Rodney W. Nichols, past President and CEO Emeritus of the NY Academy of Sciences, is Senior Advisor to the Alliance. Rod.firstname.lastname@example.org
Two irrefutable facts characterize the third world these days. One is welcome: poverty is dropping. The other is worrisome: donor fatigue is rising. This combination is critical for the future of work by non-profit organizations in developing countries. The Alliance For Global Good’s Innovation Fund – a modest initiative in funding with less modest ambition for results – aims to influence the intersection of these global trends.
According to the World Bank, poverty declined around the world from 1981 to 2010. The number of people living on less than $1.25 per day dropped from two billion to one billion. The percentage of people in the developing world who live in poverty fell from above 50% to about 20%. This astonishing result flowed from economic growth – an historic economic development — catalyzed by technology, education, and global markets.
At the same time, most governments in industrialized countries – the principal donors of aid — are fatigued about what seem to be endless calls for assistance . They are wary of adding more to the past streams of help to developing nations. Part of the weariness arises from budget squeezes at home, prompting taxpayers to challenge international expenditures. Another source of the fatigue is evidence that assistance has not always been used most productively, or, worse, it has been siphoned off to elites rather than reaching the intended beneficiaries.
Crisscrossing these facts on the ground is a powerful perception: the economic improvements — in, say, Africa — bring sharper awareness of the remaining deprivations in food, education, and health. As deToqueville remarked in his Social Report: “The evil which was suffered patiently as inevitable, seems unendurable as soon as the idea of escaping from it crosses men’s minds.” Hence, access to clean water, and to electricity, for example, become higher priorities.
Consider the twin consequences of all this for the non-profit groups working in the third world. On one hand, the “evils” of famine and disease are being reduced. So social missions may seem less pressing. On the other hand, large populations remain trapped in poverty, restlessly desperate at the bottom. Even the better off people, making a little more than $1.25 a day, hardly know the quality of life they wish for. Thus, for more than a billion persons, humanitarian social missions confront genuine urgency.
What to do? With shifting socio-economic conditions, non-profit groups must adapt. While they should stick to their core competence, they also must launch new efforts that suit the shifting circumstances. In doing so, groups face the “innovator’s paradox:” whenever they start new programs, they often find that the skills central for the old activities do not flex easily to meet the new program’s demands. Why?
A general explanation is that the group’s traditional allocation of effort across the staff, or the group’s underlying skills, or its culture — all honed over many years of past success — may not fulfill the essential requirements of imagining and anticipating the emerging social expectations. But this does not lead inexorably to “failure.” A period of transition may be needed for the new activity to be not only anchored firmly in the organization but also resonate with the rapidly moving front of society’s aspirations.
What will be important in the transition is what Dr. Susan Raymond shrewdly underscores, in her new book, Recession, Recovery, and Renewal: the imperative to “maintain an outward line of sight.” Who are the intended beneficiaries? It is the same as in a business: who are the customers? What do they want? As surrounding economic growth gains traction, how are a people’s needs changing? When the innovative program satisfies these tests, the new program will succeed. When it does not, the program will have to be reshaped. Along the way, not so incidentally, the “old” projects also will benefit from insisting on an outward line of sight.
The basic rationale for the AFGG’s Innovation Fund makes two strong assumptions. First, only through change can non-profit groups succeed as social and economic conditions evolve. Second, this process will be enhanced by opening new lines of earned revenue — yes truly earned, not granted by donors or governments. A market-like mechanism inevitably will sort out which non-profit groups best meet social goals; most informed can tell the difference! So far, the Innovation Find’s first round of grantees – awards were made one year ago—validate the initial assumptions.
Innovations can and do thrive in the work of non-profits in the developing world. The process matures best when groups earn their own way, insisting upon an “outward line of sight,” as Dr. Raymond emphasized. To foster this transformation, the AFGG’s pioneering Innovation Fund makes a difference: it lowers the barriers to productive change by providing the extra margin of capital essential for inventive experiments, and by doing so, it then buttresses revenue as a buffer against downturns in support from philanthropy and government. This ensures that the critical of reducing poverty will be met even if fatigued donors fade.
The pitch panel met in NYC to advise on the merits of the six finalists in the 2013 competition for Innovation Grants. Part 4 of this series will report on the results.