12 december 2008
Shell Foundation gives birth to philanthrocapitalism
As is well known, a number of the super-rich, including Richard Branson, Ted Turner, Bill Gates and Jeff Skoll, have dedicated their lives and, just as importantly, a substantial part of their fortunes to relieving the needs of the worlds poor. However philanthropy is not the exclusive preserve of former CEOs, a growing number of multinationals also run huge funds for the same purpose. One of these is the Shell Foundation operated by Royal Dutch/Shell.
The Shell Foundation has a remarkable record. One of its programmes is Aspire, which in 2006 won the prestigious Africa investor award for Best initiative in support of Small and Medium-sized Enterprise (SME) development. Aspire is designed to help under-served SMEs in Africa to fulfil their potential and in turn bring sustainable jobs and economic growth to the continent. Through a long and close partnership with GroFin, a specialist business developer and financier, the Shell Foundation is helping to pioneer a new business model specifically designed to service this sector. GroFin is backed by the Belgian, British, Swiss, Finnish and Dutch governments’ development finance institutions BIO, CDC, SIFEM, Finnfund and FMO. The Skoll Foundation, Syngenta Foundation and Triodos, the ethical investment bank, have also invested. As a result GroFin currently manages funds in excess of 225 million dollar sourced in large part from African partners as well as international investors, including the Shell Foundation. To date it has financed over 100 businesses, while Shell claims the investments have created and maintained almost 3,000 jobs and improved livelihoods of 17,500 people.
In their book Philanthrocapitalism. How the rich can save the world, Matthew Bishop and Michael Green praise Aspire as ‘the Shell Foundations biggest success so far’. They quote with approval the former director of the Shell Foundation, Kurt Hoffmans claim that: “The international development community, donors, NGOs and foundations created by rich people are stuffed full of issue experts who dont know how to solve problems or produce scaleable solutions.” According to Hoffman these groups “largely lack the tools, drivers and efficiency incentives that business uses to solve problems en route to making profit.” He continues saying that “the old crop of NGOs and donors, and the new generation of guilty artists and rich offspring of rich people, have only money (the least valuable social-change asset ) to bring to the table. They have no business acumen at all and worry about solving ego-assuaging visible consequences of poverty rather than tackling its causes.”
The question remains, however, whether businesses have enough understanding of the deeper changes that are required to transform society. Can methods drawn from business solve social problems and are they superior to other approaches used in the public and civil society? How justified, if at all, is Hoffmans arrogance? Michael Edwards is unconvinced. In answer to the “hype surrounding philanthrocapitalism” Edwards, the author of Just another Emperor? The Myths and Realities of Philanthrocapitalism, says: “I have always been confused by the way in which venture philanthropists and social entrepreneurs differentiate themselves from the rest of civil society on the grounds that they are results-based or high-performance, implying that everyone else is uninterested in outcomes.” Edwards calls for “more humility” among philanthrocapitalists. “The most important results measure impacts at the deepest levels of social transformation, and there is a wealth of evidence showing that they are generated by social movements that rarely use the language or methods of business management.” P+ webtip: Shell Foundation