew Bibby, 'Doing The
• ..the Credibility Alliance and a
Right Thing can Pay Good ■
• former Director of Oxfam
Dividends Too’, The Observer.
India.
9 March 2003.
-.
'.
107 Incidentally, it is often true
’’R Naomi Klein, No Logo, ■
that there are relatively few
Picador. USA’ 2p0(). : ,
people in business who
™ Op.cit.59
'
really understand the NGO
120 See Chris Rose-,(in press) . community, though this is
Wars of Persuasion: Strategy •
also changing:
■■■• - for Campaigners, Earthscan
; f. • •. 103 Op. cit.34 v Knnan-Pane. '
•
•
■
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SustainAbility
20-22 Bedford Row
London WC1R 4EB
United Kingdom
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For more information on SustainAbility's
21stCentury filGO.Research Program .
please contact Seb Beige at SustainAbility.
If your organization is already involved in
addressing some of the Questions we have:
raised in this report, we would be very
interested to learn more.
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UN Global Compact
Room 1894
United Nations
NewYorkCity.NY.10017
United States
F +1 212 9631 1207
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United Nations Environment Programme
Technology, Industry and Economics Division
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France
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