NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Jane Nelson, who wears many hats (IBLF, Kennedy School, Brookings), spoke yesterday at a meeting of the Global Poverty Roundtable at the GlobalWorks Foundation here in Washington. Jane offered a wide-ranging, yet concise summary of all of the ways business can engage in development. Jane said [and, Jane, I beg your forgiveness in advance for this shallow and truncated version of your presentation] that the activities fall in three general categories: core business activities, competence-led philanthropy, and influence on the enabling environment for business.

On Core Business: Two broad areas: First, practice responsible business (human rights, environment, labor, compliance, accountability, etc); second, increase economic opportunities — innovate for new markets. How? By leveraging global value chains, increasing local content purchases, creating business linkages, creative financing mechanisms which draw on core businesss knowledge and skills, and perhaps most promisingly, through more and more effective collective business initiatives — industry-wide efforts that both set standards and create healthy and friendly competition to succeed within these new standards.On Competence-led Philanthropy: Jane’s basic observation is that even though business philanthropy is a tiny part of post-tax income, it mounts up and quickly exceeds the resources of even the multi-lateral development agencies. (Specifically, she surveyed the philanthropic budgets of 50 Fortune 500 companies and found them equal, in sum, to the total budget of UNDP). Just re-balancing where money goes, and increasing attention to funding opportunities in emerging markets (that is, giving more money where goods are created and where goods are actually sold) will have big impacts. Flagship programs are good tools to unite a highly-dispersed MNC’s efforts, create real brand value, and allow for more effective philanthropy. Mobilizing volunteers — from one’s own employees to affinity groups external to the company (e.g., diaspora communities, organizing remittances for development goals) — can be effective. For the record, the term “competence-driven philanthropy” is something that I’ve only heard from Jane. Is it a new term?

On Business’ Role in Public Policy: While businesses are acutely aware of crossing a line — from “statesmanship” on policy to parochial lobbying, there are good examples of how to do it, such as the Extractive Industries Transparency Initiative. Weak governments and institutions present particular challenges (a point later amplified by others – notably Bruce McNamer of Technoserve and Fred Tipson of Microsoft — who pointed out the severe “macro” problems that dwarf the “micro” efforts of any one company). Business can be helpful in giving support to governments in achieving the already agreed-to goals for development funding, e.g., the G8’s Point 7 commitment for ODA.

Lots of food for thought here. Thanks to the Global Poverty Roundtable to hosting, and to Jane for her excellent remarks.