The 21st Century NGO In the Market for Change

SustainAbility The Global Compact United Nations Environment Programme 01 Forewords Acknowledgements

The 21st Century NGO is part of an ongoing learning process for SustainAbility. The 02 Executive Summary extensive research that went into the production of this report has only been possible with the active help and support of a wide variety of organizations and Novo Nordisk 04 Chapter 1 individuals. Top of this group have been our NGOs in the spotlight project partners, namely Gavin Power and Vivian Smith of the UN Global Compact team, and Jacqueline Aloisi de Larderel and 06 Chapter 2 Cornelis van der Lugt from the United Paradigm shift Nations Environment Programme (UNEP).

We are extremely grateful for the financial 10 Chapter 3 support of our strategic partners, Novo The business of NGOs Nordisk and VanCity Savings Credit Union, VanCity Savings Credit Union and also warmly thank our other sponsors, DuPont, Holcim and the International 20 Chapter 4 Finance Corporation (IFC) for their generous Agenda 21: NGO governance support for the project.

The four workshops that provided additional 26 Chapter 5 material for the project involved a wide From market intelligence to range of actors. Here we would particularly intelligent markets like to thank Vivian and Gavin for their DuPont support in co-hosting the Porto Alegre World 36 Chapter 6 Social Forum and New York City workshops, Bringing change to market Rita Clifton at Interbrand for co-hosting our London workshop, and Priscilla Boucher of VanCity and Suzanne Hawkes of Impacs for 46 Chapter 7 their invaluable help in organizing the final Conclusions and Vancouver workshop. recommendations We are deeply indebted to our Project 52 Appendix 1 Advisory Group, including Priscilla Boucher Holcim Centres of Excellence (VanCity Credit Savings Union), Jed Emerson (Hewlett Foundation), Barbara Fiorito (Oxfam USA), Vernon Jennings (Novo Nordisk), Miklos 53 Appendix 2 Marschall (Transparency International), Viraf Interviewees and Mehta (Partners in Change) and Simon Zadek Workshop Participants (AccountAbility). They commented on early drafts of our white paper and then on the 55 Appendix 3 final report. Notes International Finance Corporation Finally, we would like to thank Infonic for their research support, Catalysis for their help with outreach as well as other members of the SustainAbility Core Team, including in particular Jodie Thorpe, Kavita Prakash-Mani, Tell Muenzing, Oliver Dudok van Heel, Judy Kuszewski, Yasmin Crowther and Geoff Lye for their help in organizing workshops, undertaking interviews and reviewing early drafts.

The research and conclusions presented in this report have not been formally endorsed by the supporting organizations (listed above) and consequently are the sole responsibility of SustainAbility. Any remaining errors of fact or judgement are SustainAbility’s. If you spot any, please let us know. The 21st Century NGO 01

SustainAbility foreword UN Global Compact foreword UNEP foreword

The 21st Century NGO represents the first The strategic move by many non- The first UN conference on the environment phase in a new round of our work on the governmental organizations to become active in Stockholm in 1972 highlighted that agenda driven by NGOs — and on the players within market systems has profound pollution knows no borders. Twenty years emerging strategic, accountability and implications for multi-stakeholder initiatives later at the Rio Earth Summit, the link governance agendas for NGOs themselves. that seek positive social and economic between environment and development was The report is partly an updating of work change. made. The Johannesburg Summit last year SustainAbility has been doing for more than reinforced the concept of sustainable a decade on evolving relationships between For some civil society actors, confrontation, development, highlighting the need for a business and civil society — and, in particular, which has proved a highly effective means new development model in our globalized between business and NGOs. But it is also for raising awareness of critical issues, is world. It also emphasized the social and intended as a provocation, as an being joined by cooperation with other environmental responsibilities of the encouragement to NGOs to challenge their stakeholders, including business, to produce corporate world. own thinking, sense of mission and strategies. solutions to pressing global challenges. UNEP has been working with business and As we wrote the report, we imagined Much of this shift stems from the realization industry for many years to engage different ourselves talking to NGOs and those who that many of today’s problems require sectors in an effort to advance sustainable fund them, but we would hope that public multi-stakeholder responses. Moreover, the production and consumption. We have been and private sector readers will also find ascendancy of markets demands that societal hosting annual consultative meetings with useful guidance on where the agenda may actors come to grips with today’s market trade and industry associations since 1984, now be headed. This is no longer a simple fundamentals in order to reach their goals. involving increasing numbers of NGOs and matter of reputational risk for such sectors, labour organizations. These dialogues raised but of potential market drivers. As NGOs’ The UN Global Compact is an ambitious awareness among associations of new expertise and contacts evolve, so they experiment in multi-stakeholder challenges and equipped them to catalyse themselves will come to be seen by collaboration intended to embed global change in their own ranks. UNEP helped thoughtful companies, investors and markets with universal principles around bring many key stakeholders to the table, government agencies as a source, direct or human rights, labour, and the environment. providing a neutral platform for the indirect, of market intelligence. The logic: The findings of this report are important to discussion of major issues. On many if NGOs shape markets and markets shape the Global Compact, which can succeed only occasions, however, questions were raised companies, then companies that understand if business, labour and civil society work from various sides about the role and where key NGOs are headed may get the together. Dozens of international NGOs are representivity of different partners. jump on their competitors. now actively engaged in the Global Compact, in addition to numerous local NGOs — all In this publication SustainAbility builds on The report is based on a wide literature working as part of the Compact’s worldwide the tradition developed in our Engaging review, interviews with nearly 200 key people network of stakeholders. Stakeholders series of tackling the big issues around the world, and four workshops held in head on. So for example: how do NGOs go Brazil, Canada, the United Kingdom and the In addition, this report will help inform about working with business? There is no United States. In addition to thanking those a high-level UN panel that is currently ‘one-size-fits-all’ solution. We are all who took part in the interviews (pages 53- examining the interaction between civil confronted with complex societal roles: 54), we are enormously grateful to the UN society and the UN system as a whole. the diversity of sustainable development Global Compact Team, the United Nations requires a diversity of approaches from all Environment Programme, our sponsors (Novo We would like to applaud SustainAbility actors including NGOs. Nordisk, VanCity, DuPont, Holcim and the for once again stretching the boundaries International Finance Corporation), our of current thinking and thereby provoking During sixteen years as head of UNEP DTIE, NGO partners and the wider project team. new debates and discussion. We are certain I have learned that we need to evolve our Thank you all. that this new report will lead to a better shared vision, while keeping our feet on the understanding of the critical trends and ground. This is why over this time I have so Seb Beloe dynamics that are unfolding within the enjoyed the partnership with SustainAbility Director, Research & Advocacy civil society movement. which I hope has brought new ideas and John Elkington new light to the sustainability debate. Chair, SustainAbility Georg Kell Executive Head, UN Global Compact Jacqueline Aloisi de Larderel Assistant Executive Director, UNEP Director, UNEP DTIE (Division of Technology, Industry and Economics)

Seb Beloe John Elkington Katie Fry Hester Sue Newell Georg Kell Jacqueline Aloisi de Larderel The 21st Century NGO 02

Executive summary Panel 0.1 ‘Old’ and ‘new’ NGOs The not-for-profit sector is now worth over $1 trillion a year globally.01 As a result, it Issue 20th Century 21st Century Comment attracts growing attention, not all of it comfortable. For example, McKinsey & Status Outsiders Insiders 20C NGOs spent the second half of the Company — the management consultancy — century as outsiders, challenging the system. say that the US nonprofit sector alone could 21C NGOs will increasingly be part of it. free up at least $100 billion in additional value by changing its notions of stewardship Focus Problems Solutions 20C NGOs spotlighted problems, seen as and its operating practices.02 Non- symptoms of market failure. 21C NGOs will governmental organizations (NGOs) that focus on solutions, delivered through (and once largely opposed — and operated often disrupting) markets. outside — the system are becoming integral to the system (Panel 0.1). So expect growing Structure Institutions Networks Many 20C NGOs started small, then grew into interest in NGO priorities, strategies, major institutions. Growth will continue, but accountability and business models. 21C NGOs will invest heavily in networks.

Funding Guilt Investment Much 20C NGO funding was fuelled by public Backdrop: the shifting landscape anger or guilt. 21C NGOs will aim to persuade supporters that they are good investments. The 21st Century NGO project is our seventh survey of the NGO landscape, but is the Worldview 1-D 3-D 20C NGOs communicated in sound-bites, first supported by such a wide consortium with single-issue campaigns. The 21C of NGOs and public and private sector agenda will be multi-dimensional, ditto partners. The project has detected early most successful NGOs. tremors which we believe represent warning signs of seismic shifts in the landscape Accountability Ad hoc Strategic Most 20C NGOs followed charity sector across which NGOs operate. Our assessment rules. 21C NGOs adopt best practice in of the implications is reflected in Panels transparency, accountability and 0.1 and 0.2. governance.

Beyond these cross-cutting themes, we Source: SustainAbility 2003 © identified several key issues which will have a profound influence on the role, Globalization: Few interviewees think NGO governance: The heat is on, with relationships and responsibilities of 21st globalization has ended: most indicators NGO trustees and directors facing tough century NGOs. These include: suggest the process continues.03 new challenges. Today, nonprofit boards Paradoxically, perhaps, many NGOs now are expected to: From market intelligence to intelligent argue for more globalization, not less. markets: Currently, few NGOs spend much But they stress that it needs to be refocused — govern to determine the direction of time thinking about business, let alone on ‘globalizing human rights, justice and the organization and to make plans markets. Even so, they have had a profound accountability for those that abuse those and policies; influence on both. The evidence, however, rights’. A growing number of NGOs are — employ, support, and evaluate chief suggests a need to engage and shape actively working to understand how the executives; markets more directly. The key question is: processes of globalization can be guided — approve budgets and monitor expenses; how can we civilize capitalism through to create and distribute greater social and — raise funds; and markets? Panel 5.1 (page 27) sketches five environmental benefits. — promote the organization’s cause. main areas of response: anti-business campaigns; market intelligence; market Civil society boom: On current evidence, Tomorrow, in addition, they must manage engagement; intelligent markets; and NGO and civil society organization (CSO) four areas of risk and opportunity as shown market disruptions. numbers, scale, reach and influence are all in Panel 0.2. We apply a SWOT framework to likely to grow. These people, whoever and the NGO sector in Chapter 6 (pages 36–45), wherever they may be, are driven by values assessing their capacity to manage a fifth that are typically different from those tension: engagement with businesses and prioritized in major economic and political markets. institutions. And it’s an extraordinary fact that the global nonprofit sector, with its $1 trillion-plus turnover, could now rank as the world’s eighth-largest economy.04 The 21st Century NGO 03

Panel 0.2 Risk mapping tool for NGO boards Accountability — Stakeholder issues — Constituency issues — ‘Responsible’ (TBL) campaigning — Competitive positioning T lity ra — Brand exploitation bi ns — Corporate co-option ta pa n r u e Transparency o n c c — Financial & ethical disclosures c y — Director & staff compensation A vernanc Go e — Promotion policies & practices — TBL reporting — TBL assurance mechanisms Funding Risks — Adequate for current needs — Adequate for future needs — Sources of funding Pe e — Fundraising methods rformanc —% allocation to ‘cause’ F s Standards u d n r d a — Professional standards & targets i d —Position on CSR frameworks ng an St e.g. GRI, AA1000 — Stakeholder benchmarks — Stakeholder satisfaction — TBL standards required of suppliers & partners

TBL: Triple Bottom Line

Source: SustainAbility 2003 ©

Conclusions 6 In the process, new forms of competition Recommendations Our headline conclusions are that: are evolving in the ‘NGO market’, with So what should NGOs do? new entrants like companies, business 1 Although by no means universally popular, networks, NGO networks and social The first thing is to recognize that markets NGOs, NGO-like organizations and CSOs entrepreneurs blurring traditional are central to their future. Markets are play an increasingly vital role in boundaries. becoming legitimate channels for social democratic and democratizing societies. change — and are also likely to be, on 7 Both national and international NGOs, balance, more efficient and effective than 2 The challenges they address are as a result, are having to pay more many traditional approaches. But the rules of growing — and will continue to do so. attention to the whole area of branding the game, clearly, will be very different. and competitive positioning. 3 Governments and business may resist Second, NGOs need to: establish where they their advocacy, but there is now real 8 In parallel, the mainstreaming trend is are and need to be against the five-stage interest in the potential roles NGOs can exposing established NGOs to new model (page 27); and explore aspects of the play in developing and deploying accountability demands. internal agenda, including strengths and solutions. weaknesses spotlighted by the risk mapping 9 But, problematically, all of this is tool (above) and the SWOT framework (page 4 As a result, a new market-focused happening at a time when traditional 37). Recommendations for NGO funders are opportunity space is opening up, but this sources of NGO funding are increasingly offered on page 49, with guidance for often requires solutions that are not squeezed. businesses interested in working with NGOs simply based on single-issue responses. on pages 26–35. 10 Finally, we sense an urgent need to 5 This represents a challenge even for most review — and further evolve — NGO mainstream NGOs, so public and private ‘business models’. sector partnerships are increasingly essential in leveraging change. The 21st Century NGO 04

Introduction: why NGOs? The globalization of capitalism has seen The research successive waves of market liberalization and When SustainAbility first investigated the privatization sweeping around the world. Our research ran from September 2002 world of non-governmental organizations These trends, in turn, have provided a rich through May 2003. A key component of the (NGOs), in 1987,05 the scale and influence of variety of issues for civil society, in general, work involved interviews with leading NGOs the movement was already considerable — and NGOs, in particular, to confront. from different world regions (page 53–54). In but its subsequent evolution, fuelled by the total, we involved nearly 200 people in the processes of globalization, has been Globalization may have been on its back foot research either as interviewees or workshop extraordinary. The 21st Century NGO project in 2003, but our research suggests that we participants.08 Each was selected on the basis represents our seventh survey of the NGO may be seeing a structural change in the of such criteria as geography, issue focus, landscape,06 but is the first to have been ‘business environment’ within which NGOs peer referral and size of the organization they supported by a consortium of NGOs and operate. The primary focus of this work has represented.09 The primary focus has been on public and private sector partners. All our been on the large, international, branded understanding NGO perspectives, but we have previous surveys have explored aspects of the NGOs, though we have also interviewed a also talked to key individuals in foundations, interactions between NGOs, business and range of national groups operating in governments, businesses and academia in markets, but this latest project has detected countries around the world. We have order to better understand the context within early tremors which we believe represent explored both the emerging priorities which NGOs operate. Based on these insights, warning signs of seismic shifts in the promoted by these NGOs as well as critical we have attempted to extrapolate out, landscape across which NGOs operate. challenges they themselves are beginning to reading between the lines of our interviews, face. As indicated by the involvement of key to generate a perspective on where But why focus on NGOs — and why now? NGOs both as supporters of the project and international NGOs and the agenda they drive One key reason: there is growing interest in as members of our project advisory group may be headed. the role and impact of ‘civil society’, usually (see inside front cover), our explicit aim defined as representing that set of throughout has been to map the emerging We readily acknowledge that the institutions, organizations and behaviours agenda, with a view to helping NGOs respond organizations covered here are predominantly situated in the space between the state, the to the new challenges efficiently, effectively northern-based — and biased towards well- market and the family. Appendix 1 spotlights and in time. known ‘professional’ membership-based a number of centres of excellence in this NGOs. In part this is because we believe that area. The way in which civil society In highlighting NGOs and emerging trends in such models help describe how other parts of researchers view NGOs is well summarized their operating environments, our logic runs the world may develop. But, at the same by Michael Edwards of the Ford Foundation: as follows: time, we realize that NGOs operating in ‘If civil society were an iceberg, then NGOs emerging markets face very different would be among the more noticeable of the — First, international NGOs powerfully shape opportunities and constraints. Our insights in peaks above the waterline, leaving the great and drive the corporate responsibility and these areas have also been integrated into bulk of community groups, informal sustainability agendas. this report, but we do recognize that further associations, political parties and social research is needed in order to more fully networks sitting silently (but not passively) — Second, as a result, NGOs represent lead address these emerging market issues. below.’ 07 indicators of where political and business agendas are likely to go in future. Clearly there is a world of NGOs and beyond Activist NGOs are the shock troops of civil that a broader civil society that is not fully society, but there are many others forms of — Third, given the scale of the changes represented in this report. Nonetheless, NGO, focusing — among other things — on needed in the world to ensure sustainable though still small, our interview pool does analysis, networking, behind-the-scenes development, their role is likely to grow represent a significant community of NGOs lobbying or service delivery. Whatever they in importance. and other leaders. It is on the basis of this do, the roles and responsibilities of NGOs group that our conclusions are drawn. have been thrust into the spotlight in the — But, fourth, they face growing competition wake of the profound changes that followed for public, political and business ‘mind- the collapse of many communist bloc share’, as other actors adopt their regimes. perspectives, language, campaigning style and tactics and work at how to deliver change.

— Fifth, as some NGOs build major brands and move into the mainstream, they face growing calls for greater transparency and accountability.

— And, sixth, as the landscape tilts around them, some of the more thoughtful NGOs are recognizing an increasingly urgent need to revisit and refine their roles, responsibilities and business models. The 21st Century NGO 05

The report Panel 1.1 Definitions The 21st Century NGO is designed for a mixed readership. Primary target audiences are Accountability NGO NGOs and their funders, with specific An actor (whether an individual or an Self-governing, private, not-for-profit recommendations for each in Chapter 7. organization) is ‘accountable when that organization geared toward improving the We also believe that the study will be of actor recognizes that it has made a promise quality of life of disadvantaged people.15 interest to people from the business to do something and accepted a moral and community who want to better understand legal responsibility to do its best to fulfil Partnership what tomorrow’s NGO will look like, and that promise’. 10 A partnership is a cross-sector alliance in where their agenda is headed. The report in which individuals, groups or organizations particular gives guidance on NGO-business Civil Society agree to: work together to fulfill an partnerships and how these can be most Civi society is the set of institutions, obligation or undertake a specific task; effective (Chapter 5). The structure of the organizations and behaviour situated share the risks as well as the benefits; and report runs as follows: between the state, the market and the review the relationship and revise the family. Specifically, this includes voluntary agreement regularly.16 — Chapter 2 looks at market and political and non-governmental organizations of changes that are driving a ‘Paradigm Shift’, many different kinds, philanthropic Social Enterprise which in turn is transforming the NGO institutions, social and political movements, A business whose main aim is to generate ‘market’. other forms of social participation and a social benefit, with the secondary aim of engagement and the values and cultural generating a fair return to investors.17 — Chapter 3 focuses on ‘The Business of patterns associated with them.11 NGOs’ — addressing ten key questions Social Entrepreneur about their role and operations. Corporate Social Responsibility (CSR) A change agent in the social sector who CSR implies continuing commitment by devises new ways to meet unmet social or — Chapter 4 then describes in detail four business to behave ethically and contribute environmental need through the market.18 challenges facing NGO boards. to economic development while improving the quality of life of the workforce and their Sustainable Capitalism — Chapter 5 explores a fifth challenge in families, as well as of the local community A system of capitalism which maintains the greater depth, investigating how NGO and society at large.12 long-term health of the diverse economic, engagement with business is shifting social and environmental systems on which ‘From Market Intelligence to Intelligent Emerging Markets it depends. Markets’ and analyzing some of the Developing countries recognized as having implications for NGOs. access to international capital markets, Sustainable Development thereby creating opportunities for Development is sustainable where ‘it — Chapter 6 applies a standard business attracting private capital flows.13 meets the needs of the present without SWOT test to NGOs, asking the question compromising the ability of future how successful they are likely to be in Market generations to meet their own needs’. 19 ‘Bringing Change to Market’. Conditions affording individuals or groups the opportunity for buying or selling goods Triple Bottom Line — Chapter 7 sets out our key conclusions or services.14 A framework for measuring and managing and recommendations and provides a set economic, social and environmental value, of 21 internal and external challenges added or destroyed. for international NGOs, including a set of ‘wild cards’. For more information see www.sustainability.com

Activist NGOs are the shock troops of civil society. The 21st Century NGO 06 Paradigm shift

NGOs are entering a huge opportunity space, but they also face growing competition. The 21st Century NGO 07

Challengers challenged Not everyone is comfortable with the Panel 2.1 increasingly central role of NGOs, however. The Cardoso Panel Like it or not, NGOs are experiencing a Mike Moore, the WTO’s former director- paradigm shift. The environment in which general, is far from alone in calling for ‘new In February 2003, UN Secretary-General they evolved — and boomed — is now rules of engagement’ between civil society, Kofi Annan announced the formation mutating. Some trends are in their favour, international institutions and governments.24 of the ‘Cardoso Panel’ to assess the others not. Anti-globalization protests, ‘NGOs have had too much of a free ride in interaction between the United Nations underpinned by a groundswell in public identifying themselves with the public and civil society organizations. The panel, support, have come to define the latest interest,’ agrees Jeffrey E. Garten, Dean of chaired by former Brazilian President wave in public concern for social and the Yale School of Management. ‘They have Fernando Cardoso, includes a number environmental issues.20 But as 2003 dawned, acquired the high ground of public opinion of eminent persons representing much of the world was distracted by more without being subjected to the same public governments, NGOs, the private sector pressing fears around ‘security’ and the scrutiny given to corporations and and academia. global ‘war on terror’ led by the world’s governments.’ 25 Garten concludes: ‘It is time new hyper-power, the United States. that companies and governments demand The panel will work against a backdrop more public examination of NGOs.’ of exponential growth over the past In many ways globalization, if not actually in decade in the number and influence of retreat, appears to be very much on the back- Not surprisingly, some NGOs see such NGOs, and their increasing interaction in foot. The failures of multilateralism in Iraq, challenges as attempts to muzzle critics. formal deliberations of UN bodies and political schisms in the European Union, a Instead, they argue that membership NGOs conferences. Today, more than 2,000 NGOs backlash from many world regions including derive their legitimacy from their supporters, have consultative status with the UN the Islamic world, the faltering Doha Round often numbered in millions. But these calls Economic and Social Council, and about of trade talks, incipient protectionism, SARS: for NGO transparency and accountability 1,400 with the UN Department of these have been just some of the factors can only grow as these organizations go Information. undermining confidence in our economies mainstream and, in the process, handle ever- and in globalization.21 greater financial flows and exert increasing While NGOs have been instrumental in political influence.26 directing international attention to the In spite of such anxieties, however, importance of poverty reduction and few interviewees believe the process of This trend was a key reason why human rights, there have also been signs of globalization has actually ended. Most SustainAbility decided to embark on this, our strain within the UN system. As Kofi Annan indicators of globalization continue seventh NGO survey. But, we soon concluded noted: ‘Many Member States are wary of to increase.22 Indeed, paradoxically that if we were to simply focus on NGO the constant pressure to make room for perhaps, many NGOs now argue for more accountability, we would risk missing a much NGOs in their deliberations, while NGOs globalization, not less. In the process, more significant trend for NGOs and civil feel they are not allowed to participate however, they stress that it needs to be society. This is the accelerating paradigm meaningfully’. One of the objectives of the refocused on ‘globalizing human rights, shift from a late 20th Century focus on panel will be to examine the ways in which justice and accountability for those that governments and regulation, to an early participation of NGOs from developing abuse those rights’.23 In the build up to the 21st Century obsession with markets as the countries can be facilitated. 2003 G8 Summit in Evian, for example, principal channel for delivering sustainable the talk was of ‘humanised globalization’ development.27 This shift is the central focus and we began to hear of alternative of The 21st Century NGO. (rather than anti) globalization activists, or ‘altermondialistes’. The civil society boom Instead of simply confronting globalization, many NGOs we spoke to are actively working Early in 2003, SustainAbility and the Global to understand how these processes can be Compact team co-hosted a workshop at the guided to create and distribute greater social World Social Forum (WSF) in Porto Alegre, and environmental benefits. Consequently Brazil (Panel 5.9). The sheer number of people the new agenda promoted by international at the Forum (120,000, according to some NGOs straddles a range of issues, among estimates) suggests that the civil society them: new definitions of security, global and sector is still booming. This assumption drives corporate governance, accountability in most of the centres of excellence (page 52) Like it or not, financial markets, access to basic necessities tracking civil society and NGO trends, many in emerging markets (e.g. clean water, projecting further growth in NGO numbers. NGOs are experiencing affordable energy, and drugs for HIV/AIDS Key drivers they spotlight include: and other diseases) and the role of social a paradigm shift. entrepreneurs. The 21st Century NGO 08

Panel 2.2 Membership growth in international NGOs 1990–2000

120,000 120,000 1990 2000

100,000 100,000

80,000 80,000

60,000 60,000

40,000 40,000

20,000 20,000 Japan Oceania South Asia estern Europe North America W East Asia / Pacific Sub-Saharan Africa Low income countries High income countries Middle income countries Latin America / Caribbean North Africa / Middle East Eastern Europe / Central Asia Source: Union of International Associations

— the opening up of ex-communist and One possible outcome: some activist NGOs focused on service-provision, including other emerging or transition economies to networks and NGOs will begin to use market many of the world’s largest NGOs such as markets, democracy and civil society forces more consciously and aggressively to CARE and Global Vision International, are also models. 28 undermine particular companies or sectors. being subjected to intensifying competitive — the communications revolution, with But, Gilding notes that, ‘when it comes to pressures. Declining government funding, the internet and other information how to achieve market transformation, the more demanding beneficiaries and donors, technologies linking and empowering problem is that NGOs are almost completely and new market entrants increasingly require individuals and groups worldwide. ignorant on how markets and business work, these groups to ‘perform or perish’, in the — the withdrawal of government from many while business is largely ignorant of how to words of Kumi Naidoo of Civicus, a speaker areas of service provision, especially to work with NGOs.’ Strongly stated, but many at our New York workshop on NGO vulnerable communities. NGO people would probably accept the idea accountability. — falling trust in traditional institutions that they still have much to learn about (governments, church, business). business and markets. Significantly, however, As the new paradigm evolves, some — ongoing social inequality and continued many we interviewed are now investing interviewees fear that NGOs that once environmental degradation. growing efforts in this area. pushed out into ‘open space’ — that hadn’t been previously defined or colonized — will Beyond growth in numbers, several Inevitably, like mainstream markets, the find they are increasingly reduced to mopping interviewees predicted other changes in the NGO ‘market’ has its own ’bulls’ and ‘bears’. up, filling in voids left by markets and focus of NGOs. ‘We’re seeing a sea-change in Take Chris Rose, who has had senior roles in governments. But others insist that NGOs terms of social change,’ says Australia-based Friends of the Earth, WWF and Greenpeace. and other elements of civil society will Ecos executive chairman Paul Gilding, a He wonders whether a 30-year ‘golden era’ mutate to adapt to the new conditions. former executive director of Greenpeace of NGOs is now ending, and suspects that International. ‘Market forces are seen as there is a real risk of a major downturn in increasingly legitimate. And NGOs are the prospects for advocacy NGOs.29 starting to smell changes in the relationships between corporations and society. The big thing to watch for is NGOs switching on to market transformation, and being more deliberate and strategic in such approaches.’ The 21st Century NGO 09

Either way, these trends have major Other voices also argue that there are Panel 2.3 implications for NGOs. Indeed, in contrast inherent weaknesses in current forms of NGOs in emerging markets to those who claim that NGOs have had globalization, with market dominating élites their day, some see NGOs just entering their guaranteeing dysfunctional outcomes.34 Democratization, globalization and the golden age. With public opinion research If globalization continues, we would expect rise of new market economies are having consistently showing NGOs enjoying high a continuing relative disempowerment of profound impacts on NGOs in these levels of trust,30 both governments and governments — with power and influence countries. In Latin America and South companies have no option but to take notice. migrating to businesses, the financial sector, Africa, where civil society was often multilateral organizations and, inevitably, focused on the struggle for democracy, NGOs have even been described as the ‘Fifth NGOs. NGOs have been able to refocus on Estate in Global Governance’, with NGO development and the environment. ‘super-brands’ now enjoying much higher In China, Russia or Central Asia where levels of trust and influence than global Holding capitalism in tension there is little tradition of NGOs, there companies.31 In emerging markets, some has been a growing recognition of the governments are also turning to NGOs for Once, many business people and political positive contribution they can make. advice on key issues. Vladimir Putin, no less, leaders thought of NGOs as communist- was recently involved in a Civic Forum for inspired. Today, as many civil society Paradoxically, however, democratisation NGO leaders aimed at providing input on organizations go mainstream, such can also weaken civil society if NGO Russian government policy. accusations seem almost quaint. But there leadership moves into government. may be an interesting historical parallel in Mokhethi Moshoeshoe of the African the making. Just as communism, in all its Institute of Corporate Citizenship observed: Finches, not dodos forms, helped hold capitalism in tension and ‘Until 1994 NGOs in South Africa were spurred social progress in the market- focused on the political agenda and No need to worry, then, that NGOs will go the dominated world, so in a world where the confrontation. Post-1994, their main cause way of the dodo. Of course, as they enter the market is becoming the dominant paradigm, went away and they lost some of their top mainstream, it will become harder for any NGOs and other civil society groups are people to the government. They were left one NGO to stand out from the crowd, which evolving to play a similar role of holding big rudderless and without leadership.’ is why we have focused on NGO branding business (and big government) in check.35 (Panel 3.6). But, on current evidence, far from However, in other cases, previously being on the slippery slope to extinction their While NGOs may come under growing sceptical governments have begun numbers, scale, reach and influence are all competitive pressure both from existing and consulting NGOs. Daniel Taillant of the likely to grow in the coming decade. Panel 2.2 new actors, the people who found and drive Center for Human Rights and Environment illustrates the significant growth in NGO these organizations are an entrepreneurial in Argentina comments that: ‘NGOs were numbers between 1990 and 2000.32 bunch. They will come up with new ways to seen to be people at the margins pulling drive social change and deliver social and at chains they shouldn’t be pulling at — Remember, though, that evolution also environmental value to their clients, questioning authority. However, there involves natural selection. A significant beneficiaries, funders and other supporters. have been advances and some recognition number of NGO people we spoke to expect a that others outside the state also have ‘shake-out’. ‘There is a need for — perhaps the That said, they could still prove to have been expertise and can contribute.’ imminence of — a market correction in the a transitional stage in social evolution. Think NGO sector,’ says Bob Dunn of Business for back to Martin Luther pinning his 95 theses African Institute of Corporate Citizenship Social Responsibility (BSR). So, instead of to a church door in Wittenberg. Was that so www.corporatecitizenship-africa.com dodos, maybe we should think in terms of very different from Greenpeace hanging Darwin’s finches, mutating to occupy highly banners off factory chimneys or nuclear Center for Human Rights and Environment diverse ecological niches? Certainly reactors? The values that drove Luther in www.cedha.org.ar globalization is throwing up plenty of new the early 1500s spawned the evolution of issues, opening out new niches for both proliferating forms of Protestantism which, activism and service delivery. in turn, helped drive the processes of wealth creation and accumulation now labelled ‘Globalization’, argues Kumi Naidoo of ‘capitalism’. Civicus, ‘is exacerbating global inequality, and its “rules” — to the extent that we can call It seems certain that values introduced by them that — appear to be driven by the rich NGOs will play a similar role in the 21st at the expense of the poor.’ 33 He notes that: Century, but where will today’s NGOs be in ‘Globalization, and the forces driving it, is 2020, let alone 2100? throwing up a set of intractable challenges that brazenly cross national borders and which, by their very definition, defy national- level solutions. The spread of environmental degradation, HIV/AIDS, human trafficking, the drug trade and terrorism are all enabled by globalization.’ The 21st Century NGO 10 The business of NGOs

For a $1 trillion global business, the non-profit sector is still very poorly understood. The 21st Century NGO 11

Like most social movements, many of Also, at least in the early stages of the NGO Panel 3.1 today’s best-known international NGOs life-cycle, NGOs often have little knowledge Long-lived NGOs emerged from the fringes of society. Over of the processes of wealth creation and time, however, their issues — be they distribution they challenge. So these Many international NGOs are decades, environmental protection, poverty alleviation people, unlike politicians, businessmen or if not centuries old. The International or human rights — have begun to come in bureaucrats, are typically outside the welter Committee of the Red Cross for example, from the cold. But for many people they still of pressures and drivers that lock business was set up in 1863 by a Swiss citizen, remain something of an unknown quantity. and government into well-established and horrified by the lack of adequate medical So here are answers to the ten questions potentially problematic ways of operating. services for the thousands of wounded we were most frequently asked by those following the battle between France and outside the NGO world who have to work As these groups become more established, Austria at Solferino, Italy. out how to relate to these organizations they may blend into the mainstream, and their agendas. sometimes because they sell out (‘watchdogs Indeed wars — and their aftermath — were becoming lapdogs’, as UK environmental often the catalysts for the formation of activist Jonathon Porritt once put it), and NGOs. Save the Children was set up in Who are these people? sometimes because the mainstream itself 1919 by two sisters campaigning against has shifted. Development groups, for the injustice of the economic blockade We were recently asked this question by example, once mere gadflies, are now major on Germany and Austria, and CARE (the senior executives of a major international institutions in their own right. Definitional ‘Co-operative for American Remittances energy company which has been hounded by problems make estimations of the size of the to Europe’) was formed after the second NGOs. ‘Who are these people?’ they wanted sector problematic, but by most measures world war to provide relief to impoverished to know, and ‘Why are they so different this is a large industry — so large that almost communities in Europe. from us?’ Big questions — and strikingly by definition it is ‘mainstream’.36 Valued at reminiscent of the film Butch Cassidy & The over $1 trillion a year, and employing 19 Some environmental NGOs also have their Sundance Kid, when the outlaws are finding million paid employees, it’s an extraordinary roots in the distant past. The US Sierra it impossible to shake off the pursuing posse. fact that the sector could now rank as the Club, for example, was founded in 1892 by world’s eighth-largest economy. John Muir to protest proposed reductions Those who work in NGOs, be they ecological in the boundaries of Yosemite National campaigners or program officers delivering Park, while the Royal Society for the humanitarian relief, have always been Where did they come from? Protection of Birds (now Europe’s largest different from those who run the powerful wildlife conservation organization) was institutions of the day. This is only in part an NGOs did not spring into existence fully set up in 1889 to campaign against the issue of wanting to see change in shorter formed in 1961, even though that was the Victorian trade in wild bird plumage. time-scales than those inside the system feel year that Amnesty and WWF were first is possible. The values that many of those launched, as illustrated in Panel 3.2. Social Red Cross who have gone into NGOs hold are also activism has long roots. For example, the www.icrc.org significantly skewed when compared with movement in the early 1800s to ban slavery those working in the mainstream worlds of in the British Empire was partially driven by Save the Children business and government. They prioritize the British and Foreign Anti-Slavery Society, www.savethechildren.org ethical, social or environmental issues in and some of today’s best-known NGOs also different ways and feel a stronger sense of have their roots in the late 19th Century.37 CARE outrage when these values are offended. www.care.org In the early years, religious groups often That said, however, we have seen a striking played a key role, including providing recruits The Sierra Club convergence between the values of those to work in these new organizations. The links www.sierraclub.org in the NGO or CSO sectors and those between the anti-slavery movement and (particularly younger people) working in religious groups such as the Quakers are well RSPB mainstream institutions. Indeed, this is one documented. But churches were also very www.rspb.org.uk of the factors now driving the growing active in supporting the emergence of a new interest, on all sides, in partnerships. It is still wave of NGOs founded to provide aid to true, however, that NGOs and CSOs attract communities devastated by World War II, as people who are driven by an urgent sense of well as in supporting the independence and social, economic, environmental or political pro-democracy movements in Europe and injustice. And this, in turn, can lead to forms elsewhere. of organizational schizophrenia as some people in a given NGO promote partnerships with business or others actors, while others oppose such relationships, either as a matter of principle or because of specific concerns about a particular potential partner. Managing such tensions is becoming a central challenge in many NGOs pursuing the path of engagement. The 21st Century NGO 12

Panel 3.2 Growth in numbers of international and national NGOs with key founding dates

50,000

45,000 founded as

40,000

35,000

30,000 founded as the Co-operative for founded as The British and Foreign 25,000

20,000 Care International 15,000 / The Oxford Committee for Famine Relief 10,000 Anti-Slavery International Anti-Slavery Society International Committee of the Red Cross Audubon Society Sierra Club Save The Children Oxfam Christian Aid American Remittances to Europe International Union for the Conservation of Nature International Union for the Protection of Nature 5,000 1839 1863 1886 1892 1919 1941 1945 1948 910s 1830s 1840s 1850s 1860s 1870s 1880s 1890s 1900s 1 1920s 1930s 1940s 1950s Source: SustainAbility 2003 © based on information from the Union of International Associations

Panel 3.3 The 1960s and 1970s, however, saw the Ten North-South differences emergence of a new, largely secular and increasingly activist wave of NGOs. Amnesty Northern (developed market) NGOs Southern (emerging market) NGOs International, for example, was formed in 1961 to be ‘a permanent international 1 Well researched (page 52) Poorly researched movement in defence of freedom of opinion and religion’. The US Natural Resources 2 Broadly accepted part of national and Variously banned, tolerated or neglected Defense Council (NRDC) followed in 1968, international governance players in governance Friends of the Earth a year later (1969), splintering from the Sierra Club over the 3 Many big, international brands; often Few brands, mostly national and smaller; issue of nuclear power, then Greenpeace franchised internationally brands rarely franchised (1971) and Human Rights Watch (1978).

4 More individual giving Fewer, larger supporters A generational shift was under way in the NGO world. Previously, many long- 5 Foundation support (and agendas) Multilateral aid agency support established organizations were run by central (and agendas) central people who were broadly positive — or at worst neutral — to business, whereas new 6 Skew towards campaigns, advocacy, Skew towards service provision, though groups were often launched by younger though there is a vast — if less visible — there are some very powerful activist people who were anti-business, anti-profit world of service providers movements and anti-growth. In some cases, their line has softened, in others not. 7 Professionalization well advanced Professionalization early stage Recently, we have seen an ‘echo boom’ of 8 Growing capacity to engage business Weak capacity to engage business indigenous, independent NGOs in many emerging and transition markets, with the 9 High leverage NGO-business High leverage NGO-business partnerships fall of the Berlin Wall in effect signalling partnerships fairly well established still fairly rare the dawn of a new era for CSOs. In many of these former Soviet countries, as well as 10 Often speak for ‘South’ Hardly ever speak for ‘North’ other emerging markets, there has been explosive growth in NGO numbers. The 21st Century NGO 13 ATTAC / OneWorld / Global Witness / The Ethos Institute / CIVICUS / Friends of the Earth Amnesty International / / Médecins Sans Frontières / Global Village of Beijing act P / / founded as Action in Distress founded as Tearcraft Mexican Center for Philanthropy Coalition for Environmentally Responsible Economies / orld Wildlife Fund eace Brigades International raidcraft ransparency International W founded as Appeal for Amnesty Natural Resources Defence Council Survival International Philippines Business for Social Progress Greenpeace ActionAid T Human Rights Watch The Centre for Science and Environment P Landless Peasants Movement Landless Peasants Conservation International CERES CEMEFI International Business Leaders Forum International Campaign to Ban Landmines T The Treatment Action Campaign The Treatment Jubilee 2000 The National Business Intiative (South Africa) Association for Taxation of Financial Transactions for the Aid of Citizens of Financial Transactions Association for Taxation 1961 1968 1969 1970 1971 1972 1975 1978 1980 1981 1984 1987 1988 1990 1992 1993 1998 1996 1995 1960s 1970s 1980s 1990s 2000s

But in contrast with the situation in the BENGOs, for example, are ‘Bent NGOs’, That’s a key reason why we are seeing at developed world, the larger national NGOs in offering sweetheart deals to founders, least some anti-globalists, for example, these countries are sometimes set up by staff or others. ENGOs are focused on the beginning to reposition themselves as business leaders to deal with urgent social environment, MANGOs are ‘Mafia NGOs’, promoting alternative forms of problems. For example, Philippines Business providing cover for money laundering or globalization. In short, this isn’t simply for Social Progress was set up in 1970 in protection services and GONGOs — a rebranding issue for individual NGOs or response to the Marcos regime; in South ‘government organized NGOs’ — are an CSOs, but for entire sectors. Making the Africa the National Business Initiative was important element of civil society in switch won’t be easy, but it has to be done. aimed at facilitating dialogue between countries like China and Russia, even holding business and political players towards the government itself to account in some cases. end of the apartheid regime; and in Brazil the ABRINQ Foundation was set up by business The most widely used term for organizations people to address child labour problems. that are neither run by government nor See also Panel 3.3 for other differences profit making has been non-governmental between ‘Northern’ and ‘Southern’ NGOs. organization (NGO). Increasingly, however, the term CSO is also used. This embraces not only fixed address organizations with paid What do we call them? staffs, but also the whole range of groupings and associations that make up civil society. 39 That’s a tough one. NGOs have been called all sorts of things over the years, but as the If we stand back from this proliferation roles and issues they address have grown — of acronyms, however, one thing is clear. and as others have sought to mimic their Organizations that are primarily defined language and structure — the labels have by their labelling as non- (e.g. non- also proliferated. So what do we call them? governmental, nonprofit) or anti- (e.g. anti- NGOs, NPOs (nonprofit organizations) globalization, anti-war) organizations, have or CSOs (civil society organizations)? a communication challenge to address. Or should we use terms like BENGO, BRINGO, Some of them, at least, recognize the need ENGO, GONGO, MANGO, PONGO, RONGO or to emphasize more positive, pro- messages. SONGO? 38 It all depends, but these semi- humorous labels raise real issues. The 21st Century NGO 14

Panel 3.4 Sharks, Orcas, Sealions and Dolphins A sealion NGO Polarizers Integrators would not think Aim to achieve change by Aim to achieve change disrupting the status quo through constructive of biting the hand through confrontation partnerships with businesses, governments and other that feeds it. stakeholders

Discriminators Orca Dolphin Study targets to — Highly intelligent —Great capacity to learn understand how best — Strategic — Adapts strategies and to engage them — Independent behaviour to context — Unpredictable — Creative — Eats both sealions and — Fends off sharks some dolphins

Non-discriminators Shark Sealion Do not discriminate — Acts on instinct —Keen to please between targets —Tactical at best — Professional and — Attacks any target well trained in distress — Prefers the mainstream — Often attacks — Uneasy if separated in packs from its group — Feeding frenzies

What do they do? — Orca — Dolphin Greenpeace was one of the most obvious Migration into this area continues apace These days, there is an incredible diversity of players in this area back in 1996-7, but as more NGOs recognize that businesses NGOs and NGO-like activity. In 1996, has now been joined by others like Global and market frameworks have to be SustainAbility carried out an assessment of Exchange, The Corner House, People for addressed for significant change to be the ways in which NGO-business the Ethical Treatment of Animals (PETA), achieved. It is important to note, however, relationships were developing.40 In the and the Sierra Club. In addition, this that many new entrants in this category process, we introduced a new set of labels category has been bolstered by groups are not NGOs. Socially responsible for NGOs: Sharks, Orcas,41 Sealions and migrating from other areas. investment groups like Sustainable Asset Dolphins (Panel 3.4). The language was Management (SAM), as well as social widely picked up, but now, seven years on, — Sealion enterprises or ‘campaigning companies’, we wanted to check whether the A key characteristic here is that an NGO display many Dolphin characteristics. Our classifications still held up. wouldn’t think of biting the hand that research also suggests that this area will feeds it. There are still plenty of NGOs continue to evolve significantly in the The answer is a qualified yes. While the happy to adopt this role, even though coming years (see Chapter 7). categories still work well, there have been Sealions have been coming under attack substantial changes in the composition and from more aggressive NGOs. As a result, Like pioneer species of plants that specialize character of each of the different categories, some Sealions are cleaning up their act. in colonising new areas, ‘pioneer’ NGOs also for example: NGOs operating in emerging economies, colonise new issues. For example, the for example, often have little choice in involvement of NGOs in issues like access to — Shark where their funding comes from, but essential medicines for poor communities A key trend here has been the surfacing of many that would have fallen into this generally follows a ‘life cycle’, with the a considerable number of groups within category in 1996 are now stricter about identification of an issue at the grass roots the broader ‘anti-globalization’ movement who they allow to support their work. level first, after which other actors weigh in that oppose globalization and consider Oxfam’s refusal to accept funding for to generate a critical mass that drives the violence legitimate against a broad range development work in Iraq from the issue up the agenda of decision-makers. of targets. ‘belligerent countries’ has been a recent Panel 3.5 illustrates the life-cycle of the case in point.42 Interestingly, a number of campaign to promote access to essential NGOs are now developing criteria for medicines, in particular access to AIDS drugs when they will and will not accept money in emerging economies. from companies (Panel 5.4). The 21st Century NGO 15

Panel 3.5 Life cycle of an issue — access to essential medicines

Levels of public exposure The mainstream media Politicians and regulators e.g. The Doha Declaration on the Trips Agreement, The public George Bush’s AIDS Initiative e.g. Celebrities (Mandela, Bono) and foundations (Bill Gates) Local activists and networks e.g. Third World Network, Health Action International, Treatment Action Campaign

International NGOs and UN agencies e.g. MSF, Oxfam, UNDP, WHO

Emergence phase Expansion phase Extension phase Embedding phase Time

Source: adapted from Peter Winsemius, Tilburg University

How are they organized? — M-form organizations include NGOs like CARE, Human Rights Watch, National Inevitably, given the range of issues NGOs Business Initiative (South Africa), and address, their geographical diversity, varying Philippines Business for Social Progress. sizes and cultural context, there is an Some may incline to conservatism over enormous variety of organizational forms. time, but they can also be extremely Nonetheless, Helmut Anheier of the London challenging. In some ways, perhaps, School of Economics (LSE) Centre for Civil they have had less time to be tamed Society 43 has suggested that there are three and co-opted by the system. basic organizational forms: the ‘unitary’ (or U-form), ‘multidivisional’ (M-form) and — N-form organizations are different ‘network’ (N-form) varieties. again; their primary characteristic is network structure. Global public policy — U-form organizations include traditional networks like the World Commission on unions, the Catholic Church, the Red Dams, the International Action Network Cross and Red Crescent Societies, on Small Arms and the Coalition for an Socialist International and the International Criminal Court would be International Chamber of Commerce. considered N-form NGOs as would These organizations are hierarchical, Climate Action Network, Friends of the stable, predictable and centralized. They Earth International, Reclaim the Streets, also tend to be somewhat conservative. the World Social Forum and many other anti-globalization movements. The 21st Century NGO 16

Panel 3.6 Is there an NGO life cycle? Do they compete or collaborate? What future for NGO brands? The simple answer is no, not a predictable While it is rarely openly acknowledged, In March 2003, a SustainAbility-Interbrand one, but organizations of all types go NGOs in their more developed markets workshop in London explored the through life cycles: they are born, learn, of the north clearly compete for media importance of ‘brand’ to NGOs. Our instinct mature, reproduce 44 and, in some cases, attention, members, money and other was that the increasingly crowded NGO enter a period of senility before they die or resources. What’s more, market pressures marketplace would be leading NGOs to fall into a coma. So what can we say about favouring competition appear to be focus on the clarity of their identity, values, NGO life cycles? The first thing is that there building. Karen Suter of the UK Royal message and brand. The workshop are ‘flushes’ of NGOs, just as flowers bloom National Institute of the Blind argues attracted major NGOs such as OneWorld in the desert after rain, NGOs thrive on that: ‘There is a lot more competition International, Amnesty International, and upwellings of issues and there are periods between charities, and we are increasingly Friends of the Earth as well as smaller — like the 1960s in Western Europe and the competing for a smaller cake of players such as the Fairtrade Foundation, US or the 1980s in Eastern Europe — when donations’. 45 Traidcraft and the Soil Association. In a new generation wakes up to a new set of broad summary, we found that: issues and decides to take action. This competition powerfully influences how NGOs are run. Some groups specifically — Yes, NGOs are thinking hard about their Focusing on international NGOs, most have design their fund raising strategies to avoid brands, with many engaged in brand emerged in response to a specific set of competing with important stakeholders, management activities, though they needs and issues, but often these needs and including other NGOs. The US Center for describe it as ‘clarity of identity’ or issues have evolved over the years. In the Environmental Leadership in Business, for ‘communication of values’ — both felt case of groups like CARE, they have shifted example, in its initial stages chose not to to carry less of the baggage of corporate from delivering aid packets to Europe to compete for foundation money because jargon and business speak. helping to address the root causes of it did not want to compete with other poverty in communities around the world. environmental NGOs. Equally, UK — Many NGOs have recruited professional development groups coordinate the timing ‘brand managers’ to enhance the clarity ‘Wise heads’ might argue that N-form of fund raising activities so they do not of thinking and communications behind organizations will eventually ‘grow up’ compete with one another. So, for example, NGO brands. and adopt many M- and even U-form ‘Christian Aid Week’ is scheduled for characteristics. Certainly, such networks a different week from ‘Save the Children — NGOs recognise that they have become are likely to crystallize out into a cluster Week’. a medium in their own right for of new, semi-permanent or permanent business communication of corporate organizations. The largely N-form World While fundraising has been the primary responsibility, hence some of the Social Forum, for example, may need to area of competition, increasingly the larger, demand for partnership, and that this become more institutional over the years branded NGOs are also competing for brings both risks and rewards. if it is to translate the energy that it has ‘mindshare’ among target audiences rallied into effective change. including with governments, the media and — They know that credibility is business. Several interviewees said that at fundamental to their success, and that But there is no inevitable migratory path least some NGO communications their brands must stand for integrity from N- to U-forms, and many U- and M- departments are actively discouraging as a minimum. They are grappling form organizations may well adopt aspects collaborative engagements with other with how business partnerships might of the N-form ‘business model’ to ensure NGOs because they are thought to challenge this ‘integrity’ with the success in their changing environments. introduce confusion into stakeholders’ ‘consumers’ of their causes. For example, established groups like minds about a given NGO’s brand platform. Environmental Defense, or World Vision Indeed the importance of developing and — They increasingly see steps to bring International have adopted the maintaining a powerful brand is something transparency and accountability into campaigning techniques of the hugely that NGOs are increasingly conscious of, their sector as fundamental to the effective internet campaigns or ‘dot-causes’ with several using branding PR agencies to longer term success of their brands, and which are often no more than loose assist them in developing a strong and all they aspire to stand for. Among the networks of ‘hacktivists’. coherent ‘brand message’. 46 NGOs that have invested heavily in their brands are the Fairtrade Foundation, Oxfam and WWF.

For further information on the workshop see www.sustainability.com/programs/ pressure-front/workshops The 21st Century NGO 17

But, while competition undoubtedly exists, Panel 3.7 many leading NGOs are also able to No silver bullet for NGO accountability collaborate effectively. This is particularly true at an individual level, where field staff So how should an NGO handle the 3 Legitimacy often collaborate by sharing resources and accountability agenda? This question was NGOs are often challenged on their working actively together where their the subject of a SustainAbility-Global legitimacy (e.g. ‘Do NGOs speak as the missions overlap. In company-focused Compact workshop held at the UN poor, with the poor, for the poor, or about campaigns, individuals in different headquarters in New York in April 2003. the poor?’).50 Among other things, organizations often take the approach that Given the variety of NGOs operating legitimacy can be based on: moral and one NGO will adopt a confrontational globally, there is no one-size-fits-all legal sources, membership base, technical attitude, while — in a pincer movement — approach, no silver bullet. But at least five expertise, and/or effective performance. another adopts a more collaborative elements are generally considered Some NGOs feel that a membership-based posture. As Jules Peck of WWF-UK important: organization operating in a democratic explained: ‘Different NGOs have different society is by definition legitimate. skills. The good cop, bad cop routine works 1 Drivers for accountability However, in other areas, where there are really well. Where we agree on the overall Four drivers for NGO accountability weaker legal and regulatory structures, objective, WWF will often go in the back emerged from a team workshop 48 on certification schemes and self-regulation door to work with companies behind the the subject: morality (accountability of the NGO market are emerging to scenes, while other groups create the is right in principle), performance provide this legitimacy — for example, the pressure by banging on the front door’. (accountability improves effectiveness), Philippines Council for NGO Certification political space (accountability increases (PCNC)51 and the Credibility Alliance 52 Organizationally, collaboration is often credibility and thus influence), and in India. easier between ‘non-traditional’ partners wider democratization (accountability operating across different sectors. ‘Five of NGOs strengthens democracy in the 4 Stakeholders Year Freeze’ in the UK, for example, is a general political environment). Beyond NGOs must answer to competing demands coalition including environmental NGOs, meeting basic moral and legal norms, from a variety of stakeholders for the development groups, farmers, religious NGOs need to establish an appropriate results and wider impacts of their groups, unions and women’s groups balance between the resources required performance. Stakeholder mapping for campaigning against genetically for additional accountability and the NGOs is increasingly a management modified crops. 47 benefits that might accrue from this necessity as they must understand and (e.g. how it supports an NGO’s mission). balance their accountability to at least Collaboration is also a strong feature of three sets of stakeholders: clients, staff NGO activity in many emerging economies. 2 Geopolitical context associates, and supporters (see page 19).53 So the East-East program, sponsored by the Expectations and mechanisms for Open Society Institute, links NGOs in the accountability vary enormously 5 Implementation former USSR and Central and Eastern depending on the laws, culture, funding A number of mechanisms are available to Europe. GroundWork in South Africa has patterns and location of an NGO’s assist in implementing the chosen level of partnered with NGOs in India on health operations: for example, transparency accountability. The Global Accountability issues, while Grupo Puentes is a new may represent a great risk in countries Project (GAP), for example, identified four network of Latin American and Dutch where human rights are not fully dimensions of both internal stakeholder NGOs which seeks to share information protected. Similarly, accountability for accountability (member control, on corporate social responsibility. funding is very different for NGOs appointment of senior staff, compliance dependent on large numbers of local, mechanisms and evaluation processes) individual donors than it is for NGOs and external stakeholder accountability dependent on philanthropic funding (external stakeholder consultation, from international organizations. complaint mechanisms, corporate social Furthermore, in areas where civil responsibility, and access to information) society is relatively young, sophisticated that are important for international and onerous demands regarding NGOs to consider. 54 accountability may be unrealistic, even strongly counter-productive at this For further information on this workshop see stage. Interestingly, as was stated at our www.sustainability.com/programs/pressure- ‘Do NGOs speak as workshop on the issue: ‘There is no word front/workshops 49 the poor, with the for accountability in Portuguese.’ poor, for the poor or about the poor?’ The 21st Century NGO 18

Panel 3.8 Who funds them? Real changes in NGO revenue by source 1990–1995 France, Germany, Hungary, Israel, United Kingdom, United States For many NGOs, the honest answer to this question is still virtually nobody. According to the Regional Environment Center in Hungary, there are over 900 NGOs in Poland, 8% Fees hropy for Se over half of which survive on an annual ant rvic hil e 5 budget of less than € 500. However, for P 2% the larger international NGOs that are the primary focus of this study, the main sources of funding are governments, foundations and individual contributions. Save the Children in the UK, for example, has an annual budget of £110 million, of which nearly half comes from individual donors. CARE International, on the other hand, based in Brussels and the largest of all international NGOs, received almost 70% of its US$420 million budget in 2001 from government contributions.

The importance of large donors in NGO business models is even more inflated in emerging economies, where local awareness of NGOs may be low and local donors P ub are few and far between. In such cases, lic international donors are often the only Se cto significant source of funding. This fact can r 40% raise issues of divergent priorities, political agendas and ‘tied aid’, as well as long-term sustainability when major donors move on. That said, Ashoka as well as the Soros and the Rockefeller Foundations are looking Source: The Johns Hopkins Comparitive Non-Profit Sector Project to stimulate local philanthropy, and the International Finance Corporation is helping transform nonprofit initiatives into commercially viable micro-finance banking institutions. 55

For NGOs dependent on money invested in stock markets, recent losses around the world are proving particularly difficult. In 2002, for example, major US foundations were experiencing significant losses, with The Packard Foundation reportedly losing almost 70% of its value. In the UK, too, the value of UK charities’ and voluntary organizations’ equity investments has fallen sharply. According to a study published in early 2003, these investments have lost nearly a third of their value (£8.6 billion) since the beginning of 2001.56

For NGOs dependent Some interviewees argued that these pressures will mean many NGOs ‘end up on money invested in going to the wall’. But even for those that survive, major changes are likely with several stock markets, recent interviewees acknowledging that they are actively looking to diversify sources of losses around the funding, including developing ‘fee for service’ offerings, a source of funding that has world are proving increased markedly in recent years (see particularly difficult. Panel 3.8). The 21st Century NGO 19

Who are their stakeholders? How effective are they? Panel 3.9 Measuring NGO effectiveness Although different NGOs are likely to answer In many NGOs this is a long standing issue, this question very differently, ultimately whereas for others it is only now surfacing.57 One indicator of how the NGO world is most international NGOs recognize their Given the nature of their work, however, it becoming more competitive: the number accountability to three primary stakeholders: is often hard to say, but recent research of agencies and consultants helping suggests ‘not very’. Now, with less money to funders target the most ‘effective’ NGOs — Clients give, large donors are increasingly focused with their support. Third party investors In basically the same way that companies on ensuring that their donations provide like Venture Philanthropy Partners in are accountable for the quality of the maximum value. New foundations launched the US, or independent consultants like products and services that they supply to by the new breed of entrepreneurs — like New Philanthropy Capital in the UK, are their customers, so NGOs are accountable the Gates Foundation, and a new slew of developing methodologies that, they for the quality of the services that they corporate foundations 58 — are keen to apply believe, enable them to identify and provide to their ‘clients’. While in some business metrics to the philanthropy world. support the most effective NGOs targeting cases this relationship is clear (for key social or environmental issues. example the beneficiaries of the services They see themselves as making ‘investments’ they provide), in other cases the ‘clients’ in projects rather than grants, working with NGOs themselves are responding by may be more abstract like ‘future ‘partners’ not ‘grantees’. They talk targets and developing more systematic approaches to generations’ or ‘justice’, or marginalized milestones and are interested in concepts measuring effectiveness. ActionAid voices like wildlife or children. like ‘blended value’, where the idea is that recently implemented ALPS (Accountability, the social and environmental value created Learning and Planning System) to provide a — Staff and Associates by NGO projects are assessed, valued and framework for reviewing and assessing the A significant share of NGO power and rewarded.59 performance of the organization, and the influence comes from the skills and US-based Foundations of Success has expertise of their staff, as well as the NGOs increasingly are also being ranked on recently started working with conservation wider networks of supporters and aspects of their performance. In the US, for organizations to develop metrics volunteers they attract and mobilize (e.g. example, both Worth and Forbes magazines for measuring the effectiveness of including other members of federation now run annual features assessing the conservation efforts. NGOs). Like companies, NGOs are clearly efficiency and effectiveness of different accountable to these communities for the NGOs.60 Consultants specialise in giving ‘As a conservation industry, we have to way that they operate, for without their guidance on which NGOs are most effective prove we are effective in achieving what support (in the form of money, energy or and groups like the American Institute of we say we do,’ said Nick Salafsky, the co- time) they could not achieve their Philanthropy provide annual ‘Charity Rating director of Foundations of Success. ‘If objectives. NGOs often work in coalitions Guides and Watchdog Reports’. 61 As the next we can't show that, the attention and and so also owe some accountability to chapter explains, such trends signal new resources of society will shift to other their coalition partners. And NGOs pressures for NGO trustees and directors. problems. That realisation, and pressure working towards the same goal as other from donors is forcing conservation to NGOs, local communities or grass roots wake up and face this issue.’ organizations share at least some accountability for their actions across Venture Philanthropy Partners this network. www.venturephilanthropypartners.org

— Donors and Supporters New Philanthropy Capital Traditionally, NGOs have not had the www.philanthropycapital.org forms of legitimacy or financial support typical of true markets, in that many of Foundations of Success their ‘clients’ are unable to pay, or www.fosonline.org cannot pay enough to support an NGO’s operations. So that’s where a third group of stakeholders have also been recognized for NGOs. This group includes major donors and other resource providers such as foundations and governments, the UN and sometimes companies.

While one might assume that this makes NGO accountability relatively straight- forward, complications arise because conflicting demands are often put on NGOs by their different stakeholders. Their boards and managers must ensure that there is balance between these competing demands (see page 17). The 21st Century NGO 20 Agenda 21: NGO governance

NGO trustees and directors face four main areas of risk and opportunity The 21st Century NGO 21

Panel 4.1 Risk mapping tool for NGO boards Accountability — Stakeholder issues — Constituency issues — ‘Responsible’ (TBL) campaigning — Competitive positioning T lity ra — Brand exploitation bi ns — Corporate co-option ta pa n r u e Transparency o n c c — Financial & ethical disclosures c y — Director & staff compensation A vernanc Go e — Promotion policies & practices — TBL reporting — TBL assurance mechanisms Funding Risks — Adequate for current needs — Adequate for future needs — Sources of funding Pe e — Fundraising methods rformanc —% allocation to ‘cause’ F s Standards u d n r d a — Professional standards & targets i d —Position on CSR frameworks ng an St e.g. GRI, AA1000 — Stakeholder benchmarks — Stakeholder satisfaction — TBL standards required of suppliers & partners

TBL: Triple Bottom Line

Source: SustainAbility 2003 ©

Times, they are a-changing. As Charles F. The four areas of tension fall into two main Probing deeper, we found two broad Dambach of BoardSource argues: ‘There areas: governance (specifically accountability approaches to NGO accountability. Some was a time when service on many nonprofit and transparency) and performance (funding NGOs and their supporters believe that boards was perceived mainly as an honorary and standards). We will work through each concerns about accountability are directly role. Today, nonprofit boards are expected to in turn. Although these are tensions, or addressed as a function of their make-up. govern — to determine the direction of the paradoxes, that NGO trustees, directors and Stephen Tindale, Executive Director of organization, to make plans and policies, managers will increasingly have to address Greenpeace UK, argues that as a to employ, support, and evaluate the chief and resolve, clearly they are also false campaigning organization that is both executive, to approve budgets and monitor dichotomies. Most NGOs will not have transparent about what it does, and gets expense, to raise funds and promote the a choice of either/or; instead, it will be all its money from individuals, ‘the question organization’s cause.’ 62 a matter of both/and. of accountability does not really arise’. 63 Others see membership numbers as a proxy On the basis of our interviews, we see a for accountability. ‘And the more members, cluster of emerging issues that NGO boards 1 Accountability the greater their legitimacy,’ as Barbara must now address. The overarching challenge Exclusive or Inclusive? Unmüßig of the Boell Foundation in Germany is the need to come to grips with the put it. Such groups see a major tension paradigm shift identified in Chapter 2. The This issue, often linked to NGO transparency between greater accountability entire landscape in which NGOs operate is (see section 2 below), surfaced time and and their desire to be flexible and nimble. tilting towards market-based thinking and again in interviews. In one case, a US NGO solutions. Linked to this shift, we see four even asked us to drop the whole line of Many northern NGOs also worry about areas of risk and opportunity. A ‘beta version’ inquiry. In effect, they could see the issue the implications of accountability demands of a tool for mapping these risks and coming, but wanted to postpone the day of for southern NGOs, which are politically opportunities is shown in Panel 4.1. reckoning. The reaction was strongly more vulnerable. In some cases, greater reminiscent of corporate responses to the transparency may pose real personal risks NGO trustees and directors need to be clear whole reporting agenda a decade or so ago (Panel 3.7). This is a crucial issue — and one on where they stand in relation to this new when the triple bottom line agenda began we hope to explore as part of our ongoing landscape of risk and opportunity. They need to emerge. But, as Panel 4.1 suggests, there 21st Century NGO program. to actively review and audit where the NGOs are real issues about the extent to which they are responsible for are currently campaigns are ‘responsible’, the degree to positioned — and how they might best which NGOs allow their reputations and move forward. brands to be used and stretched in relationships with non-NGO actors, and — an ongoing danger — the risk of capture and co-option by partners, private or public. The 21st Century NGO 22

Most mainstream NGOs, however, The strategic dilemma for the international One way in which at least some NGOs are particularly those in our ‘Dolphin’ category, NGOs that are the main focus of this study is trying to address such issues is via reporting value the extra legitimacy provided by clear how to value and responsibly manage their (Panel 4.2), with groups like WWF (UK) now accountability processes more highly than relationships with local constituency groups. producing their own environmental reports, they do any flexibility lost. Some, such as One interviewee argues that NGOs while others like Amnesty International are Amnesty, Friends of the Earth, Oxfam, the increasingly need to ‘think locally and act under pressure from members to produce Sierra Club and Transparency International, globally’, bringing the knowledge and their first reports. It will be interesting to see have extensive internal democratic processes authenticity of local experience to bear on whether growing numbers of NGOs sign up for selecting leaders and/or identifying global issues and policy-making. Groups like to new transparency and stakeholder campaign priorities and positions. the Polaris Institute in Canada are proving engagement standards like the Global adept at this by coordinating an informal Reporting Initiative (GRI) and Meanwhile, another growing tension in network of community groups from around AccountAbility’s AA1000 standard — not the NGO community is between what Steve the world, in an ongoing battle against the simply to pressure the corporate world, Viederman of the Initiative for Fiduciary privatization of water. but to ensure that they, too, comply with Responsibility calls ‘membership-based emerging best practice. NGOs’ and ‘constituency-based NGOs’. Simultaneously, local groups must ensure Membership NGOs are the professional that they stay true to their own campaigners and activists working in constituencies. A key challenge facing 3 Funding the branded NGOs, typically operating indigenous NGOs in Central and Eastern Simplicity or complexity? internationally. Constituency groups, by Europe, according to Robert Atkinson at the contrast, operate locally and are composed Budapest-based Regional Environment The third tension reflects the growing of grassroots individuals motivated to take Center, is to get back to their roots. Having complexity of many of the issues that NGOs action by issues that they face in their own often refocused on the needs and priorities are now confronting. Fundraisers must raise daily lives. of international donors, including the main the funds needed for NGOs to function. branded NGOs, some of these local groups NGO program staff, by contrast, are usually Major NGOs clearly need to proceed with have drifted away from their membership focused on delivering the ultimate product or caution. As Marlo Raynolds of Canada’s base. These gaps must be bridged if such service associated with the organization’s Pembina Institute puts it, with a degree groups are to remain legitimate. mission. The tensions here are obvious. of understatement: ‘The gap that I see is between the bigger brand-name NGOs and In addition, there are thorny issues around the local grass-roots groups. These bigger 2 Transparency how money is raised from the public, which groups do not have the time to work with Stealth or goldfish bowl? corporate sponsors are involved and on what local communities by and large. The grass- terms, the extent to which all such funds end roots in turn can get a bit frustrated by this.’ The element of surprise has often served up addressing the issues promoted during campaigning NGOs well. So even fundraising, and the degree of wider (e.g. Even where there is interaction, the potential organizations that accept the accountability triple bottom line) leverage achieved by exists for major ‘brand’ NGOs to act as a trend (with growing demands for financial NGOs with all the resources at their disposal. ‘dominant species’, restricting the space and even ethical disclosures) have real available for small local NGOs to evolve. problems around just how far linked Jeanne-Marie Gescher of Beijing-based transparency pressures should go. This is not Claydon Gescher Associates Sustainable simply a question of whether the overarching China notes that: ‘Chinese NGOs are growing strategy should be stealthy or open, but of up in a very sophisticated world. They will be which bits of an NGOs operation should be judged by the same standards as developed subject to which rules. world NGOs — which may limit their natural growth (or their ability to grow naturally).’ That said, one thing is clear: the transparency element of the NGO accountability equation will attract much greater interest and effort. Miklos Marschall of Transparency International (TI) argues that the ‘natural accountability deficit’ of NGO work can be overcome with an approach he calls ‘Transparency +’. Appropriately enough, this approach requires TI to ‘provide more information than is needed on who we are, what we do, and where our money comes from.’ Interestingly too, TI is also planning to focus more of its work on the whole issue of NGO transparency. The 21st Century NGO 23

As the most dramatic problems are addressed, real ‘shock-horror’ (and funder- friendly) stories may be harder to find in some areas. As Tony Juniper of Friends of the Earth puts it: ‘It isn’t easy to find pictures of chimneys with orange smoke coming out of them any more!’ 64 So an ongoing dilemma for many NGOs will be how to migrate their supporter bases away from easily understood issues towards the more complex issues that ultimately are where future action is likely to be most effective.

Further complexity is added as NGOs increasingly have to think in ‘3-D’, ensuring that their own activities are coherent from an environmental, social and economic perspective. As one interviewee put it: ‘NGOs can still be very flaky, anti-democratic and other-worldly. They often ignore the impacts that they may be having on employment!’

Jobs may be particularly sensitive politically in a recession, but there are many other potential political landmines that NGOs can unwittingly step on. Mainstream NGOs are increasingly attuned to these risks. For example, initial support for boycotts aimed at banning child labour, supported by NGOs like Save the Children, have been replaced with more sophisticated responses recognising the trade-offs that must be made. As Save the Children (UK) argue in Source: Foreign Policy magazine their report Business Benefits: ‘In an ideal world, no child would work unless they wanted to, but families who are struggling to survive don’t have many choices’. 65

NGOs that fail to effectively address these wider concerns not only risk public resistance to their proposals, but may also attract attacks from other NGOs. WWF, for example, was recently criticized by Sir Paul McCartney on behalf of PETA (People for the Ethical Treatment of Animals) for supporting a new EU chemical testing regime which will lead to an increase in the number of animal tests. Growing NGO transparency may even increase the challenges for NGO boards and managers in such areas, as the reporting trend has in the corporate sphere. ‘Today, nonprofit boards are expected to govern.’ The 21st Century NGO 24

Panel 4.2 Panel 4.3 NGO report benchmarking NGO report scores

Many readers will be aware of — Impact and effectiveness of programs Organization Score (%) SustainAbility’s regular surveys of (including campaigns, projects, corporate sustainability reporting, which public policy initiatives, consumer CERES 45 rank company reports on the quality, education, etc.). credibility and usability of information Oxfam GB 42 provided. As an experiment, we decided These are relatively early days for NGO to do the same with a handful of recent reporting in these areas, so we would WWF (UK) 41 NGO reports. expect a wide range of scores. In Panel 4.3 we present the results of our quick Save the Children (UK) 38 Many NGOs provide annual reports of assessment of a sample of NGO reports. some sort, normally a basic yearly review It’s worth noting that these groups vary Environmental Defense 28 of finances. In many countries, these widely in size and available resources, reports are required by law, just as they so direct comparisons are difficult. Civicus 25 are for companies. With a top score of only 45% and an Global Action Plan 24 But a handful of organizations are now average of just 29%, this small sample beginning to issue more sophisticated suggests that NGOs currently lag World Vision 21 reports. These tend either to examine considerably behind their corporate the organization’s own environmental counterparts in both the quality and Friends of the Earth (UK) 18 management and performance (CERES coverage of reporting. We would stress, and WWF); or, in the case of Oxfam GB, to however, the huge variation in size and One World Trust 9 assess how their main stakeholders view resourcing between organisations like their operations and effectiveness. Oxfam, Save the Children or WWF and tiny outfits (if influential) like the One World The role of NGOs in society is different Trust. And, having recently completed from that of companies, of course, so the SustainAbility’s own latest accountability basic thinking behind our assessment report, we are also acutely aware of just methodology had to be modified. how time-intensive such reporting We considered three main spheres of exercises can be. influence for NGOs: But we believe that the pressure is building — Organizations’ mission, purpose and on NGOs to demonstrate accountability basic design (including governance, and earn trust. Given the critical stakeholder relationships, principles and importance of trust and perceived integrity codes, and main issues and impacts). to the whole NGO and CSO sector, we expect growing activity in this field and — Internal operations (including particularly among organizations (including employment and compensation issues, CERES and SustainAbility) that pressure efforts to manage the sustainability others (e.g. governments and businesses) impacts of everyday operations and to come clean. development of performance indicators for programmatic activity). For more information see www.sustainability.com The 21st Century NGO 25

4 Standards Even where civil society and NGOs are Passion or professionalism? relatively new, we see an intensifying push towards greater professionalization. The The final area cuts across all the others. NGO Development Center in Russia has NGOs, whatever issues they address, tend moved from providing basic advice to to be fuelled by a sense of injustice, even NGOs to helping with more specific skills outrage. Passion is their fuel. But the such as managing effective meetings, mainstreaming of much of the NGO sector time management and training for means that NGO boards have to manage a administrative staff. growing tension between a ‘24/7’ approach to work, characterized by raw passion and In addition to traditional funder 100% commitment, and the ‘9–5’ approach requirements, growing links with business that commonly characterizes more in the developed world are driving greater ‘professional’ work environments. professionalization among NGOs and community groups in emerging economies. While not unique to the NGO community, So Future Forests, a UK-based business that this tension is particularly acute in a sector helps companies minimize their climate where many staff members are driven less impacts, is working with Women for by the traditional benefits of salaried work Sustainable Development 66 to develop carbon than by a deep personal commitment to the storage capacity. Such relationships mean issues. As already mentioned (page 22), that NGOs are having to become more this leads to a set of tensions that have to focused on managing and measuring the be managed — and often managed with impact of their operations. exquisite sensitivity — as these organizations evolve partnerships where there has been Indeed, a key assumption in our 21st Century a history of mutual hostility. NGO program is that many of the most successful international NGOs will undertake As the NGO sector has matured, strategic reviews of their activities and plans, professionalisation has made major inroads. using some variant of the tool illustrated in Many NGOs have introduced strategic Panel 4.1. Having done so, they will aim to planning to give the organizations more meet new accountability and transparency structure and direction. Oxfam, under their requirements by moving towards fuller, triple Strategic Change Objectives, has set out a bottom line disclosures and reporting. more structured process for selecting campaign priorities. And WWF International has developed a ‘WWF College’ to promote networking and career advancement opportunities.

NGO boards have to manage a growing tension between a ‘24/7’ and a ‘9-5’ approach to their work. The 21st Century NGO 26 From market intelligence to intelligent markets

Is there an evolving NGO master plan for transforming 21st Century markets? The 21st Century NGO 27

Panel 5.1 Five NGO responses to the market

NGOs respond to markets in five main ways (Anti-Business As markets evolve, however, tensions are created that ultimately Campaigns, Market Intelligence, Business Engagement, Intelligent are released through ‘market disruptions’. Often driven by Markets and Market Disruption). The first four responses are usually regulatory change or new liability regimes, such disruptions can additive with each additional response growing in sophistication, jump market frameworks to higher levels of sustainability (Figure A) building on the experiences of the previous one and working in but can also knock them back down to lower levels (Figure B). parallel to drive business and market change.

Figure A Figure B

Market Disruption Market Disruption

arkets arkets nt M nt M lige lige tel tel In ent In ent agem agem Eng Eng ss ss ne nce ne nce si lige si lige u tel u tel B In B In et ns et ns rk aig rk aig a p a p am am M C M C s s s s e e n n i i s s

u u

B B

- -

i i

t t

n n

A A

Source: SustainAbility 2003 ©

Influencing markets Meanwhile, levels of trust in companies and So, particularly given what happened to the private sector continue to fall. ‘People communism with its manifesto, does this Currently, very few NGOs spend much are angry with corporations and distrust lack of a grand vision and plan really matter? time thinking about business, let alone their power. This is not the exclusive view It does, we believe, and will come to matter markets. Even so, they have had a of incorrectly named “anti-globalization” even more. Much of what has happened profound influence on both.67 They act protestors. This is the view of the public because of NGO activity has been the as forms of distributed intelligence and at large,’ said one of our interviewees. result of what complexity theorists term conscience in the market place. In Supporters of NGOs, and possibly society ‘emergence’. Complex systems under pressure retrospect, many of the market outcomes more widely,69 want NGOs to work as produce surprising (and sometimes of NGO pressures have been incidental, watchdogs holding corporations accountable unwelcome) results. As NGOs become part unplanned, even accidental. Which makes for their impacts. of the system they are trying to change, the it surprising that so few people have stood likelihood of unintended consequences grows back from all this effort and considered in Some interviewees accepted that a new and, in parallel, so does the need for detail the system-level changes needed to focus on markets was already changing the strategic reflection, planning and action. build sustainable economies — and how way they operated, but argued that the NGO efforts could best be deployed to media or consumers should still be the To be socially and environmentally this end.68 primary targets for NGOs. The evidence sustainable, capitalism needs forceful, presented in The 21st Century NGO, however, ongoing external challenges. The communist This is changing; for example, in key markets, suggests that we are seeing a fundamental experiments may ultimately have been notably the United States, new government shift in the landscape over which NGOs disastrous, economically, environmentally administrations have allied themselves more operate, with market influence emerging as and from the perspective of human rights, closely with the business community than a key feature. That said, for better or worse, but the underlying concerns about the with NGO activists. In such circumstances, as there has been no master plan for the dynamics of capital are being rediscovered one interviewee put it, NGOs are ‘having to transition to sustainable capitalism. by the anti-globalization movement and make a virtue out of the necessity of running The closest we have come to such a global others. market and business campaigns’ because of a strategy was probably 1987’s Our Common lack of traction with these administrations. Future. 70 The 21st Century NGO 28

Panel 5.2 So, given our assumption that the global Whether or not driven by globalization, Empowering democracy market paradigm will powerfully shape the many issues that confront society are now first decades of the 21st century, how can so complex and intractable that they are not Established in 2001, Empowering we civilise capitalism through markets? solvable without multisectoral approaches. Democracy is a project of the Corporate Panel 5.1 sketches four main types of Most major international NGOs recognize, Campaign Working Group, a coalition of response: anti-business campaigns; market for example, the important role that trade environmental, human rights and labour intelligence; business engagement; and plays in development within emerging organizations, including AFL-CIO (The intelligent markets. A fifth, market economies. As Save the Children stated in American Federation of Labor and Congress disruptions, 71 acknowledges that markets its evidence to the UK’s House of Commons: of Industrial Organizations), Campaign also have limitations as a tool for achieving ‘the issue is not whether to have global trade ExxonMobil, CERES, Co-op America, change. Let’s look at each in turn, rules, but rather what kind of rules, and how CorpWatch, Friends of the Earth, Global recognizing that there is nothing cast they should be balanced to ensure they do Exchange, The Interfaith Center on iron about these levels or stages. They can, not have adverse impacts on social, health Corporate Responsibility, the Rainforest and often do, run in different sequences — and education provision within poor Action Network, the Texas Sustainable or in parallel. countries.’ Energy and Economic Development (SEED) Coalition and others. Meanwhile, many of the world’s best known Anti-business campaigns and most successful NGOs — ATTAC, the The initiative involves an annual Clean Clothes Campaign, Free Burma, Friends conference for corporate campaigners The default setting of many NGOs when of the Earth, Global Exchange, No Sweat! aimed at sharing skills 72 and teaching addressing an issue is a media campaign. and PETA — have focused their campaigns on each other the basic strategies and tactics Indeed, many NGOs evolved out of what companies and brands. Some NGOs have which NGOs and activists can use in were originally single-issue campaigns. been so successful with this strategy that corporate accountability campaigns.73 In this role, NGOs act as a ‘distributed’ or using a corporate brand to leverage an ‘delegated’ conscience for society, with issue onto the public is now generally Participants also get to hone their newly individual citizens ‘sub-contracting’ parts viewed as a campaign staple. As one acquired skills by focusing their attention of their ‘citizenship’ (e.g. concern for Greenpeace activist noted: ‘[Focusing on on a single company’s annual meeting human rights) to NGOs. Over time, the brands] was like discovering gunpowder with a Day of Action. scale and sophistication of such campaigns for environmentalists’. can evolve into an ‘arms race’ with the Empowering Democracy targets of their campaigns. So influential have these campaigns become www.empoweringdemocracy.org that it is often sufficient for a well-known Some interviewees suspect that the golden and trusted NGO simply to threaten action era of campaigning may be over. Whether for corporations to reverse controversial or not this is true, there are reasons for plans. One recent example: Oxfam’s criticism believing that campaigning will become of Nestlé when the company tried to recover tougher. But in addition to the forces driving £6 million in debt from Ethiopia early in more general engagement with markets, 2003 causing the company to reverse its we are seeing a number of trends that make policy. anti-corporate campaigning more likely, not less: Effective though they may be, such campaigns tend to be relatively simplistic. — Globalization, liberalization and To generate a powerful public response, privatization are bringing corporate issues have to be framed as far as possible players, particularly big brand companies, in black and white. While this was fine for into the spotlight. single-issue campaigns or exposés of child labour or seal clubbing, it is becoming — In many emerging economies too, increasingly difficult to communicate there has been a strong growth in contemporary issues in this way. consumer movements targeting companies and educating consumers Additionally, these types of campaigns to help them make choices, especially in are often only effective against companies ‘[Focusing on brands] new market economies where consumer with well-known brands. Furthermore, in choices previously were limited. emerging markets NGOs do not have the was like discovering clout to challenge businesses in an —Key activist groups, including many of adversarial way, and campaign techniques gunpowder for the anti-globalization groups, increasingly honed in the developed world are often recognise that anti-corporate campaigns not appropriate in these regions. Which environmentalists.’ can be more powerful than anti- brings us on to market intelligence. government campaigns. The 21st Century NGO 29

Market intelligence — Investors Panel 5.3 The use of shareholder resolutions has Market gatekeepers Where NGOs do switch on to markets, been growing in the US, with some signs an early step involves building market that the trend may spread to parts of While regulators have traditionally held intelligence about companies and other Europe. Some resolutions are filed by the keys to market approval, products key market actors. While still antagonistic, individual NGOs, but often a coalition increasingly need NGO endorsement as NGOs operating at this level have forms. Friends of the Earth International, well if they are to be successfully launched developed a more sophisticated for example, joined forces with onto the market. GM technology, for understanding of the drivers of business organizations from communities example, introduced into the agriculture and market behaviour, targeting key neighbouring Shell facilities in Nigeria, sector with government support in the stakeholders in their attempts to change the Philippines, South Africa and the US European Union, met massive and business behaviour. to raise issues with shareholders at the coordinated resistance from NGOs — an company’s 2003 Annual General Meeting. approach that ultimately denied the Campaigning models that require the active industry access to much of this lucrative support of the media are limited both in — Boards market. terms of the complexity of the message In the past, NGOs have tended to and the receptivity of audiences. While engage professionals in companies: Similarly, many pharmaceutical they can be extremely powerful,74 ultimately lawyers, PR people and more recently applications, including therapeutic cloning additional — and more sophisticated — staff in corporate social responsibility and the new technologies associated with tools are usually needed to drive more or sustainability departments. But nanotechnology, are also experiencing fundamental changes within companies recognizing that many of these people resistance that is reminiscent of the and value chains. have problems engaging their own top early days of agricultural biotechnology. management, a few NGOs are trying to ‘Several of the companies promoting the The approaches NGOs have developed to go direct to corporate boards. CERES new technologies are the same,’ says Pat supplement traditional media-focused (the Coalition for Environmentally Mooney of the ETC Group, a Canadian campaigns now address a range of Responsible Economies), for example, has NGO. ‘And, remarkably, most have not stakeholder groups likely to have a more launched a campaign on ‘sustainable learnt from their experiences.’ specific interest in a particular company. governance’, targeting corporate boards These stakeholders, who are often able to on the fiduciary risks for directors raised Contrast this approach with that used by assimilate more complex intelligence on by climate change.75 companies promoting renewable energy or corporate behaviour, include: organic food. ‘We are the best consultancy — Peers the industry never had to pay for!’ declares — Employees Some parts of the wider business Tim Lobstein of the UK Food Commission, Existing company employees are often community have also been allies or (as which has been actively promoting new targeted, but potential recruits are also some business people would probably put products that have strong social or a critical stakeholder group for companies. it) ‘accomplices’ in driving higher environmental credentials. Companies that People and Planet, a student activist standards on social and environmental understand this new market reality group, recently hijacked a series of performance. Leading companies recognize the value in testing new graduate recruitment fairs run by supporting groups like the World Business technologies and products with critical ExxonMobil, aiming to dissuade potential Council for Sustainable Development audiences, hoping at worst to avoid recruits from joining the company. (WBCSD), CSR Europe and the Ethos hostility, but at best to get some very Institute in Brazil have helped build effective — and inexpensive — marketing. — Customers and suppliers pressure on their members and other A striking strategy adopted by some companies. The UK’s Business in the ETC Group NGOs involves ‘secondary’ and ‘tertiary’ Community and Argentina’s Centre for www.etcgroup.org campaigning up and down a company’s Social Responsibility have both developed supply chain. The campaign to stop the rankings of corporate engagement with The Food Commission Three Gorges Dam focused on the social and environmental issues, which www.foodcomm.org.uk financial backers of the project, including have proved extremely potent, driving Citigroup; the efforts to stop Monsanto competition between companies. marketing genetically modified products in Europe focused on targeting The amount of business data potentially supermarkets supplying the end product; available to NGOs is exploding — through and SHAC’s (Stop Huntingdon Animal the internet, newsletters, socially responsible Cruelty) attempts to close the animal investment funds or new legislation providing testing company Huntingdon Life Sciences access to information.76 This will likely drive a involved the aggressive targeting of growing sophistication in market intelligence. customers, banks and consultants. As one interviewee said, one powerful trend is likely to be the shift towards ‘distributed market campaigning’, whereby thousands of individual actors — through purchasing, investment and career decisions — put pressure on a company or industry to change its behaviour. If such behaviour could be co- ordinated on a sufficient scale, some campaigners argue, it could change the very nature of the market with key NGOs working in concert to actively ‘kill companies’. The 21st Century NGO 30

Panel 5.4 Rules of engagement Business engagement

NGOs with experience of business — ensuring beneficiaries (e.g. local Many major NGOs have backed into engagement beyond simply accepting communities, biodiversity, etc.) actually the market space, some because their money from the private sector have benefit from the relationship; merchandizing operations provide an developed ‘rules’ to help limit the risks — consulting other parts of the additional source of funding, others and maximize the opportunities of this organization (e.g. national groups because they have had no choice — engagement. Based on a survey of several checking with the international alternative sources of funding have dried organizations,77 the following four main secretariat); up. But for others — like Business for rules appear to be widely supported. — ensuring the partner company is not the Social Responsibility (BSR) in the US, the target of criticism (e.g. by other NGOs, International Business Leaders Forum Beyond the relatively limited number of shareholder resolutions, UN reports etc.); (IBLF) in the UK or the Ethos Institute black and white decisions, many leading — requiring transparency in key aspects in Brazil — it is their mission in life. groups score companies on how well they of the partnership (e.g. requiring a report meet these criteria in order to determine to be published on the partnership One major weakness in the responses the appropriate level of engagement, outcomes). outlined in stages 1 and 2 above is that varying from: they are overwhelmingly negative. The campaigners clearly articulate what they do — no engagement; Rule 3 not want, but are less forthcoming in terms — one-off consulting; of positive changes they would like to see. — collaborative/retainer relationship; The company must be well placed to As one interviewee put it: ‘Ask the average — partnership based on a shared sense drive change in its own sector and across campaigner: “Where do you want the of mission and objectives. the business community more generally. industry to go?” and you won’t get a good answer. Instead you will get a list of specific The company is likely to be viewed as things which are wrong with the current Rule 1 well placed if: business operations.’

The company must be serious in — theoretically the business can be Increasingly, no matter how sophisticated its intent to change its behaviour pursued ‘sustainably’; these negative campaigns become, they only or take action. — it is willing to have the learning from get us so far. In the end, a proportion of the the relationship disseminated more NGO world will decide that the best way of The company is likely to be viewed widely to ‘inspire change within and leveraging corporate and market change is as serious if: beyond the sector’; to get directly involved. As Randall Hayes, — it is involved in issues that are founder of the Rainforest Action Network — the leading individual is central to important to the NGO’s priorities; put it: ‘If you [as an NGO] are not talking to decision-making (e.g. is not in HSE, — it is a sector leader (in terms of size, business, you are just preaching to the choir. marketing or communications); innovation, etc.); The real change to protect the environment — the leading individual has the capability — the sector is strategically important is going to come from the business sector; (position, mandate) to implement (e.g. high environmental/social impact); we can’t depend on government regulation recommendations; — it has a history of leadership on to solve our problems.’ 78 — it is willing to accept ‘risk’ in the SD issues. relationship (e.g. that the NGO can Oxfam, for example, already has a ‘virtual withdraw from/criticise the company, team’ of ‘private-sector engagement and/or there is transparency externally Rule 4 consultants’, while PACT offers a range of about the relationship); services to companies and local communities — the scope of the work goes well beyond The NGO must be able to maintain its that are aimed at ‘creating win-win communication; independence from the business partner. partnerships for business and communities’ — it has a strong track-record on SD through its ‘Engagement to Action Process’. issues (e.g. ISO 14001 certification, NGOs maintain independence by: Coalitions of NGOs are also beginning commitment to the Universal to work across different sectors. The Declaration of Human Rights, etc.). — closely scoping the project and explicitly Collevecchio Declaration, for example, stating that either organization is free to signed by over 100 NGOs, sets out a criticise the other in other areas of vision for a sustainable financial sector.79 Rule 2 activity not part of the partnership; — limiting (or in some cases prohibiting) The NGO must be able to maintain financial payments between the parties; clear accountability to its own key — strictly limiting co-branding; stakeholders. — maintaining confidentiality on some aspects, but requiring transparency in NGOs maintain clear accountability by: other areas of the relationship; — ensuring there is an ability to withdraw — consulting their staff on relationships at any time. with companies (though final decisions lie with NGO management); The 21st Century NGO 31

Working collaboratively with the private Panel 5.5 sector is an increasingly popular route for Business benefits NGOs. As early as 1998, a survey of 133 US NGOs found that while many rated their From a business perspective, the drivers 3 Building brand equity and reputation current relationship with corporations as for corporate engagement with NGOs ‘Choose Positive Energy’ was a ‘antagonistic’ or ‘nonexistent’, most foresaw — at least initially — tend to focus on partnership between The Body Shop the development of cooperative relationships generating a better understanding of NGO International and Greenpeace in future.80 perspectives on key issues, and then, all International aimed at promoting being well, building relationships with key renewable energy. The combination Major environmental groups like individuals. However, over time, more of the two brands was important in Conservation International have long- tangible business value can be realized assuring the credibility of the campaign established corporate partnership programs, from these relationships. Companies with among key audiences including but even traditionally more hostile groups experience of NGO engagement tend to customers, and other NGOs. like Environmental Defense in the US and recognize four main areas of value: Amnesty International in the UK have 4 Bringing diverse perspectives together established collaborative relationships with 1 Generating business intelligence and for creativity and innovation leading businesses. Greenpeace, often seen avoiding or reducing risks FedEx partnered with the Alliance for as one of the more hostile groups, declared For example, the Norwegian oil Environmental Innovation (part of at a London conference in 2002 that company Statoil worked with Amnesty Environmental Defense) to reduce the ‘Greenpeace is a company’s best ally,’ able Norway to train Statoil employees to environmental impact of their vehicle to help ‘bring companies into port before identify and solve business dilemmas in fleet. It is hoped that the new hybrid- the storm. Companies need Greenpeace in connection with human rights issues, electric vehicles — which are being order to win.’ 81 thus reducing the company’s exposure introduced in 2004 — will ultimately to human rights related risks. In replace the company’s 30,000 strong There is also anecdotal evidence that addition, Statoil collaborates with fleet, leading to significant reductions growing numbers of companies are keen to Amnesty International on a UN project in environmental emissions. engage in strategic dialogue with NGOs, both in Venezuela training the country's in western developed countries and in other judges and public defence lawyers in Amnesty Norway parts of the world where NGOs have not human rights — ultimately helping to www.amnesty.no traditionally had a strong role (e.g. Japan).82 provide a more stable environment for society and business. Statoil That said, and while ‘partnerships’ between www.statoil.com NGOs and business are an evolving trend in 2 Developing and expanding markets the world of corporate social responsibility,83 or opportunities DuPont not everyone is convinced that NGOs get a DuPont, for example, has convened a www.dupont.com good deal from these relationships. As one stakeholder panel on biotechnology to interviewee warned: ‘Businesses are basically help the company articulate positions Positive Energy interested in buying trust through these on important issues, and guide as well www.choose-positive-energy.org partnerships. Do [NGOs] really appreciate as challenge the company’s actions in the costs and risks of doing this?’ the development, testing and Alliance for Environmental Innovation communications of new products www.environmentaldefense.org/alliance Several NGOs felt many types of NGO- based on biotechnology. business engagement sold their interests short. ‘Too many ‘stakeholder fora’ focused on high-level generalities without delivering practical change on the ground,’ said one interviewee. Others were highly critical of particular NGOs for not demanding enough of business in their partnerships.84

Others also question the validity of talking about partnerships when most current relationships are really just that — ‘Businesses are ‘relationships’. As Sir Geoffrey Chandler, who founded and for ten years chaired Amnesty basically interested International UK’s Business Group, put it: ‘While partnership is a word much in vogue, in buying trust the cuddliness of the term tends to seduce rather than lead to cold analysis’. Others through partnerships.’ suggested that the notion of partnerships had become ‘trite before it had been tested’. The 21st Century NGO 32

Panel 5.6 Success factors

What it takes to make an NGO/business partnership succeed was one subject that our Canadian workshop addressed. The table below combines the outcome of this workshop with the insights of other interviews on this question.88 For more information on the findings of this workshop see www.sustainability.com/ pressure-front

Insights Examples

Balance of power Each partner needs to benefit directly from Environmental groups and energy the partnership, and understand how the companies in Alberta, Canada both benefit other party benefits. Money is often a from early agreement on ways to reduce critical factor in this regard and it is for this environmental impacts associated with reason that many NGOs refuse to accept new project developments. In particular, money for partnerships beyond what is companies get a more effective and quicker needed to cover costs. (and less expensive) ‘hearing process’ with the regulatory authorities, and NGOs get the opportunity to provide input into the planning process.

Agree the rules of engagement Roles, rules and risks of partnerships need US-based Alliance for Environmental to be crystal clear to all partners. Agreeing Innovation has a standard ‘partnership the scope, expectations, codes of conduct, agreement’ setting out the objectives of objectives, decision-making, evaluation and the partnership, as well as what is expected conflict resolution processes is a critical from each partner. The Recycling Council stage at the beginning of the partnership. of British Columbia agreed to give partner companies three days advance warning of any advocacy work they were planning against partners.

Mandates Individuals participating in partnerships Linda Coady (formerly of Weyerhaeuser), need to be senior enough to take decisions when negotiating with environmental on behalf of their organizations, and NGOs, was given the mandate to speak on must have the mandate of their own behalf of the timber industry as a whole organizations and partners to ‘step out when discussing how to reconcile pressures of the comfort zone’. for access to old growth forests in British Columbia in Canada.

Trust Trust is a key ingredient ensuring that the Greenpeace International and The Body partnership can rise above the inevitable Shop International have built up a history snags and complications that these of positive collaboration through a range relationships experience. Trust can be built of partnerships. In addition, the two up institutionally between organizations organizations share similar values in with common values, but more often promoting positive social and requires personal chemistry between the environmental change. These values individuals involved. provided a solid foundation for a recent partnership promoting renewable energy. When miscommunications threatened the campaign, the strong sense of trust between the two organizations ensured that the partnership remained on track. The 21st Century NGO 33

Nonetheless interest in partnerships endures, Intelligent markets Panel 5.7 indeed grows. One reason: pressure from Making business cents funding sources. For example, the Avina ‘This is a huge system!’ the late Donella Foundation in Latin America has programs Meadows argued when confronting the In order for NGOs to really harness the that provide matching funding to NGOs WTO. ‘We’re cranking the system in the power of markets in changing business that can raise money from the private sector. wrong direction and the control measures behaviour, NGOs need to develop a deep And Oxfam America was only able to access are puny!’ she warned.89 The point understanding of how businesses create funding from the Ford Foundation with the Meadows and others have been making is and capture value. Sue Hall, founder of the involvement of Starbucks in a project helping that in order to get effective change in US-based Climate Neutral Network (CNN) a community cooperative in Mexico to systems, NGOs need to intervene ‘higher has developed a methodology that does improve the quality of fairly traded coffee. up’ in the system, reframing markets to just this for climate change. Government departments, including the reward positive behaviour and penalise Department for International Development negative behaviour. So expect the next The original idea behind the CNN was to in the UK and the Canadian International decade to see growing efforts to make develop a system that enabled companies Development Agency, also now have market mechanisms more intelligent, to capture the full commercial value of programs specifically promoting NGO- providing a huge opportunity space for moving towards a net-zero impact on business engagement. some NGOs and other actors. climate change. According to CNN, the ‘value proposition’ exists at four levels: Development NGOs, such as Oxfam, To date, most NGO engagement with the Amnesty International, Save the Children private sector has been at the level of 1 Operational efficiencies and CARE, are also expanding their remit individual companies. Increasingly however, Saving energy saves money. from addressing human needs and political a new (or perhaps reinvigorated) model of and civil rights to include a greater focus on campaigning is emerging. As Michael 2 Marginal efficiencies human, economic and social rights. This Shellenberger from Lumina Strategies put it: Participation in carbon trading enables requires such organizations to engage the ‘This is not just about going after an issue or efficient companies to make money underlying power relationships that result a company, it is about going after the whole by selling carbon ‘credits’ to other in these unmet needs, leading them into market, and trying to guide the market in companies who can’t reduce carbon greater engagement with other powerful a particular direction by shrinking it in one emissions as efficiently. actors, including the private sector.85 area, and actively trying to expand the market in other areas at the same time.’ 3 Minimizing contingent liabilities Good case studies of the dynamics and If carbon comes with a cost (as it outcomes of such engagement are rare, In the same way that NGOs have had to increasingly does) companies can save however. One reason is that seldom is there ramp up their ability to understand complex by reducing exposure to these future a real appreciation of where converging trade legislation to better influence costs. interests lie between NGOs and businesses.86 governments and multilateral institutions. Assessments or audits of partnerships are NGO campaigners interested in market- 4 Differentiation still atypical, although SustainAbility driven changes are going to have to switch Many companies believe that ‘carbon conducted one for The Body Shop from a ‘culture of critique’, as Suzanne cool’ 95 products or services will be International and Greenpeace International Hawkes from the Canadian NGO IMPACS popular with consumers, helping the in 2003.87 calls it, towards a better understanding of company positively differentiate the business pressure points, motivations and company brand or product. Based on experience to date, it appears culture. that a number of preconditions are required Climate Neutral Network before genuine partnerships can be One area where NGOs have made significant www.climateneutral.com established. Panel 5.6 lists some conditions progress is in developing certification and gives examples of how they have standards for specific industry practices been applied in practice. Relatively few that help to frame and guide market ‘partnerships’ to date have been able to developments. Campaigns by NGOs such as meet these preconditions. Even fewer Greenpeace Canada, the Rainforest Action have been able to demonstrate genuine Network (RAN), the Natural Resources improvements in practices or impacts. Defense Council (NRDC) and others against the forest products industry in the Pacific Northwest were particularly effective ‘This is not just about because NGOs could point to legitimate standards for industry practice that clearly going after an issue addressed environmental and social concerns in the form of the Forestry Stewardship or a company, it is Council (FSC) certification. about going after the whole market.’ The 21st Century NGO 34

Panel 5.8 Equally, having a credible standard for As Jonathan Shopley of Future Forests What’s hot, and what’s not in organic food in Europe has enabled the argues: ‘The 21st century economy is going stakeholder engagement? farming and retail industry to engage to have to be one where business can sell constructively in delivering higher social services which repair and protect the As more companies begin to recognize and environmental value through the market. environment’. Future Forests describes itself the value of engagement with the NGO It also enabled Greenpeace to passionately as ‘a campaigning business’ and the coming community, those same activists — subject advocate increased industry investment in decades will likely see the emergence of to ever-growing demands from the this sector, in effect becoming an additional many more. corporate sector — are becoming much (and very valuable) marketing arm for more discerning in terms of the types of organic food. engagement they are willing to offer. Market disruptions Whether or not particular NGOs decide to Five years ago, the novelty of talking to embrace certification standards, it is building Though far from perfect, markets are major corporations was often sufficient to strongly in some areas. ‘Fairly traded’ foods the best wealth creation and distribution engage NGOs in a dialogue on general CSR (as certified internationally by the Fairtrade mechanism available to us. In some cases, issues. Today, many activist groups that we Labelling Organization International) have markets change slowly and predictably, as talked to shun these types of interactions, more than tripled in three years in the UK a geological landscape might. In the preferring instead to spend their limited and now represent £58 million of annual process, however, huge strains can build resources on one-to-one discussions with sales. A small proportion, but approximately up, which demand release. The resulting business leaders addressing core business where sales of organic food were in 1986, eruptions or quakes can create impacts on decision-making. before they went stratospheric 90 and, we are a shocking scale, levelling the layers of told, ‘consumers, producers and retailers are market engagement or jumping them to For many, the involvement of EHS or convinced that fairly traded food will develop a higher level of effectiveness. communications professionals is a real in the same way.’91 turn-off, as are initiatives where the While market campaigning is a growing agenda is set exclusively by business. However, some of those we interviewed focus for many NGOs, markets can fail us ‘Dialogue is a necessary preliminary step,’ warned against an over-proliferation of for a number of different reasons. Natural says Raymond van Ermen of Brussels-based standards. Viraf Mehta of India’s Partners for monopolies do not lend themselves to European Partners for the Environment Change cautioned: ‘The past three or four market-based solutions, and even where (EPE). ‘But there is stakeholder fatigue years have seen a proliferation of interest in markets may be appropriate, they can where the dialogue is not action-oriented CSR in the Indian business community. This, still be ineffective if they fail to price enough’. combined with a multiplicity of voluntary resources properly. codes has caused confusion amongst European Partners for the Environment companies or unwitting endorsement of When mis-pricing continues over extended www.epe.be CSR activities without evidence of serious periods, it can build huge potential engagement. The risk is that the needs of overhangs of financial liability, and NGOs, the most vulnerable among India’s poorest of course, are increasingly active in working are getting lost, especially when corporate to direct and apportion these new liability philanthropy is permitted to masquarade regimes. A coalition of NGOs led by Friends as CSR.’ of the Earth International, for example, is trying to apply the lessons learned in tobacco Standards, at best, are only part of the litigation — sometimes working with the process. Really intelligent markets will same lawyers who tackled Big Tobacco — to emerge — potentially at least — from the challenge companies on issues ranging from convergence of a range of factors, including climate change to obesity. Ultimately, in the better market intelligence, socially same way that smoking is increasingly responsible investment, market incentives, banned from public spaces, so the ‘market’ the internet, satellite remote sensing, may also become constrained for fast-food increasingly transparent supply chains and, outlets and other services and products that inevitably, the growing engagement of NGOs are deemed hazardous to human or and NGO-like actors in markets. One example environmental health.93 of the evolution of an intelligent market is the Chicago Climate Exchange, which is a Experience also shows that markets can voluntary system for reducing and trading cramp the ability of pioneers to do the right greenhouse gas emissions.92 things. While relatively few companies are likely to support legislation that limits the The question here is whether NGOs will be overall extent of the market, a growing content simply to catalyze the new market number of companies do recognise that order, or whether some at least will aim to regulations aimed at shaping the market in become players. Either way, NGOs may find favour of social and environmental goals themselves competing — at least for mind- can be beneficial. share — with NGO-like businesses, ‘conscience commerce’ and social entrepreneurs. The 21st Century NGO 35

Björn Stigson of the World Business Council Panel 5.9 Panel 5.10 for Sustainable Development (WBCSD) has Is CSR a ‘rich world’ issue? Governments and regulators rejected the notion that business has a minimalist regulatory agenda. ‘Businesses One of our research workshops was held Our focus is primarily on the relationships can do much to encourage eco-efficient during the 2003 World Social Forum in between NGOs and the private sector, but practices, but they need an enabling Porto Alegre, Brazil and focused on NGO- politicians, governments and regulators framework from society if they are to move business partnerships, looking in particular remain critically important. This is true at forward with any greater speed. It is the at the potential for such partnerships in all stages in our five-stage model (page role of governments, in consultation with emerging markets. ‘Is CSR is a “rich world” 27), but particularly so in Stage 5, the business, to create the conditions that allow issue?’ asked one of the participants. ‘market disruptions’ phase, where political, business to contribute fully to sustainable government and policing functions grow development.’ While participants emphasized the fact in importance. that the vast majority of NGOs in emerging Too often, markets operate on the basis of economies are focused on addressing the Getting even leading businesses to open limited information, So NGOs, too, are basic needs of their beneficiaries, the up on their lobbying and policy positions increasingly joining forces in a range of overall trend is for NGOs to be increasingly is still very tough, and building business initiatives aimed at raising the regulatory aware of — and active in — driving support for new laws, regulation and floor. The ‘Publish What You Pay’ campaign, improved company performance on social enforcement regimes remains almost as founded by George Soros and the Open and environmental issues often with the difficult as it ever was. Too often, deeply Society Institute, and involving over 27 NGOs active support of leading businesses on wired business reflexes produce knee-jerk from 30 countries, was originally focused these issues. reactions when exposed to the merest on getting oil companies to publish the whiff of proposed regulation. payments they make to host governments One word of frustration though: southern so that voters can hold their governments NGOs argued forcefully that often the CSR Government involvement comes in many to account. But this approach back-fired debate is seen as being framed in the north different forms, though. The International when leading companies were excluded with inadequate space given to southern Institute for Environment and Development from lucrative new negotiations. So the voices. Child labour, for example — initially (IIED), for example, has mapped different campaign, with backing from companies, seen as a ‘black and white’ issue by types of ‘public sector engagement’ around is now attempting to gain the support of northern NGOs — is now understood to the CSR agenda,96 leading to four broad governments in order to provide a level involve complex trade-offs. categories of intervention: playing field. For more information on the findings of 1 Mandating, in which governments Competition frequently favours business-as- this workshop see www.sustainability.com/ define minimum legal standards for usual strategies, until something major gives pressure-front performance and behaviour. - and/or governments step in. Ultimately as Barry Coates from the World Development 2 Facilitating, involving public sector Movement (WDM) has put it: ‘Campaigning agencies enabling or incentivizing has been crucial in creating the pressure for improved performance. business to take social and environmental issues seriously, [but] few companies have 3 Partnership, including acting as been willing to sacrifice their competitive convenors or facilitators. position for an ethical stance. This highlights the need for governments to regulate, in 4 Endorsing, which covers attempts to order to create the incentives for companies promote the CSR agenda through to do the right thing and to sanction those ministerial speeches, policy documents, who breach acceptable standards.’ 94 demonstration projects and/or procurement policies. In short, however sophisticated the market intelligence, however active the NGO In some cases, of course, political leaders, engagement in markets and however governments and public officials will start intelligent aspects of the market become, with the ‘softer’ options (e.g. endorsing) we are still dealing with an imperfect world. and progressively move towards the The cycle between stages one to four loops ‘harder’ ones (e.g. mandating). Done right, back on itself, repeatedly, but stage five this can spur private sector innovation. ‘market disruptions’ is often needed to jump If mainstream NGOs are to optimize their the overall sustainability of the system to a impact in the new market paradigm, they higher level - often through some form of must shape their campaigning, advocacy regulatory intervention (see Panel 5.10). and lobbying to ensure that public sector frameworks, rules and initiatives are Next, we present a SWOT analysis for NGOs efficient, effective and crucially politically in terms of their capacity to achieve change sustainable. through market frameworks. The 21st Century NGO 36 Bringing change to market

Have NGOs got what it will take? 37 The 21st CenturyNGO 0Succession 20 19 18 17 16 Threats 15 14 13 12 11 Opportunities 10 9 8 7A 6 W 5 4 3 2 1V Strengths Source: RichardEdelman‘RebuildingPublicTrust throughAccountabilityandResponsibility,’ EthicalCorporationconference,NY Who doesthepublictrust? P 10% 20% 30% 40% 50% 60% 70% 80% 90% 1 anel 6.1 00% eaknesses Alienation Stagnation Counterfeiting Babel Enterprise Globalization Mobilization Differentiation Gatekeeping Capture Timeframes Professionalism Culture Momentum Networks Communication Expertise alues symmetry niomna susHmnRgt susHealthIssues HumanRights Issues Environmental Issues 55% 16% 6% 13% 1 disadvantaged people’ on ‘improvingthequalityoflife of strong valuesbase.Whetherthis focuses variety, NGOsshareacorestrength: play acentralrole.Despitetheir enormous Even intheworldofvaluecreation,values and economic (andenvironmental) goals’, single greatest asset. values probably representtheNGOsector’s Expertise strengths, weselectedfive: (page 44).Fromawiderangeofpotential weaknesses (page40)andemergingthreats space (page42),subjecttoanumberofclear positioned toexploitthenewopportunity First, leadingedgeNGOsareremarkablywell Strengths for eachofthefourmainSWOT headings. framework. We identified20themes, five W limitations, weappliedaSWOT (Strengths, To NGO toachievechangethroughmarkets? So howwellequippedistheaverage 10% 20% 30% 40% 50% 60% 70% 80% 90% 1 00% eaknesses, OpportunitiesandThreats) betterunderstandNGOcapacitiesand V alues Momentum , Communication 59% . 14% 97 or ‘advancingsocial, , V Networks alues 4% , 14% 98 and culturedivides. in buildingcommunitylinksacross ethnic institutions. Considertherole that NGOsplay to incubatesuccessfulnewrelationships and High levelsoftrusthavealsoenabled NGOs distrust. ‘self-interest’ weretwofactorsleadingto trust, while‘notdoingwhattheysay’and important factorsinencouragingpeopleto ‘honesty’ and‘vision’wereparticularly in leadersofdifferentinstitutionsfoundthat be sotrusted.Onestudythatlookedattrust gone intowhyNGOsandtheirleadersshould trusted, relativelylittleresearchefforthas on howmuchdifferentinstitutionsare But, whiletherehasbeenalotofresearch human rightsandtheenvironment. society, particularlyonkeyissuessuchas more trustedthanmostotheractorsin least inthedevelopedworld—NGOsarefar years whohaveconsistentlyfoundthat—at different organizationsoverthepastfew This isconfirmedinresearchbyarangeof are held. for muchofthepublictrustinwhichthey this dimensionoftheirpositioningaccounts While NGOshavenomonopolyonvalues, 10% 20% 30% 40% 50% 60% 70% 80% 90% 1 00% 100

54% NGOs

17% Governments

7% Corporations C, 2002 99 12% Media The 21st Century NGO 38

In terms of relationships, think of Friends of As a result, other organizations, including the Earth in both Jordan and Israel, where socially responsible investors, have come they are working together on the ‘Good to rely on the expertise of NGOs. Walden Water Neighbors Project’, addressing water Asset Management, for example, works issues and trying to rebuild trust and with ‘Healthcare without Harm’ to understanding in the two communities. better understand the issues facing the pharmaceutical sector. NGOs like Amnesty In terms of new institutions, think of International and WWF routinely supply the role played by the US Coalition for data on corporate performance to socially Environmentally Responsible Economies responsible investors. That said, much of (CERES) alongside UNEP in spawning the the expertise now embedded in the NGO Global Reporting Initiative (GRI), or that of universe is to date more readily available to the New Economics Foundation (NEF) in the public sector than to the private sector. incubating initiatives like AccountAbility and the Ethical Trading Initiative in the UK. Source: Diane Cohen, PETA 3 Communication In summary, NGO values are key to their ability to attract expertise, to create The bigger the community, the more momentum, to communicate powerfully important communication skills become. and credibly, and to build robust local, Some NGOs are a match for any advertising regional and global networks. agency, with the added advantage that their messages tend to be believed. Leading NGOs often have a symbiotic relationship with the 2 Expertise media, providing appealing stories, expertise and background information, but also In a complex, fast-moving marketplace, depending on media coverage for much expertise is critical. The evolving expertise of their impact. of NGOs on the plethora of issues on which they campaign is another vital asset. NGOs In some cases the connections go deeper. are regularly consulted by the media on In Canada, the name ‘Pollution Probe’ 102 was stories related to their areas of interest originally coined by journalists covering the and expertise. activities of protesting students in the 1970s. Only later did it become a formal NGO. Even well-publicized failings simply serve to A significant proportion of NGOs see their underline just how important a role NGOs primary objective as getting issues and In the same way that have come to play in providing expertise on stories onto the media agenda and have these issues. 101 Some NGOs, indeed, provide found creative ways of bridging into the the printing press lists on their website of individuals with media world. In Brazil, for example, the expertise on key issues that the organization Ethos Institute has for the last three years served to drive the works on. One example is the Union of awarded a prize for journalists recognizing Concerned Scientists (UCS) in the US, their contributions in raising awareness of growth of the early founded in 1969 by faculty members and corporate social responsibility issues. students at the Massachusetts Institute Protestant Church, of Technology (MIT). A key strength of NGOs has been their ability to recruit support from celebrities and high- so the internet is Development groups have also built up profile public figures. Whether it is Paul enormous amounts of expertise and capacity, Newman doing the voice-over for an supporting the not just on technical issues of delivering aid environmental group’s new TV campaign, to remote communities, but also in helping or Jade Jagger and Martin Sheen protesting capacity of NGOs communities understand and articulate their the war in Iraq, many NGOs have been very needs and rights. Relationships between skilled in winning celebrity support and, and civil society to these NGOs and the communities they serve thereby, media coverage for their issues are often long term, with individuals or and campaigns. network and grow. institutions embedded in communities for decades — potentially giving these organizations a deep appreciation of the problems communities face and of potential solutions. The 21st Century NGO 39

Panel 6.2 Climate Action Network

Global Co-ordinators Regional Members Global Links Regional Links

Source: Environmental Systems Research Institute Inc (ESRI)

4 Networks The Economist has acknowledged the 5 Momentum importance of this capacity to network, In an increasingly networked world, success pointing out that: ‘[In Seattle] NGOs built A prime concern in the heady days of the depends on the strength of your networks. unusual coalitions — environmentalists and New Economy, but always a key focus in Indeed, few parts of global society have labour groups, for instance, bridged old gulfs campaigning and politics. But momentum, moved more rapidly than NGOs to adopt and to jeer the WTO together’. 105 NGOs, too, are be it political or economic, is a perishable adapt what Kevin Kelly dubbed the ‘New acutely aware of the vital importance of commodity. Luckily for the NGO movements, Rules of the New Economy’. 103 Much of the networks. Robert Napier, CEO of WWF-UK, while some parts of the movement may ‘New Economy’ may have gone down in told us that ‘WWF is only as strong as its falter, others inevitably pop up to fill gaps. flames, but many of the basic principles will network’, and particularly emphasised the Opportunism, in fact, has been a key strength prove central to sustainable 21st Century importance of building strong connections of many NGOs. Often, they operate like wealth creation. with NGOs operating in emerging economies. opportunistic viruses, exploding into life when the conditions are right, fading when And, consciously or not, activists and NGOs This last point was reiterated in many of they change. pioneered many of these principles before our interviews with developing world NGOs. most others. In turn, New Economy Grupo Puentes, a network of 19 NGOs in When brainstorming this section, there were technologies — among them the internet and Latin America and the Netherlands, works a number of NGO characteristics we sensed mobile telephones — have powerfully fuelled together to promote CSR. Isabelle van were not adequately captured in the SWOT activism with some interviewees suggesting Notten, involved in setting up the network, framework. Contributors felt that many that in the same way that the printing press argues that: ‘There is a strong sense that NGOs had ‘raw energy’, a point underlined served to drive the growth of the early organizations in the South want to set their by a number of interviewees, who Protestant Church, so the internet is own agenda. At the same time, businesses in acknowledged the ‘huge amount of energy’ supporting the capacity of NGOs and civil Holland are starting to ask Dutch NGOs what that they had gained from the anti- society to network and grow. 104 As Sabine legitimacy they have to speak for the South. globalization movement. NGOs are also often Leidig of Attac Germany put it, ‘We are the It is important for Dutch NGO legitimacy prepared to take risks. They want to push Linux model NGO.’ that southern NGO voices are louder and boundaries, are comfortable with change better channelled into this debate.’ and generally future-oriented. The 21st Century NGO 40

We struggled to find a way to capture these Murray Culshaw of Murray Culshaw Advisory 7 Asymmetry characteristics before someone suggested Services 106 in India believes that this creates that what we had described reminded him a major psychological barrier. ‘The NGO and Again this weakness reflects an NGO of teenagers. Overall, this is a major strength business sectors are not speaking the same strength. Being small and relatively and NGOs wanting to ensure a strong language’, he stresses. But the roots of the unencumbered by tradition, NGOs can be positioning will need to ensure they don’t problem often run much deeper. more flexible than the companies and other lose that energy, that ‘teen spirit’. But, to organizations they target.110 But this very fully engage the mainstream, major NGOs For many watchdog NGOs, whether in asymmetry in scale and resourcing can also must consistently blend their teenage energy developed or emerging economies, close play against NGOs. Indeed, scarcity of with a dose of adult experience and wisdom. partnership with business is profoundly resources is something that is often pretty uncomfortable, particularly if their much hard-wired into NGOs. And this can involvement is in any way linked to the be a significant weakness when attempting Weaknesses commercial success of the business — a to engage businesses in dialogue. situation they feel compromises their own NGO strengths outweigh their weaknesses, integrity. In a chicken-and-egg process, there Sara Parkin, once a leading Green politician as their success indicates. But, inevitably, is a lack of business acumen among most in Europe and then a co-founder of Forum they also suffer from weaknesses that NGOs, which both reflects their philosophical for the Future, stresses that the asymmetry potentially render them vulnerable to positions and hinders attempts to bridge is particularly evident ‘when participating in impending threats (page 44) and could divides. To date, precariously few NGOs have consultations and working groups. Many mean that they fail to capture emerging the skills to work with business managers in NGOs have to work to project-funded opportunities (page 42). Here we look at creating initiatives of real mutual value. 107 budgets, with this kind of business or five actual or potential weaknesses: government engagement done for free. Culture, Asymmetry, Professionalism, For some NGOs, the biggest cultural barrier For business participants, by contrast, Timeframes and Capture. Inevitably, some to progress in leveraging change in markets engagement tends to be in their job are the flip sides of strengths. may be their shared history. Successful descriptions.’ confrontational campaign strategies have meant that these groups have developed For NGOs operating in emerging economies 6 Culture independent, often uncompromising and attempting to engage companies in approaches. There is also a common dialogue, these problems can be even starker. ‘Organizational culture’, they say, is what perception that business actors have Often enabling legislation is not yet in employees do when supervisors are not betrayed the trust of NGOs and other place 111 and few foundations or donors looking over their shoulders. And shared stakeholders, a fact that helps make business recognize the sustainability or CSR agenda. cultures also suppress friction, allowing among the least trusted institutions in ‘Even until recently, donors and funders did shared solutions to evolve faster. In most society.108 This ‘bad history’ makes it difficult not really know about the concept of parts of the world, however, a yawning to engage in productive partnerships. sustainability and so were not funding it,’ cultural gap separates NGOs from business. Even where there have been successes, the notes Mokhethi Moshoeshoe of the African Partly, this is an issue of language. confrontational approaches of NGOs have Institute of Corporate Citizenship. sometimes prevented greater progress.109 As Ernst Ulrich von Weizsäcker put it, More worryingly, talented and experienced ‘In order to persuade governments and activists who might have the experience to corporates into action, [NGOs] have to pay engage constructively with business are the price of cultural change.’ often lured away by other sectors, including business. This has been true in many central and eastern European countries, and also in countries like South Africa — where regime change has meant that NGO leaders have moved into governmental positions.

8 Professionalism

This is a central challenge for NGOs (page 25). But while many NGOs are pushing through programs to professionalize their operations, the vast majority still operate in a more ad hoc manner. This is particularly true in emerging economies, where new initiatives to work with local NGOs and communities often come up against issues of professionalism.

Source: Zapiro / GroundWork The 21st Century NGO 41

Working with local partners is critical to Furthermore, donors and the general public Panel 6.3 the Rainforest Alliance, for example. These often experience ‘compassion fatigue’ Building NGO capacity to engage with ‘local’ NGOs are trained to do auditing for when faced with an ongoing set of problems business in emerging economies the Alliance’s sustainable agriculture which never quite seems to be resolved. certification program and provide essential Foundations and other large donors also In early 2003, SustainAbility facilitated grounding in local technical issues and suffer from what one interviewee called a conference call between several NGO stakeholder concerns. However, while an ‘projectitis’, a key symptom of which is ‘a leaders working in emerging economies. integral part of the Rainforest Alliance’s lack of patience with projects lasting more The purpose of the call was to explore business model, we were told that some of than two years.’ Many NGOs recognize this the issues facing NGOs in these countries these local groups ‘do not think like problem — and noted that they suffer from that are keen to engage with the business businesses — and often fail to appreciate the ‘project churn,’ limiting overall effectiveness. community on sustainability issues. A importance of financial management and number of key themes were established: client service in the relationships the NGOs have with businesses’. 10 Capture — Some NGOs in emerging economies were set up by business to tackle Related to this problem is the enduring issue The most successful NGOs tend to have a sustainability challenges affecting the of accountability, particularly the need to fair degree of independence. But political private sector, for example the Ethos ensure that key stakeholders are informed — scientists know that systems under challenge Institute (Brazil), NBI (South Africa) and and supportive — of decisions to collaborate try to capture or co-opt the forces arguing Philippines Business for Social Progress. with business. Several NGOs cautioned for change. As parts of the NGO agenda Yet for many NGOs, engagement with colleagues to ensure that decisions to work come into the mainstream, this challenge business is still mostly about funding. with business are shared with key is becoming increasingly urgent. stakeholder groups. This is especially difficult — This can pose a risk — for example if for NGOs working as part of large federations In the 2002 version of the Shell Global young NGOs receive philanthropy before or networks, where there is often great Scenarios, one scenario involved the they have the capability to manage it variation in the appetite for engagement evolution of a so-called ‘Business Class’, a productively — but may also be a lost with business among different groups. ‘global elite’ of highly educated, high earning opportunity for more meaningful individuals living in megacities in regions engagement with the private sector. Some organizations engaging business have across the world. ‘In Business Class,’ we developed processes to manage this were told, ‘it’s not uncommon to belong Capacity was seen as a big barrier, but challenge. Both Canada’s Pembina Institute to a circle of employees in an extractive suggestions on how skills for business and the US World Resources Institute (WRI) industry, for example, while also belonging engagement could be enhanced included: ensure that key staff have an opportunity to a circle of those protecting nature from to comment on proposals for business the environmental effects of such extraction. — NGOs set up by or otherwise already engagement. WWF have also set up a global But the leaders of both the industry and engaging with business can work with steering group to assess particularly the environmental organizations belong to other NGOs to build economic and controversial projects where these involve the same larger circle of interconnected business literacy. business participation. global elites.’ 112 — NGOs can draw on international While engaging with business and rubbing experience, best practice and tools to 9 Timeframes shoulders with the rich and powerful may develop competence on the corporate well bring opportunities for influence, the social responsibility agenda and — more Time is central to the corporate responsibility risk is that gaining membership of the importantly — develop local models and sustainability agendas. That said, it’s business class undermines connections with (or localise global models). something of a paradox that corporate local communities and the constituencies timeframes may be significantly longer than that NGOs were formed to represent and — Build a better understanding of the those of many NGOs, despite the public defend. ‘Corporations breed out diversity,’ NGOs ‘business case’ for NGO-business perception that NGOs stand for long-term observes Jean Horstman, chief learning engagement — in other words establish values. A key reason: donor funding is often officer at Boston-based BELL (Building how the NGO agenda is served by this project- rather than program-based, forcing Educated Leaders for Life). ‘Global NGOs engagement. NGOs to focus repeatedly on raising funds, have learnt to do the dance-steps whereas many companies are able to invest [with corporations], but local NGOs and For more information see for the long term. Worryingly, for many community groups don’t even know there www.sustainability.com/pressure-front NGOs, this is also a trend which many say is a dance, aren’t invited, or can’t afford is getting worse. the dance lessons!’ The 21st Century NGO 42

The danger for international NGOs is that by — Acting as watchdogs, monitoring Others, though, suggest that powerful NGO engaging in this dance, they may jeopardize corporate and governmental performance, brands can — even should — house multiple their own ability to genuinely represent the and further building on their role as ‘civil activities side by side. Whatever strategy interests of their stakeholders. During the regulators’ in applying the ‘soft law’ of they adopt, NGOs will need to recognize 1999 round of climate talks in Bonn, various CSR standards and codes of the business wisdom of ‘sticking to their Germany, the head of an Indian NGO blasted conduct. 114 knitting’. Diversification can lead to over- US environmental groups for being so eager stretch and loss of focus. Given the widely to preserve access to the White House. —Working as guide-dogs with leading differing roles now possible for NGOs, any He warned that they were turning their businesses, helping them negotiate the single organization would be hard pressed to backs on the climate issue — as well as on new landscape and developing new maintain credibility in every sphere. ‘Don’t those donors who assumed the groups would approaches to generate social, be all things to all people,’ cautioned one be acting on behalf of the planet. ‘You environmental and economic value. interviewee. ‘Select a niche and go for it.’ are supposed to be the conscience of the As Calestous Juma, Professor of the global environment,’ the leader told US Practice of International Development An interesting question, whichever route a environmentalists, ‘but instead you are more at Harvard University, put it: ‘I envisage given NGO takes in tackling markets, is concerned with acting like junior cabinet a new model of nongovernmental whether, very much as Intel has developed ministers.’ 113 organization, bristling with technical the concept of ‘Intel-inside’, it could build know-how, that could play a major role truly value-added ‘NGO-inside’ types of co- working with companies to tackle the branding and relationships with business Opportunities problems on the ground.’ 115 and other market actors.

Third, whatever the balance of strengths and weaknesses in particular NGOs, a vast new 12 Differentiation 13 Mobilization opportunity space is opening up, in part because of their campaigning efforts to date. One of the great strengths of the NGO Momentum is one part of the formula for Based on our interviews, it is clear that a world is its very diversity, which in turn mobilizing a critical mass of support. While significant minority of NGOs are increasingly opens up a multitude of opportunities. This NGOs have been phenomenally successful aware of the unprecedented opportunity to diversification has generally been a natural at catching the public imagination, their reshape markets in favour of sustainable phenomenon, though in some cases it has ability to mobilize supporters outside a development. Here we focus on: been managed. In the environmental field, narrow range of issues is generally limited. Gatekeeping, Differentiation, Mobilization, for example, much of the conservation That said, groups with powerful brands like Globalization and Enterprise. agenda in the US was once carved up Amnesty International are beginning to between WWF (focusing on parks), The target companies and markets more actively. Nature Conservancy (purchasing land for While recognizing the limited resources 11 Gatekeeping protection) and the Sierra Club (conducting available to research corporate performance, advocacy). Amnesty are now poised to follow the lead As anyone involved in branding knows, set by Oxfam and environmental groups there is a powerful appetite among citizens Interestingly, a number of interviewees in targeting a small number of companies and consumers for interesting, trustworthy suggested it was time once again for groups each year to leverage change across industry opinion-leaders. Central to many to de-merge and differentiate. So will we more generally. opportunities now opening up for NGOs is see more de-mergers? Some think so. For the enormous stock of public support they example, Chris Rose (formerly of Greenpeace, Often the major challenge for NGOs enjoy. Being trusted clearly provides NGOs WWF and Friends of the Earth) argued when operating in this area is to balance a with a strong foundation on which to build, at Greenpeace that the organization should commitment to core principles, with the but how should they proceed? Among the split into three parts: one part focusing on inevitable compromises that are required in ways in which they could further evolve entertainment and media, appealing to going mainstream. Both the Forestry their roles: supporters through music concerts supported Stewardship Council (FSC) and the Marine by big name artists; a second continuing Stewardship Council (MSC) — products of —Working with governments as honest in ‘classic Greenpeace’ style, based around initial relationships between WWF and brokers in shaping new institutions for a community of risk-taking activists; various industry groupings — have sometimes global and/or corporate governance — and generating high-profile, media-friendly been criticized in recent years for missteps helping to co-evolve new market tools direct-action campaigns; and a third, in their enthusiasm to scale-up these and performance standards. ‘business-solutions’ part, working closely approaches.116 with business to develop solutions generating value for Greenpeace, the company and society. The 21st Century NGO 43

Other NGOs are hoping that the power of Perhaps the greatest opportunity for the market will drive their practices into the NGOs working with business, however, is mainstream. Groups like Canada’s Pembina to capitalize on their support in — and Institute explicitly aim to hand over aspects connections to — grassroots communities, of their work to mainstream consultancies particularly in emerging economies. These when the market is able to attract and local NGOs are not looking for involvement support their involvement. Equally groups just in terms of monitoring. As Azay Guliyev, like Social Accountability International (with of the National NGO Forum of Azerbaijan, its SA8000 certification system) and the put it: ‘We also want to build our own Climate Neutral Network (with its ‘Climate capacity to work with business.’ Cool’ logo) are configuring their offerings to make them readily adoptable by mainstream International NGOs can play a vital role in consulting organizations with the capacity the development of the CSR agenda in to drive these standards into the market emerging economies, ‘as long as they are mainstream. sensitive to constraints, and don’t come with a partisan agenda,’ says Matthew Murray of Source: The Rainforest Foundation More positively still, the capital markets — the St Petersburg Center for Business Ethics often the targets of campaigning groups — and Corporate Governance. In summary, are also now being employed to help raise there is a huge opportunity space here for capital to address social and environmental NGOs because companies are looking for issues. Traidcraft and the Ethical Property authentic local stakeholders, both because Company in the UK have both had success they are required to and because they in raising over £7 million of new capital recognize the value of having effective, through ‘Alternative Public Offerings’ legitimate relationships in communities (APOs).117 If the mainstreaming process is where they operate. to build further momentum, such funding mechanisms must evolve rapidly. 15 Enterprise

14 Globalization Markets reward enterprise more than dissent. The biggest opportunity for NGOs, as a result, Few organizations have been as successful in may be to stop being pure not-for-profit globalizing their operations as leading NGOs. ventures and, instead, to dive into the market The success of the anti-globalization protests itself, developing for-profit business models. is a case in point and as Naomi Klein put it While the market will continue to need in her book No Logo: ‘Anti-corporate malaise watchdogs that hold it in tension, as more is so widespread that it even transcends old intelligent market frameworks are developed rivalries within the social and ecological so the opportunities to create value across movements. Since when did grocery-store the triple bottom line agenda will also grow. workers’ unions weigh in on indigenous land claims? Since puncturing Wal-Mart became A key problem here: it is deeply ingrained a cause in and of itself.’118 within the NGO community (and perhaps beyond) that not-for-profits are These campaigns are powerful partly because automatically good and for-profits they engage groups in generating 3-D automatically bad. ‘It’s a fundamental solutions to complex problems. Whether the paradigm that has to shift in our heads,’ says network involves bringing environmental Paul Gilding of Ecos. Several ‘campaigning groups together with childcare campaigners businesses’ that we spoke to claimed that to tackle chemicals in the environment, or they were often faced with the criticism connecting community groups around the that: ‘It doesn’t makes sense to make money world to challenge water privatization, out of an environmental [or social] problem.’ tackling issues from multiple, triple bottom Ultimately, however, the market may be the line perspectives is proving a powerful only route through which many of our most campaign tool. intractable problems will be solved. The 21st Century NGO 44

Indeed, if people like Jed Emerson from the Hewlett Foundation are successful in redefining what ‘value’ means in the marketplace by developing methodologies for capturing, rewarding and trading ‘blended value’,119 then many NGOs might find that they can make more of a difference on social and environmental issues by becoming part of the market than they can working outside it.

Threats

So fourth, and finally, what are the key threats that NGOs face in attempting to drive change in businesses and markets? We spotlight: Babel, Counterfeiting, Stagnation, Alienation and Succession.

16 Babel

Background noise drowns out messages. Too many voices confuse audiences, particularly when saying different things. Even apart from obvious temptations to divide and rule, there are already plenty of excuses for governments and business to dismiss the NGO agenda. Wars on terrorism, economic downturns, and the complexity of competing CSR and sustainability standards Source: Suzy Becker / Grist magazine and languages all distract from the perceived Corporate Average Fuel Economy (CAFE ) need to address the underlying social and standards are government-imposed environmental issues. ‘My main concern is standards, requiring overall levels of fuel around the macro issues,’ says Gwen Ruta economy from car and truck fleets from the Alliance for Environmental operating in the United States. Innovation. ‘Current macro forces are making it much more difficult for me to do my job.’

But a real downside of the NGO world’s diversity is the growing confusion over multiple standards, something that André Fourie of the National Business Initiative in South Africa identified as a significant threat. ‘Too many competing voices,’ was how he put it. ‘Corporations may be put off by the variety of competing standards or may use this as an excuse to do nothing. NGOs need to show more consistency and integrity in how we deal with the business community.’ No wonder some NGO people see the need for a ‘shake-out’. The 21st Century NGO 45

17 Counterfeiting 19 Alienation Under such an ‘ethical squeeze’,125 when consumers can buy anything from life Success breeds mimicry. We have already For NGOs, it is all too easy to alienate insurance to lipstick and feel they are looked at the risk of NGOs and their leaders supporters. Many of us switch off when creating real social and environmental value being captured by the system, but there is problems become too complex, so one of the in the process, some may begin to ask why a more subtle threat — that their language challenges facing NGO leaders described in they need NGOs? But, we would still need itself might be co-opted. NGO-business Chapter 4 is that between the complex watchdogs, advocates will insist. Indeed, but partnerships also possibly allow businesses nature of many sustainable development the risk to NGOs is that this would be the to define the language of debate, potentially issues and the need to be simple and clear niche to which, in the long term, they might muzzling or muffling NGO critics. when communicating. ‘Very little is really be confined. And even here we find that black and white now — mostly we are mainstream NGOs are under pressure. To take just one recent example, President dealing with shades of grey,’ as one Bush’s adoption of the language of interviewee put it. Getting supporters to As Ross Gelbspan argued in Grist: ‘Out of ‘corporate responsibility’ to describe fiduciary ‘migrate’ from the clear black and white the vacuum of national leadership [from responsibility to shareholders has potentially issues and into more complex, but ultimately the major environmental groups] on climate outflanked the NGO communities that more important, areas is not easy and risks change, a new climate movement has had been using these terms to describe alienating supporters, members and other emerged. It is scattered in pockets a wider agenda, also involving social and funders. throughout the country: in Olympia, St. Paul, environmental responsibility. Of course, the Boston, Portland, New Orleans, Austin, and upside is that if business starts using the But the biggest risk relates to trust. San Francisco, and in countless churches language of ‘corporate responsibility’, NGOs As Joel Fleishman, chairman of the Markle and campuses where dedicated activists, might be able to stretch it back out to Foundation, warns: ‘The greatest threat to impatient with the lack of activity on the include the wider agenda. the not-for-profit sector is the betrayal of national front, are taking matters into their public trust, and the disappointment of own hands.’ 126 public confidence.’122 Interestingly, leading 18 Stagnation Indian NGOs, recognizing the importance It would be a deep irony if, just as they earn of promoting good practices within the a place at the table, NGOs find that their Even the most powerful social movements voluntary sector, have formed a network to space is occupied by innovative networks of stall. Too often, success sows the seeds of develop and promote a set of concepts, local activists, by social entrepreneurs, by later failure. As NGOs have become more principles and norms to enhance the NGO-like actors less constrained by NGO institutionalized, so they become more credibility of the sector.123 values, or by business organizations focusing ‘mature’ and, often, more conservative. on CSR and sustainability issues. But these ‘Pioneer’ activists are joined by organizing threats shouldn’t surprise us. Ecology tells us 'prospectors', then by increasingly change- 20 Succession that ecosystem succession often sees pioneer phobic NGO ‘settlers’ — generally bringing species driven out by colonizers better a lower appetite for risk.120 ‘Big brand NGOs, Times change, new people enter the game adapted to the territory that the pioneers like big brand companies, often see their and innovative business models evolve. opened up. strategic agenda through a set of risk- Ultimately, the greatest threat to the ability management goggles,’ said one interviewee. of NGOs to survive and thrive may be an inability to move fast enough as new Some parts of the environmental community entrants muscle into their market. NGOs in the US accuse the ‘beltway green groups’, may find themselves caught in a pincer based in Washington D.C., of having lost movement between ‘civil corporations which their edge on the climate change agenda. are both willing and able to take greater Too often these organizations are at the account of their social, environmental and mercy of funders whose agendas range from economic footprints’ 124 and social protecting wetlands to keeping disposable entrepreneurs who are able to demonstrate diapers out of landfills. ‘These groups are (and win rewards for) the triple bottom line running around putting out all of these fires,’ value they create. This is an area ripe for environmental journalist Dianne Dumanoski innovation and the successful innovators has written, ‘but nobody’s going after the will be disproportionately rewarded. 121 pyromaniac.’ ‘The greatest threat to the not-for-profit sector is the betrayal of public trust.’ The 21st Century NGO 46 Conclusions and recommendations

Paradoxically, the 21st Century NGO program starts here. The 21st Century NGO 47

Probably the most-quoted line in the 1967 Panel 7.1 film The Graduate was the moment when External agenda the Dustin Hoffman character is advised to get into ‘Plastics’. These days the advice Trend Implications could just as well be ‘NGOs’ or ‘CSOs’. These organizations stand on the edge of a huge 1 Pro-globalization Anti-globalizers will still challenge opportunity space which we expect to evolve energetically, but expect pro-globalization rapidly, in turn driving a further expansion arguments from a growing number of in the spectrum of NGOs, NGO-like mainstream NGOs. organizations and CSOs. 2 Security Security will be seen as having strong ethical, It has been striking to find the extent to social and environmental dimensions, not which NGO people now see the agenda — just political, military and economic. Expect and the opportunity space — as global. targeting of ‘military-industrial complexes’, People like Kumi Naidoo of CIVICUS see and growing concerns about ‘Big Brother’ this trend as inevitable, with globalization implications of surveillance (e.g. activities of leading to a new scale of problems in such the American Civil Liberties Union). areas as environmental degradation, HIV/AIDS, human trafficking, the drug 3 Governance A huge jump, but both global and corporate trade and terrorism.127 In some of these governance are now on the NGO agenda areas, NGOs will be part of the problem (e.g. CERES). identification, strategic prioritization and solution-development processes. In others, 4 Climate change Along with emerging health challenges (e.g. they will be adversely impacted by the HIV/AIDS, malaria, SARS, TB), this challenge responses of governments or other key straddles environmental, social and economic actors. concerns. Huge implications for future development patterns, both in developed and Also remarkable was the amount of positive emerging economies. Existing initiatives (e.g. feedback that we received from contributors. Carbon Disclosure Project) will take root. ‘What an interesting and timely study,’ interviewees would often say. Even MBA 5 Human rights As signalled at 2002’s World Summit on students — exposed to early research Sustainable Development, the agenda is findings — were keen to know how they expanding to include such issues as access could get involved in the NGO sector. to clean water, affordable energy and life- They did not plan to spend their entire saving drugs. careers in this area, but recognized that it now powerfully shapes politics and the 6 Emerging markets Even developed-world NGOs with no operations economy, so that a period of NGO experience in emerging markets are increasingly sensitive is now seen to be a real asset on a CV to their agenda. One key focus: trade justice. or résumé. The Doha Round of trade negotiations may have stalled, but many NGOs now see reform But it was clear, too, that different people of the whole IMF/WTO system as essential. had very different reasons for being interested: 7 Market mechanisms The 2003 World Social Forum saw a call for more targeting of high profile corporate brands. — Business people typically wanted to Expect growing interest in liability regimes know where activists and NGOs might be and class actions (e.g. Friends of the Earth headed next. International). But NGOs are also showing interest in positive use of market mechanisms, — Government people wanted to know such as emissions trading (e.g. Chicago about the political momentum of different Climate Exchange). parts of the movement. 8 Transparency They may not see much value in current — Media people wanted to know what company reports, but growing numbers of impact ‘wild card’ developments like NGOs are focusing on corporate transparency recession, the ‘war against terrorism’ or (e.g. CORE, GRI, Publish What You Pay, TI). SARS might have on the NGO agenda. We see a convergence of interest between NGOs, business and governments, with efficient — And NGO people, well they had all sorts markets depending on good information. of questions. Like politicians and business leaders around the world, they sense the 9 New technology Closely linked to trade, health and environment ground moving under their feet. They concerns, a number of new technologies know change is coming — and it makes (e.g. GM foods, human genome work, many of them uneasy. nanotechnology) will continue to spark major controversies. The 21st Century NGO 48

Panel 7.2 We didn’t specifically ask NGOs to identify Wild cards their likely priorities over the next few years, but pointers quickly emerged during the Based on our research and interviews, here research and interviews. Here we identify are six trends which would significantly 21 issues or trends, not as a definitive listing, affect the NGO opportunity space. but as a provocation for NGOs and those Of course some wild cards could be more that are affected by them. Panel 7.1 focuses positive than those identified here. on nine dimensions we detected in the external agenda driven by NGOs. Panel 7.2 highlights six ‘wild cards’ mentioned by Trend Implications interviewees, or which surfaced in our research. Panel 7.3 looks at some of the 1 Recession, slump, deflation The globalization project begins to unravel. implications for NGO funders, and Panel 7.4 Recession turns into slump in some areas. spotlights six elements of the emerging Entry of China into WTO depresses world internal agenda for NGOs. prices. Deflation takes stronger hold in Japan, spreads to Germany. NGOs massively squeezed financially. From a business The future starts here perspective, the current cost of future liabilities soars as inflation slows. Paradoxically, our work on what we might call the ‘NGO industry’ does not end with 2 War on terrorism The global policing needed to combat The 21st Century NGO, but starts here. As terrorism produces political fallout for one reviewer responded to a late draft of the NGOs. Economic problems encourage report: ‘to present a truly holistic picture of governments to take harder lines on major the status of NGOs moving into the 21st issues like climate change; many NGOs Century,’ we would need to ‘investigate, marginalized. Spiral of reputational integrate and synthesize much more ‘deflation’ hits NGO world. comprehensively the organizational interests, perspectives, behaviours and circumstances 3 The ‘Enron’ NGO Trust is a highly perishable commodity. The of NGOs from developing countries.’ And this, elements of a ‘Perfect Storm’ build with inevitably, ‘would entail meeting with a discovery that a leading NGO has misled wider variety of NGOs and other civil society the public for years. The ‘Enron’ effect leads groups in emerging economies.’ to tougher accounting rules for NGOs, squeezing capacity to leverage funds. Key areas that would certainly benefit from further work include: the specific constraints 4 Donor fatigue With little evidence that NGOs are able and opportunities for NGOs operating in to drive major changes in political and emerging economies; how to build NGO economic systems now under pressure, key capacity for more effective engagement in foundations adopt different investment and transforming markets; identifying key funding patterns. Social entrepreneurs barriers to the scaling-up of NGO market- benefit, many NGOs miss early warning based approaches; and undertaking a signals and suffer. scenario building exercise on the future options for the World Social Forum. 5 Ethical squeeze The opportunity space grows, but is colonized by a range of existing and new For the moment, and accepting these actors, many for-profit. Consumers and qualifications, let’s draw out a few key voters take comfort in the mistaken belief trends. In particular, we will look at that something is being done, throttling implications for the external agenda driven back on support for activists. by NGOs and the internal agenda they now face, plus — as already mentioned — a 6 Biters bit Where NGOs successfully build partnerships number of potential ‘wild cards’. with companies and other actors, they attract fierce attacks from NGOs that have failed to do so, or want to pump up their own profile. Result: further dents in the credibility of the sector. The 21st Century NGO 49

The first point to make is that recent decades Panel 7.3 have seen what we might call a ‘civil society Implications for NGO funders boom’. Those involved may still find it hard to see this phenomenon in market terms, but The stock market’s downturn, recession this area has its ‘Bulls’ and ‘Bears’. The Bears and reduced government budgets are just argue that the golden days of activism are some factors making it a very difficult over, while the Bulls counter that the scale time both for NGOs and those that fund of the political, social and economic them. So what do the survey results mean transformations needed over the coming for foundations, governments and other decades mean that we ‘ain’t seen nothing large funders of NGOs? yet’. Oddly, both Bears and Bulls may be right. The Bulls because the future, we believe, Area Possible Foundation Actions will see an explosion in the number and scale of opportunities for the sort of changes Market paradigm — Maximize the total performance or ‘blended that NGOs have long called for, the Bears The market paradigm applies to NGO value’ 128 of both philanthropic investments because new entrants to the market could funders, too (Chapter 3). as well as of financial assets. marginalize even some of the best-known —Work to develop frameworks for ensuring NGO brands. the accountability and effectiveness of foundation activities. As described in Chapter 2, it is clear that — — In addition to traditional grant-making at least in the OECD world — the agenda is activities, consider providing venture capital moving on from the anti-globalization ‘peak’ to companies and social enterprise working of a few years back. The challenge now will to provide social and environmental benefits not be simply to attack the agents of in addition to financial return. globalization, but to work out practical ways in which the processes of globalization can NGO capacity — Provide organizational funding for the be made more humane, more accountable Funders can help NGOs build capacity development of business engagement skills. and, ultimately, more sustainable. to engage with business and markets — Raise the profile of sustainable market and (Panel 6.3). CSR agendas with local NGO players and Though the ‘radical fringe’ may strenuously governments — particularly in emerging deny and resist this impending shift, our economies, where the issues may not be interviews suggest that a significant number mainstream. of mainstream NGOs are headed in this direction — or are planning to do so. Market stages — All stages (1–4) of NGO engagement with And one inevitable problem they will face Funders should support NGOs that business and markets are required for in the process is that this more positive, are active in trying to achieve change effective market change. Funders should constructive work tends to attract fewer through markets (Chapter 5). support both NGOs that create the ‘heat’ headlines. This potentially raises a major that encourages companies to engage with issue in terms of attracting and holding the CSR agenda, as well as NGOs that create members, and in sustaining (let alone the ‘space’ that enables businesses, NGOs building) funding levels. However, NGOs and other stakeholders to collaborate in investing in market-based change may also reshaping market frameworks. find alternative sources of funding emerging, — Fund NGOs active at Stage 5 (market including service relationships with disruptions) to work out how to spur the governments, companies, SRI funds and necessary market evolution. social entrepreneurs or eco-preneurs. Accountability — Provide support to NGOs developing Funders of NGOs should provide core accountability mechanisms and systems. funding in this area (Panel 3.7). — Fund bridging between new transparency and accountability initiatives (e.g. Global Reporting Initiative) and the wider world of NGOs. Funders should — Allow resources for evaluation of support NGOs that effectiveness at the project level. Opportunities — Promote opportunities for proactive market are active in trying Funders should encourage NGOs to engagement — beyond remediation and explore and move into high-leverage tail-pipe solutions. to achieve change niches or opportunity spaces (page 42). — Look for NGO ideas and proposals with real potential for scale-up. through markets. — Help NGOs co-evolve new market tools and performance standards. — Include NGOs as ‘honest brokers’ when developing new institutions for global or corporate governance. The 21st Century NGO 50

Panel 7.4 The gulf remains Internal NGO agenda A reassuring finding was that our ‘Strange Trend Implications Attractor’ analysis still works well. Even greater numbers of NGOs and NGO-like 1 Scaling As problems grow, major NGOs must learn businesses are headed into what in 1996 we to scale up their impact, although not dubbed the domain of the ‘Dolphin’ (page necessarily their own organizations. 14). But what surprised us seven years on Networks and partnerships will be crucial was to find signs of a counter-trend. Some multipliers as we have seen with global parts of the ‘Orca’ community look set to policy networks. The most successful NGOs evolve in unexpected directions. will be the best networkers, the most reliable partners. While many NGOs increasingly want to work with business and through markets, a small 2 Competitive strategy NGO boards must evolve new strategies to number of activists are working on new ways cope with new risks and exploit emerging of using market mechanisms to damage — opportunities. Successful NGOs will and in some cases destroy — companies. experiment with new business models We have seen this trend in embryo with the and with ‘co-opetition’, learning to work attacks on Huntingdon Life Sciences (HLS). with organizations they also sometimes Whatever the legality of such campaigns, challenge or compete with — both businesses there is a growing sense that they can be and NGOs. very effective in ending perceived abuses.

3 Funding Key to any plans to scale up, all the evidence ‘The number of activists isn’t huge,’ said suggests funding is becoming tighter. Expect HLS managing director Brian Cass in mid- the position to get worse. NGOs must build 2003, ‘but their impact has been incredible. a better ‘business case’ for funders, but will There needs to be an understanding that this also need to explore new funding/business is a threat to all industries. The tactics could models. Partnerships with selected social be extended to any other sector of the entrepreneurs and/or SRI funds could help. economy.’ 129 The risk here is that business people will see such tactics as little more 4 Branding As competition builds, so the necessity (and than terrorism and, therefore, something for value) of strong branding will grow. This is governments to sort out. The real excitement, an area where strong brands have already however, is going to come when activists and evolved, with lessons learned that should be NGOs work out how to use mainstream better known. New brands will be co-evolved market mechanisms against vulnerable by NGOs with public and/or private sector companies and markets. partners. The wider risk: they create virtuous cycles that disadvantage non-branded Meanwhile, though we see continuing competitors. convergence between the interests of some leading companies and some mainstream 5 Accountability That said, high profile, branded NGOs are NGOs, we also see a continuing gulf between increasingly vulnerable to accountability mainstream economic thinking and the challenges. Few feel in control; those that do emerging positions of the radical fringe probably shouldn’t. NGOs must decide which elements of the civil society world. This was accountability and transparency standards strikingly evident in the positions taken early to adopt, whether and how to report, and in 2003 by the rival World Economic Forum what form of assurance to embrace. (WEF) and World Social Forum (WSF) events in Davos, Switzerland, and Porto Alegre, 6 Governance As with companies, these increasingly Brazil. In addition to the more obvious complex issues will drive the agenda up to differences between WEF and WSF in terms board level. Also, expect more watchdog and of gender, age and outlook,130 there are more rating reports on NGOs forcing them to more substantive differences in attitudes, not least actively manage their risks and exposures. around the role of globalization. The 21st Century NGO 51

For WSF, if globalization is seen as positive Worryingly, the implications of this seismic Conclusions at all, it is often because it is seen as an shift are not clear, at least in our experience, opportunity to globalize conscience and to many NGO people we spoke to during the Our ten headline conclusions are that: consciousness. For WEF, in contrast, it is course of this project. They may be interested primarily about globalizing capital flows in aspects of the emerging agenda, for 1 although by no means universally popular, and economic opportunity. example the challenge of NGO branding NGOs, NGO-like organizations and CSOs (page 16), social enterprise (page 43), play an increasingly vital role in All sorts of things could happen to narrow business partnerships (page 30) or the democratic and democratizing societies. or widen this gulf, but at present it looks concept of ‘blended value’ (page 19), but to difficult to bridge. The wild card factors date most haven’t been able to pull together 2 the challenges they address are spotlighted in Panel 7.2 are just some of the all the pieces of the puzzle. growing — and will continue to do so. forces that could inject additional volatility into the situation. These conditions, as some So, beyond the mirage, what is it that we 3 governments and business may resist interviewees signalled, are likely to drive are arguing NGOs should do? The first thing their advocacy, but there is now real some form of ‘shake-out’, or ‘market is to recognize that markets are central to interest in the potential roles NGOs can correction’ as Bob Dunn of BSR put it. their future. As Paul Gilding of Ecos argues, play in developing and deploying markets are becoming legitimate channels solutions. It seems inevitable that many NGOs will for social change — and they are also likely be forced to become more accountable. to be, on balance, more efficient and 4 as a result, a new market-focused We will also see more ratings and benchmark effective than many traditional approaches. opportunity space is opening up, but this surveys of NGO effectiveness. The problems But the rules of the game, clearly, will be often requires solutions that are not that have hit US-based The Nature very different. simply based on single-issue responses. Conservancy 131 underscore just how damaging the emergence of a full-blown To make a success of this new order, 5 this represents a challenge even for most ‘Enron NGO’ scandal could be. mainstream NGOs — and innovative pioneers mainstream NGOs, so public and private — will need to understand how the new sector partnerships are increasingly The shockwaves that have hit major forms of competition are going to work. essential in leveraging change. companies in recent years also show how NGOs will need to get a better sense of the risky it can be to count on past reputation emerging competitive challenges from 6 in the process, new forms of competition and trust-based relationships. This is companies, business networks and social are evolving in the ‘NGO market’, with particularly true of NGOs, as Oxfam America entrepreneurs that have adopted elements new entrants like companies, business Chair Barbara Fiorito puts it, ‘because they of the NGO agenda. networks, NGO networks and social demand so much public good will and entrepreneurs blurring traditional attention’. That good will needs active To compete effectively for mind share and boundaries. management and renewal. In India, for their share of society’s resources, mainstream example, the Credibility Alliance (page 52) NGOs will need to: 7 both national and international NGOs, is working extremely hard to rebuild social as a result, are having to pay more trust in the NGO community after a series — establish where they are against the attention to the whole area of branding of controversies focusing on different five-stage model outlined in Chapter 5 and competitive positioning. forms of fraud. (page 27) — and, equally important, where they would be most effective 8 in parallel, the mainstreaming trend is a few years on. exposing established NGOs to new Beyond the mirage accountability demands. — explore aspects of the internal agenda We always knew the notion of the ‘21st highlighted in Panel 7.4, perhaps 9 but, problematically, all of this is Century NGO’ would prove to be something supplemented with a review of their happening at a time when traditional of a mirage. Nor do we think that there is performance in respect of the strengths sources of NGO funding are going to be one successful business model and weaknesses spotlighted in our SWOT increasingly squeezed. for NGOs. In different circumstances, framework (Chapter 6, page 37). individuals and groups will exploit U-form, 10 finally, we sense an urgent need to M-form, N-form and others forms of NGO — evolve and apply custom-tailored review — and further evolve — NGO not yet invented to great advantage (page versions of our risk mapping tool ‘business models’. 15). But the key point here is that the whole (Chapter 4, page 21). NGO landscape is tilting not just towards partnerships with business, which many NGOs still see as a slightly more sophisticated form of philanthropy, but towards market-based solutions, market mechanisms and, for better or worse, market dynamics. The 21st Century NGO 52

Appendix 1 Centres of Excellence

Far from being comprehensive, the following list aims to provide readers with a taste of some organizations (academic, NGOs and other) we found particularly helpful in our research.

Civil Society Research Capacity Building Partnerships Accountability & Governance

London School of Economics Institute of Development International NGO Training One World Trust, UK Centre for Civil Society, UK Research, USA and Research Centre, UK www.oneworldtrust.org www.lse.ac.uk www.jsi.com/idr www.intrac.org Formed in 1951 by members of The Global Civil Society Yearbook In 2002, IDR merged with World INTRAC is an NGO supporting the British Parliament, One World is a joint project of the London Education, a Boston-based other NGOs with the aim of Trust aims to promote a greater School of Economics Centre for nonprofit organization dedicated improving civil society sense of world community. Civil Society and the Centre for to improving the lives of the poor performance. Part of their The Global Accountability the Study of Global Governance. through economic and social research program focuses on Project’s report Power Without It provides a wealth of inform- development programs. Much of whether NGO-private sector Accountability is a comparison of ation and data — and each year their research revolves around partnerships are more effective in 18 organizations’ accountability, provides a useful barometer on strengthening and managing civil bringing about sustainable focusing in particular on the current issues and debates society. Critical Cooperation: An development than are adversarial transparency and governance. in the sector. Alternative Form of Civil Society- campaigns, fair-trade initiatives Business Engagement suggests or company self-regulation. BoardSource, USA Hauser Center at Harvard that civil society-business co- www.boardsource.org University, USA operation is possible even when Business Partners for Formerly the National Center for www.ksg.harvard.edu/hauser important interests are in Development (BPD), UK Nonprofit Boards, BoardSource The Center aims to understand conflict. www.bpdweb.org enables organizations to fulfil the role that the nonprofit sector BPD was launched as a three- their missions by helping build and nongovernmental Pact, USA year program designed to study, strong and effective nonprofit organizations play in aiding www.pactworld.org support and promote strategic boards. It provides useful societies to discover and Founded in 1971 with support examples of partnerships resources giving practical accomplish important public from USAID, Pact is a member- involving business, civil society information, tools and best purposes. ship organization of US private and government working practices, training, and leadership and voluntary organizations together for the development of development for board members The Center for Civil Society aiming to ‘help build strong communities around the world. of nonprofit organizations Studies of the Johns Hopkins communities that provide people Putting Partnering to Work worldwide. Institute for Policy Studies, USA with opportunities to earn a provides the results and www.jhu.edu/~ccss dignified living, raise healthy recommendations from this work. The Credibility Alliance, India Global Civil Society: An Overview families, and participate in www.credibilityalliance.org gives a broad comparative democratic life’. Pact focuses on The Centre for Innovation in Formed in 2001, The Credibility description of civil society in strengthening the capacity of Management, Canada Alliance is working towards 35 countries, examining the grassroots organizations, and www.cim.sfu.ca creating a self-regulatory geographic patterns and creating coalitions and networks Based at Simon Fraser University framework for NGOs that allows characteristics of the sector among government, business and in Vancouver, CIM was set up for the establishment of norms, and analyzing its scope, size citizen sectors to achieve social, to help business and other their promotion and adoption, and financing. economic and environmental organizations create social and and certification that justice. shareholder value through organizations meet these norms productive stakeholder in an effort to promote the CIVICUS, South Africa engagement. voluntary sector’s credibility. www.civicus.org Founded in 1993, this inter- national alliance of NGOs aims to nurture the foundation, growth and protection of citizen action throughout the world, especially in areas where participatory democracy and citizens' freedom of association are threatened. Their values include courage, justice and equality, which are reflected in their cutting-edge programs, addressing issues such as transparency and legitimacy of CSOs (civil society organizations). The 21st Century NGO 53

Appendix 2 Sheila Saraiva W1 Susanne Stormer W3 Gita Kavarana List of Interviewees and Independent Novo Nordisk Centre for Science and Workshop Participants Joe Sellwood W1 Environment Pact France Ashok Khosla W1 NGO-Business Vivian Smith (W1 and W3) Bruno Rebelle Development Alternatives Partnership Workshop UN Global Compact Greenpeace France Malini Mehra WSF, Porto Alegre, Brazil Centre for Social Markets W2 Emerging Markets Canada Georgia Viraf Mehta W2 Conference Call Priscilla Boucher W4 Nino Saakashvile Partners in Change W3 NGO Accountability & VanCity Savings Credit Union Horizonti Sonia Shrivastava Governance Workshop Linda Coady W4 Partners in Change NYC, USA WWF–Canada Germany Shankar Venkateswaran W4 NGO-Business Elizabeth Everhardus W4 Christoph Bals American India Foundation Partnership Workshop Pollution Probe Germanwatch Vijaylakshmi Vancouver, Canada Suzanne Hawkes W4 Rainer Griesshammer Development Alternatives W5 NGO Branding Workshop IMPACS Oeko-Institut London, UK Dianne Humphries W4 Lindsay Keenan W1 Kenya Suncor Energy Greenpeace International Michael Clement W1 Argentina Rob Kerr W1 Dr Ansgar Klein AFCAP Victoria Arbamouich W1 Environics International Ltd Bundesnetzwerk Independent Myrna Khan W4 Bürgerschaftliches Engagement Malaysia Cristna Catano W1 Canadian Business for Social Sabine Leidig Andrew Ng Fundación SES — Br. AR. Arq Responsibility Attac-Germany WWF Malaysia Christopher Johnson Patrick Mallet Jürgen Maier If People, consultant to ISEAL Alliance Forum Umwelt & Entwicklung Mexico Grupo Puentes Andrew Mallory W4 Miklos Marschall Margarita Almodóvar Delfina Linck W1 Small Potatoes Urban Delivery Transparency International Fundación del Empresariado AVINA Foundation Andrew McAllister W4 Jens Martens Chihuahuense Jorge Daniel Taillant McAllister Opinion Research World Economy, Ecology and Centro de Derechos Humanos y Donna Morton W4 Development (WEED) Netherlands Medio Ambiente (CEDHA) Integral Economics Professor Edda Müller Gemma Crijns Pedro Tarak W1 Dave Mowat W4 Federation of German Institute for Responsible Business AVINA Foundation VanCity Savings Credit Union Consumer Organisations (EIBE) Nyenrode University Robert Penrose W4 Helmut Röscheisen Harry Hummels Australia BC Hydro Deutscher Naturschutzring (DNR) Institute for Responsible Business Paul Gilding Dave Quigg W1 Barbara Unmüßig (EIBE) Nyenrode University Ecos Corporation North American Social Forum Heinrich Boell Foundation Isabelle van Notten Planning Process Professor Ernst von Weizsäcker Independent Azerbaijan Bruce Ralston W4 Member of the German Farda Asadov VanCity Savings Credit Union Parliament Peru The Open Society Institute Marlo Raynolds W4 Michael Windfuhr Guida de Gastelumendi Azay Guliyev Pembina Institute FoodFirst Information and Independent National NGO Forum of Nicole Rycroft W4 Action Network (FIAN) Azerbaijan Markets Initiative Philippines Nicole Salmon W4 Greece Elvie Ganchero W2 Belgium Oxfam Canada Maro Evengelidon W1 Philippine Business for Social Raymond van Ermen George Scott W4 Greek Social Forum Progress European Partners for the VanCity Savings Credit Union Environment Yalmaz Siddiqui W4 Hungary Russia IBM Business Consulting Services Robert Atkinson Vyacheslav Bakhmin W2 Brazil Tamara Stark W4 Regional Environment Center The Open Society Institute Nelmara Arbex W2 Greenpeace Canada Matthew Murray Instituto Ethos Coro Strandberg W4 India St Petersburg Center for Business Fabio Feldmann W3 Strandberg Consulting Priya Anand W3 Ethics and Corporate Governance Forum Brasileiro de Mudanças Denise Taschereau W4 Murray Culshaw Advisory Services Elina Tchizhevskaya Climaticas Mountain Equipment Co-op Chandra Bhushan NGO Development Center Neissan Monadjem Centre for Science and Transparência Brasil China Environment South Africa Cristina Murachco W1 Jeanne-Marie Gescher W2 Murray Culshaw Dr David Fig Instituto Ethos Claydon Gescher Associates Murray Culshaw Advisory Services Biowatch South Africa Valdemar de Oliveira Neto Michelle Ollett Dr Vikas Goswami André Fourie W2 AVINA Brasil Claydon Gescher Associates Business and Community National Business Initiative Rebecca Raposo Foundation Tracey King Grupo de Institutos Fundações Denmark Aditi Haldar SABCOHA e Empresas (GIFE) Lise Kingo W5 Development Alternatives Mokhethi Moshoeshoe Maria A. P. Ribeiro W1 Novo Nordisk Ashok Jaitly African Institute of Corporate Associação Saude da Familia TERI Citizenship The 21st Century NGO 54

Kumi Naidoo W3 Mary Kaldor Evan Bloom Pamela Kraft W3 CIVICUS Center for the Study of Global Impact Alliance Tribal Link Foundation Bobby Peek Governance (LSE Seminar) Joan Boyle W3 Stephanie Kurzina GroundWork Fiona King International Schools Association Oxfam America Richard Sherman Save the Children Fund UK Michelle Chan-Fishel Aryeh Neier GLOBE Southern Africa Paul King Friends of the Earth The Open Society Institute WWF–UK Professor Gordon Conway Clare Nolan W3 Spain Hetty Kovach W3 Rockefeller Foundation Congregation of the Cristina García-Orcoyen One World Trust Elizabeth Cook Sisters of the Good Shepherd Fundación Entorno Harriet Lamb W5 World Resources Institute Kate Pearson W3 Fairtrade Foundation Erik Curren BoardSource Sweden Miles Litvinoff W1 Lumina Strategies Gavin Power W3 Mans Lonnroth OneWorld International Sister Pat Daly UN Global Compact Mistra Ann Longley W5 Tristate Coalition for Glenn T. Prickett OneWorld International Responsible Investment Conservation International Switzerland Dr Chris Marsden W5 Ramu Damodaran W3 Janet Ranganathan Jem Bendell Amnesty International Civil Society Service, World Resources Institute United Nations Research Institute Business Group United Nations DPI Dawn Rittenhouse W3 for Social Development Robert Napier Pat Daniel DuPont Barbara Dubach W5 WWF–UK CERES Michael Rodemeyer Holcim/WBCSD Aly Nazerali Don Doering Pew Initiative on Food and Pamela Hartigan Aga Khan Foundation (UK) World Resources Institute Biotechnology Schwab Foundation for Social Amy O’Meara Bob Dunn Laura Roper Entrepreneurs Pact Business for Social Responsibility Oxfam America John Palmer W5 Michael Edwards Gwen Ruta UK Oxfam GB Ford Foundation Environmental Defense Cathy Anderson W5 Stuart Palmer W5 Jed Emerson Nick Salafsky Greenpeace Traidcraft William and Flora Hewlett Foundations of Success Kirstie Arnould W5 Sara Parkin Foundation Judith Samuelson Friends of the Earth Forum for the Future Michelle Evans W3 Aspen Institute Initiative for Stella Bland W5 Jules Peck International Service for Human Social Innovation through Forum for the Future WWF–UK Rights Business Simon Burall Kate Raworth Catherine Ferguson W3 Peter Sandman One World Trust Oxfam GB Franciscans International Independent Henk Campher Tanya Reed W5 Barbara Fiorito W3 Sarah Severn W4 Oxfam GB WWF–UK Oxfam America Nike Rita Clifton W5 Chris Rose W5 Catherine Fitzpatrick W3 Michael Shellenberger Interbrand Campaigns Consultant Physicians for Human Rights Lumina Strategies Craig Cohon Rory Stear Alisa Gravitz Timothy Smith Globalegacy Freeplay Energy Group Co-op America Walden Asset Management Martin Cottingham W5 Sophia Tickell Sue Hall William J. Stibravy W3 Soil Association Oxfam GB Climate Neutral Network International Chamber of Jane Cotton Karen Westley Professor Virginia Hodgkinson Commerce Oxfam GB Shell Foundation The Georgetown University Yasmin Tayyab W4 Kel Currah Sarah Wykes Public Policy Institute International Finance Corporation World Vision International Global Witness Sarah Horowitz Alice Tepper Marlin Chris Davies Working Today Social Accountability Save the Children International USA Jean Horstman W3 International Secretariat Barbara Adams W3 Building Educated Leaders for Life Lloyd Timberlake Deborah Doane W5 United Nations NGO Liaison (BELL) AVINA Foundation New Economics Foundation Patricia Armstrong W3 Lisa Jordan W3 Dr Chris Toppe Chloe Evans W5 Human Rights Consultant Ford Foundation Independent Sector Interbrand Matthew Arnold Calestous Juma Steve Viederman W3 Peter Frankental World Resources Institute The Kennedy School of Initiative for Fiduciary Amnesty International Stella Arthur W3 Government, Responsibility Business Group United Nations NGO Liaison Harvard University Iain Watt W3 Lynne Franks W5 Alan Atkisson Adrian Karatnycky CERES Sustainable Enterprise and Atkisson and Associates Freedom House Eric Whan W3 Empowerment Dynamics (SEED) Stuart Auchincloss W3 Eileen Kaufmann W3 Environics International Ltd Mark Griffiths W5 Sierra Club Social Accountability Tensie Whelan Branding Consultant Zehra Aydin W3 International Rainforest Alliance Gavin Hayman United Nations CSD Secretariat Channapha Khamvongsa W3 Sister Pat Wolf Global Witness Margorie Berg Daniels Ford Foundation Interfaith Center on Corporate Jeremy Hobbs International Society for Jackie Khor Responsibility (ICCR) Oxfam International Secretariat Third-Sector Research Rockefeller Foundation Simon Billenness Scott Klinger Oxfam America Co-United for a Fair Economy The 21st Century NGO 55

Appendix 3 07 Michael Edwards, ‘NGO Rights 2Paradigm shift 31 See, for example, ‘Non- Notes and Responsibilities — a New 20 Our research suggests that the Governmental Organizations: Deal for Global Governance’, first wave peaked in 1969- the Fifth Estate in Global Executive Summary The Foreign Policy Centre, 1973, the second 1988-1991, Governance,’ Edelman PR and 01 Recent work by the Center for 2000. and the third (first visible in Strategy One, presented to the Civil Society Studies at John 08 See Appendix 2. the streets of Seattle during World Economic Forum, New Hopkins University suggests 09 For more information on 1999’s anti-WTO protests) York, 2 February 2002. that even excluding religious our methodology, see 1999-2002. For more 32 While NGO numbers have congregations, the ‘non-profit www. sustainability.com/ information see SustainAbility increased significantly over sector is a $1.1 trillion programs/pressure-front/ / UNEP, Good News and Bad: the past decade, several industry’, employing 19 million 21C-NGO-proposal The Media, Corporate Social interviewees pointed out that fully paid employees and 10 David Brown and Mark Moore, Responsibility and Sustainable low transaction costs mean representing the world’s ‘Accountability, Strategy, Development, SustainAbility / that, while technically still eighth largest economy (John and International Non- UNEP, London, 2002. existing, up to 40% of these Hopkins Center for Civil governmental Organizations’, 21 For example, US-based The groups are actually inactive. Society Studies: Global Civil Nonprofit and Voluntary Sector Nature Conservancy is under 33 http://1nweb18.worldbank. Society – Dimensions of the Quarterly, Vol.30, No.3. federal investigation following org/essd/essd.nsf Non-profit Sector, John September 2001 pp.569-587. exposés in The Washington 34 Amy Chua, World on Fire: Hopkins, Baltimore, 1999). 11 The Centre for Civil Society, Post over its handling of How Exporting Free Market 02 Bill Bradley, Paul Jansen and London School of Economics donations and New York State Democracy Breeds Ethnic Les Silverman, ‘The Nonprofit and Political Science (LSE). Attorney General Elliot Spitzer Hatred and Global Instability, Sector’s $100 Billion 12 World Business Council on is also calling for increased Doubleday, 2002. Opportunity,’ Harvard Business Sustainable Development, NGO accountability. 35 See for example Jean-François Review, May 2003, pp.94-103. Stakeholder Dialogue on CSR, 22 For example, the LSE’s Centre Rischard High Noon: 20 Global 03 See, for example, Views of a The Netherlands, 1998. for Civil Society looks at a Problems, 20 Years to Solve Changing World, The Pew 13 SustainAbility/IFC/Ethos range of indicators for Them, Basic Books, New York Global Attitudes Project, June Developing Value: The Business globalization, including 2002. www.rischard.net 2003 which suggests that Case for Sustainability in numbers of students studying people around the world share Emerging Markets, abroad, levels of global trade, 3 The business of NGOs a desire for democracy and SustainAbility, 2002. levels of air travel and 36 Op. cit. 01 free markets – and also 14 The Oxford English Dictionary, international tourism, and 37 See for example E. A. generally ‘acknowledge and 1995/96 adapted. growth in communications Nadelman, ‘Global Prohibition accept’ globalization. 15 A. C. Vakil ‘Confronting (e.g. numbers of English Regimes: The Evolution of www.people-press.org the Classification Problem: a speakers, access to Norms in International 04 Op. cit. 01 Taxonomy of NGOs’, World information technology). Society’, International Development, vol.25, no.12, 23 Amnesty International, quoted Organisation, vol.44, no.4, 1Introduction p.2060 (1997). Capturing some in Terraviva, the independent 1990. Discusses the role of 05 John Elkington and Tom Burke, environmental issues through daily of the World Social NGOs in the development of The Green Capitalists, Victor viewing future generations as Forum, 24 January 2003. international regimes to Gollancz, London, 1987. ‘disadvantaged people’, this 24 Mike Moore, A World Without combat piracy, slavery, 06 Other surveys were: Green definition does not address Walls: Freedom, Development, prostitution (‘white slavery’) Pages: The Business of Saving groups which ascribe intrinsic Free Trade and Global and the hunting of elephants. the World, by John Elkington, value to organisms or eco- Governance, Cambridge 38 Some of these labels are from Tom Burke and Julia Hailes, systems which would be University Press, 2003. Wiseman Banda, ‘What type of Routledge, London, 1988; The included in our definition of 25 Jeffrey E. Garten, Globalization an NGO is your NGO?’, United Green Wave: A Report on the NGOs. Sub-groups of NGOs without Tears: A New Social Nations Chronicle, vol.XXXV, 1990 GreenWave Survey, are described in Chapter 3. Compact for CEOs, Harvard no.1, 1998. SustainAbility with British Gas, 16 Jane Nelson, Business as Business School Press, 2002. 39 For more formal definitions London, 1990; The Corporate Partners in Development, 26 Op. cit. 02 see our glossary on page 05. Environmentalists: Second Prince of Wales Business 27 This shift has been under 40 See, for example, John GreenWave Survey, Leaders Forum, 1996. way for some time, with Elkington and Shelly Fennell, SustainAbility with British Gas, 17 For additional definitions see Greenpeace UK and others ‘Shark, Sealion or Dolphin?’, London, 1991; The Green www.socialenterprisemagazine adopting a market focus in Tomorrow, March-April 1997; Keiretsu, John Elkington and .org This definition would the early 1990s. and Chapter 9, ‘After the Anne Dimmock, special also include terms like 28 See www.freedomhouse.org Honeymoon’, in John Tomorrow survey supplement, ‘campaigning companies’ for numbers of ‘free’ and Elkington, Cannibals with 1994; and Strange Attractor: and ‘conscience commerce’. ‘partially free’ societies. Forks, Capstone Publishing, The Business-ENGO 18 For a more extensive 29 www.sustainability.com/ Oxford, 1997. Partnership. A Strategic Review definition see Gregory Dees, news/articles/core-team-and- 41 Better known as the of BP’s Relationships with ‘The Meaning of Social network/chris-rose-golden- ‘killer whale.’ Environmental NGOs, Entrepreneurship’, age-of-pressure-groups 42 Nick Carter, ‘Oxfam to Shun SustainAbility for BP, see John www.gsb.stanford.edu/ 30 See for example data from Iraq Funds from Belligerent Elkington and Shelly Fennell, csi/SEDefinition MORI, Environics, Gallup and States’, www.alertnet. ‘Shark, Sealion or Dolphin?’, 19 World Commission on Independent Sector. org/thefacts/reliefresources/ Tomorrow, March-April 1997. Environment and Develop- 602345?version=1 ment, Our Common Future, Oxford University Press, 1987. The 21st Century NGO 56

43 Anheier and Themundo, 56 ‘Charities face crisis over 68 Exceptions include the centres 80 Quoted in P. J. Simmons, ‘Organisational Forms of drop in gifts from wills’, of excellence in Appendix 1, ‘Learning to live with NGOs’, Global Civil Society’, LSE William Kay, The Independent, plus people like Stewart Brand, Foreign Policy, Fall 1998, Global Civil Society Yearbook, 26 April 2003. Buckminster Fuller, Jeff Gates, pp.82–96. LSE, 2002. 57 See, for example, David Paul Hawken, Bill McDonough 81 John Pascantando, speech to 44 A point we come back to in Rieff, A Bed for the Night: and Michael Braungart, and Greenpeace Business Chapter 6. Humanitarianism in Crisis, Donella Meadows. Conference, October 2002. 45 William Kay, ‘Charities Face Simon and Schuster, 2002. 69 Op. cit. 30 82 SustainAbility / Centre for Crisis Over Drop in Gifts from 58 For example, Aventis, Cisco, 70 Our Common Future, Active Community / Cable & Wills’, The Independent, Nike, Novartis, Schlumberger The World Commission on Wireless, Corporate 26 April 2003. and Shell are setting up Environment Development Community Investment in 46 Some commentators have foundations focused on (Brundtland Commission), Japan, SustainAbility, 2003. suggested that there is a more sustainable development Oxford University Press, 1987. 83 The notion of partnership insidious form of competition issues. 71 For a similar framework on the approaches received a major in the NGO sector, in which 59 See Jed Emerson, ‘The Nature role of markets see Brody, boost at the World Summit on community groups around the of Returns: A Social Capital Weiser, Burns, ‘Corporate Sustainable Development in world vie with one another to Markets Inquiry into Elements Involvement Initiative’, Johannesburg, September gain access to international of Investment and the Blended prepared for the Ford 2002, where they were hailed NGOs. See, for example, Value Proposition,’ Social Foundation Grantee by governments, business and Clifford Bob, ‘Merchants of Enterprise Theories No.17, Convening, 2-4 June 2003. some NGOs. Morality’, Foreign Policy, Harvard Business School, 72 Training includes: researching 84 To take just one example, March/April 2003, pp.36-45. 2000. corporations, influencing Kathryn Fuller, WWF–US’s CEO, 47 See www.fiveyearfreeze.org/ 60 Reshma Memon, ‘To Give Well, boards, direct action, legal is also a Board Director of gmleaflet Give Wisely’, Worth, February tools, corporate citizenship, Alcoa, and has been criticized 48 ‘Protecting the Rights and 2003 and ‘What’s the Charity countering greenwash, for not doing more to prevent Addressing the Responsibilities Doing With Your Money?’, shareholder activism, the siting of a new Alcoa plant of Non-Governmental Forbes.com, 2002. globalization, divestment and in a sensitive ecological area Organizations’, Workshop 61 American Institute of grassroots power. in Iceland. sponsored by The Ford Philanthropy Charity Rating 73 ‘Empowering Democracy’ final 85 NGOs are partly leading and Foundation and Sawarung, Guide and Watchdog Report, conference report, 27–30 partly responding to others in Bandung, Indonesia, AIP, 2002. May 2001, Dallas, USA. addressing the underlying 6-8 January 2003. 74 The Stop E$$0 campaign rights of impoverished 49 Workshop Summary Report, 4 Agenda 21: NGO Governance claims that regular petrol communities. For example, ‘Who Guards the Guardians?’ 62 Charles F. Dambach, Structures buyers at Esso stations in the the Ford Foundation has a SustainAbility, April 2003. and Practices of Nonprofit UK have dropped by 7% as a program aimed at supporting www.sustainability.com/ Boards, BoardSource, 2003. result of the boycott of Esso NGOs active on economic, programs/pressure-front/ 63 Anthony Perret, ‘Interview – on account of their position social and cultural rights, and workshops Stephen Tindale’, Elements on climate change (though other institutions such as the 50 Hugo Slim, ‘By What Magazine, June 2001. this is disputed by UN Committee on Economic, Authority? The Legitimacy 64 A counter-point that was ExxonMobil). Social and Cultural Rights and and Accountability of NGOs,’ raised suggested that ‘orange 75 www.ceres.org/our_work/sgp the World Health Organisation Working Paper presented at smoke’ is only controversial 76 For example, the UNECE are actively advocating the The International Council on because of NGO campaigns — Aarhus Convention. existence of such rights. Human Rights Policy previously it would have been www.unece.org 86 Jane Covey and David Brown, International Meeting on seen as an indicator of 77 The approaches used by over ‘Critical Co-operation: An ‘Global Trends and Human economic success. 20 NGOs were reviewed Alternative Form of Civil Rights — Before and After 65 Business Benefits – How including The Alliance for Society-Business Engagement’, September 11’, Geneva, Companies Can Take Positive Environmental Innovation, IDR Occasional Papers, vol.17, January 10-12, 2002. Action on Education, Child CERES, Forum for the Future, no.1, 2001. 51 For more information see Labour and HIV/AIDS, Save the The Pembina Institute, Pact, 87 See www.sustainability.com www.pcnc.com.ph Children/DFID, 2003. Save the Children and the 88 Our thanks to The Body Shop 52 www.credibilityalliance.org 66 See www.climateindia.com/ World Resources Institute. International and Greenpeace 53 Op. cit. 10 about for more information. 78 Erb Environmental International for their insight 54 Hetty Kovach, Caroline Management Institute and on these issues. Neligan, and Simon Burall, 5 From market intelligence Green Business Network, 89 Donella Meadows, ‘Places to Global Accountability Report 1: to intelligent markets Collaboration for a Change: Intervene in a System’, Whole Power without Accountability? 67 Previous anti-business A Practitioner’s Guide to Earth, Winter 1997. The One World Trust, campaigns include 19th Environmental Nonprofit- 90 In 2001, organic food and 2002/2003. century anti-slavery Industry Partnerships, drink sales were worth £8.3bn 55 The IFC has worked with movements and the campaign August 2003. Available at (US$12bn) across Europe (see Accion, SEWA and Profund against companies operating www.greenbiz.com/ ‘From Green into the Black’, in this way. in apartheid-era South Africa partnerships Brand Strategy, November www.accion.org from the 1960s. 79 www.foe.org/camps/intl/ 2002 pp.26-27). www.sewa.org declaration.html 91 John Vidal, ‘Retail Therapy’, www.profundinternational. The Guardian, 26 February com 2003. 92 www.chicagoclimateex.com The 21st Century NGO 57

93 The use of litigation is 109 For example, some 121 Quoted in Ross Gelbspan, The 21st Century NGO something that many NGOs commentators have suggested ‘The Big-Name Game’, Grist, In the Market for Change we talked to identified as a that if the International 31 July 2002. Second Edition 2003 growing trend. See, for Campaign to Ban Landmines 122 Quoted at www.independent ISBN 1-903168-08-2 example, Susan Ariel had been more patient and sector.org Sustainability 2003 © Aaronson, ‘Courting willing to compromise, they 123 Op. cit. 49 International Business’, might have had more success 124 Simon Zadek, The Civil All rights reserved. No part of this The International Economy, in winning US support for Corporation: The New Economy publication may be reproduced, Spring 2003. their proposals. (see P. J. of Corporate Citizenship, stored in a retrieval system or 94 Quoted in the article by Lola Simmons, ‘Learning to live Earthscan Publications, 2001. transmitted in any form by any Okolosie, ‘When Does Protest with NGOs,’ Foreign Policy, 125 We thank Chris Rose for this means, electronic, electrostatic, Work?’, The Observer, Fall 1998, pp.82-96). phrase. magnetic tape, photocopying, 2 March 2003. 110 As illustrated earlier, although 126 Quoted in Ross Gelbspan, recording or otherwise, without 95 ‘Climate cool’ is the smaller than the corporations ‘The Big-Name Game’, Grist, permission in writing from the certification mark of the they target, some NGOs are 31 July 2002. copyright holders. Climate Neutral Network major multinationals in their denoting products and services own right. 7 Conclusions and Research and Writing that are carbon neutral. 111 For example in Croatia NGOs recommendations Seb Beloe 96 Tom Fox et al., Public Sector are still taxed as businesses, 127 For more on these issues see John Elkington Roles in Strengthening and even in developed the writing of Moises Naim in Katie Fry Hester Corporate Social countries regulation is still Foreign Policy, particularly ‘The Sue Newell Responsibility: A Baseline evolving. In Japan nonprofits Five Wars of Globalization’. Study, The World Bank, 2002. were not recognized in law www.foreignpolicy.com Information Design until 1998. www.board/fivewars Rupert Bassett 6 Bringing change to market 112 People and Connections: 128 Jed Emerson, ‘Horse Manure 97 Op. cit. 15 Global Scenarios to 2020, and Grantmaking,’ Foundation Print 98 Kolmut Anheier and Lester Shell International, 2002. News & Commentary, L&S Printing Salamon, eds., The Nonprofit 113 Quoted in Ross Gelbspan, May/June 2002. Sector in Developing Countries, ‘The Big-Name Game’, Grist, www.foundationnews.org New York, Manchester 31 July 2002. 129 Mark Huband, ‘Activists pose University Press, 1998. 114 Jem Bendell, ‘Civil Regulation: big threat, bosses warned,’ 99 See, for example, work by a New Form of Democratic Financial Times, 30 May 2003. Edelman Public Relations, Governance for the Global 130 John Elkington and Seb Beloe, Environics, Harris Interactive, Economy?’, New Academy of ‘WEF versus WSF: Who Will The Independent Sector and Business, in Terms of Win the Fight?’ Radar, others. Endearment: Business, NGOs February 2003. 100 Declining Public Trust Foremost and Sustainable Development, 131 The Washington Post recently a Leadership Problem, edited by Jem Bendell, ran a series of exposés on The Environics International for Greenleaf, 2000. Nature Conservancy, alleging World Economic Forum, 115 Calestous Juma, ‘How Not to mismanagement of resources 14 January 2003. Save the World’, New (see David Ottaway and Joe 101 For example, Greenpeace UK’s Scientist, vol.175, issue 2362, Stephens, ‘Nonprofit Land mistakes — later admitted — in p.24, 28 September 2002. Bank Amasses Billions’, estimating levels of toxic 116 Penny Fowler and Simon Heap, 4 May 2003). chemicals in the Brent Spar. ‘Bridging Troubled Waters: The 102 A major environmental NGO Marine Stewardship Council’, based in Canada. Intrac, in Terms of Endearment: 103 Kevin Kelly, New Rules for the Business, NGOs and New Economy, Fourth Estate, Sustainable Development, London, 1998. edited by Jem Bendell, 104 We thank Gavin Power for Greenleaf, 2000, and ‘Trading this insight. in Credibility: The Myth and 105 ‘The non-governmental order’, Reality of the Forest The Economist, 9 December Stewardship Council’, The 1999. Rainforest Foundation UK, 106 Murray Culshaw is Chair of November 2002. the Credibility Alliance and a 117 Andrew Bibby, ‘Doing The former Director of Oxfam Right Thing can Pay Good India. Dividends Too’, The Observer, 107 Incidentally, it is often true 9 March 2003. that there are relatively few 118 Naomi Klein, No Logo, people in business who Picador, USA, 2000. really understand the NGO 119 Op. cit. 59 community, though this is 120 See Chris Rose (in press) also changing. Wars of Persuasion: Strategy 108 Op. cit. 94 for Campaigners, Earthscan Kogan-Page. SustainAbility UN Global Compact United Nations Environment Programme 20–22 Bedford Row Room 1894 Technology, Industry and Economics Division London WC1R 4EB United Nations 39–43 Quai André Citroën United Kingdom New York City NY 10017 75739 Paris Cedex 15 T +44 (0)20 7269 6900 United States France F +44 (0)20 7269 6901 F +1 212 9631 1207 T +33 (0)1 4437 1450 www.sustainability.com www.unglobalcompact.org F +33 (0)1 4437 1474 www.unepie.org

For more information on SustainAbility’s 21st Century NGO Research Program please contact Seb Beloe at SustainAbility. If your organization is already involved in addressing some of the questions we have raised in this report, we would be very interested to learn more.