A fair division of the spoils of charity

Thursday, February 21, 2008

Intel hit the headlines early this year when its relationship with One Laptop Per Child, a non-profit project providing cheap laptops to children in developing countries, came to an abrupt end.

Nicholas Negroponte, the non-profit’s founder, accused Intel of, among other things, promoting its own version, the Classmate laptop, which was designed for developing countries.

The acrimonious end to this collaboration highlights the dangers for companies, non-profits and non-governmental organisations as they embark on joint initiatives, whether they are fighting diseases in developing countries or creating new businesses that are designed to generate revenue and jobs in poor communities.

For companies, such partnerships are a chance to boost their citizenship credentials by tackling social and environmental issues. However, both parties need to agree on ways to share the commercial benefits that result from their joint initiatives.

“There will soon come a time when people become more sceptical of companies entering partnerships, and that’s the last thing you want,” says Sonila Cook, partner at Dalberg Global Development Advisors.

Ms Cook believes that mechanisms are needed “by which NGOs are reassured that the companies they’re working with are not in it purely for commercial reasons but because they also want to make a difference”.

Sometimes, the commercial benefits are unexpected. When Vodafone embarked on M-Pesa, a pilot project delivering financial services to Africans via mobile phones, it did not anticipate the impact of rapid growth in mobile phone use in developing markets.

“The initial thinking was around the need to develop products and services for people at the economic bottom of the pyramid,” says Chris Burgess, head of corporate responsibility at Vodafone. Today, the corporate responsibility team is only involved in monitoring the social and economical impact of the rollout. “Now it is a commercial initiative,” he says.

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Source: Financial Times (link opens in a new window)