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Business Tactics, Social Results

By Lucy Conger


The chasm that separates the performances of the modern and pre-industrial economies is a continuing concern of social, religious and civic groups, and an issue of growing attention for businesses in the vanguard of a new vision of corporate responsibility. The challenge of bridging these gaps in performance and distributing more evenly the benefits of global capitalism is drawing together wealthy multinational corporations and socially minded non-profit organizations in a venture commonly called social entrepreneurship. Corporations and social advocates are joining forces and forming partnerships aimed at making a reality the promise of a global economy teamed with a global conscience.

Social entrepreneurship responds to a new global reality: the ascendency of the private sector. The reasons for corporations to carve out a role in philanthropy and international development are several. Reduced government funding for social services and “reliable and self-generated sources of income” from business create momentum for corporate participation in generating jobs and improving the standard of living in communities where corporations are based, says Charles Raymond, president and CEO of Citigroup Foundation.

Added advantages are the unique ability of businesses to identify and maximize the value of marketable assets in communities and the greater flexibility and independence of action that come from working with private sector funds, he says. The expanding presence of private corporations in areas that were once the preserves of government puts business in close contact with the development needs of local communities.

The other half of the equation in social entrepreneurship is the diverse array of non-governmental organizations that are increasingly present in social and economic development projects—education, health care, microfinance, employment generation, disaster relief, labor standards and safety and environmental protection—around the world. As the role of social advocacy has expanded in developing countries, many NGOs have evolved and adopted more businesslike practices that allow them to diversify activities, generate income, and become more professional and streamlined. There is a growing recognition that NGOs have the right scale and skills to reach the very poor in remote communities and can, therefore, provide the invaluable link between human needs and cumbersome state bureaucracies and detached corporations.

The evolution of thinking within socially sensitive corporations and among the efficiency-minded non-profit groups creates a common ground on which to forge partnerships that confront the challenges of the global economy. A new approach to philanthropy is spreading through corporations, writes Jane Nelson in a World Bank study. Building value for shareholders will remain the top priority, but this new philosophy has corporations also recognizing the importance of building value for society, she says. With this approach, the new philanthropy advocates a shift to building partnerships through corporate giving and adopting a permanent presence by committing company resources—people and products—and making more long-term funding allocations, says Nelson.

Two prominent institutions that are taking a lead in promoting partnerships are the Citigroup Foundation and the Prince of Wales Business Leaders Forum. Their programs illustrate the philosophy and variety of activities embodied in the concept of social entrepreneurship.

Citigroup Foundation

The global banking powerhouse Citigroup has adopted philanthropy as a goal of its operations. The financial services company, with 240,000 employees far-flung across 102 countries, has unified its charitable contributions worldwide under the Citigroup Foundation. The mandate of the foundation is to establish Citigroup as a leader in global philanthropy, says Raymond, by creating economic and educational opportunities worldwide and linking global resources with local community needs. In 2001, Citigroup Inc. has set aside US$63 million for foundation projects.In the Citigroup Foundation vision, corporate philanthropy is a win-win equation that offers sweeping benefits for those receiving grants and for the corporation: improving the human condition, increasing opportunities for participation in a growing world economy, establishing more efficient and effective organizations and developing skills to use the existing asset base, Raymond says.

The foundation supports a variety of activities, including microfinance, aimed at expanding the skills and opportunities of individuals so they can achieve a higher level of independence and economic self-sufficiency. Funding development organizations involves technical assistance to teach best practices, marketing and specific skills; and capital grants that promote economic independence for social and civic groups. For individuals, the foundation supports training, mentoring and internships and programs that offer financial and technical education.


In the last five years, the Citigroup Foundation has increased its support to microlenders, says Raymond. The approach to microlending is a clear example of partnership. Citigroup employees volunteer directly with microfinance institutions, either by providing technical assistance or by participating as members of boards. Citigroup staff form support teams that advise MFIs on taxes and regulations, conventional and cause-related marketing, technology and financial systems. The foundation’s financial participation in microfinance institutions takes the form of grants.

The Prince of Wales Business Leaders Forum

Charles, Prince of Wales, founded the Business Leaders Forum in 1990 to promote corporate social responsibility through a wide range of efforts. The forum emphasizes partnerships between business and NGOs and tripartite partnerships among corporations, civic groups and multilateral aid agencies. The forum advocates a broader role for business in society; brokers partnerships for action programs; sponsors exchanges and training programs to prepare government, business and civil society for working in partnerships; and researches and promotes the benefits of social responsibility to businesses.

The Business and Enterprise Development program partners foreign executives with local businessmen to promote the growth of small and medium-size businesses and to improve working conditions in communities where multinational corporations are based. Diverse partnerships have evolved, including management training taught by international executives to local businessmen in Hungary and advising local suppliers in India and Bangladesh on how to improve labor standards. These partnerships have the goal of applying international expertise to raise business skills and standards in emerging markets.

The Insight program teaches managers how to work in partnerships. Through exchanges between business executives and civil society managers, the forum seeks to promote mutual understanding of each other’s corporate cultures and priorities. Insight ex-change meetings have focused on themes such as agriculture, coastline protection, crime, education, ethical trade and financial management.

Models for Partnership

Microenterprise lends itself well to partnerships because small businesses have the potential to boost economic development in communities but often lack the capital and management skills that international firms can supply. The III Inter-American Forum on Microenterprise held in Barcelona in October 2000 was targeted at promoting partnerships between Spanish cooperation agencies and Latin American business development and microfinance institutions.

Partnership with microfinance can take many forms, according to María Otero, president of ACCION International, a microfinance network, and a keynote speaker at the Microenterprise Forum. Training to improve the management and executive skills of microbank managers and technical assistance to prepare staff in credit analysis methodologies are two areas where international partners can develop the capabilities and soundness of microfinance institutions, she says. Aid agencies or corporate partners of microfinance institutions can help develop new financial products and low-cost methods of reaching clients that enhance the possibility of serving poorer clients and those living in rural areas.

As partnership becomes more widespread, an ever greater variety of actions will be found for productive cooperation between business and civil society. And over time, more and better reporting will become available on what corporations have learned and how they have benefited from their incursion into the social hardships of the communities where they work.

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