Corporate-NGO partnerships absolutely hold potential for positive change from an environmental, social and potentially governance perspective.

Mara Bolis, Senior Advisor, Market Systems, Oxfam has more than 20 years of experience working in the fields of international development, emerging markets finance and business. Bolis leads on Oxfam’s work on shareholder advocacy with U.S. corporations, as well as influencing work on impact investing. Bolis helped set up the Women in Small Enterprise initiative, which includes Oxfam America’s first impact investing fund that focuses on women entrepreneurs in Latin America.



Christopher P. Skroupa: How do you see strategic partnerships with NGOs (non-government organizations) as an opportunity for companies looking to invest in ESG (environmental, social and governance) initiatives?

Mara Bolis: Corporate-NGO partnerships absolutely hold potential for positive change from an environmental, social and potentially governance perspective. For corporations, the benefits of NGO partnerships are well-known: partnerships with NGOs can enable corporates to develop initiatives that respond authentically to local community needs. NGO partnerships also provide corporates with intelligence about ESG-related risks, such as political fragility and rising inequality, for which honest feedback is otherwise largely unavailable.

From the NGOs perspective, the benefits of a corporate partnership are about leverage and pathways to scale. As in the case of Oxfam’s work with food and beverage companies, inspiring a change in sourcing policy at a major multinational corporation, and guiding that change to its successful implementation, has the potential to open up economic opportunities for millions of small-holder farmers. The ability of first movers to inspire a race to the top among peers, and even within industries, is also a clear advantage.

That said, from Oxfam’s perspective, truly transformative partnerships are not the norm. There is an urgent need to develop new partnership models if we are to successfully address the grave and rising global challenges before us. CSR activities, which can involve NGO partnerships, have not had nearly the hoped for impact while exacting significant transaction costs for both sides.

There are attendant risks – most importantly that the partnership results in little more than window dressing. For a partnership to be successful, there must be deep alignment of interests. Oxfam has a fixed constituency: people living in poverty. A successful partner for an NGO like Oxfam will be a corporate that sees its future as inherently tied to the long-term success of communities that the partnership would benefit.

Skroupa: Does an NGO partnership with a sustainable company provide the same benefits as an NGO using impact investment funds to pursue its programmatic objectives? What are the implications, positive or negative, of each? What sort of implications does a strategic partnership have that an impact investment doesn’t, and vice versa?

Bolis: Impact investing and partnerships with impact funds do confer many of the same potential benefits of strategic partnerships, in that they extend leverage and influence beyond the traditional NGOs asset and relationship base. For decades, the only financial instrument used to improve the lives of people living in poverty was the 100 percent loss-making grant.

Starting with Ford Foundation’s pioneering program related investment approach, examples like Root Capital’s factoring agreements or Village Capital’s peer-selected seed capital model, demonstrate what socially-minded finance can look like if we unleash the power of our collective imagination. As NGOs move into cultivating, supporting and even becoming impact enterprises, they will need to rely on these types of adaptive financial mechanisms – made possible by the impact investment movement – as mainstream capital is not fit for purpose.

That said, if these funding models are not designed around prioritizing impact, they can open NGOs up to dangerous risks. As I’ve said, NGOs like Oxfam have a fixed constituency: people living in poverty. By assuming investment funds, an NGO runs the risk of introducing competing interests may in some circumstances be at odds with those of the NGO’s core constituency. The lack of transparency in this space has led to the impression that impact investing is a panacea: you too can save the world and make money at the same time!

Yet, impact investing operates in contexts of market failure: the market is not efficiently providing the product or service desired, e.g., clean water, energy access, affordable health care, at an adequate price and/or amount and the public sector isn’t capable or willing to bridge the gap.

Given that fact, solutions in this space are inherently risky, costly, time-consuming and will involve decision-making that weighs the needs of investors against the needs of other stakeholders – e.g., workers, customers, community members. These factors may detract from the returns investors expect to receive. You may have fully aligned investors for whom this is of no consequence. However, for an NGO, there should not be a risk that another constituency can come before serving people living in poverty.

For this, as with corporate partnerships, clarity on terms and conditions that prioritize impact upfront to ensure an alignment of interests is critical. Where impact investing makes sense from a programmatic standpoint – i.e., that this type of funding is the most effective to drive financial sustainability for the downstream enterprise such that it will reach scale – and the funding is structured in a way that eliminates the risk of mission drift, it can make sense. Nonetheless, it must be carefully orchestrated.

I think the vanguard is actually partnerships between impact investors and NGOs. NGOs and the research and expertise they provide should be as viewed as cutting edge R&D for the impact investing world – not to mention the world of socially responsible investing. I think in the future, impact investors focusing on particular content areas will increasingly seek advice from NGO experts in those fields as part of their investment decision-making and in evaluating the impact of downstream investments. Furthermore, for impact investors interested in making real, deep, structural change on the issues that they are targeting, policy partnerships with NGOs could be a formidable way to tackle such issues head on.

Skroupa: As companies become more concerned with impact investment, more funds are being allocated to social causes. How do you see the trend of impact investment affecting the economy at large?

Bolis: I think you are asking how impact investing has influenced traditional financial markets and, hence, larger economic systems. As the impact investing goes mainstream, it is worth asking whether traditional capital markets have influenced impact investing more than impact investing has influenced traditional capital markets. What choices and sacrifices has the field made to lure mainstream capital into this space? Impact investing started as a new, exciting strategy to create positive social and environmental outcomes but, as the field goes mainstream, the intentionality, at both fund and enterprise level, that made the field unique is in danger of getting lost.

As money floods into the space we must double-down on and become more innovative around the principles, rules, norms, mechanisms and structures that make impact investing distinct from traditional finance. If we don’t, impact investing won’t succeed in affecting the economy at large because – in competing with the expectations of mainstream capital – funds will flow to the lowest-hanging fruit; towards investments in sectors that are broadly positive for society, such as healthcare, education and infrastructure in developing countries, but that are executed with no regard for social inclusion or social justice.

Skroupa: Are you able to identify positive changes in the environments or economies where impact investments are made?

Bolis: It’s the right question to ask, and the simple answer to this question is that, today, it is far too difficult to know. Ten years into this experience, isn’t that a bit odd? The space needs encourage and celebrate greater transparency around reporting both the impact and financial returns, both gross and net, achieved by impact investors. This will help set realistic benchmarks that are appropriate for the context and the problem being addressed. More independent research is needed to understand the enterprise-level experience, as well as that of the communities the enterprise is serving, and analyze which structures, approaches and incentives best assist enterprises to maintain an intentionality to optimize impact.

Bolis will be a panelist for the discussion The ESG Roadshow: How to Brief Investor Relations on the ESG Value Proposition
Moderator at the ESG 4 Summit in New York, NY on April 5.

Originally published on More articles by Christopher Skroupa on his Forbes column.