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How do NGOs work with the private sector?

July 7, 2011
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Earlier this week I spent an intense two days discussing Oxfam’s private sector strategy with our big cheeses, joined by a variety of real 2008-670-Communism-Capitalism-pragmatismlive capitalists, whose views ranged all the way from ‘Oxfam is irrelevant’ to people who closely resemble NGOs in suits. Far too much to process into anything coherent, but here are some initial random impressions.

Is it ‘us and them’ or ‘we’? The underlying views of Oxfam staff are scattered along a spectrum from anti-capitalist watchdog to anti-poverty business partner. Where you sit depends partly on your job (campaigners tend to be more anti-, fundraisers more pro-), partly on your personal story and psychology. As an organization, we aim to play both roles – insider and outsider, but the centrifugal forces driving them apart are strong. It takes a certain kind of person to sit down and bond with a captain of industry one day, and then slag them off to the media the next. We have some of them, but for the rest, there is a tendency to opt for one or other camp, leading to some difficult exchanges.

What is the private sector anyway? We don’t have a ‘state strategy’ or a ‘civil society strategy’ so why have one on the private sector? I came to the conclusion that we were actually discussing something much more specific – a ‘large company engagement strategy’. It didn’t include structural discussions about how markets contribute to development (industrial policy and upgrading, taxation and social contract etc) or much on those parts of the private sector we probably know best – women in the informal sector, small farmers (except when they sell to big companies). It’s not easy to keep those on the agenda (I raised corporate taxation with a couple of the business reps and got a pretty frosty reception), so you need to make sure you consider them separately if they drop off your ‘private sector strategy’.

Even within this narrower definition, there are subcategories. We identified four:

· Corporate giving: orphanages and stuff – by far the most widespread. My favourite example of in-kind giving was persuading a mobile phone operator in Cambodia to equip women community leaders with mobile phones so they could stay in touch with each other (the few women leaders feel very isolated). The neat touch was making sure the phones were pink, so the men wouldn’t ‘borrow’ them.

· Value chain restructuring: bumping up the role of smallholders in supply chains, or improving labour rights

· Pro poor products and services – bottom of the pyramid business

· Social enterprises – the new boom of hybrid not-just-for-profit businesses

gesWhy do companies talk to us? I think this is what is meant by the ubiquitous fuzzword ‘value proposition’. What’s in it for them? Setting our own bipolar combination of hubris and insecurity to one side, the reasons the business folk actually gave were quite useful and helpful to keep in mind next time we are pitching to a ‘corporate’, whether in insider or outsider mode. Firms talk to Oxfam/other large NGOs because:

· We are both ‘deeply valued’ and ‘feared’ (we are also apparently, sometimes ‘hated’ but I doubt that leads to much engagement)

· The level of public trust in an NGO is often higher than in a business, and so we can get people who would not normally talk to each other (hostility or different worlds) into a room and keep them there until they make a deal. This brokering, convening role feels like the way we will go in the future.

· We are useful partners in talking to third parties, like governments or funders, when they would not accept talking to business alone.

· We understand wider issues beyond the remit of business (what one exec referred to as ‘the poverty thing’)

If businesses have a higher opinion of NGOs than we sometimes have of ourselves, that might explain why, according to one business rep, csrwe ‘don’t ask for enough’ – we should make bigger and more frequent demands of business. However, think hard about what you are going to ask for. If you say ‘we want you to do X’ and the reply is ‘OK, but we want you to help us do it’, will you be able to follow through?

Finally, getting symbolic action to influence other constituencies such as government or public opinion (e.g. persuading Nike to pull out of the US Chamber of Commerce over its stance on climate change) is likely to be easier than stuff that directly hits the bottom line.

Lots of other stuff, but that’s (more than) enough for one post.


  1. I am glad you redefined the ‘private sector’ which I think is an unhelpful term – both because of the generalizations it leads to as well as the fact that NGOs are essentially private organisations. Both NGOs and businesses seek to serve the public but usually in different ways.

    As an entrepreneur who has set up NGOs and businesses (and some businesses that have never made a profit – in case on tries to use the for profit categorisation), I observe some of the debates such as the one that you have described and wonder which pigeon hole I would fit into. The isms that alter our perspective are small compared to the common bond of ‘service’ of some kind and being ‘humankind’.

  2. Hi Duncan
    Thanks for blogging on this as I start to plan an issue of the journal Gender & Development on Business and Enterprise (aka Private Sector, and we’ve just had a very interesting discussion about NOT calling it that, since no-one ‘out there’ ever uses the term….). My observation/question here is, how do we who are concerned with gender equality and women’s rights engage with this debate bearing in mind the vexed relationship between capitalism and feminism? Global industries are built on the exploitation of a female workforce due to the fact that women accept lower wages and worse conditions than men, for two reasons – first, the stereotype of women’s work as being secondary to a male wage earner (and thus they don’t apparently require a ‘family wage’ like men do); and the (tacit, or less tacit) awareness of women’s desperation to put food on the table. This lower bargaining power with the market leads of course to a spiral downwards for male workers (especially racial minorities). Of course, there’s a flipside to the debate. In gender and development there has been a long debate between the feminist researchers who have exposed these issues, versus the researchers who point out the paradox of the emancipatory effect of employment, even in poor conditions, on women – ‘it is better to be exploited than not exploited’. There’s also optimism that in places where industries have evolved into requiring a workforce with higher formal education and skills, women then receive better wages and the chance of acquiring more education and skills to suit them for the job opportunities on offer. Yet in fact, there’s research which indicates that gender norms are too sticky to allow this – often the employment opportunities in this new phase of economic development pass back to a male workforce. These debates are still very much alive and kicking. How, ultimately, can we persuade capitalist businesses to be less capitalist???

    Duncan: Blimey, that’s a biggie. First thought is that you sound a bit like Engels circa 1848, who would doubtless have said anything resembling modern European industrial relations was incompatible with capitalism. Worth thinking about what has in the past driven different branches of business to adapt and improve labour conditions and then see what might make them follow suit in the case of women employees?

  3. I’ll take the Engels observation as a compliment – he was the first one to notice the dependent relationship between women’s unpaid reproductive work and capitalist development, too. A Good Guy.

  4. This is an interesting perspective and a topic we just had a long discussion about in our organisation. I worry about the four categories you came down to, since you seem to need to pack a whole lot into: “Value chain restructuring” without discussing it much. This is presumably where fuzzy Corporate Social Responsibility comes in, or for the “anti-s” as you call them, corporate accountability.

    In this layout it seems very hard to deal with the large enterprises that do bad things. From disempowering local communities, to land grabs, to destruction of health and environment on which local communities depend, there are plenty of cases of large enterprises that need a bit more change than “value chain restructuring”. Even tax is an example you gave. But if you don’t make accountability or even “do no harm” a central part of the engagement strategy don’t you send the wrong message?

    While one wing of Oxfam may be out slagging off the multinational for tax avoidance, if another wing is sitting down politely and asking them to donate a couple dozen pink mobile phones (incidentally was it Vodafone?) that seems to send very mixed signals.

    Duncan: fair enough Peter, I guess the four categories are for positive engagement. More confrontational forms of engagement to ‘stop bad stuff happening’ would be another category altogether (maybe more than one) and yes, pose real challenges for any organization trying to put together a coherent insider-outsider strategy

  5. From another Island

    Thanks Duncan,
    The default that the private sector is Big Business is a little less useful in this antipodean Isle. We only really have one big business of our own and as such it has a rather too treasured national status. Most of the Big business in NZ are from Somewhere else and engagement that can feel right cosy can dissapear in a keystroke at the behest of offshore owners.
    Very real and tangible engagement with the SME sector is likely to prove more stable and rewarding in the longer run as the businesses are owned locally, frequently owners are integral in the management of the business , thus meaning we are talking to the organ grinder and oftenn have less turnover at a senior level than off shore based corporates enabling deeper personal relations.
    Eons ago in another likfe as a third sector academic I was involved in some work which looked at the different motivations of sme vs big business and what types of NGOs and relationships suited each. This showed, as you suggest, that large international NGO’s like Oxfam were a better match for large multinationals but that the motivationn for relations at the SME level were more personal and less transactional.
    We are doing a bit of thinking here about what private sector enagement looks like and means so appreciate your post

  6. Thanks for a very interesting post.
    I am missing the ‘missing middle’. In the environment I am working (Tanzania) large corporate engagement is incidental (why should they), and SME engagement has limited impact.
    I am particularly inspired by examples of local entrepreneurs, who are trying to occupy the space in-between, despite the many difficulties. Maybe they fit in your ‘social enterprises’ category. I think they deserve attention, as they are more likely to be indigenous entrepreneurs and create a more sustainable economic impact.

  7. Thanks Duncan, I am interested in your conclusion that you were ‘discussing a ‘large company engagement strategy’….not structural discussions about how markets contribute to development’.

    Was this deliberate or just the way it turned out?

    I am interested in the relative importance given by Oxfam to working with MNCs as opposed to working on the overall ‘enabling environment’ for the private sector – activities that may facilitate the developemnt of a privae sector that by the very way it operates, provides more opportunities for poor people.

    My sense is that if we can get this right – and alot of it will be about the enabling environment for MSME development – then the impact will surely be much greater than that that could be provided by MNC engagement – the impact of pink phones non-withstanding….

  8. I would like to write more about the whole private sector strategy for NGOs.

    For now, just some thoughts.

    To what degree do we sell our soul for some cellphones or shelf space for fair trade goods? As you say often: it is all about power. Shifting the balances of power. With public private partnerships it seems to me more about getting money or doing whatever the company does and putting it in the spotlight. Very much like SWEDOW: we get cellphones, and we always can define where they are useful. But should we not be dealing with the main problem of the poor, instead of the given cellphone? The main problem seldom being what is on offer from a company.

    I must admit NGOs need money. I am often surprised how much they need it and what they are prepared to do for getting just another batch.

    As we know, management attention is the most scarce resource in development. Big business needs a lot of it. They will not talk to Emma nor Asok, so even if it brings in dough: what will we stop doing when we start dealing with big business.

  9. But the big question, surely, is why your private sector strategy is apparently not focused on the contribution that the private sector makes or might make to poverty reduction (what you summarize as “markets’ contribution to development”) and the consequences of that analysis for Oxfam.

    For example, the big political question of the day is job creation, and not only in the Middle East: my starting point is to acknowledge that the private sector provides est. 90% of jobs. At IFC, we frankly don’t know enough about the job creation effects of our interventions (esp. secondary and tertiary effects rippling through the economy), and over the next 18 months we will be studying this with interested partners through an open-source process. We expect that what we learn will have practical consequences for our own strategy and for our operational decision-making, also feeding into the next-but-one World Development Report on jobs.

    This all seems to me as potentially relevant for Oxfam as for us. As Peter Chowla says, this is not about CSR, but about how the development community and the private sector (small, medium and large) can better work together where we have overlapping goals or objectives.

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