A Corporation’s Role in Building Local Communities – A response to Acumen Fund Lesson #4
Lesson #4: “We won’t succeed in the long-term without cultivating local leaders, local money, and strong local communities.”
Over the past 10 years, Acumen Fund has refined its approach for investing in market-based solutions that uplift the poor from rural Pakistan to the slums of Kenya. Acumen Fund’s 10 lessons from the past decade were highlighted in Scott Anderson’s recent post, Next Thought Monday. Lesson #4 emphasizes the significance of local solutions driven by strong leadership to solve problems of poverty in their communities. Creating Shared Value in India, by nonprofit consulting firm FSG, illustrates how corporations can play a major role in facilitating this locally driven growth of communities.
FSG’s idea, Creating Shared Value, describes a powerful alternative to traditional CSR. Rather than settling for charitable donations, some companies are making a business case for addressing social problems in their communities such as poor health, low food security, and widespread poverty. These companies are also driving systemic and institutional shifts through developing local clusters of strong suppliers, infrastructure, talent, and an effective legal system. Creating Shared Value in India, offers case examples of innovative efforts by corporations that ’do good’ but do it well.
Nestlé is one company discovering that addressing social problems by cultivating local expertise needn’t be at odds with the bottom line. The Swiss-based company’s Moga factory in Punjab transformed a farming community into a prosperous milk production district. Nestlé supported local milk farmers by investing in village infrastructure including tanks, chilling centers, artificial insemination centers, and veterinary aid. The company also provided training and advice on improving dairy practices through field camps and educational tours. By subsidizing the procurement of milking machines, Nestle assisted farmers in accessing financial services. Nestle also uplifted the community via local development efforts around health, sanitation, and education. By developing a strong local community and a reliable supply chain, the factory that started out procuring 551 kgs of milk per day now collects 887 tons of milk from over 110,000 farmers every day. Nestlé has indeed done good, but done it well.
As Acumen Fund’s lesson #4 rightfully points out, a strong leader grounded in local knowledge is essential in implementing local solutions to solve the toughest problems of poverty. New ways of operating business, like the Moga factory, require leaders with the audacity and vision to explore untapped territories and scale-out breakthrough ideas. These are the type of leaders that Acumen Fund seeks in communities around the US. Acumen Fund chapters are self-organized, volunteer-led groups. They provide a platform in our respective communities for spreading Acumen Fund’s principles and its approach to help create a world beyond poverty, and through these activities, we cultivate leadership within our network of volunteers. For more information on Acumen Fund chapters, please read my blog post on the Acumen Fund blog.