Feature October 2014
Century-old global aid agency transforms to social enterprise
Earlier this year, the Dutch international aid agency Cordaid (www.cordaid.org) entered into a joint venture with a high-tech imaging company to introduce a product that is expected to help reduce infant mortality and maternal death, initially in Ghana and then in other African countries.
The venture is a good example of the creative problem solving Cordaid employs to address seemingly intractable problems in some of the poorest, most fragile places in the world. It is one of more than 2,000 projects in 38 countries supported by the century-old organization founded as the Catholic Organization for Relief & Development Aid.
In this case, the problem was the dearth of gynecologists available to help at-risk pregnant women living in remote communities. A Dutch company, in conjunction with universities in the United Kingdom and the Netherlands, invented a small portable ultrasound instrument with embedded mobile technology that allows midwives and nurses to transmit information to a gynecologist who could be hundreds of miles away. If necessary, Cordaid will arrange transportation for the woman to get to the hospital.
“The mother can go back healthy herself, and her child as well. If she stayed in her community her chances of surviving would be 10-20 percent in some cases,” said Henri van Eeghen, Cordaid’s director and one of the architects of its transformation from a traditional aid organization to a social enterprise. The primary purpose of a social enterprise is to achieve social impact, rather than generate profit.
In addition to health care, Cordaid operates in the fields of security and justice, women’s leadership, education, entrepreneurship, disaster reduction and food security in Africa, Asia, the Middle East, and Latin America.
The organization works with a network of more than 600 local civil-society partners. With program spending of nearly €180 million in 2013, it is one of the largest nonprofit organizations in the Netherlands. Cordaid also manages an investment fund of some €80 million.
Van Eeghen, chief operating officer since late 2009, is well-positioned to help bridge the worlds of business and international development. He has a deep background running for-profit companies – including the Van Eeghen Group, an international producer and distributor of food ingredients – as well as charitable projects around the globe.
When officials at Heineken decided to set up a factory in Ethiopia, the last place they expected to find workers was in a nearby slum. “We said, ‘why don’t we build a bridge?’” van Eeghen recounted. Cordaid and its partners offered to train the local young people to work in the brewery. Heineken and other companies faced with a shortage of skilled labor agreed to pay for the training. Participants must commit to work for the company for a minimum of three years.
Van Eeghen called the concept “exciting.” He noted that creativity is at the heart of social enterprise. “The world around international development has been changin g– from the places where we work, to the funder environment,” he said. “We’re looking at different ways for the work to be done.”
Both beneficiaries and funders are served well by social enterprise. “The positive financial contribution we create will be invested back into the programs.”
Another innovative approach pioneered by Cordaid is results-based financing (RBF) in the field of healthcare. RBF sets healthcare targets determined by citizens, healthcare professionals and universal guidelines. The government’s services are monitored based on these targets, and are verified by patient experience. When providers meet the targets, they are financially rewarded, and when they do not, they are incentivized to improve.
“In fragile contexts emerging from conflict or disaster, RBF helps restore the trust and social contract between citizens and the state,” noted van Eeghen.
Initially, Cordaid introduced RBF to Sub-Saharan Africa, and today uses the approach in 13 countries. Seven countries have adopted RBF as national healthcare policy. Cordaid also has expanded RBF from health care to other fields, including education and security.
Cordaid also has embraced a growing paradigm shift in evaluating programs, from measuring output (i.e., how many schools did we build?) to measuring outcomes and social impact (do students have the tools to improve their communities?). This has necessitated new, creative models of change, van Eeghen noted.
“Once you rethink [problems] and come up with different models of change, you look back and say, ‘Why didn’t we think of that earlier?’”
Pioneers in open data
At the heart of Cordaid’s approach is the ability of local communities to influence policies and decisions that affect their lives. Since 2013, Cordaid has been giving citizens the tools to do that through “open development,” making detailed information about its projects available online.
This transparency helps foster social accountability – the ability of citizens and non-governmental organizations in developing countries to hold their governments accountable for responding to citizens’ needs. It also helps restore trust among citizens, governments and nonprofits, a scarce commodity in conflict and post-conflict zones.
Cordaid’s entry into social enterprise and open data went hand in hand. Through open data, the organization invites citizens, funders and others to provide feedback on what the organization is doing and the results that have been achieved.
“We’re saying to the outside world, ‘Have a look,’” said van Eeghen. “It’s very good for internal people too, because you make yourself vulnerable.” He noted that aid organizations often have been criticized for lack of transparency.
Cordaid’s open data program is based on the International Aid Transparency Initiative (IATI – www.aidtransparency.net). While more than 200 organizations and governments worldwide publish their development cooperation data according to IATI standards, Cordaid took the initiative to the next level, sharing all its program and project data, including budgets, targets and results. “The ultimate goal, however, is to inspire all those who share our goals to innovate with us,” Cordaid CEO Simone Filippini wrote in the organization’s 2013 annual report.
By engaging in social entrepreneurship together with “communities of change” – coalitions of private, public and nonprofit actors at the local, national or international level – Cordaid believes it can make a larger contribution to creating flourishing communities.
Measuring what flourishing communities look like is an important focus of its efforts. For example, Cordaid works with local women to define measures to assess their role in society. “We help them create a methodology and an index through which to measure change,” van Eeghen said. The measures might be on the political or economic level, or they may relate to a specific conflict. In Colombia, for example, they include the extent to which women have access to capital, own land, are involved in the political arena, and influence how tax money is spent.
“We take the community as the starting point of how they want to measure something. They define it within their own realm of interest, their own realm of needs – not my needs or yours, but from their perspective,” van Eeghen noted. Especially in post-conflict countries, women are a major force for change – and for good reason, he said. While men have been conditioned to respond to conflict with aggression, women “have different ways of dealing with conflict situations.”
“You don’t see change in the short term, but as time goes by you look and you really do see it,” he said.
Van Eeghen said he is “more than willing” to share Cordaid’s experience with other philanthropists. The first step in the change process, which began in 2012, was to give staff members $2,500 to invest in themselves. “[We told them] to find out for yourself how well you fit into this new model. ... At the end of the year some people said, ‘It’s not my piece of cake; I don’t feel comfortable with this.’” They were given time to find another job.
Those who wanted to stay went through intensive training. The top management team participated in a year-long program on social enterprise through the University of Amsterdam. The 12 team members spent a full day every other week getting to know each other well and redefining their own role within the organization. Cordaid also created a social enterprise incubator where staff members can test innovative ideas. “Then 7,000 people around the world shoot at your idea,” van Eeghen joked. “At some point the person says, ‘I would like to formulate it into a project and validate the idea.’”
Van Eeghen advises philanthropies interested in social enterprise to start with their “why?”
“Don’t look at the ‘hows’ and ‘whats’ – start with what is it that is triggering you, whether you’re a family foundation or an international aid agency. If you don’t do that you have to come back to it again,” Van Eeghen warned. “What is the motive that is triggering you for change or discussions about change? For a lot of people, the social enterprise model fits very well.”
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