Date: 2025-04-03 Page is: DBtxt003.php L0913-TVM-MMW-000037
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TrueValueMetrics ... Peter Burgess Manuscript
Making Management Work for Relief and Development |
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Chapter 37
Organizational View, Part 3 |
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Private Sector
Make-up of the private sector The private sector comprises both for-profit and not-for-profit organizations and includes the following segments: (1) international NGOs; (2) “south” NGOs; (3) public multinational corporations; (4) private multinational corporations; (5) the “south's” enterprise sector; (6) academic institutions; (7) professional firms and organizations; (8) banking and financing organizations; (9) advocacy groups; (10) public private partnerships; (11) cooperatives; (12) private schools; (13) private health care facilities. International NGOs International NGOs are the backbone of “north” intervention. Some people refer to NGOs as Not-For-Profit (NFP) organizations. I prefer calling them “Social Value Organizations (SVO)” but this has not been widely adopted. The “for profit” corporate world is clear about the goal ... it is profit. An SVO can be quite clear that it is aiming to maximize “social value”. These organizations have become the backbone of the “north's” relief and development interventions. One of the issues with large NGOs is that their funding is largely from government, and much of their work is done on government's agenda. It would be nice to think of them as being uninvolved with government, but they have to be tightly involved otherwise the funding ends. NGOs have to compete for available resources, and the driver of their success and reputation is their fund raising or fund attracting capability. Some NGOs have an inside track to bilateral funding (USAID, DANIDA, DFID, etc.). Some NGOs have the inside track to faith based philanthropy (World Vision, etc.). Some NGOs have an appeal directly to the public (Oxfam, ActionAID, etc.) . At the end of the day, the work that gets done is what donors are willing to fund and not very much what people and communities most need. What Donors Want I wish the donors wanted solid management information about socio-economic performance, but it seems that a good little story with nice visuals told over and over again is better. What is good for PR seems to be good for donors. Full information about a program that does thousands of pieces of work, some of which are a great success, some not so good and some plain bad does not work as well as some good photo-ops around a little very expensive initiative. The sooner that the donors can be helped to change from PR and photo-ops to serious analysis of management information, the sooner there can be sustainable success in development. The NGOs have responsibility for implementing programs agreed by their funding partners, whether a bilateral donor, a multilateral financial institution or philanthropic funding. To survive, these organizations need to maintain the fund flow into their organizations, and do whatever it takes with the donors to accomplish this. Obviously they have to do something on the ground, but doing the most on the ground is less of a priority than ensuring the donors like what is being done. Good things that are difficult to describe, or difficult to get into feedback to the donors are less important than works that the donors like. Information about “north” NGOs is limited. Many “north” NGOs do very good work, and some waste relief and development resources. It is not easy to tell the difference based on easily accessible verifiable “facts”. Only limited financial information is published, and what this shows is little more than the aggregate general accounting financials with some very limited information about how spending is allocated between “program” and “administration and overhead”. This helps a bit, but not very much. There is almost nothing anywhere about an NGOs performance in using program resources to get sustainable results of value to the beneficiaries. While most NGOs will happily talk about transparency and accountability, almost none is very much interested in actually doing transparency and accountability. It is not at all clear whether they know what these words mean ... and I am fairly sure that if they really did, I am not sure they would even want to talk about them. What Determines? ... Performance or Policy Donors are wonderful because they have money ... but they are a menace because they usually want things done their way or not at all. In a world of surplus fund flows, this would not be a big issue, but when the resources are very limited relative to the work that needs to be done it is serious. In the case of malaria programs ... long lasting insecticide treated bednets (ITN) became the preferred intervention for donor funding, even though interior residual spraying (IRS) was a much lower cost way of reducing the impact of malaria in the community. Some of my work suggests that an integrated mosquito and malaria control (IMMC) program could be even lower cost again ... but nobody is really looking with any seriousness into these cost performance issues. The result is that the money spent does far less than it could if used in the best possible way. Making “north” NGOs more effective The potential of international NGOs in the relief and development sector to do valuable work is significant, but cannot be realized unless there is rigorous value analysis going on internally. It would be nice if program performance was visible to the interested public, but it is more important that program performance is improved internally so that better results are seen by the beneficiaries. Good people have got to take substantially more responsibility for ensuring that the organizations do the best that they can. Mobilizing what “north” NGOs know There is a lot of latent value in the knowledge of the “north” NGOs. The big international NGOs have a lot of knowledge ... rather little of this knowledge is used to the extent that it could be. It would be great if there were some ways for the big NGOs to share their knowledge in some useful and valuable ways. At a small exposition in 2004, I asked several well known international NGOs if they knew of any local NGOs that were doing good programs ... the answer was “yes”. I asked whether these programs were being implemented with funding from the international NGO ... the answer was “yes”. I asked whether the local NGOs were getting as much funding as they really needed ... the answer was “no”. I asked whether the international NGO was considering helping the local NGOs to expand their fund raising capability ... the answer was “no”. As I see it ... this is a big lost opportunity. The international NGO has some valuable experience while the local NGOs, knows a lot about local strengths and weaknesses and could be invaluable in helping to channel resources to good local NGOs. But building on the opportunity requires changing the mindset ... easier said than done. Many of the international NGOs are very good at what they do. Some of them do work much more efficiently than anyone else ... their costs doing the work are lower than others by a significant amount ... but who knows? This sort of information is not getting into the public space where it can be found. Instead fund flows are based on all sorts of other decision factors, some of which are not in the least bit appropriate. I always think of Oxfam's work with water as a good example of an NGO that knows what it is doing in this domain. International NGOs and their local partners also have a huge knowledge about places. They have a network of offices and a staff that they have built up and have useful experience and knowledge about all the places where they have been working. This knowledge would be amazingly helpful in understanding better the dynamic of development and how relief and development interventions have performed at the community level. Just imagine if the knowledge of the international NGOs could be mobilized to be the foundation for supporting the very best possible interventions for community development all across the “south”. Rather than having fund flows that arguable do only more or less value destruction, there could be fund flows that produce high multiples of socio-economic development value. The possibilities are exciting. Big “north” NGOs with short reach There are “north” NGOs of all sorts that are well known in the “north” but have little or no reach into the communities in the “south” where relief and development work needs to be done. These NGOs know their way around the corridors of power and the places where funding decisions are made, but have rather little meaningful presence in the “south”. These organizations get funding, but do not do very much with it. They would be very easily identified if there was universal value analysis reporting about organizations engaged in using relief and development fund flows. These organizations need to be highlighted and helped so that they deliver more value to beneficiaries in the “south”. The resources are available, but they are not used very well. Small “north” NGOs There are thousands of small “north” NGOs engaged in various ways with the relief and development sector. Many of these NGOs do valuable work, but there are also many that cannot get enough traction to do things of value. They need more operational support and services than they can afford to be effective. Some have a very valuable contribution to make, perhaps some very useful expertise, but they cannot do much with it without “reach” into the “south”. They could benefit enormously from different sorts of help ranging from professional help with fund raising, help with administrative matters, help with reach into the “south”, and all sorts of other areas. These organizations do not have the scale needed to be able to operate efficiently beyond a very limited scope. They can be helped by working in a cooperative way with others. More ways to work cooperatively need to be established. “South” NGOs Many entities ... but how much potential? There are millions of “south” NGOs, many doing amazing work with quite small resources. Most get no external financial or material support at all. If they had access to the support they need, the change in the socio-economic status of communities in the poor “south” would be tremendous. If all the small NGOs in the “south” doing good work were funded to allow them to do all they can do, much of the problem of modern development would be solved. Community organizations There has been a growth in the dialog about community, and community centric development, but reliable easily accessible information about what is actually happening in communities is very limited. That is not to say that the information does not exist, merely that it is not accessible easily. At the moment there are no good methods for getting reliable information about communities, and the activities and organizations involved. This information is critical to improving community level relief and development sector performance. Local people know this information, but do not have the resources to use the information to do things of substance, and the international donors and supporters to not have the information and cannot therefore allocate resources in the most useful way. When this is fixed ... community level performance is likely to improve substantially and quickly. Registered NGOs Many “south” countries have systems for “registering” NGOs. This has both good and bad sides. The fact that an organization is “registered” tells one absolutely nothing about its performance and its potential. The registration helps a little to understand the structure of the sector, which is positive, but it also helps to enable constraints on their performance by the authorities, which may not be positive. The prevailing systems used to try to regulate and control the operation of small NGOs needs improvement. In a good number of countries, activities in the informal sector, while be economically important, are not considered “legal” activities which opens up all sorts of opportunities for graft and corruption. In order to maximize what can be done, all informal activities that are “good” need to have all the opportunity that is possible and not to be constrained by inefficient controlling regulation. Information about “south” NGOs The information needed about “south” NGOs is key item reporting based on a robust set of management information, together with an oversight and validation dimension so that the information reported is reliable. The public stakeholders should be able to tell whether an organization is doing useful work or not, and whether the results being achieved are reasonably good relative to the resources being used. The public should be able to identify organizations that have created a public reputation that does not in any way reflect what they are actually doing ... and avoid them. These NGOs are sometimes referred to in Africa as “Briefcase NGOs”. Some “south” NGOs are linked to “north” NGOs Some, perhaps many, “south” NGOs are associated with “north” NGOs and get their funding doing work that is on the agenda of the “north” NGOs and their donors. This is a good model ... up to a point. It could be improved substantially if there was accessible management information about what is being accomplished and how much everything is costing. The value chain is probably very much capable of being improved. The “north” NGO probably absorbs a substantial amount of the fund flow paying for its administrative and overhead expenditures. The work done by the “south” NGO may well be quite effective ... low cost and high value ... but not as much as would be possible in an optimized environment. Briefcase NGOs Some “south” NGOs are referred to as “Briefcase NGOs” meaning that they have paperwork and presentations, but absolutely no presence on the ground. These NGOs have an ability to convince “north” NGOs and donors that they are capable, but in fact they are not. They get funded, and they probably even satisfy all the reporting and feedback requirements ... all paperwork ... when in fact they do absolutely nothing on the ground. The type of community level accountability already frequently referred to in this book guards against this type of organization and helps protect the donor from misuse of their funds. Conference centric NGOs There are also “south” NGOs that have high visibility because of their presence at conferences. A tiny presence in a community becomes more and more overblown the further the organization moves up the food chain. Public Multinational Corporations About stockholder value and profit above all else The large multinational corporations like Shell, BP, Exxon Mobil, Newmont Mining, Nestles, Cargill, Vodaphone, etc. are bigger than most of the countries in the “south” where they operate. I was curious. BP promotes itself as a company pushing into the future “Beyond Petroleum” and a supporter of sustainable development, but when you look at their corporate information one finds a $100 million annual worldwide commitment to this compared to a profit for the year of $22,600 million and a distribution to stockholders of $8,000 million. In one of their documents I thought there was $500 million of support for sustainable development ... but then saw that this was a cumulative five year planned spend! BP and the other oil companies make the point that they pay a lot to governments in income taxes, royalties and production taxes ... perhaps more than they pay stockholders ... but they cannot say much about the scale of their efforts in support of sustainable development and impact on community. And the way oil industry money finds its way into government and is then lost to any form of public accounting is another huge issue needing attention. There are many corporate organizations of international stature and highly respected in the “north” that have operations in communities around the world. Among these are oil companies, mining companies, timber exploiting companies, and others. However, these organizations hardly focus at all on the socio-economic progress of the communities in the country, but only on the effectiveness of the activities in contributing to corporate performance ... that is profits. These companies have earned respect in the “north” because of profit performance and not at all because of their focus on social responsibility and contribution to society as a whole. The power of the capital markets requires that major corporate organizations produce huge profits “or else”. This is not a good model for global socioeconomic equity, but it is the single and only important driver of modern corporate strategy. There is a little bit of talk about corporate social responsibility, but it is talk, and not much else. In the bigger scheme of things the talk is totally immaterial. The modern multinational company has been the most efficient value creator in all of history ... but the methods have not been universally moral and ethical. In the future there is likely to be an accounting, and it seems to be prudent to start to do things to mitigate the eventual outcome of such an accountability analysis. Corporate organizations should focus on their primary mission, but organizations that have social goals in support of communities should be funded from corporate profit flows on a scale that is meaningful. The value chain of the modern multinational is not much different from the old colonial set up of yesteryear ... perhaps it is more favorable to the modern corporate owners than the old colonials. Many major corporations have started their own foundations that serve as channels for such initiatives, but there is little information yet that facilitates an analysis of their performance. Associations of big corporations Corporate organizations have also become more active in creating vehicles to address common interests. The World Economic Forum (WEF) based in Switzerland is one such association, and in the USA there is the Corporate Council for Africa (CCA). These organizations can help coordinate programs that can be of value for society in the “south” that goes way beyond what any individual company might have the capacity to do. Engaging these organizations in supporting work that is needed for relief and development success, and yet perhaps not appropriate for an individual company to support, has potential to be valuable. Corporate social responsibility Good corporate citizenship requires a high level of social responsibility, but this has not been a big part of corporate thinking until quite recently. Even now, it is not clear that social responsibility applies much beyond where the corporate oversight rules require it. Clearly this has to change. Change will come much more quickly if a “management information” dimension of the relief and development sector is implemented that shows what is being done everywhere there is corporate engagement. On balance this will be beneficial for good companies. Private Multinational Corporations Some big companies, and growing The global economy is now very much impacted by very large private corporations that do business everywhere and are accountable nowhere. This is a rapidly growing group, and accelerating as publicly traded corporations get more and more attention from regulators. Some of these companies help with economic performance in the “south” but it is less and less clear what the value chain look like. Some of these companies have almost global control of industry sectors like, for example, the international trade in rice and grain, some parts of the shipping industry, and some parts of global wholesale and retail trade. It is going to be a challenge to hold these corporate entities accountable and to understand whether or not they are operating a decent citizens, both at the local level and in global terms. I was helping a colleague analyze some company accounts in Africa and noted that a good number of the expenditure lines had a notation “CN” against them. My first reaction was Credit Note ... except that the accounts were in French and it made no sense anyway. I soon learned that it actually stood for Caisse Noire ... a set of totally fictitious accounting lines that served to move moneys earned into expenditures without every having to be accounted for in the profit of the company. I then learned that these monies were remitted offshore to the account of one of the principal stockholders who just happened to be the Head of State. This type of accounting is a lot more common than it should be ... but who really cares. This company was able to profit mightily from government construction contracts at huge profit margins, and everyone was happy. Except, of course, it had a bad impact on the economy and the society ... and rather soon afterwards this President was ousted by a very unhappy populace. Smaller closely held companies Smaller closely held companies operate very much out of the eye of the general public. They are responsible for some very good economic performance, as well as some serious abuse of the norms for ethical business. In terms of potential for support for sustainable development modest scale international business holds the most promise. Companies operating profitably do not have a sustainability problem, and they can make profit by doing good ... a win win proposition. Companies can operate in an honest mode and be successful ... but it gets to be very difficult when the governance environment includes organized corruption and enforcement. Local leadership has to address this problem. It is not easy. Good, honest people can end up dead. The “South's” Enterprise Sector In addition to the “south's” NGOs described above, and the multinational corporate sector, there are a number of other types of organizations in the “south's” enterprise sector, or could be in the sector. Social entrepreneurs The social entrepreneur has emerged as a force for good in a number of places around the world in the “south”. These entrepreneurs are doing work that has a lot of social value, and more or less profit. The profit permits the organization to be sustainable ... but it is the social value that justifies the organizations activities and its raison d'etre. The social entrepreneur is a subset of the local entrepreneurs. In terms of value adding, in most cases, local entrepreneurs are creating local net economic value adding more than the local operations of global operations funded through FDI. One must be cautious about thinking solely about social entrepreneurs as the local enterprise sector. The local entrepreneur is not always “nice”. In many places, especially in remote rural areas, a local entrepreneur can be operating in monopoly situation, and in that circumstance, a market driven entrepreneur is going to try to profit to the maximum. An entrepreneur is also likely to behave with what appears to be an anti-social attitude in a shortage economy. This is the normal entrepreneurial behavior, and the expected market behavior. This behavior is less possible when there is no shortage in the market. Cooperatives There have been successes and failures with cooperatives. In some cases big cooperatives have been created as a way to exercise control over part of the value chain, and to extract value from the value chain for the benefit of outsiders or the elite. In other cases, farmers have formed cooperatives and have been able work cooperatively to gain better market advantage. In theory a cooperative form of organization is attractive because it makes the people directly concerned with the organization the owners of the organization. There is one less stakeholder. But a cooperative is still no better than what is possible within the value chain for the products and services. In many agricultural situations an agricultural cooperative is no better than the underlying economics of agriculture ... and in so many crops in the “south”, like coffee, cocoa and tea, the value chain is very much loss near the farm gate and profit overseas as the processed product is marketed to the consumer. Public Private Partnership (PPP) Public Private Partnership (PPP) has proved to be a very good way of combining the need for common good with private sector resources and initiative. Such an organizational structure has been facilitated in some jurisdictions by changes in the law so that there is as much fairness in the way a PPP runs as possible. For example, in the event that the PPP calls for a levy on all businesses in the community, and 60% of the businesses agree, then the 40% that do not agree will still have to pay the levy since all will benefit from the work that is to be done. Public Private Partnerships (PPPs) have been used to fund the clean up and maintenance of a lot of different parts of the City ... for example: Bryant Park, Central Park, Times Square, Grand Central Station, etc. Each PPP does things differently to suit the characteristics of the neighborhood, making use of both paid help and volunteers in the most productive way. All of these areas were badly maintained and deteriorating under City oversight ... but with a community based PPP, there has been wonderful rejuvenation and at a low cost to the general taxpayer. Informal sector The informal sector in the “south” is very important, and at the same time is almost totally ignored and marginalized. Bluntly put, almost all the value adding in the economy takes place in the informal economy ... in contrast to the public sector and the formal sector where value destruction is too much the norm. Self employment in small scale business, and work in subsistence agriculture are parts of the informal economy. A lot of caring social work is being done by ordinary people and unregistered small organizations. This is really what an enterprise economy is all about. Removing constraints on the informal sector will help it to be more productive and will be very advantageous for ordinary people, the community economy and eventually the country economy Academic Institutions Academic institutions in the “north” Academic institutions in the “north” are presently substantial recipients of relief and development sector fund flows. It is not entirely clear that these funds are used in ways that are delivering tangible benefit to the “south” though it is clear that they are a useful part of the income of the institution. There is a need for internal management to review the value adding associated with the use of academic resources, not only from the perspective of an individual's education and the value to the academic institution, but also to the performance of relief and development in the “south”. This analysis should be done within the organization and be also done with a view to transparent public accounting. Academic institutions in the “south” Academic institutions in the “south” have a lot more constraints than those in the “north”, and especially financial and material constraints. Faculty members of universities in the “south” should be able to identify ways in which their own knowledge and the institution's knowledge can be applied in a valuable way in support of the performance of relief and development in the “south”. But to some extent like the academic institutions in the “north” these institutions have some element of “ivory tower” in their views and the way in which their work is applied. Perhaps too much, there is a gap between the learning and the practical world that could use intellectual input that is familiar with local realities. Cooperation There are all sorts of ways in which academic institutions in the “north” could cooperate with those in the “south”, and vice versa. Increasingly, the institutions in the “south” should be engaged in work that is needed not only in connection with teaching local students, but also helping to research critical local issues. Professional Firms and Organizations Professional firms and organizations are a critical part of society. Professionals are many and include: accountants, lawyers, medical professionals, financial professionals, business professionals, business consultants, engineers, architects, scientists, educators, civil service professionals, journalists, management consultants and so on. Professionals like lawyers and accountants serve as links between laws, rules and regulations and the business world that is engaged in economic activities. Professionals like engineers and architects serve as a link between science and technology and business. Professional firms and individuals are fully integrated into the fabric of a productive society. In the “south” The professional sector in the “south” is one of the most critical for enabling relief and development progress. Professionals have an important role in bring balance to the power of the local politician and the abuse of the local rich elite. This is not an easy challenge, but it is tremendously important. Professionals in the “south” also have another challenge. They need to organize their affairs in order to be an effective counterbalance to the professionals and other experts from the “north” who operate in the “south” and only collaborate to a minimum with the “south”. There is a big need for professionalism in the “south”, and it would be a lot better if this professionalism is local rather than imported. To the extent that international experience is needed, then the collaboration can be initiated, but from the “south” to the “north” rather than the other way round. Mobilizing the accountancy profession Whatever happened to the accountancy profession? I would have thought that the accountancy profession would have been vocal about the weak accounting and lack of systems and accountability in the relief and development sector, but it has never happened. Hopefully accountants will become more engaged in ensuring that management information that is suited to decision making in the relief and development sector is organized, and will take a role in establishing end-to-end trust in the information that is available both withing projects and organizations and to the public at large. The legal profession The legal profession in the “south” is important in the context of local socioeconomic activity. It needs to be very much more understood and respected both in the local context and in terms of international activities. It can be argued that the legal profession in the “south” needs to have reach into the “north” and for their to be international links that not only facilitate activities by the “north” in the “south”, but also facilitate much broader cooperation on all sorts of issues. The legal profession has a valuable role to play in building trust between the “south” and the “north” so that commerce and finance operate on a more nearly level playing field. At the moment, who knows much about the work being done by the legal profession in the “south” ... not very many. This needs to be easily accessible common knowledge. Engineers and architects In order for the “south” to be more successful, there needs to be more building and construction. This requires professional engineers, architects and others so that quality is sound and safe. “South” professionals have got to take a bigger role in making sure that quality of good and that there is the best possible value from the way things are done. Building professional reputation takes time, and professional organizations need to take a pro-active role in making the quality of local professional firms well recognized. Professionals in the engineering field need to make sure that all aspects of quality and professionalism are improved, including, for example, the reputation and integrity of engineering testing laboratories in the “south”. Banking and Finance Organizations Microfinance organizations Microfinance is considered a big success. There is no question that microfinance has grown rapidly over the past 20 years, and in the last five years has been able to attract substantial new money. The microfinance sector is maturing and there is a substantial framework of organizations from the community to the capital markets. The dialog about expansion has become professional combining expertise in the banking area with expertise in the development area. The majority of the metrics associated with microfinance are from the perspective of the organizations administering microfinance programs, with not very much about the impact of the programs on the beneficiary and the community. Organizations that offer mini-finance and muni-finance to community organizations are not yet established. It appears that for community progress to be accelerated, there is a requirement for financing that has a larger loan level than is usual in the microfinance. Mini-finance is needed to enable small and medium sized enterprises in the community to expand and create jobs. Muni-finance is needed so that the community can enter into contracts with local contractors and pay them to do construction that is for the common community good. Investment clubs Investment clubs in the 1950s and 1960s expanded to be the Unit Trust and Mutual Fund movements. The clubs that are organizing today to talk about and support philanthropic causes should be encouraged to grow and perhaps morph into Social Investment Funds to support high performance community level activities. In order for this to happen, there needs to be not only the ability to transact an investment, but also the ability to get good reliable information easily. There also needs to be a growing range of alternative social investment funds so that people have choice and can also diversify their activities and their risks. Community finance There is a need for locally well respected intermediaries to be responsible for community finance. This is going to be an entity that is most trusted in the community, and understands the role of “trust” both with respect to the community and to the funding stakeholders. In the “north” it is possible to bring investment funds into a community in many different ways. For example: (1) a municipality can float municipal bonds; (2) it can attract developers to build in the community; (3) it can attract a company to open a business in the community, maybe a factory, maybe a store; and, (4) it can attract a bank to open in the community Something similar should be possible in the “south”. The scale may be different, but the financial and economic concepts are the same. For the socio-economic progress of the community, it does not really matter whether the funds flow through public or private entities, but it matters very much what they do. There needs to be enough accessible public accounting information so that it is absolutely clear how money is being spend and what is being accomplished. Community currency organizations The value of monetizing an economy is apparent from economic history. There have been many efforts to implement systems of community currency that monetize economic activity around a community under the authority of the community rather than a remote monetary control organization. Various techniques have been used to create “credit” for use in community activities, of which the credit card is but one example. Without some way to monetize or securitize the values in a community, it is difficult to move beyond community financing constraints. Networks The concept of network has become especially dynamic in the past few years. While there have been networks identified for a long time, the growth of new networks has been very rapid in the recent past, and facilitated very much by the Internet and new technology. I have routine contact using the Internet with people all over the world. It is my own personal network and bigger than anything I could possibly have imagined when I was growing up. Clubs and Networks After I had made my first visit to Canada and the United States from the UK as a student in 1960 I wrote about some of the difference between the two countries. I noted that the UK as a society was like a club, an exclusive club that was good for its limited membership, but everyone else was excluded, while society in North America operated as a network, where some simple common thread was used to expand connections and bring more and more into being connected, quite often for a good common purpose.The network idea of society fits well with the way the world has evolved, and needs to evolve. And it works especially well in the modern era with the tools of technology that help with getting connected. Like so much else, a tool that can be a power for good, can also be a power for evil. The challenge is to network so that the good are connected, and as a large networked community have power to be an influence for good Network for knowledge sharing There are all sorts of ways the Internet is already being used to share knowledge. In fact the sharing of knowledge may now have become counterproductive. There is just too much of it. But it will evolve in due course and become easier and more efficient. Probably sooner than later. One of the critical challenges is to make it possible for the poor and disenfranchised to get access to information that is useful for them. There are two parts to this: (1) is the question of access where the infrastructure is limited or non-existent; (2) is the relevance of the information that can be accessed. Network for getting data inputs In order to build and maintain management information that has ongoing value for relief and development, the contributing network needs to be strong. To some extent, volunteer help can be used, but there also needs to be a growing number of paid professionals employed managing the network and continuing the process of making the information as valuable as it can be. The World Bank and the various regional development banks, with or without the IMF ought to be the key organizations for financing government and the public sector. It should not be necessary to create new institutions to handle this work. But new organizations are needed to serve as financial intermediaries between the relief and development activities and the funding organizations. To some extent this is being done by NGOs, and to some extent by other organizations like the Micro Finance Institutions (MFIs). Their efforts need to be complemented in two areas: (1) community level organizations; and (2) capital market financial intermediaries. Also there needs to be improvement of the information access organizations so that there is not only information about “north” focused philanthropy, but also philanthropic organizations and their performance doing work in the “south”. There has been a lot of growth in this area over the past five years, but the coverage is only a tiny proportion of what is needed. The value of a network The value of a network is not simple a function of how many people are in the network, but what it is able to do, and what value can be attached to the results. There are a growing number of software applications and web based systems that make it possible to build a network and be in touch. They are popular, and to the extent that people like them they must be delivering something of value to the participants. The Value Potential of Networks I am reminded of the early days of laser light and fiber optics. I was present at one of the first scientific demonstrations of the laser at the Royal Institution in London ... and then watched fiber optics emerge as a decoration for the living room ... before it eventually morphed into a replacement for copper in wired telephony. Social networking on the Internet with MySpace, FaceBook and YouTube is the network equivalent of the decorative lighting for the living room ... amusing ... pretty ... but without much substance. One day, similar technology is going to be used to connect serious material about what is good for society, and also to identify and apprehend those that are engaged in ripping off society. It can be a truly “new world order” ... and the challenge is for this new world order to have good winning out over bad. Network technology has not yet moved to the stage where it is powerful enough to make the world a significantly different place. The idea of network is powerful and one day there is going to be either significant value adding from the network idea or there is going to be something dramatically negative. The possibility of software to help make a great contribution is present, and hopefully will be embraced. The challenge is to use the power of network for something more than mere amusement and social entertainment. The Internet and social networking has been proven to be an amazing use of modern technology ... but its value is rather modest compared to what is possible. An obscene reality Social networks like MySpace, or FaceBook, or YouTube come together very fast, and are considered to have enormous value by the “north's” financial community ... and indeed they do have value because the users on these networks are potential buyers for everything under the sun, and the advertising community needs to get their attention. Meanwhile, the networks that are needed to get important information flowing about the performance of the relief and development sector and the use of relief and development fund flows have no “value” in the eyes of the capital markets. This is a reality ... and though it might be obscene ... it is unlikely to change any time soon ... unless ... When the value of success in development is demonstrated beyond a shadow of doubt, and the viability of a network is demonstrated, and the very successful philanthropic community understands the dynamic of relief and development success, then value will be appreciated and things will change. Advocacy Groups Advocacy for relief and development sector reform Advocacy movements have been active for many years now ... at least for 20 years. There has been advocacy about making changes in the relief and development sector but rather little has been achieved. Based on results one has to conclude that advocacy has not been effective. A substantial component of the advocacy effort has been for reform at the World Bank, the IMF, and the UN including the WTO. And for just as long, there has been almost no change in these organizations and the relief and development institutions as a whole. There are too many people with a vested interest in the status quo. Principles of Physics 1 Physics was my favorite subject at school, and it led me to doing engineering at college. Subsequently it has helped me to understand various complex systems in the real world. ➢ A small force does not make much of an impression on a big object.How does this play out in the relief and development sector? In the relief and development sector, the well known organizations like the World Bank, the bilateral donors and the UN are all “big objects”. By contrast the groups seeking to be agents of change are very small forces. Ergo ... nothing is going to change. The advocacy movement (a small force) has no hope of getting the World Bank and the relief and development establishment (big objects) to move. It is a waste of time and energy to try merely by frontal assault. Advocacy for debt relief There has been a lot of advocacy effort for debt relief. It has been going on for decades, and the problem of debt is still around, and new debt is being added all the time. The advocacy is pushing against a symptom of the problem, rather than the problem itself. The advocacy community involved with this is strong, well organized and highly motivated, but at the end of the day, not doing very much. Advocacy for transparency There has been a big growth in the dialog about transparency over the past 20 years, but dialog about transparency does not improve the practice of good accounting. Getting value from “transparency” in big and complex organizations needs quite sophisticated management information and organizational structures so that what one gets to see has any meaning. The transparency movement is not strong in its accounting dimension. The words are persuasive, but the substance is not much. There are many papers, workshops and conferences ... there are press releases ... but it is rather more difficult to get a sense of what of durable value has been accomplished. Communities in the “south” seem to be faced with ongoing failure of the relief and development sector, and the fund flows still seem to be at risk. Letter writing ... and more The advocacy movement can do very well in getting letters written. Bread for the World Bread for the World is a big organization and proud of how long it has been in existence and how big it is. They are able to get lots and lots of people to contact Congress ... but at the end of the day ... for what result. They have not been able to change the behavior of Congress very much at all ... but the power of their organization has a huge potential to do something much more valuable than merely sending letters to legislators. But it is not really clear how much politicians modify their views, and make legislation that reflects the theme of the letter writing campaign. If the goal is to have an impact on the performance of relief and development then something different is needed that goes beyond just writing letters. Principles of physics 2 There are lots of principles of physics that can be applied in real world situation. ➢ A little force applied to the long arm of a lever can move a very big object ... a little bit at a time ... all that is needed is a lever and a solid place to rest the fulcrum of the lever. ➢ Or an alternative ... a small movement at the little end of a level produces a big movement at the long end of the lever.How can this be applied in the relief and development sector? The advocacy movement can get the big objects to move by finding where they might be vulnerable, and leveraging that. I have concluded that they are very vulnerable in the area of performance, lack of management information and willingness to be transparent ... and their need for perpetual funding support. The media is powerful and capable of taking over the information agenda, but this will be less possible where there are strong sources of good information that are easily accessible. With a relatively small amount of effort, a system of credible management information can be built to help the media tell stories that are of relevance to the relief and development sector. The advocacy movement is a key part of a healthy society. The advocacy associated with the relief and development sector has been active but not effective. This needs to change, and it is entirely possible. The advocacy movement has the potential to be very valuable. It knows how to get people's attention and communicate a message. But after that ... what? There needs to be a natural next step in all advocacy so that people who get the message can do something of value. Other Structures New structures are needed Many of the existing relief and development sector structures are very well suited to their core activities, and would respond well to a regime of good management information. But some new structures are needed. These new structures will fill gaps in the relief and development sector and serve to catalyze some new high performance activities. Community Development Finance Organizations There is a need for a structure that: (1) has a form that donors like; (2) a form that beneficiaries like; and, (3) a form that is operationally effective and limits risk to all concerned. In most cases, the beneficiaries that need to benefit are ones that live and work in communities. Socio-economic value is rarely generated in any other position in the relief and development value chain. The financial and economic realities must be addressed in a way that is acceptable to the key stakeholders: (1) the donors; and, (2) the beneficiaries. The critical realities are: (1) there is latent potential in a lot of communities in the “south” but no cash; (2) there is a lot of cash in the capital markets and corporate organizations in the “north”; and, (3) no organization that effectively bridges the gulf between the two. In the event that it is difficult, if not impossible, to create a single organization that has the dual personality needed, then there needs to be a chain of organizations that link end to end from community to funding and from funding to community. Universal Public Accountability Consortium There is a need for a group to come together to implement a universal public accountability program. Some group is going to have to take a role in championing the establishment of public accountability. A group of existing organizations could form a consortium to take on this challenge, and to establish and maintain the necessary technology infrastructure to make it functional. |
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