Transforming the NGO and forging cross-sectoral partnerships in the 21st Century

Accenture Development Partnerships’ ongoing work with some of the largest non-governmental organizations (NGOs) has experienced how important it is for the private and public sectors to be aligned in their efforts. This need has been increased still further by the onset of global economic uncertainty, tighter financial constraints and increased competition for funding and support.

Dramatic growth, rising diversity

Before examining the implications of these shifts, let’s take a look at how the development sector got to where it is today. Over the past two decades we have witnessed dramatic growth in the number, diversity, reach and influence of civil society organizations, private enterprises, new forms of social enterprise, public-private partnerships and virtual networks.

These range from multi-million dollar trans-national coalitions, corporations and NGOs to millions of low-budget community-based initiatives and individual citizen action projects. They are supported by unprecedented communications capacity via the Internet and global media, other enabling technologies, more open and democratic societies in many countries, market liberalization, and high levels of private wealth creation and entrepreneurship.

Collectively, these trends are driving a fundamental shift in the source and nature of resource flows from developed to developing economies, and are changing the face of international development. Perhaps most importantly, the expansion in the development sector has been accompanied by a surge of dynamism and innovation that has seen the emergence of new development players and approaches ? notably the advent of new and more complex coalitions between the public, private and non-profit players.

Three waves of evolution

Given this sea-change Accenture Development Partnerships set out to understand these emergent models, explore what works and what doesn’t, and assess the relative merits of public sector and market-driven approaches. In the future, such an understanding will be essential to improving the effectiveness and impact of international development.

Figure 2: Evolution of Partnership Approaches

Achieving High Performance in the NGC sector: a call to action

In our view, such collaborative structures are the future for the development sector ? and NGOs must embark on nothing short of a transformation process to make them happen.

Although the stakes are high and the challenges significant, there are real grounds for optimism, based on early indications that transformation and even collaboration are already underway, and that the pace of change is increasing. And this collaboration is not a one-way street: there are also encouraging signs among the donor community of a willingness to engage with the private sector in new and innovative ways (see information panel on new models for donor engagement).

As NGOs move to capitalize on the new vistas of opportunity now emerging, the front-runners are developing the blueprints of new operating models for others to emulate in the foundation, transformation and collaboration waves. As these waves occur and mature, the leaders in each of the three core sectors ? NGOs, business and governments ? will face particular imperatives to make collaboration deliver the goods.

For international NGO leadership, these imperatives include:

• Embark now on transformational change, including major back-office investment, together with cultural shifts to enable closer partnering with business. The current economic climate will trigger considerable consolidation within the sector with many organizations not surviving. Others will be forced to merge or be taken over – investing now will help organizations survive over the next 12-18 months when the full effects of the ‘credit crunch’ will be seen.
• Harness and seek to influence the power and direction of the private sector, embracing some of the best thinking, skills and capabilities of business.

For global business leadership:

• Make the business case for engaging in development. Look beyond the next quarter’s bottom line towards long-term business sustainability, which will ultimately underpin long-term returns to shareholders.
• Engage with NGOs as key stakeholders in your business strategy?including in accessing new markets and helping expand your positive role in developing communities around the world.
• Play a broader role in strengthening the development sector. Make core assets, people and skills available to NGO partners and support their transformation.
• Lastly, with trust in business being at an all time low business leaders need to prove that corporate responsibility and a commitment to sustainability is not just for the good times.

For leaders of governments and donors:

• Invest in and support the NGO transformation process. Seek to fund projects that support the transformation process and help develop core capabilities.
• Play a role as a broker and catalyst of new generation partnerships. Increase development aid, but spend more on promoting innovation and collaboration.
• Revamp outdated procurement procedures to increase flexibility and accommodate new options and collaborative models.

Change based on these recommendations will be challenging, but certainly not impossible. Today these imperatives have taken on even greater importance for all arties due to the global credit crunch. Accenture Development Partnerships does not claim to have all the answers, and some of our conclusions may be controversial. But we are confident that the future will be all about increasing collaboration and continual change. It is up to NGOs to make it a reality.

This article is drawn from an Accenture paper entitled Development Collaboration; None of Our Business? Non-Governmental Organisation Transformation and the Evolution of Cross-Sectoral Partnerships in the 21st Century, written by Gob Bulloch, Executive Director, Accenture Development Partnerships. A PDF of the paper can be downloaded from www.accenture.com.

Through our research and relationships, Accenture Development Partnerships has identified three distinct waves of evolution, as development non-profit organizations begin to partner more strategically with each other and with business to improve the scale, sustainability and accountability of their impact.

In summary, these three waves of evolution – illustrated in Figure 1 – are:

• Wave I – “Foundation”: Early efforts to invest in raising performance levels are carried out on a piecemeal basis but progress is being made. The starting point is the recognition that money invested in building organizational competencies is an important enabler, and not a waste of resources.
• Wave II – “Transformation”: change is driven by more strategic imperatives and spans the entire organization, as demonstrated by an increasing willingness to collaborate within the sector to reduce costs and improve efficiency.
• Wave III “Collaboration”: change is more systemic, as evidenced by a growing number of international NGOs playing a crucial role as seamless partners in a new breed of complex coalitions and hybrid business models.

Figure 1: Waves of change in NGO’s evolution

Progress to date

As the chart shows, NGOs’ potential impact increases as they progress along this three-stage journey. So how fast and how far are they going? The answer varies for organization to organization.

Most international NGOs are starting to come to grips with the first wave?and those that do not do so risk falling behind the pack. But the real value will come in the second and third waves, which bring transformational and systemic change both at the level of the individual organization and across the sector as a whole.

The leadership of NGOs, global businesses and governments will play a crucial role in navigating this complex transformation process. In our view, it is in all their interests to do so. NGOs in particular have a real opportunity to harness the latent power of a private sector which is increasingly receptive to collaborative approaches. However, to do this NGOs must first transform themselves to partner effectively as peers with their counterparts in other sectors.

Growing pressures…

As these profound changes occur, international development and aid effectiveness are in the spotlight as never before. 2005 marked a turning-point, with the Group of Eight (G8) summit in Gleneagles raising hopes for a new era of donor government generosity. Even with the ongoing debate over delivery of the promises and commitments of 2005, the G8 summit in Germany in 2007 and the summit in Okinawa in 2008 maintained a strong focus on aid, trade and debt relief.

The increases in aid are being accompanied by calls for greater accountability, transparency and efficiency, which should lead to superior development outcomes and impact. However, there is clearly still much work to be done. Half the population of the developing world still lacks basic sanitation. And according to the UN Millennium Development Goals (MDG) Report (2007), if current trends continue, the target of halving the proportion of underweight children by 2015 will be missed by 30 million children.

Moreover, the combined threat of climate change, the food and energy crises, and the overall global economic downturn and credit crunch only add to the challenges of development. For example, the World Bank estimates that at least 100 million people will be pushed deeper into poverty and hunger by high food prices, and climate change will dramatically alter the contours of where crops grow and where mosquitoes survive.

…and emerging approaches

Given these challenges, there is a growing belief across business, government and civil society that a fundamental overhaul of the development landscape is required. Indeed, world leaders have called for greater engagement of the private sector and other non-traditional players to improve the chances of achievement of the MDGs.

This has also led to a focus on developing more ‘inclusive’ business models and discussion of more integrated value chains among different multinational organizations. At the same time, business thinking is starting to play a greater role within the development community (see information panel on new models for private-sector engagement).

Inevitably, tensions have emerged between the ‘traditional’ development approach and business-orientated ‘market-driven’ approaches. However, the way forward is now emerging in the fork of new ‘hybrid’ partnership approaches, as shown in Figure 2. These have the potential to harness the full latent power of each sector ? public, private and civil society ? to engage in global problem solving in areas such as poverty, health, education and the impact of climate change on developing countries.