Bloomberg Business/Buckley & Campbell: If Unilever Can’t Make Feel-Good Capitalism Work, Who Can?

Bloomberg Businessweek

If Unilever Can’t Make Feel-Good Capitalism Work, Who Can?

The $170 billion corporate empire has been trying to prove corporations can do well by doing good. Can the idealism survive in an age of cost-cutting?

Photographer: Jamie Chung for Bloomberg Businessweek; Typography: Justin Metz

By Thomas Buckley and Matthew Campbell
Thu Aug 31 04:01:07 2017

At an open-air school assembly hall in the dusty southern Vietnamese village of Phuoc Thanh, the consumer-products colossus Unilever is implementing a high-powered strategy to sell more soap: the handwashing dance.

It goes like this. Rub your left palm with your right hand, then clap, now right, clap, up, down, thumbs, knuckles, clap. Then repeat, scrubbing vigorously. The 200 or so children present on a muggy May morning, ages 8 to 10, know the routine by heart. Dressed in tidy uniforms of white short-sleeved shirts, red scarves, and matching tartan shorts, they leap from their plastic stools to mimic the six teenage instructors up front with impressive precision, shimmying up and down. The choreography, part of a campaign developed with Unilever’s behavioral scientists, manages to be at once cute and corporate. On the way out, the students are encouraged to pick up free Lifebuoy soap and P/S toothpaste at the school clinic. Naturally, it’s all made by Unilever.
Featured in Bloomberg Businessweek, Sept. 4, 2017. Subscribe now.
Illustration: 731

Few corporations can claim to have done more to shape consumers’ habits. The Anglo-Dutch conglomerate’s 19th century founders popularized the bar of soap. Unilever pioneered the fish finger, frozen peas, and the commercialization of margarine. The first-ever advertisement on British TV was for Unilever toothpaste. Today the company makes Hellmann’s mayonnaise, Ben & Jerry’s ice cream, Axe deodorant, and Dove soap, among hundreds of other products it says are used by 2.5 billion people every day. Virtually everyone reading this sentence has a half-dozen or more Unilever items at home right now.

It’s a $170 billion empire that would seem to encourage conservatism. What is formally known as the fast-moving (as opposed to durable) consumer goods industry is, actually, resistant to change. There are tight margins achieved by epic economies of scale, and for companies the size of Unilever, wins tend to be incremental: a catchy bit of marketing here, a better spot on the shelf there. And yet the handwashing dance is a small part of a vast experiment with few parallels in the recent history of business.

Under Chief Executive Officer Paul Polman, Unilever is seeking to espouse a trendy sentiment—that it’s possible to make more money by acting virtuously—on a global stage. That means selling environmentally friendly detergent, installing thousands of water pumps in African villages, even removing gender stereotypes from advertising. The initiatives are tied together by two arguments. First, that ethically discerning shoppers in the developed world—or, less charitably, Gwyneth Paltrow among the urban bourgeoisie—are willing to pay a premium for products that do less harm to the planet. And second, that encouraging health and happiness in emerging markets will turn millions of the global poor into consumers for the first time. In theory, they’ll be loyal to the brands that sought them out.

Such syrupy pledges of net-positive behavior are readily found in business these days, including “B corps” such as Warby Parker and the Honest Co. and so-called socially responsible investment funds. Startups repeating a “make the world a better place” mantra are a running joke on Silicon Valley, the HBO satire. But although plenty of organizations have built identities, or at least marketing plans, around the idea of doing well by doing good, Unilever is the first to attempt it at the greatest of industrial scales. It’s as if Etsy’s management team were to take over at Wal-Mart and mount a sincere rebuttal to the bottom-line-above-all demands of shareholder capitalism. “Too many companies are running their business into the ground, I would argue, by being myopically short-term focused on the shareholder,” says Polman, a burly 61-year-old Dutchman, in an interview at Unilever’s London headquarters, a spectacular neoclassical block on the banks of the Thames. “We’re going back to what it should be.”

“It’s not just emotion. The numbers play it out”

Shareholder capitalism, alas, has other plans. Earlier this year, Unilever received an unsolicited, $143 billion takeover bid from the Kraft Heinz Co., the maker of the eponymous cheese slices and ketchup. Kraft Heinz is run by 3G Capital, a voracious private equity company whose billionaire Brazilian owners have torn through markets with a simple, investor-delighting strategy for the businesses they acquire—fire, sell, or eliminate anyone or anything that isn’t nailed down. The implicit message to Unilever was clear: Handwashing dances are nice and all, but your CEO is spending too much time keynoting climate change conferences when he should be finding ways to move more mayo.

Unilever shares soared. Its managers were aghast, privately describing Kraft Heinz as something like a financial-engineering sweatshop with a side-hustle in cheese processing. Although Polman fended off the approach, Kraft Heinz is free to try again—a six-month cooling-off period mandated by U.K. takeover law expired on Aug. 19. The odds are strong that Kraft Heinz will return, because 3G’s business model depends on a steady flow of new acquisitions. Even if 3G chooses another target, its philosophy is fast becoming the norm, and there are plenty of hungry activist investors that could besiege Unilever with similar demands.

Proving a feel-good approach can deliver profits as well as plaudits is now an existential struggle for Unilever. Polman says he can do it. But he’s fighting some fundamental laws of the financial system. And if Unilever can’t make conscientious capitalism work, there’s little reason to believe anyone else can in numbers big enough to matter.
Polman in London.
Photographer: Laura Pannack for Bloomberg Businessweek

As Unilever’s executives travel the path to ethical-earnings nirvana, they sometimes exhibit an emotional intensity that seems out of whack with the ordinariness of the underlying shampoos, deodorants, and unguents. One example is Vaseline, a thoroughbred in Unilever’s stable. When Alan Jope, the president of Unilever’s personal-care business, gives presentations on the product, he always dreads one PowerPoint slide. It contains a video about a woman named Ntokozo, a South African community nurse who treats children with HIV. The virus can dramatically worsen eczema and other skin conditions; Vaseline comes in handy. “It’s almost bloody impossible not to well up when you see it, and I’ve seen it a dozen times,” Jope, a Scotsman, says of the video. In Vietnam boardrooms, executives tearfully recount their mandatory weeklong stays with poor rural families that might share one toothbrush among five people. And back at headquarters, Polman says he struggles to maintain his composure at the thought of migrants braving the Mediterranean to seek a better life in Europe.

The soulfulness is of a piece with the corporate ethos Polman has sought to instill since coming to Unilever in 2009 from archrival Nestlé, where he was passed over for the top job and had given every indication of being a middle-of-the-road executive. His Unilever tenure had an inauspicious start. To mark the handover, Polman and his predecessor met for dinner at Mumbai’s Taj Mahal Palace hotel on Nov. 26, 2008—the night a group of Pakistani terrorists stormed the building. The executives hid behind a door as gunmen rampaged through the dining area, ultimately killing more than 30 people. Polman, who escaped with his party through a window, has long declined to talk about the attack, though he said shortly afterward that it prompted him to see “a lot of qualities in people that I didn’t see before.” Only Polman knows whether the event transformed him, but for outsiders it’s difficult to separate his brush with death from his subsequent quest to wring more from life than marginal increases in deodorant sales.

As Polman settled in at Unilever, he began hacking away at corporate orthodoxies one by one, starting with a 2010 Financial Times interview in which he stated flatly: “I do not work for the shareholder, to be honest. I work for the customer.” He also scrapped the practice of reporting quarterly earnings guidance. At most companies, such a move indicates imminent financial trouble, but Polman seems to have done it out of a genuine desire to pursue long-term strategies. He announced a plan to halve Unilever’s environmental footprint by 2020 while doubling sales—shifting to sustainable ingredients for the former and courting emerging markets for the latter. The goal, according to a statement, was nothing less than to “decouple business growth from environmental impact.”

“You have to use that size and scale as a force for good”

Thus began an uncynical effort to fight the perception that “corporate social responsibility,” as it’s known, is a gimmick to minimally compensate for the damages caused by companies’ operations. Polman banned the term, preferring to let the results speak for themselves. Energy use per metric ton of production fell by almost a quarter from 2008 and 2016, contributing to savings of more than €400 million ($472 million); water use is down by even more, again cutting expenses. Sanitation is another concern. Unilever staffers have fanned out across India and Africa to install toilets, access to which significantly reduces the incidence of infectious disease—and significantly increases sales of Domestos-brand toilet cleaner. The Vietnamese handwashing events are part of a broader initiative called Perfect Villages, in which 1,000 towns in the country of 90 million are inundated with Unilever assistance.

Polman has joined the likes of Bono and Richard Branson as a darling of the enviro-philanthropic elite. At development conferences, you can hardly squirt a recycled-plastic tube of Dove body wash without hitting him, hurrying from speech to panel to roundtable with the likes of actor Emma Watson. One morning at the 2017 World Economic Forum in Davos, delegates crammed into a tiny hotel lobby for a standing-room-only, Polman-led session on “double standards, unspoken rules, and unconscious biases that create gender inequality.” He’d already given a separate talk on the United Nations’ sustainable development goals, and later in the week he appeared alongside the prime minister of Norway and an indigenous-rights activist from Chad to stress the importance of combating deforestation.

Some hard-nosed analysts say that Polman’s extracurriculars can be a distraction. Robert Jan Vos, who tracks the industry for the ABN Amro bank in Amsterdam, notes that Unilever has “postponed” some decisions to accommodate Polman’s agenda, including long-delayed plans to divest some struggling food brands. Still, Polman largely gets away with his ubiquity on the conference circuit because his strategy seems to be working. Since his first year at Unilever, annual sales have climbed from about €40 billion to a little less than €53 billion, and the company’s earnings margin is healthy, if unspectacular, at about 18 percent. Brands that Unilever defines as sustainable accounted for 60 percent of sales growth last year, expanding 50 percent faster than its other product lines. Excluding dividends, its shares have more than doubled in the past five years.

Those results have encouraged Unilever to aggressively acquire what it calls purpose-driven brands—a term that roughly works out to “stuff Whole Foods devotees pile in their carts.” Last year, Unilever bought Seventh Generation Inc., a Vermont-based manufacturer of eco-friendly detergent, and more recently took over condiment-maker Sir Kensington’s, a challenger in the vegan mayo wars. It also looked into buying the Honest Co., the mission-focused seller of diapers and home-cleaning products co-founded by actor Jessica Alba.

For decades, prices in the consumer-goods industry have been constrained by fickle shoppers, who would rapidly change brands to save a few pennies. But the people Unilever is targeting pay a premium for virtue. A 100-ounce bottle of Seventh Generation detergent is $12.99 at Target, one buck more than the same amount of Tide. “It’s not just emotion. The numbers play it out,” says Natasha Lamb, a managing partner at the ethical-investment company Arjuna Capital, of Polman’s methodology. The green-tinged end of the market is “where the growth is,” she adds, “and the demand, and the extra margin that you can charge.”

Still, sometimes Unilever can seem to be defining “purpose” down. Of the household names vying to join its roster of 18 “sustainable living brands,” a few have ethical credentials that are less than obvious, such as Tresemmé shampoo. Jope says, without apparent irony, that “the extra confidence a woman can get from that great-hair moment” will help empower China’s female workforce. Suave shower gel is favored because its quick-rinse formulation theoretically encourages bathers to use less water. But from a financial perspective, Unilever’s eagerness to imbue mundane purchasing decisions with a grander meaning isn’t ridiculous if modern shoppers are buying it. And they are.

One of the corporate doctrines Polman rejects is media training. In an age when most big-company bosses stick rigidly to their assigned talking points, his comments flow in all directions, like a Magnum-brand ice cream bar melting in the sun. In a May interview, his answer to an initial question about the scope of Unilever’s ambitions runs to an uninterrupted 924 words, traversing Milton Friedman, the savings rates of American workers, the discontent of the postindustrial middle classes, and the work of the Canadian astrophysicist Hubert Reeves. “Adam Smith wrote his book The Theory of Moral Sentiments 17 years before he wrote his book The Wealth of Nations,” he says. “You cannot get wealth if you don’t have morality.”

Polman is built like a rugby player, 6-foot-3 and bald except for a thinning gray crown. He wears a long camel blazer, a lightly striped shirt, and blue cuff links depicting Unilever’s logo: a stylized U made up of 26 symbols including a double helix, an ice cream cone, a dove, a snowflake, a sweater, recycling arrows, and a heart. In Polman’s telling, Unilever isn’t just finding new ways to sell chocolates and kitchen solvents. It’s also articulating an updated model of capitalism applicable to the global economy. “You can put yourself to the purpose of others, and in doing so, you can be better off,” he says. “There’s always the guy we remember from parties who never pays. But that doesn’t last, because then everyone turns around and says, ‘Screw you.’ It’s symbiosis. As a group of friends, we want to make each other better, and then you become stronger as friends. It’s the same with business. I see business as an ecosystem.”

The strategy is designed to appeal more to farsighted institutional investors than to the mercurial hedge funds that dart in and out of stocks after days or even seconds. The sovereign-wealth or pension funds of China, Norway, Japan, and California are all significant Unilever shareholders, and Polman calls short-term players “not our kind of investors.”

He delights in making the case that sustainability pays, sometimes even in the shorter run. Last year, Unilever announced it had succeeded in bringing the volume of garbage sent to landfill at more than 600 factories and offices to zero, thanks to aggressive composting, recycling, and reuse of industrial byproducts. Critics “said it couldn’t be done,” Polman says. Now, “people are happier working there, customer service is up, product quality is up, we’ve saved a s---load of money”—more than €200 million, according to the company—“because we don’t have to deal with waste,” he continues. “And the world is better off.”

One of the unlikelier expressions of Polman’s conviction that the right thing can also be the profitable thing is the transformation of the Axe line of deodorants, body wash, and other pungent products pitched to boys whose hormones have developed faster than their sense of smell. Around the turn of the century, Axe’s value proposition to this demographic was not exactly woke. One ad featured a stampede of bikini-clad women clambering through forests and over sand dunes, all because a young man on a beach sprayed his underarms with Axe. Another centered on a lanky male beachgoer whose choice of body wash left nearby women spellbound and clothing-optional. A slogan promised sex: “The Cleaner You Are, the Dirtier You Get.”

The secret of many consumer-product categories is that under the label, the ingredients are all basically the same, and so a resonant piece of marketing can make an outsize difference. By 2008, Axe became one of 13 Unilever brands with annual sales above €1 billion. If Polman had concerns about sexism, objectification, or misogyny, he kept them to himself. But by 2014, sales had stagnated, and women’s groups were stepping up criticism of Axe’s cringe-inducing ads. The marketing struck a particularly unwelcome contrast with Dove’s widely lauded “Real Beauty” campaign, which celebrates women of diverse shapes and sizes.

“How long can you do that before a Ponzi scheme stops?”

Unilever commissioned a study of 3,500 men in 10 countries to explore changing conceptions of manliness. The results fascinated Jope, whose personal-care division includes Axe. “The surprise was the level of stress and pressure that guys feel under to conform to an outdated version of masculinity,” he says. “Guys are asking questions—you know, ‘Is it OK to be a virgin? Is it OK to experiment with how I portray my gender? Is it OK to use skin-care products?’  ”

Unilever set out to revamp Axe with the help of 72andSunny, a Los Angeles- and Amsterdam-based marketing company. The brand’s new personality was introduced at the beginning of 2016, with a 60-second ad that’s been viewed on YouTube more than 10.5 million times. Women, clothed or otherwise, are peripheral characters. Instead, it depicts men in a range of unexpected identities. One twirls at a party in hot pants and high heels. Another spins on his wheelchair with a dance partner in his lap. Two flirty men lock eyes in a record store. The new slogan: “Find Your Magic”—that is, with a little help from a certain range of grooming products.

In commercial terms, Unilever says the Axe switcheroo is a success. The unit is again experiencing “a steady acceleration” in sales and is now “growing back at the level we would want our billion-euro brands to be growing at,” Jope says, declining to disclose precise figures. It’s also allowed “a corporate sigh of relief” by moving Axe into line with Unilever’s self-image, he adds.

Unilever announced in 2016 it would seek to eliminate “gender stereotypes” from marketing across all of its operations, depicting women more as professionals and less as housewives grateful for a new-and-improved detergent, for example. The impact on the global advertising industry could be significant, because Unilever spends more than €8 billion annually. As Polman puts it, “You have to use that size and scale as a force for good.”

One juggernaut that isn’t famed for using size and scale as a force for good, in the Paltrovian sense, is Kraft Heinz, which 3G Capital owns with Warren Buffett’s Berkshire Hathaway Inc. You won’t find the Chicago- and Pittsburgh-based food maker working with the World Bank to lessen the carbon impact of bovine flatulence in the Kraft Macaroni & Cheese supply chain, as one imagines Polman might if he had the chance, nor leveraging its Capri Sun juice line to address infrastructure gaps in water-stressed regions of Africa. At companies controlled by 3G—including Anheuser-Busch InBev, Tim Hortons, Popeyes Louisiana Kitchen, and Burger King—the overwhelming goal is to relentlessly juice profits. Usually that comes through reducing costs. One 3G partner has likened expenses to fingernails, saying, “They have to be cut constantly.” Another, upon eating his first-ever Burger King Whopper, quickly deemed it too whopping a portion for the price.

In early February, 3G CEO and Kraft Heinz Chairman Alex Behring met Polman for lunch at Unilever’s London offices. He’d come with a surprising proposal: a debt-fueled cash-and-shares takeover of massive proportions. Unilever is Europe’s seventh-largest company by market value, and the $143 billion deal would be the biggest in the history of the consumer industry.

Polman was staggered, according to people familiar with the deliberations at Unilever at the time, and set out to do everything he could to stop 3G. It would mean overriding many of his own investors. When news of Kraft Heinz’s offer leaked on Feb. 17, a Friday, the company’s shares climbed the most on record—more than 13 percent. What followed was remarkable even by the standards of contested acquisitions, in which the target has every incentive to play hard to get. Unilever’s public reaction was an unambiguous slapdown, a statement that said there was “no merit, either financial or strategic,” in a deal, nor any basis to even entertain negotiations. A private letter from Polman to 3G co-founder Jorge Paulo Lemann, Behring, and Buffett made similar points, and Unilever executives and advisers began working the phones to press an off-record case to journalists that a deal would destroy the company’s long-term-focused business model.

The contest continued the next day. To help find allies in Britain, Kraft Heinz had hired Finsbury, an elite London public-relations agency with deep political ties. But Finsbury is majority-owned by the advertising conglomerate WPP Plc, which handles much of Unilever’s marketing. Polman took this as a personal affront and fired off an email to Martin Sorrell, WPP’s CEO. Finsbury dropped its new client within hours. (WPP declined to comment on Finsbury’s role.) Meanwhile, politicians in Westminster were beginning to grumble that a takeover could strip the U.K. of an important part of its industrial base—not an idle concern under the leadership of Prime Minister Theresa May, who has pledged to intervene more forcefully in business than her hands-off predecessors.

By the end of the weekend, 3G knew it would be in for a bruising public battle. Lemann and Behring decided it would be best to withdraw, at least temporarily. Unilever remains a tempting target, with plenty of costs to annihilate and deep reach into emerging markets. And 3G has a history of grinding down opposition, as its directors’ Anheuser-Busch brewing group did when it reached a $104 billion deal to buy rival SABMiller Plc in 2016. To get there, it raised its bid four times, eventually piling so much pressure on SABMiller’s reluctant board that its members could no longer refuse to let investors reap the windfall. At Unilever, it’s shareholders’ votes—and not those of broader “stakeholders” such as customers, employees, or Vietnamese villagers—that determine whether the company survives.

 “I see business as an ecosystem”

Polman doesn’t take much prodding to unload on Kraft Heinz and its owners. He shares in the widely held perception that 3G companies’ main route to growth is through ever-larger acquisitions. “How long can you do that before a Ponzi scheme stops?” he says. “That’s what the world is waiting for.” Polman argues that cutting costs is comparatively simple, that anyone can “take out one-third of the people. That’s not really skilled management.” He notes that Unilever’s sales are growing steadily, while at Kraft Heinz they’re flat or down.

Kraft Heinz is trying to soften its image. In March it pledged $200 million toward an expanded corporate social responsibility program, focusing on malnutrition, supply chain impacts, and emissions reductions. The announcement came shortly after some Kraft Heinz investors made a series of sustainability-related proposals for its annual meeting that the company asked shareholders to reject, arguing they were redundant. In an August statement, Kraft Heinz said that “CSR has been and will continue to be a consistent component” of its operations. Efficiency improvements are made, it said, “so that we can invest in the growth of our brands and businesses—in ways that benefit our people, our customers, and our long-term profitable growth strategy.” Kraft Heinz declined to comment on any future bid for Unilever.

Even if 3G doesn’t come back for Unilever, its example is still drastically changing how the consumer goods industry is expected to behave. No one is exempt—activist investors have ongoing campaigns at Nestlé and Procter & Gamble—and Polman has had to make concessions. In April, Unilever announced a top-to-bottom overhaul of its operations, raising its cost-savings targets and promising shareholder-friendly measures such as stock buybacks. It’s even embracing “zero-based budgeting”—an accounting concept popularized by 3G in which managers start with a clean sheet of paper and have to justify every penny of cost, as often as each quarter.

If 3G or another pitiless force succeeds in changing Unilever to the core, it’s likely Polman would depart as CEO. Already, some of his statements have a valedictory quality. He’s significantly outlasted the average tenure of bosses at companies of a similar size. Given his public priorities, it’s unlikely he’d seek another corporate position if he left Unilever; plenty of global organizations are looking for leaders with private-sector credentials.

It’s impossible to say yet whether Polman’s legacy will be as a pioneer or an outlier. Fundamentally, that’s a question of which way the arc of economic history will ultimately bend. “Do we choose to serve a few billionaires, or do we choose to serve the billions?” he asks. “Over time, I think the billions will win.”


(Corrects credit for the lede image.)

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Stanford Social Innovation Review/Arani Kajenthira & Philippe Sion: Collaboration Collective Impact Without Borders

Collaboration
Collective Impact Without Borders

Successful, multi-national, collective impact efforts require that organizations carefully consider two dimensions of their approach.

By Arani Kajenthira & Philippe Sion Aug. 29, 2017

Since publishing our first article on collective impact—a structured, cross-sector approach to solving complex social problems—in 2011, we have deepened our understanding of what it takes to effectively implement collaborative processes between different sectors. Recently, FSG has been asked to advise on a growing number of efforts that foster funder and grantee collaborations across national borders. Given this increasing interest in using collective impact principles across geographies and cultures, we would like to share what we have learned from launching and advising funder-driven, transnational collaborative efforts. These collaborations are at different stages and aim to address a wide variety of challenges (including social mobility in Israel, fisheries sustainability in Mexico, human trafficking in Brazil, and alternative care in Cambodia).

While collective impact is not always the only or even the most appropriate approach, when conditions are present for a successful, multi-sector collaboration to address a systemic issue in a foreign country, two dimensions require particular consideration.

1. Build relationships and test interest before investing in local capacity.

Over the years, multiple funders have approached us convinced that collective impact principles will deliver transformative impact on a social issue in a foreign context. Typically, these funders are interested in identifying local partners for such an effort, recognizing that they need significant local interest and capacity to successfully move forward.

In Israel, for example, Joel Tauber, chairman of the Tauber Family Foundation, invested in building a relationship with a local funder, the Rashi Foundation, well in advance of launching a collective impact effort called Rise Together Israel. The long-term initiative aims to better integrate investments and services along a cradle-to-career continuum to improve the social mobility of every citizen, particularly young people who have historically struggled to succeed academically and economically. As part of a commitment to engaging all voices from the community, Tauber also spent time in Israel bringing local stakeholders on board by sharing his own experiences with social mobility—in particular, his work mobilizing the Jewish diaspora to support the arrival and integration of Ethiopian Jews in Israel. “I had seen so many other attempts to address this issue fail before,” Tauber recalled, “that I became convinced that a new approach was necessary to achieve the longer-term impact we were seeking.”

Building relationships with stakeholders on the ground is especially important when working in a developing country. Local organizations can be understandably wary of external groups coming in and pitching a new idea as a panacea for the local community. Many of these organizations are also dependent on foreign funds. Consequently, they may feel pressure to indicate tacit acceptance of new ideas to ensure that they receive adequate funding for operations, even if they are not invested in implementation.

Funders should consider these power dynamics, which detract from the more equitable approach that collective impact embraces, and determine how they can play a backseat role as the effort takes off and becomes more sustainable. This involves investing additional time in explaining the new model, and reassuring actors on the ground that they are aiming to make a long-term investment and maximize the value from existing activities and resources, rather than run a short-term pilot. And rather than attempting to measure population-level outcomes of any such investments in the first 24 months, funders should focus on tracking evidence of stronger relationships between partners that lead to shared ownership of strategy.

It is also important to identify local organizations interested in both championing collective impact ideas and providing backbone support (staff that foster cross-sector communication, alignment, and collaboration), and ideally establish partnerships well before launch.

In Mexico, for example, FSG is supporting an initiative funded by the Walton Family Foundation (WFF) to improve the sustainability of local fisheries. FSG first assessed the interest of local WFF grantees, including Comunidad y Biodiversidad A.C. and Smartfish, in taking a structured, collaborative approach. Grantees were enthusiastic about moving forward but also emphasized the importance of having local leadership. Consequently, WFF is investing in building the expertise of a local team to effectively navigate outreach to additional partners and ensure long-term sustainability of any resulting collaborations moving forward.

Finally, funders working internationally should take into account the availability and reliability of data they need to specify a social problem, and measure an initiative’s outputs and outcomes. When there is limited data on the at-risk or target population for a collaborative effort, funders may need to think about how to acquire additional data—for example, by partnering with academic institutions or empowering local organizations to work directly with government to strengthen data collection.

Gathering evidence from workers formerly in slave labor. (Photo by Marcelo Cruz)

In Brazil, Xavier Plassat—a coordinator at Comissão Pastoral da Terra, which fights rural poverty—developed his own comprehensive dataset to record human rights violations. Plassat leveraged his on-the-ground presence to collect claims from enslaved workers, resulting in a dataset far larger than the dataset law enforcement authorities had. With the vision and support from Humanity United and leadership from the Freedom Fund, organizations like Comissão Pastoral da Terra and government agencies are developing a common agenda that can make use of Plassat’s data.

2. Engage early and often with government leaders.

Some countries have a stronger history of reliance on government-run social safety nets than others. In countries like Brazil, Mexico, and Germany, for example, where the government is the primary if not the only provider of social services, there may be an expectation that municipal, regional, or even national government officials will consult with community leaders, nonprofits, philanthropies, and the private sector, develop their own solutions, and manage implementation. These expectations can present challenges for any attempt to implement a more collaborative process. “Please prepare your recommendations and I will decide,” said one city official we met, in front of private foundation, business, and nonprofit leaders asking for his support. This was not surprising to those who had worked with public sector officials before. However, the reason these non-government actors decided to experiment with collective impact principles in the first place was because of its potential to address systemic issues, and its aim to incorporate more inclusive cross-sector dialogue and decision-making.

As mentioned above, finding the right partner in government and engaging with them early is important. Senior government officials may not have time to participate in all the conversations needed to sustain an effective collaboration over time, so it can help to identify their trusted advisors, who have the ability, willingness, and authority to represent the government perspective but also the bandwidth to take on this liaison role.

Village Based Social Workers learn the social work skills they need from Cambodian Children’s Trust's senior social workers. (Photo by Prak Chamnan/Cambodian Children’s Trust)

In our work in Cambodia with Family Care First, for example, a government official who had trusted relationships with the leaders of several government agencies was willing to play a more active role in a collaborative effort to address child protection issues; he was willing to work within and across departments to increase overall support for the effort. In our experience, some government actors may be more accommodating of a collaborative effort if they clearly understand how they can share the credit for any resulting impact or if they receive other incentives to collaborate.

The five elements of collective impact, and the collective impact principles of practice can make an enormous contribution toward systems change in all parts of the world. Both of the points highlighted here, of course, are also worth considering when implementing a collective impact project at home, but they are essential to efforts that cross borders.
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Arani Kajenthira is a former associate director at FSG, where she advised multiple collaborations in different parts of the world. She is now the head of strategic initiatives at the Walton Family Foundation.



Philippe Sion (@SionPhilippe) is a managing director at FSG, and has nearly two decades of experience advising social change leaders in the corporate, nonprofit, foundation, and government sectors. He has led collective impact efforts with a global reach, including cross-sector collaboration to support migrants, refugees, and other disadvantaged populations.

Tags
Asia, Collaboration, Collective Impact, Cross-sector Collaboration, Government Programs, International Development, Middle East, Partnerships, South America
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        One of the fastest-growing corporate citizenship programs is skills-based volunteering—in which a team of corporate employees works for an extended period of time to help a nonprofit solve a complex operational problem. The benefits of the program for both parties are clear, but it’s also tougher to implement than many initially think. https://ssir.org/articles/entry/the_promise_of_skills_based_volunteering
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Stanford Social Innovation Review/Letts & Holly: The Promise of Skills-Based Volunteering

Civic Engagement
The Promise of Skills-Based Volunteering

One of the fastest-growing corporate citizenship programs is skills-based volunteering—in which a team of corporate employees works for an extended period of time to help a nonprofit solve a complex operational problem. The benefits of the program for both parties are clear, but it’s also tougher to implement than many initially think.  

By Christine Letts & Danielle Holly Fall 2017

(Illustration by Luke Best)

Over the past decade, businesses of all kinds have become much more socially aware and active. In 2015, more than 75 percent of large US corporations were engaged in corporate citizenship activities of one type or another.1 Those included traditional philanthropic activities such as corporate giving and volunteer programs, as well as new efforts such as impact investing and skills-based volunteerism.

Among the array of corporate citizenship programs, skills-based volunteerism is the most rapidly growing, with more than 50 percent of companies now channeling the talents of their employees to nonprofit organizations.2 The rise in popularity of these programs is largely because a strong business case can be made for skills-based volunteering programs, which have been shown to increase employee engagement and retention, while also measurably enhancing the skills and talents that employees bring back to their desks.3 The programs have the added benefit of being particularly popular with millennial employees, whom companies eagerly seek to recruit and retain.

Businesses aren’t the only entities interested in skills-based volunteering (SBV). It is also popular with nonprofit organizations seeking a way to bring in the very skills that companies can offer—such as marketing, operations, strategic planning, finance, and technology. The need for these skills is great. The average nonprofit organization spends just 2 percent of its organizational budget on overhead, compared with the average business that spends 20 percent on overhead.4

There are a variety of SBV models at work. Two of the higher-value, but more complex, models are the “skilled day of service” and the longer-term “project consulting.” The skilled day of service model (also called a “hackathon” or “flash consulting”) is a skills-based take on the traditional hands-on volunteer days, where teams of employees come together for one to three days to help a nonprofit organization address a challenge.

The skilled day of service model is best for companies that want to engage a large number of employees (hundreds instead of dozens) and a large number of nonprofits (dozens instead of a handful). While the short time commitment can be appealing to companies and employees who are just starting to explore skills-based volunteering, it’s a model that needs to be approached carefully—particularly by nonprofits that need to put significant thought into what can realistically be achieved from a day or so of corporate consulting.

This model has proved successful for nonprofits and companies that invest the time needed in advance of the day to prepare a realistic scope of work, form the right team of volunteers, and design an event that allows for various forms of gathering information and generating solutions. One of the largest annual skilled days of service is Charles Schwab’s Pro Bono Challenge, which connects hundreds of employees to more than 75 nonprofit organizations across nine regions to address, in the span of five hours, strategic questions related to expansion, branding, and operations.

The project consulting model, on the other hand, connects individuals or teams to scoped nonprofit projects for much longer periods of time, anywhere from six weeks to six months. The projects are usually more complex, ranging from strategic planning and website design to phone bank training and program tracking software.

The project consulting model is integrated into a company’s talent and leadership development initiatives, where employees are hand-tapped to participate as a way to enhance a specific set of executive, leadership, or functional skills. In this model, teams of 5 to 10 employees typically spend a handful of hours a week, baked into their workday, addressing a scoped nonprofit challenge. In Common Impact’s 17 years working with this model, we’ve found that there are very few private sector skills that don’t effectively translate into a nonprofit context.5

This article focuses on the project consulting model. When done well, we believe it offers nonprofit organizations the highest and most lasting value of all the skills-based volunteering programs. So when we write about the “skills-based volunteering” (SBV) approach, we are referring to the project consulting model.

Given the fact that so many nonprofit organizations need technical skills and management talent, and so many businesses are willing to offer those services to nonprofits for free, the skills-based volunteering model would seem to be a match made in heaven. And in theory it is. But in practice, it has proved to be difficult to implement—so much so, that a growing number of nonprofits are turning away from skills-based support.

The primary reason for the growing unease with SBV is that absorbing this influx of corporate talent is much more complex than anyone anticipated. What we have started to see as a result of this is frustration, confusion, and wariness from both companies and nonprofits about the skills-based volunteering model.

    Traditional partnerships between companies and nonprofits, such as grantmaking and volunteerism, provide many benefits, but they are largely transactional relationships that have little lasting effect.

To truly unlock this resource as a long-term, sustainable model for public good, both nonprofits and companies need to develop a new muscle in preparing for, managing, and making the most of skills-based volunteering. To better understand the SBV model and how it can be implemented, we embarked on a research project to hear directly from practitioners—the companies and nonprofits that have tried different forms of pro bono and skills-based volunteering—to understand what works and, perhaps even more important, what doesn’t work. This article is the result of our work.6
The Value of Skills-Based Volunteering

Traditional partnerships between companies and nonprofits, such as grantmaking and volunteerism, provide many benefits, but they are largely transactional relationships that have little lasting effect. What makes skills-based volunteering different and important is that when it works, it knits together the expertise and resources from the corporate and nonprofit sectors to create strengthened sustainable solutions that don’t come undone when partners part ways. We call this “the knitting factor.”

Not only does this differentiate SBV from most traditional corporatenonprofit partnerships, but it also differentiates SBV from the more well-known practice of pro bono. The classic example of pro bono is a consulting or law firm taking on a nonprofit client as part of a portfolio that it assigns to employees. The pro bono support is done using the company’s model, approach, and structures, and is typically not customized for its nonprofit clients, as is the case with SBV.

While skills-based volunteering and pro bono are often used interchangeably, there are differences between the two. The most important difference is that with pro bono, the company’s employees generally make little or no effort to work with the nonprofit’s employees in a way that helps them learn new skills and knowledge.

To understand the benefits of SBV, consider the example of Capital Good Fund, a Providence, R.I.-based nonprofit that provides financial services to low-income communities, and its partner Fidelity Investments. The two organizations worked together to design a better interface for the client-facing online lending portal. Muna Idriss, the junior Capital Good Fund staff member who led the team, was deeply exposed to the technical aspects of project management by working closely with the Fidelity team lead. “This project was huge for me professionally,” says Idriss. “I learned so much from the Fidelity team. It changed my career trajectory.” She now manages the systems department at Capital Good Fund.

Often, the expertise provided by the company is not a skill that the nonprofit needs every day on staff. The ability to have “backup experts” increases the effectiveness of the nonprofit by providing it with technical and analytical expertise, such as system design, performance management, financial modeling, and market analysis, that it often doesn’t have and doesn’t need full-time. In addition to this injection of expertise, skills-based volunteering can provide an external perspective and validation for the nonprofit’s model and systems. “They gave our internal team a buddy, a nudge, confidence,” says John Breitfeller, CEO of Educational First Steps.

For the companies that engage in SBV, there is also significant skill development for the employees who participate, particularly if that skill development is integrated as a goal of the engagement early on. Fidelity and John Hancock, for example, have established their SBV programs as experiential talent development from their inception. These programs are targeted, branded, and implemented separately from the company’s other volunteer programs.

Fidelity’s Workplace Investing group selects eight high-potential employees from its director-level pool (employees approximately 15 years into their careers) who are being considered for the next level of leadership. The skills-based project is focused on a strategic challenge at a growing nonprofit—tasking the Workplace Investing team with assessing market position, financial health, and programmatic impact. They are paired with a coach (a senior Fidelity colleague) who mentors the team and help guides the process.

Similarly, John Hancock differentiates its Signature Skills program from its community engagement work, Signature Corps, under which large groups of employees volunteer for traditional episodic projects in the community. Seth Williams, John Hancock’s Signature Skills program manager, describes the talent development for their employees. “In addition to the value created at the nonprofit, many of our employees deepened their skills through the SBV project work, which helped accelerate their development within the company.”

With this focus on talent development, it’s critical to ensure that team members from both organizations have the core skills that are required to complete the project—and that they’re stretching in ways that don’t compromise the quality of the deliverable for the nonprofit. Take, for example, the team from Leadership Fort Worth [Texas] and Fidelity who worked together to develop a membership and outreach technology system. “The team members had never developed this app before,” says Harriet Harral, CEO of Leadership Fort Worth. “They really liked the opportunity and have stayed in touch about how it is being implemented.”



There is also value in the SBV process for the company and the nonprofit beyond the exchange of knowledge. Nonprofits get significant and immediate capacity-building results. Companies amplify the impact of their philanthropic giving and enhance their brand and reputation among customers and employees. Still, it is ultimately this knowledge exchange and the “skin in the game” that exists on both sides that enables a more balanced and integrated corporatenonprofit partnership and results in the knitting factor that makes skills-based volunteering a new, powerful social sector resource. (See “Three Skills-Based Volunteering Projects” above.)
Why Organizations are Wary of SBV

While many nonprofits and businesses participate in these programs, there is a wariness surrounding skills-based volunteering on both sides, largely driven by the lack of clarity around the investment required to produce a high-quality, mutually beneficial result.

Nonprofit wariness | There are several reasons why nonprofit organizations have not taken full advantage of skills-based volunteering programs. One reason is that the nature of the philanthropic environment has conditioned nonprofits to be largely reactive when seeking resources. For example, nonprofits often write grant proposals to accommodate the guidelines and program priorities of the funder, not their own.

When pursuing an SBV program, the opposite approach is required. Rather than reacting to a company’s proposal, a nonprofit organization must start by doing an internal assessment of what its needs are, and then seek out a business partner that can help provide those skills.

Several nonprofit leaders we spoke with talked about the temptation to agree to overtures from companies simply because they were not used to turning down a donation. While some of these leaders admit to continuing this practice, they were adamant that it’s a particularly detrimental approach when it comes to SBV. One nonprofit leader described a situation in which an intermediary brought forth an opportunity from a company that wanted to do three projects based on its own engagement goals. The nonprofit only needed one of those projects, but it felt pressure to accept all three, and in doing so it ended up wasting its own time and the company’s time.

A second reason that nonprofit leaders are hesitant to engage in SBV programs is because they struggle with understanding the time commitment required from staff and fear that the ultimate result may not be worth the investment. “When I first heard that I’d have to spend about five hours a week, I thought, ‘No way I can do that,’” says J.D. Newsom, COO of the Boys & Girls Club of Greater Fort Worth. “But the benefit of the result is so significant that the time I spent was not an issue.” Newsom’s view was echoed by every nonprofit leader we spoke to. They all agreed that the investment of time was worth it.

Finally, many of the nonprofit leaders were hesitant about SBV programs because of previous negative experiences they had had with pro bono and paid consulting. Comments ranged from “Help from a board member is not always a good fit” to “He told me that he had 20 hours he was able to devote to a project, but then he got busy and we never saw him again.”

In most cases, however, those fears about SBV proved to be unfounded. Nonprofit leaders described skills-based volunteering as a different type of engagement than pro bono—one that was much more customized to their specific organizational needs. Similar comments were made about the difference between SBV and paid consultants. In fact, several nonprofit executives described paid consulting engagements as much less transparent, client-centered, and problem-solving oriented than skills-based engagements.

Corporate wariness | One of the reasons that companies are wary of skills-based volunteering is because it is complex to implement, it requires a longer-term commitment, and the results of the engagement can be harder to measure. Traditional community engagement programs such as grantmaking and volunteerism—by contrast—more readily align with a company’s short-term quarterly outputs. And because the goals of these types of projects are narrower, the results can be easier to measure.

Working with a nonprofit organization can often put a company outside its comfort zone. For most corporations, the deep, operational engagement with nonprofits that is required of an SBV engagement means penetrating a black box. Nonprofit organizations are different, complex, and messy, and without significant investment to mitigate risk and reputation, companies are inclined to keep an arm’s-length relationship that characterizes most grantmaking and volunteering programs.

While most corporations understand and generally embrace their role in the community, the department and staff that lead these activities are often considered cost centers and are measured as such. Traditional community involvement programs have clear costs: overall giving budgets, community engagement staffing costs, volunteer time-off policies. The “cost” of SBV, however, is not something that is as easily predicted and measured.

It’s challenging for companies to establish a new investment, such as skills-based volunteering, when an immediate return can’t be quantified. In fact, we found that the corporations that have embraced SBV have been led by a few leaders who were willing to take a leap of faith that the investment would yield identifiable results. And as with nonprofits who became believers after their first successful foray into SBV, companies tend to follow the same path.
Readiness is Critical to Success

The most important factor in determining whether a skills-based volunteering program will succeed is the readiness of the company and the nonprofit organization. Both parties may have great desire and need for this type of program, but if they are not organizationally ready to undertake it, the odds of it succeeding are small.

Readiness starts with the company itself. In our research, we found that one of the critical elements of success for skills-based volunteering programs is whether the program is based on the business needs and imperatives of the company. Given the level of operational involvement that SBV entails, and the need for a tight alignment between the employee talent available and the nonprofit challenge they seek to address, it is critical to define the commitment—both from senior decision makers and from participating employees—before embarking on an SBV program. Our corporate interviewees shared a few elements for companies to consider before launching an SBV initiative:

Understand the fit with business priorities | How does the program align with strategic goals? Are the associated business goals primarily employee engagement or talent development? How will the SBV program fit into employee’s workday and business priorities? Do workers have sufficient control and flexibility over their schedule to meet the demands of the projects and team dynamics? What are the business cycles, logistics, and product or scheduling issues that will need to be aligned?

Targeting the effort | What social or organizational challenge is the company best positioned to address? What employees’ capabilities best align with the support that nonprofits most need?

Calibrating control | What is the right balance between organic program growth and structured engagement and measurement? How much control do you want to exercise? Do you want to specify the project type and level of commitment that employees dedicate, let business units decide, or let projects dictate engagement?

Iteration and adaptability | Be prepared to adapt. Don’t copy a program from another company or another internal initiative that doesn’t fit. Good will is not enough to make it successful. Once the program is defined, the corporation must support, follow up, refine, and adapt. Erin Dieterich, director of global corporate citizenship for Oracle+NetSuite, put it simply, “‘Set it and forget it’ does not work.”

A nonprofit’s readiness to engage in an SBV project is also one of the most significant determinants of project success. One should consider both organizational readiness (the nonprofit’s level of stability in operations and leadership and the effectiveness of its program model) and project readiness (whether this is the right project at the right time).

The nonprofit must have the skill, creativity, and discipline to scope the project well or be willing and able to leverage the support of an intermediary organization to assist it. (Intermediary organizations can play an important role in helping nonprofits and companies to create and manage skills-based volunteering programs. See “Using an Intermediary” below.) The project must be strategically important to command enough attention and warrant the staff time it will take to complete.

Readiness does not mean that the nonprofit already has the capabilities internally to undertake the project. Rather, it means that the nonprofit is ready to put in the energy and attention that the project demands. Consider the example of the Political Asylum/Immigration Representation (PAIR) Project of Boston. The new CEO, Anita P. Sharma, although having served many years on the legal services side of the organization, had little management experience. “We needed a new vision,” says Sharma. “We had to get out of our crisis mode.”

A team from State Street Corporation signed on for a six-month strategic planning process. While Sharma admits to having been afraid of the time commitment, she says that she was more worried about ending up with something that did not fit the organization: “I was worried that the plan conducted by those in the corporate sector would not be a good fit for our small nonprofit.” PAIR ended up with significant and actionable recommendations across marketing, operations, program, IT, and finance, providing a critical foundation for the organization as it started to navigate the changing policy environment under the new Trump administration.

The most common project scoping challenge we heard from our interviews was with projects that are too vague or too large. Another is spending too much of the project effort and time on preliminary data gathering or analysis. “For beginners, start small and tangible. This allows people to see other ways to get things done and the value of SBV,” says Gregg Betheil, president of PENCIL. On the other hand, some projects can be successful when they’re more ambiguous or less defined—if the two organizations have a high-performing and dedicated team working on it. For example, the Fidelity Workplace Investing projects are intentionally widely scoped to enable the team and nonprofit to work together to define priorities.

Project scoping is particularly important with these SBV projects, because many are unique and customized, and don’t follow a predefined process. The nature of the way the work is done in an SBV project allows for tailoring and adaptation that few paid consulting arrangements can accommodate.

It is also important to instill a spirit of inquiry and openness in both the corporate and nonprofit teams. The corporate team shouldn’t assume that it knows best and that all business practices can apply to a nonprofit environment. “Respect us. Recognize that we are experts in our field, operating for a long time with inadequate resources,” says Esther Landau, development director at the Pomeroy Recreation and Rehabilitation Center. Nonprofits, however, also need to be open to listening to guidance from their business partner. “Try not to defend what you are doing,” says Kathleen LaValle, executive director and president of Dallas CASA. “Be very openminded and be prepared to over-share. Be curious and tolerant of speaking a different language. Terms like ‘impact’ might have very different meanings. Be prepared to learn about the company.”
Using an Intermediary

Many businesses and nonprofits, particularly those newer to skills-based volunteering, often engage an intermediary to help launch and run the program. Most intermediaries charge a fee to the corporation, and often to the nonprofit as well, to ensure commitment. “It holds us accountable to fully exploit the opportunity and is a signal to the company that we take this seriously,” says Kathleen LaValle, executive director and president of Dallas CASA.

Examples of intermediaries include Common Impact, Taproot Foundation, Catchafire, and Pyxera Global. An intermediary provides several benefits to both the nonprofit and the business.
Benefits to Nonprofits

Project selection and readiness | With the rise in popularity of skills-based volunteering (SBV), nonprofits often find themselves with many more offers than they can handle. Intermediaries can help nonprofits manage the internal and external conversations required to ensure that they are pursuing the right project at the right time. “At the start, the Common Impact team creates a safe zone to help us identify the underlying issue the project will help solve,” says Emily McCann, CEO of Citizen Schools. “While we often have a hypothesis, we don’t know what we don’t know.”

Project prep, scope, and management | Once the intermediary has helped the nonprofit identify the right projects, the intermediary can help the nonprofit prepare, scope, and manage those projects. Intermediaries bring classic project management expertise, along with the added knowledge of how to make SBV projects successful. “They help keep all team members on scope,” says Pam Cannell, membership and communications manager at Leadership Fort Worth. “They can help keep a big-thinking CEO within bounds.”

Knitting needles | One of the most critical functions an intermediary can play is to act as the needles that knit together the skills and resources of the business and nonprofit, playing a consistent, objective role in moving the project forward. They focus on developing strong relationships among the players and on accomplishing project deliverables—two goals that are sometimes at odds with each other in new corporate-nonprofit partnerships. The intermediaries can also assist in small and large course adjustments, and encourage both sides to be open about progress and issues.
Benefits to Businesses

Program strategy | Businesses generally have a clear understanding of their core talents, but many need help in understanding how their core talents can be best used by a nonprofit organization and applied toward social sector challenges. Intermediaries bring knowledge of the breadth of nonprofit capacity-building needs and can help slice that need from a regional and missionspecific perspective. In addition, an intermediary can help a business decide which of the SBV models to choose from—light-touch training opportunities, hackathon-style days of service, project consulting, and sabbatical and immersion models.

Partnership management | Intermediaries can help companies build, clarify, and manage their partnerships with nonprofits— something that can be especially beneficial for companies that have many different types of relationships and programs. Intermediaries frequently take on the primary relationship with each of the two parties, engaging directly with nonprofits and, separately, directly with companies when negotiating program and project opportunities. This creates a more consistent and balanced partnership, and it also can spare the company from the legal liabilities and risk that can sometimes come with providing guidance to social sector organizations (particularly related to financial, legal, and human resource issues).

Business and social impact reporting | Intermediaries have experience understanding and measuring the impact of SBV programs, and can generate strong impact reports covering both the business return and the breadth and depth of social impact. Detailing outcomes such as the talent development of individual employees, the increase in overall brand effectiveness, and the ability of nonprofits to better deliver on their mission promise can help a company refine and build its SBV program.
People Are Also Essential

Organizational readiness may be the most important factor in creating successful skills-based volunteering programs, but coming in a close second is the need to have the right people in place, particularly at the nonprofit organization. Our research found that one of the most common reasons for slow-moving or ineffective SBV projects is poor nonprofit staffing.

To succeed, SBV projects need to be staffed and supported by people who have experience with project management, volunteer management, and the project focus area. They also need to have quick access to those with decision-making power within the organization. Typically, the person leading the project at the nonprofit organization will need to spend 10 to 20 percent of her time on the project. “You will have homework,” says Pam Cannell, membership and communications manager of Leadership Fort Worth. “We have had corporate teams of 8 to 10 people working five hours a week. The nonprofit has to keep up.”

SBV projects require diligent project management by both the corporate and nonprofit teams. Nonprofits need to be prepared to put in the time required to codesign a feasible project plan, and outline the interdependencies and pivot points within a project. Then they must hold their internal team, as well as the SBV team, accountable to that plan. While this requires classic project management expertise and facility with tools such as GANTT charts, more critical is the soft skill of volunteer management to ensure that a documented project plan can be effectively implemented.

Nonprofit organizations that regularly use volunteers in their program work are more likely to be able to optimize SBV at a quicker pace. Two of the nonprofit organizations we interviewed, Citizen Schools and PENCIL, use volunteers as their primary program staff. They understand the concept of matching skills to the task and know that it takes an investment of time to make volunteers work well in the organization.

Post-project support by the nonprofit organization is just as critical. “A project alone does not change behavior in a nonprofit organization,” says Emily McCann, CEO of Citizen Schools. “You need an executive sponsor to lead on the integration of the project and on the culture change that must accompany it.” Even with the support of an organization’s leaders, skepticism can remain among nonprofit staff who have not experienced SBV. “We still need to win hearts and minds,” says Daphne Barlow Stigliano, CEO of Boys & Girls Club of Greater Fort Worth.

Finding the right person to lead the nonprofit effort is critical. While it can be rare to find one person who has this full combination of skills and capacity, it’s important to try. “Bring the best people with the highest potential,” says Education First Steps’ Breitfeller. “The creators of our Steps 2.0 project ended up as leaders in the organization.”

It is important to involve a company’s upper management in the SBV project to ensure that the programs will be sustained in the face of business imperatives and challenges that would otherwise shuffle SBV initiatives to the bottom of the priority list. Their involvement also helps to ensure that appropriate backup will be available if needed. In addition, both the nonprofit and corporate team members are energized by the presence and help of higherlevel corporate executives.

Each Fidelity team, for example, has an executive sponsor and a business unit sponsor, to help make sure that the SBV projects are fully supported by the company. “Our employees take their skills-based work very seriously,” says Laura Hudson Hamre, senior director of community relations at Fidelity. “They approach it the same way they do in their professional roles and are eager to assist when called upon.” A nonprofit leader in Fort Worth recalled how impressed she was that a Fidelity executive with higher-level expertise in Boston was always available and even traveled to join project meetings occasionally.

If upper management support is secured and junior-level employees are eager to participate, many companies consider the program ready. However, it’s middle management that needs to support these programs over the long term in order that they understand and see the benefits to employee productivity, development, and retention. Without that, middle management sees only the cost of SBV—employees taking time away from their day jobs to focus on nonprofit clients. “For one [corporate] team member, it was important that his boss knew what he was doing,” says a nonprofit leader. “So we wrote notes to the boss telling him about the contribution.”

The corporate team lead is critical to the success and experience of the team members and the project. One nonprofit leader said of a JPMorgan Chase team lead, “Personal dedication is noticeable and it matters.” The team lead needs project management, coaching, relationship, and client sensitivity skills. Project management skills are important even in technical projects. “Don’t let the nonprofit think something is going to happen if it isn’t,” advises Andrea DeSimone, principal systems analyst at Fidelity.

It is also useful for new team leads to talk to those within the organization who have had experience with SBV projects. Providing the team leader with appropriate authority and freedom is important. The leader of a nonprofit technical project described an instance when they needed a certain piece of equipment to continue the installation of a new system. The team leader went back to his office and brought back the equipment, saving the project a few weeks of acquisition time by the nonprofit.

Even within programs that select high performers for projects as part of a leadership development initiative, corporate team members should always have a choice about whether they participate. Many corporations identify the members of the team for projects first, and then identify a nonprofit project that fits those skill sets. This ultimately makes for stronger projects by ensuring that the right expertise is available for a challenge. DeSimone advises, “Let team members have a choice about stepping out of their comfort zone or just doing what they are good at.”

One company executive led a team that was all “voluntold” by the company. She did not know why she had been picked, nor did any of the rest of the team. Several of the team members ended up dropping out of the project when work priorities prevailed. Some had a negative attitude and others just drifted away.

As important as relationship development, staffing, and support is, both sides need to be focused on making measurable progress toward the goal. While SBV has many additional benefits, the agreedupon project deliverable must stand paramount as the engagement progresses. “This engagement worked well because we achieved the result, not because everyone got along,” says one nonprofit leader. This means that all members of the project must be prepared to push back. In order to be a true capacity-building resource, both sides need to be held accountable to a tangible result.
Looking Ahead

There is enormous potential for skills-based volunteering to be a game-changing approach to addressing social challenges. By knitting together the best resources, talents, and expertise from across sectors, SBV develops and transforms relationships between institutions that need to work together to make progress on social problems.

The nonprofit leaders we spoke with are sold on using this valuable resource in an ongoing way and have begun considering SBV during their annual planning processes. Business executives are also realizing the value of moving beyond checkbook philanthropy and transactional support, and finding ways for their company to be engaged in long-term programs that create lasting change.

Employees, particularly those at the beginning of their career, who are engaged in skills-based volunteering are now being trained to understand nonprofit organizations and the complexities of the social challenges they are trying to address. SBV is laying the groundwork for new types of knowledge, relationships, and creative problem solving. While pro bono support has been in use for many years, the practices of SBV are just emerging, and new models will no doubt develop as companies become more engaged and devote their significant resources to improving their ability to contribute.
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Notes

1 State of Corporate Citizenship 2014, Boston College Center for Corporate Citizenship, 2014.
2 Giving in Numbers 2016, Committee Encouraging Corporate Philanthropy, 2016.
3 William D. Eggers, Nate Wong, and Kate Cooney, The Purpose Driven Professional, Westlake, Texas: Deloitte University Press, 2015.
4 Assessing the Problem: Underinvestment in Organizational Infrastructure, Common Impact, 2008.
5 Common Impact is an intermediary that designs and implements corporate skillsbased volunteering programs.
6 This research was conducted in partnership with Common Impact. We interviewed 15 nonprofit executives from nine organizations and 7 corporate executives from five companies: Fidelity Investments, John Hancock, NetSuite, Charles Schwab, Blackbaud, PENCIL, Citizens Schools, Boys & Girls Club of Greater Fort Worth, Dallas CASA, Leadership Fort Worth, EARN, Pomeroy Recreation and Rehabilitation Center, Education First Steps, and Political Asylum Immigrant Services. Two of the five corporations are not Common Impact clients, and several nonprofits have experience with multiple intermediaries. Interview questions covered history with pro bono work, specific experience with recent SBV engagements, key success factors, and advice for both nonprofits and corporations on this work. We also pulled from Common Impact’s previous research and 17 years of experience managing hundreds of skills-based engagements with Fortune 500 companies and their nonprofit partners.

Christine Letts is the recently retired Rita E. Hauser Senior Lecturer in the Practice of Philanthropy and Nonprofit Leadership at Harvard Kennedy School. Letts has also worked in the private sector (as vice president, Columbus Plant Operations, Cummins Engine Company) and the public sector (as the first secretary of the Indiana Department of Transportation).

Danielle Holly (@dholly8) is CEO of Common Impact, a nonprofit organization that helps corporations develop skills-based volunteering programs and partnerships with community organizations. Holly is also a contributing writer at The Nonprofit Quarterly.
Tags
Corporate Philanthropy, Corporate Social Responsibility, Corporations, Human Capital, Socially Responsible Business, Volunteering
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The Week/Sophie Warnes: RBS sale: does privatisation serve the public interest?

RBS sale: does privatisation serve the public interest?

Aug 7, 2015

Some experts believe taxpayers may be short-changed – bringing back memories of Royal Mail sell-off

By Sophie Warnes 

Earlier this year George Osborne announced the Government will be selling off its stake in RBS, seven years after it was bailed out by the taxpayer.

This plan was put into action on August 3 when around £2.1bn of shares were sold to institutional investors, primarily hedge funds.

The problem is, at current prices, the shares are worth much less than we paid for them. The then Labour government invested £45bn in the bank in 2008; at the sale price of 330p per share this would be worth barely £31bn, although continuing improvements in the bank’s profitability might boost its value over time.

The chancellor says the Government could still make as much as a £14.3bn profit from the bailouts, if you add the money from share sales and cash generated by other banks that were bailed out at the same time, such as Lloyds.

So has selling off public assets ever been the best deal for taxpayers?
Royal Mail

The Royal Mail sell-off is one of the most recent privatisations. Royal Mail was making money at the time of the sale and the discounted offer was extremely popular, including with retail investors – although some surveys suggested only one-third of the British public actually supported the move.

The Government sold 60 per cent of Royal Mail at the end of 2013, for the price of 330p per share. As soon as the business went on the market, shares leapt 38 per cent and peaked at 615p. Shares are now worth around £5 each.

The Government gave preferential treatment to certain shareholders in the belief they would be long-term investors in the company, yet according to Chris Blackhurst at The Independent, shortly after the sale, 12 of the "Lucky 16" institutional buyers with a larger allocation cashed in for a big gain.

It has been calculated the taxpayer lost out by £750m on that first day. The National Audit Office (NAO) said the Department for Business, Innovation and Skills "could have achieved better value for the taxpayer", conceding that profits were sacrificed for certainty the transaction would be completed – setting shares at a cautious low end of the price range.

"This was to achieve the Department's priority to complete a sale within the time available, against the risks of industrial action and short-term market uncertainty," the NAO said in a report. "And to reflect the price indications of a small number of priority investors whose participation was seen as vital, as well the views of over 500 other potential investors."

An independent review carried out by Lord Myners found the Government was right to be cautious about the price when Royal Mail was floated, citing a risk the shares wouldn't otherwise be sold.

"We have not uncovered any evidence to challenge the general assertion that it was unlikely that an IPO price greater than 350-360p could have been achieved through the bookbuild process, and we accept that a decision to revise the range would have come with added uncertainty and risk," the review concluded.
East Coast rail

In 2009, East Coast rail was taken over by Directly Operated Railways, a company set up by the Government to oversee the network.

Its finances were turned around quickly: just one year later, it had more than doubled pre-tax profits. By last year, the company was reporting a profit of £225m, with £216.9m of that coming straight back to the Department for Transport. In total, since Government intervention, it has given back nearly £1bn.

The company was sold to a joint venture between Stagecoach and Virgin for £3.3bn last year and formally taken over in March. If the company continued to increase its profits under state ownership at the rate it had, projections show the taxpayer could have made back that amount by about 2021 (including profit from 2009-2014).

The Government defended the decision to sell by saying its ownership was always a ‘stop-gap’ and promises by the new owners to invest in the line will deliver new routes, new trains and service improvements such as Wifi.
Northern Rock

In 2008, following the subprime mortgage crisis, Northern Rock was nationalised by the Government. The bank was split into two parts: Northern Rock Plc and Northern Rock Asset Management. In 2012, Northern Rock Plc was taken over by Virgin Money. The other half was retained by the Government and was where the 'bad debt' was placed.

This company has recovered remarkably well under state ownership. At the end of the financial year just gone it reported an underlying profit before tax of just under £1.4bn.

Last year, the section of the bank that was sold off and rebranded reported that underlying profits had quadrupled from £13m to £60m, The Guardian notes.

Anti-privatisation campaigners say the common argument that state ownership is too inefficient to make profit in the same way as private companies is false. The state loses, they argue, when the Government pours money into projects only to sell them off to private companies once they are viable businesses. The chancellor and others counter that improvements in company fortunes after their sale is a facet of no longer being constrained in the public sector – and companies that thrive in private hands contribute more in tax long-term.

With the sale of RBS under way, the debate will rest for now. But a general election in 2020, at which the main opposition could propose at least some renationalisation of key industries, will give voters the chance to express whether or not they really feel privatisation is in the public interest.

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