The politics of social impact
There is no economics without politics and vice versa. Many idealists of the social sector wish this was not the case - politics has a tainted reputation. But disregarding politics in social impact business modelling is not an option, because governments are one of the strongest forces shaping the sector.
Indeed, as laid out in a previous article, governments have so far been the most robust and enduring form of human organisation deployed towards reducing inequality and poverty. Specifically, democratic-type structures seem to have success. Empirical evidence shows consistent and strong correlation* between the reduction of poverty rates and democracy share (1). If democracy is a fairly reliable pathway towards prosperity — whereas, for example, foreign aid for economic development is not (2) — it would seem only logical that social sector organisations should actively promote it. Yet, the opposite seems to have been the trend: most social sector organisations have been trying to alleviate poverty by implementing grassroots economic development strategies (3), not by advocating for equality of rights.
[*note that there is no proof of causality, only strong correlation, see reference article]
Why traditional social impact business models avoid inequality of rights
Social sector business models conceived in the twentieth century fall into two major categories: governmental organisations and charities. Both of those groups have put sustainable growth on their agenda, but neither chose equal rights as their main vehicle.
Governmental and inter-governmental organisations “don’t do politics” because they are bound by the international principle of non-interference, which aims to prevent stronger countries from subjugating weaker ones under the pretence of economic support. This sounds great in theory, but — perhaps unsurprisingly — has not been working in practice. Aid disbursed through local systems and institutions strengthens those structures and the power behind them. It can help dictators stay in power, like in Kenya (2, p. 37), and thus arguably interferes with local politics.
Charities followed a different reasoning. Advocacy is slow-burning; they wanted faster results. On the hypothesis that wealth without rights is better than nothing, charities started community development programs that simply bypassed the local government. Whilst they can definitely claim good results and have helped millions of people, the model is not proving either sustainable or scalable (3). Governance structures are the foundation of communities and any superimposed solution that does not have roots in this bottom layer withers. Ignoring local politics is inefficient on the long run; and despite charities’ intention, it also comes across as patronising.
As the two business models are unlikely to change and neither is well-suited for advocating equality, it is clear that we need a change of approach. In the rest of the article, I am sketching out one such route: shifting the focus of government and charities on one hand so that they do work their business models are suited for; and on the other hand, bringing in two new models positioned specifically to address inequality.
How can governments help make the world a better place
The principle of non-intervention which was declared but have never truly been taken serious could actually make the world a better place. Not as if the oppressed wouldn’t deserve help; they do. Rather because practice shows that nations tend to interfere with other nations’ affairs not to help, but for their own advantage (4). There is inevitable conflict of interest. Instead of disbursing aid as part of a power play, governments could focus on three high social impact areas fully within their sovereign power:
- Introducing and enforcing legal frameworks that reduce the negative impact their citizens have on the rest of the world in the form of non degradable waste, carbon emission, arms export, unethical supply chain practices or destructive mass tourism;
- Safeguard and enforce equality of rights amongst their own people;
- Support international treaties that promote global equality and wellbeing.
Arguably, if the so-called developed countries swept before their own door first**, the rest of the world would have a lot less problems to solve.
[**A few examples of where wealthy countries could make global impact at home: the USA is the only country apart from stateless Somalia that has not ratified the Rights of the Child; Australia has the second highest CO2 emission per capita in the world; Canada and the UK are the 6th and 7th respectively on the list of countries with the highest gender pay gap.]
The role of international charities
Whilst charities that attempted to separate politics from long-term community development might have made a strategic error, neutrality is desirable or even essential when it comes to projects that focus on saving lives, such as disaster and crisis relief or vaccination and other disease prevention measures (5). These more reactive types of activities don’t solve underlying problems, but they help those who suffer due to circumstances out of their control.
Medical aid and disaster relief both require specialised skills and arguably are not the job of any one government, but a broader, global responsibility. This is the area, exception from the rule, where equality of rights is best expressed not through politics, but through effective help. Efficient and adequately prepared charities have the well-oiled mechanisms to raise funds and deploy trained personnel fast globally so that victims get help as quickly as possible.
Until we achieve global peace and learn how to minimise the impact of natural catastrophes, there will be a need to help those caught in war zones and disaster areas. The politically neutral, international charity business model is probably the best we have for this specific purpose.
New business models for sustainable equality and wellbeing
The business model is the logic behind how you deliver value. The logic behind two existing models — government intervention and charity — widely applied to deliver value in the form of sustainable and peaceful growth are not fit for purpose. Those two models are fit for other important social impact purposes and the more these organisations re-focus on what they are best placed to do, the more we will all benefit.
But the arena of equality still needs champions. These champions shall approach with a different strategy and wear a different armour to succeed. I believe that the strategy of those champions will be glocal advocacy and their armour, good quality and comprehensive data — we need both for success.
A new business model focusing on data gathering: As Angus Deaton so convincingly demonstrates in The Great Escape, comprehensive and consistent demographic data has been foundational to social policy ever since anyone thought of collecting it (Swedish data goes back the furthest) (6). This type of data is painfully incomplete in many countries today and it is the main reason why there is so much trial and error in social impact initiatives. Often we don’t even understand the problem we are trying to solve. Any organisation that puts at its focus the improvement of demographic and socio-economic data collection will put efficient tools in the hands of those raising their voice for equal opportunity. We need organisations focused on improving social data quantity and quality.
A new business model focusing on glocal advocacy: Advocacy is not new; but the concept of bringing it home is. Think of global waste management: some countries should produce less, whilst some others should not accept it from abroad. Putting the pressure on from both sides could speed up resolution. The novelty in the strategy here is the “both sides” approach — that is, focusing on national politics first for global impact, no matter where you live. It sounds simplified but it is true: fixing others is out of our control, but fixing ourselves has a positive impact outwards. Organisations or even individuals that focus on local advocacy can achieve lasting and far-reaching results and we need a lot more of them.
(1) William Easterly, Democratic Accountability in Development: The Double Standard,
Figure 3 (p1100) http://www.nyudri.org/research-index/2010/democraticaccountability
(2) William Easterly, Can Foreign Aid Buy Growth?, https://pubs.aeaweb.org/doi/pdfplus/10.1257/089533003769204344
(3) Paul, Samuel. “Poverty Alleviation and Participation: The Case for Government-Grassroots Agency Collaboration.” Economic and Political Weekly, www.jstor.org/stable/4394247.
(4) Noel Chomsky: Power over people
(5) Politicisation of Humanitarian Aid and its Consequences for Afghans https://www.odi.org/sites/odi.org.uk/files/odi-assets/events-documents/3772.pdf
(6) Angus Deaton: The Great Escape: Health, wealth and the origins of inequality
