Trend Forecast – Development Professionals

Reana Rossouw – Next Generation Consultants

Background

� Our vision

� Increasing Impact and Enhancing Value

� Our context - compare development

practices globally

� US, Europe, Far/Middle East

� Africa (continental)

� South Africa (regional)

� Starting to monitor India and Brazil

� Benchmarked against findings of our

Impact Investment Index

� Tracked for the past ten years

� Supports and expands our February 2014

presentation

� Our clients and reference

� Transnet Foundation, Nedbank

Foundation, Multichoice Africa, Pioneer

Foods, BHP Billiton, Edcon, etc.

� Supported by

� 75 personal interviews with industry practitioners

� 300 personal interviews with intermediaries

� 100 focus groups with beneficiaries

� 300 site visits

� Evidenced by

� Assessing R2 billion of CSI/SED and ED spend

� 500 programmes assessed

� 15 focus areas assessed

� 15 dimensions of impact identified

� 25 dimensions of return identified

� Library of more than 4000 indicators and 100 stakeholder / beneficiary groups - developed

To Recap: 2013/2014 Trends� 1. A brave new world

� Evidence of collaboration

� 2. Flipsides of the coin

� Increased giving/increased expectations

� 3. Lean and Mean

� Impact and outcome of recession

� 4. War on Ideas

� The growth of flagship programmes

� 5. The next BIG thing

� Environment, Enterprise (Social) Development, Impact Investment, Capacity building, operating support

� 6. GREEN (BLUE) is the new BLACK

� Environmental – water/energy/food nexus + carbon

� 7. Alphabet Soup

� Governance and Compliance

� 8. New Age Stuff

� SET Committees, Baseline Studies, Human Rights, Beneficiation, Engagement, New frameworks

� 9. Hindsight is perfect sight

� Spectacular failures, theory of change vs. theory of practice

� 10. Dangerous half truths

� Poverty alleviation vs. poverty reduction vs. poverty eradication

� 11. Fixation on numbers

� Overemphasis on quantitative impact

� 12. Dicotomies

� Scalability vs. focus, replicability vs. results, responsiveness vs. responsibility

� 13. Keeping up with the Jones’s

� New vs. old investment and development models

� 14. Volunteerism is cool

� Growth in EVP’s and customer/supplier/ network involvement

� 15. Please give that man a fish

� Cliché’s

� 16. I know what you did last summer

� Community activism

� 17. Local is lekker

� Local hero’s/ development in our backyard/neighbourhood

� 18. Status Quo is not an option

� Failure of current M&E practices

� 19. A horse – A horse for my kingdom!

� Ethical grantmaking and development

� 20. Two hills ahead

� What we know vs. what we don’t know

� What we say vs. what we do

2014 – Crossroads or tipping point?

Between a rock and a hard place

� Companies/funders/donors/investors

� Budget cuts, programme cuts, focus area reduction, strategy redesign

� Increase of non cash giving

� Increase of flagship and volunteer programmes

� NGO’s – Development Sector

� Budget cuts, programme cuts, employee cuts, close down, de-registration

� New competition and competitors – social enterprises, for profit companies, specialists

� Enterprise Development Changes in BEE Legislation

� Budget changes (2+1%), divisional changes (procurement), programme changes, strategy redesign, resource changes (cash and non-cash)

Surprises in 2014 – The good� Few donors and NGO’s have got it right and are EXTREMELY sustainable – the sweet

spot – a combination of economic, social and environmental development

� Few funders/donors put their money where their mouth is – acknowledging the need for flexibility and transparency and show a deeper understanding for the complexity and interconnectedness of social development issues

� A number of South African development models wins international recognition and awards – not because they pay for advertising or nominate themselves – but because their development models really contribute to measurable sustainable development

� Socio economic development becomes the new definition of successful social / community investment and development

� Finally – recognition that education may not be the bedrock of all CSI – evidence of the number of matrics sitting on street corners – skills development should be the new darling of investment portfolios

� It is time to look at funding advocacy organisations again – they are the reasonable voices of society – yet too few funders have the courage to consider funding these organisations

� Some donors/funders become less risk adverse and are prepared to fund social enterprises

Surprises in 2014 – The bad

� It is getting worse out there – funders and their development partners – are getting more stupid by the day

� Lack of knowledge, skill, expertise, specialisation, research and scientific evidence - prevails in development contexts

� Replication of unsuccessful development models, lack of community engagement, support and buy-in, lack of theory/academic/science or humanities based strategies (including theories of change and prove of change or insight and understanding into the complexity of development) tarnishes the industry

� Monitoring and evaluation is NOT entrenched in the development sector

� The only thing that is monitored – is that the money is being spent

� The only thing that is evaluated – is quantitative outcomes

� The only thing that is reported – is the value of input resources and number of beneficiaries

� Development still happens in isolation (silo’s) and is a competitive business

Surprises in 2014 – The ugly

� The skeletons are mounting – bribery and corruption enters development

� Unethical grantmaking practices are increasing

� Discriminatory grantmaking and development practices continues

� Failed flagship programmes fades into obscurity

� Unintended consequences of development and the mounting evidence of negative impact is ignored

� The poor are getting poorer

� The unemployed are loosing hope

� The youth is becoming more impatient for opportunity

� The voice of society is becoming more aggressive and louder

TOP 8 TRENDS

1. It is all about business� The business of development

� Is contributing to a circular economy, is creating jobs and opportunities to develop skills – yet NO NGO recognisesthe impact of investment on their own organisation

� Big data enters the space and moves from quantitative to qualitative – yet NO NGO has the capacity, process, procedures, methodology, knowledge and information management systems to capture and share the data

� The speed of change and expectations of funders have caught most NGO’s off guard – governance, accountability, responsibility, expertise, specialisation, collaboration and competition

� The business of funding

� Is providing stepping stones to lucrative careers – yet few practitioners are skilled in development practices

� Provides opportunities for power play –the guy with the cheque book has the power

� Business language has entered development – it is all about investment return, marketing, impact, strategic, governance, transparency, accountability

� Anybody that has worked in some aspect of development becomes a consultant but supply does not meet demand – for specialised knowledge

� Politics has entered the development space and licence to operate is now the No. 1 motivation for CSI spend and investment portfolios and priorities

What this means!

� The days of companies responding positively to “we are a

good organisation, servicing a real need and we need

money” proposals are long gone

� NGOs that are successfully attracting donor support are

first doing their homework to understand the business

and community investment objectives of their

prospective partners and present proposals and plans

that demonstrate “why we are a good fit for you”

2. It is not business as usual

� And it hasn’t been for years. Companies have evolved and want a higher level of engagement with the organisations and communities they invest in

� They seek selective/specific impact and want to play a larger role in finding solutions for specific social issues

� Companies have much more than money to bring to the table. They can leverage various resources, and share expertise, services and skills. In other words, they’re looking for meaningful, long-term partnerships

� Companies are being scrutinized left right and center and as such -accountability, responsibility and governance now influences and impacts what and who and why they fund

� The problems that our sector works to alleviate and find solutions for are multifaceted, interconnected and complex. Often, there is significant overlap between and among issues which is not only underestimated but also left unsolved because of ignorance and silo mentality

What this means!

� While the current economy has created added pressures,

real opportunity lies in developing a deeper mutual

understanding of development outcomes, building trust

and strengthening relationships to leverage resources

thereby increasing/accelerating change

� Emerging leaders in the development sector will be those

who approach development with a clear focus on

responsiveness, effectiveness, relevancy, collaboration

and stewardship and a deep understanding of systemic

and interconnected social/environmental and economic

systems

3. A heightened focus on performance

� The ability to demonstrate the return of investment,

accountability and responsibility for resources and the

evidence of successful, meaningful and measurable

interventions (impact) is non negotiable and a deal

breaker

What this means!

� This trend is only expected to increase as investors continue striving to maximize the value of their investments—to the community as well as other stakeholders

� This ongoing/increased attention to performance measurement is not just because of the economy—it’s because companies and their stakeholders want and need to know how their investment is being used. The bottom line:

� Those that can clearly demonstrate how an intervention and investment contributes to and achieves measurable outcomes will have a distinct advantage in the donor/development marketplace

4. A growing interest and focus on issues…not just

organisations

� Watch out for more focus on issues, rather than specific organisations

� With many NGOs performing similar or complementary services, there may be greater likelihood for support if there’s a willingness among these organisations to partner to achieve common objectives

� With many donors competing in the same market place –innovation and differentiation as well as efficiency and feasibility becomes more important

� It’s a trend that involves bridging opportunities, expertise and resources to create integrated services and solutions, wherever and wherever appropriate

What this means!

� The need and importance for collaboration between NGOs will become more commonplace

� Corporate donors, particularly those with large and sophisticated community investment departments, often have a knowledge of development work occurring in particular sectors and also possess the know-how to bring different groups together. More and more, they are looking to work with organisations to address complex issues, that impacts and influences and enhances their own future sustainability

� This means seeking opportunities to help optimise the power of people, organisations and collective resources by facilitating partnerships, rather than funding projects in isolation – one at a time

� Holistic and integrated development – across programmes and focus areas becomes non-negotiable

5. Creating shared value: A win/win proposition

� Social/community investment helps companies reduce business risk, open new markets, engage employees, build brands, reduce costs, increases profitability, advance technology, and deliver competitive returns…

� Today’s executives understand that in order for their enterprises to thrive and grow and attract the very best talent, they need to be able to draw on healthy, well-educated workforces; offer safe, clean neighborhoods to prospective employees; sell to consumers with high enough levels of income to buy their products; and conduct themselves in a way that is attractive in shareholders’ eyes.

� And that means, the business of business – is social engagement… we must create new patterns that reshape the entire system– combining the innovation of the business world, passion and humanity of the non-profit world, and consider the inclusive networked culture of the digital world to generate transformative change…

6. New Investment+ Models

� Investment in holistic /

integrated programmes

� Investment in interventions

addressing business

issues/challenges/

opportunities

� Investment in capacity

building

� Investment in organisational

/ institutional infrastructure

� Investment in leadership

and board capacity

� Contribution of products

� Contribution of pro bono

services

� Contribution of volunteers

� Contribution of

infrastructure/services/

tools

� Access to markets, access to

supply chains

� Access to resources and

networks

What this means!

� While tough times encourages creative new approaches, a time of change requires clarity and focus. Corporate funders and NGOs must communicate clearly and engage deeply and honestly with one another to understand mutual expectations and to concentrate their combined efforts and resources on the real issues affecting society

� This requires and is already evident in new investment portfolios and focus areas fixing systems not mere issues:

� New and emerging areas for consideration are:

� Food security linked to water security linked to land and biodiversity management

� Human rights, advocacy and social justice

� Mitigating the impact of climate change

� Access to the economy

7. New Development+ Models

� Increasing dependency on narrowing base of donors

� Increasing competition for resources

� Donors are becoming implementers of their own programmes

� Constraints in growth, capacity and service delivery

� Rise of the specialist development agency –environmentalists/advocacy groups

� Leave of mature leaders and rise of non skilled out of work volunteers

� The rise of intermediaries (wholesalers) that does collective fundraising and management, monitoring, evaluation and reporting and provide specialist technical expertise and services

� New income models including social entrepreneurship, sale of products/services, crowd sourcing, endowments, impact investment, interest from BEE transactions and dividends

What this means!

� The sector as we know it is changing

� Funding models are changing

� Development models need to change

� Organisational structures need to accommodate the change

� We need to learn new skills and competencies

� We need to collaborate and coordinate

8. New influences and directions

� Ignore the MDG’s

� Focus on

� The National Development Plan, Local Integrated Development

Plans, Growth and Development Strategies including the

National Skills Development Plans/Funds, Infrastructure

Development Plans, National Youth Development Plans, etc.

� Companies want to focus on issues, not programmes or

institutions

� NGOs need to start benchmarking their work – prove

their models, success, outcomes and impact and be

willing to compare results

In closing – Whereto from here?

Grantmaking origins: Charity

Grantmaking Present:

Strategic

Grantmaking Future:

Catalytic

Increasing focus on Strategy –

emphasizing measurable impact

(evidence), promoting defined and clear

goals (theories of change) and evidence-

based and scientific development models

as well as feedback (engagement)

Increasing focus emphasizing

systemic change that prioritizes

and empowers underserved

communities and supports

advocacy, community organizing

and civic engagement for those

most affected

TOP 5 FORECASTS

1. Future Forecast – Development Sector� NGOs must learn to scale up their impact, although not necessarily their own organisations

� Networks and partnerships will be crucial multipliers. The most successful NGOs will be the best networkers and the most reliable partners

� NGO boards must evolve new strategies to cope with new risks and exploit emerging opportunities

� Successful NGOs will need to experiment with new business models and with ‘co-opetition’,learning to work with organisations they also sometimes challenge or compete with — both businesses and other development institutions

� Evidence suggests funding is becoming tighter. Expect the position to get worse. NGOs must build a better ‘business case’ for funders, but will also need to explore new funding/business models. Partnerships with selected social entrepreneurs and/or SRI/Impact Investment funds could help

� As competition builds, so the necessity (and value) of strong branding will grow. New brands will be co-evolved by NGOs with public and/or private sector partners. The wider risk: they create virtuous cycles that disadvantage non-branded competitors

� That said, high profile, branded NGOs are increasingly vulnerable to accountability challenges. NGOs must decide which accountability and transparency standards to adopt, whether and how to report, and what form of assurance to embrace

� Also, expect more watchdog and rating reports on NGOs forcing them to more actively manage their risks and exposure

2. Future Forecast – Funding Sector

� Maximize the total performance or ‘blended value’ of both financial investments as well as other forms of assets and resources

� Work to develop frameworks, standards, guidelines for ensuring the accountability and effectiveness of investment and development activities

� Provide organizational funding and capacity building for the development of a resilient sector

� Consider what it will take to ensure sustainable development and include economic and environment development aspects in all programmes

� Provide support to NGOs developing accountability mechanisms and systems and allow and dedicate resources for evaluation

� Look for NGO ideas and proposals with real potential for scale-up

� Get out of the competitor mindset and consider collaboration as the new differentiator

3. The gold at the end of the rainbow

� It's not charity; it's corporate strategy

� Today investors are applying the same kind of strategic focus to development decisions that they do to the rest of the business. The ROI mindset.

� In response, nonprofits are striving to develop new metrics that spell out the "return." It is a significant departure for some organisations to go from measuring need to measuring outputs, outcomes and impact.

� A respectful partnership

� Nonprofit and corporate values do not always align. Given the complexity of today's social problems, everyone - nonprofits, the public sector and business leaders - needs to be contributing solutions.

� A new toolbox

� Success in a development context cannot just be measured in numbers. Understanding what changes, how it changes and why it changes – will become critical. Measuring the success and change and impact is already possible.

5. In 2015

� Do what matters

� Do what is right

� Do it the right way

� Engage widely

� Research deeply

� Compare extensively

� Collaborate creatively

� Communicate honestly

� Innovate flexibly

� Differentiate authentically

Thank You!

Questions?

www.nextgeneration.co.za