Since 2000 Shell Foundation has pioneered an enterprise based approach that differs from traditional corporate philanthropy, which is based upon establishing new partners with new ways of working that from the outset target scale of impact and financial viability. By applying business thinking, models and disciplines Shell Foundation has created four strategic partners that are achieving scale. These partners work on markedly different issues – sustainable transport, growing small enterprises in Africa, reducing indoor air pollution and promoting ethical trade – but share commonalities around the difficulty of the challenge.
Shell Foundation has invested “more than money” over the past ten years in its efforts to achieve scale. In its inception phase, when Shell Foundation provided short-term project-based support to multiple not-for-profit organizations, 80% of its initiatives failed to achieve scale or sustainability either due to poor execution or to lack of market demand for the proffered products and services. Quickly learning from this experience, Shell Foundation changed its strategy to focus on co-developing new business models with new strategic partners, with the result that 80% of its funds have achieved scale and in so doing, leveraged an additional $1.2 billion in finance.
Chris West, Director of the Shell Foundation, said: “Achieving truly scaleable and sustainable outcomes is not easy. It takes a huge amount of time, investment and patience. In this report, we are not claiming that we have all the answers. But we have identified some common features underpinning the success of some of our partnerships. We have learned a great deal from both our success and our failure and hope that by sharing our experience, we can help others avoid making the same mistakes.”
The key findings of the report include:
•The need to catalyse disruptive change through ‘Angel Philanthropy’ – In every instance where Shell Foundation succeeded in building partnerships that have achieved scale it has been with newly created entities that it has helped co-found, using new business models that it has co-developed.
•The importance of building sectoral partners – catalysing large-scale change is hard and, whether with for-profit or not-for profit partners, requires providing “more than money” and takes time, patience and considerable investment.
•Moving from subsidy to earned income – targeting financial viability means less reliance on aid, growth benefits more people and the accompanying innovation means the enterprises are able to provide customers with more affordable goods and services
Enterprise Solutions to Scale discusses the need to look beyond scale for wider system change. No matter how successful partners are at pioneering and scaling new enterprise-based solutions to development challenges, they alone will never fully address the un-served needs of the millions of poor people around the world.
Foundations and donors manage significant amounts of money. Yet finding data around comparative performance is difficult. By reporting failure as well as success Shell Foundation recognises the need for greater transparency in the sector, so that the value of wider lessons may be shared more effectively in the future.
Read the full Report: Enterprise Solutions to Scale
