JULIA KENNEDY: Welcome to this joint workshop for Ethics in Business and Carnegie New Leaders event. I'm Julia Taylor Kennedy, program officer for both programs.
I designed this format with Mary Gentile, who's a business ethics guru at Babson College and head of the Giving Voice to Values program. She has been the best partner you could hope for in a program like this.
I also this morning feel very lucky to hand the moderating baton to Masha Feiguinova. It's a Carnegie New Leader tradition to have a member moderate. Masha took this role very seriously, helping identify, prepare, and arrange this workshop from soup to nuts. So really the credit for today goes to her.
Masha is a program officer for the Open Society Foundations, working on the Central Eurasia Project. There, she promotes civic and political rights, good governance, and development through policy analysis, independent reporting, and grants. Most importantly, she is a member of the Carnegie New Leaders steering committee. With years of experience managing programs, she is the perfect person to lead a discussion of the changing nature of philanthropy and corporate philanthropy.
So without further ado, Masha, take it away.
MASHA FEIGUINOVA: Thank you, Julia, and thank you to the Carnegie Council for hosting this event.
Now is a really important and interesting time in corporate philanthropy. Many in the business community are moving beyond traditional philanthropy of charitable donations and effectively investing in social impact through strategic philanthropy and social engagement, while at the same time promoting the key business values and agenda of their companies.
This workshop will look at the characteristics, the new trends, and the challenges in shaping modern philanthropy.
What we see is this era was, in part, shortened by the crisis in 2008. After the crisis, as many of you will know, companies had to reduce their charitable giving budgets and could no longer guarantee the previous level of support.
The dual unintended consequence of this belt-tightening is that corporations had to become much more strategic with the funds they did have, and if they wanted to guarantee their commitment to a cause, they had to bring in the nonfinancial resources to bear.
Therefore, new models of strategic corporate philanthropy need a much deeper level of business units' engagements and buy-in to be effective. This translates into leveraging the financial and nonfinancial corporate resources, such as brand capital, creative capital, technology, convening ability, and business networks, and expertise in actually using these resources to address social problems.
The flip side of these trends on the corporate side is new challenges they present for the NGO grantees and partners. The private-public partnerships are becoming much more visible and much more involved. This leads to the imperative on the NGO side to choose the corporate partners that are in good standing as responsible actors, not just in their communities but globally.
Today, I am very pleased to have Graham Macmillan from Citi Foundation, Sarah Kroon Chiles from Thomson Reuters Foundation, and Brian Walsh from Liquidnet for Good. Together they represent the companies that meet some of the goals of impactful corporate philanthropy by creating strategies that resonate with their employees, that marshal resources to apply companies' core competencies to social challenges, and also respond to the needs of the communities.
Also, thank you to the Carnegie Council in helping me bring such a fantastic audience around the table, where we have even more representatives of companies that have pioneered some of the well-recognized philanthropic initiatives, as well as nonprofit organizations that have forged some of the more rewarding partnerships with the private sector, as well as leading consultancies in this field. This is the perfect audience for an interactive event, and I very much look forward to your contributions on some of the new trends that you are seeing or that you would like to see ushered in, as well as the operating principles that you use in identifying both the initiatives and partnerships.
With that, I turn it over to Graham Macmillan, who is a senior program officer for financial inclusion at Citi Foundation, where he focuses on bringing together formal banking practices and services to more than 2 billion people worldwide that are unbanked—very busy. Graham previously managed Citi Foundation's microfinance and enterprise development portfolios. Before his work at Citi, he was a senior director at VisionSpring, a social enterprise selling consumer products to promote economic development.
GRAHAM MACMILLAN: Thanks, Masha. Thanks to the Carnegie Council for the kind invitation.
Masha and I had a chance to sit down some months ago to frame out what this conversation would be, and what my contribution might be to what I think is a valuable discussion. It's a complex discussion that I'm not sure can be necessarily covered in this short amount of time. But I think, due to your expert moderation, you'll get through a lot of it quite well.
But before getting into that, I was asked to frame what some of the trends are in corporate philanthropy from our perspective and some of the things that I have seen and we see every day. I just jotted down a couple of notes. I'll put them out there and then we'll dive into the rest of the session.
I'm going to assume that some people know, maybe because of their job, corporate philanthropy; for other people it's a passing fancy; some people just think it's philanthropy and it's really no different from private philanthropy.
Just take out private philanthropy from the conversation. No offense to Rockefeller or Ford or Gates, but that's not part of today's conversation because, while they are our cousins, they are like a second or third cousin. There are some shared agendas, we work very collaboratively together, but we are driven by very different forces at corporate philanthropy.
That being said, the subset of corporate philanthropy, there is a whole range of corporate philanthropies.
There are what I like to call the enlightened corporate philanthropies, and that's the focus of today's conversation. I think you'll see my colleagues here represent that. Then there are more traditional corporate philanthropies, where it is very much about local relationships and managing those local relationships.
There is no right way or wrong way. But I think the way that Citi and the Citi Foundation have embraced corporate philanthropy is partially because of a response to a changing environment, whether—I wouldn't necessarily say it's 2008, although certainly 2008 had a pretty profound impact on the financial services industry and Citi in particular. I'm happy to talk about that. And I'm not a banker, I will declare that right now, so I feel no ownership.
But I think what we've had historically, and it really goes before 2008, is a real recognition that the landscape of operating today in the market requires a different approach. It is a blended value, in effect, the convergence of the public and the private sectors.
The social license to operate is given to you by the communities in which you work, by your shareholders, by your customers, by the governments that regulate you. In the financial services industry, you might imagine that's more than a few people.
So you have a variety of different factors that cause businesses to have to respond. Either they respond well or they don't respond well. I think Citi, by and large, has responded reasonably well in a variety of different ways.
Just to back up and say there are two things that I want to put out there for you to think about.
Jed Emerson, whom you may or may not be familiar with, is the author of the book Blended Value, which I would suggest for those who are not familiar with it—2004 I think is when he wrote it, give or take. [Editor's note: the book title is actually Impact Investing. See Emerson's website http://www.blendedvalue.org/] That was the planting of the flag to say that you can do well and do good at the same time, which is to say you can make money and have a profound impact in the communities in which you serve. That was somewhat game-changing for a lot of people in this particular space.
Then, last year, was the Created Shared Value book that Mike Porter and Mark Kramer put out, which amped up that conversation in a much more specific way, with very specific case studies of businesses that aren't doing it out of corporate social responsibility reasons but are doing it because it's smart business—maybe not directly for benefit to the bottom line in the short term, but most definitely in the long term. But it was a different way of reorienting your business.
Notice I am not talking a lot about philanthropy here. In my experience, philanthropy is just one tool in the toolkit, to use an overused phrase. It is for Citi in many respects the front end of a continuum of services and products addressing financial inclusion, which is part of a core pillar of responsible finance, which is sort of a nod to the 2008 experience, as you might imagine.
Financial inclusion addresses this 2.0-2.5 billion people who are unbanked and underbanked. So there's not 2 billion unbanked. They are underbanked people, however you want to define it—more in fact than that.
Citi recognizes, under the leadership of our CEO and our board, that we have a responsibility to address that and we can address that in multiple ways.
One is through business. We have commercial businesses that address this: Citi Microfinance, Citi Community Capital here in the United States, and a variety of different others—Citi Mobile, for instance, where we just did a big tie-up with USAID [United States Agency for International Development] last week, an announcement to build mobile payment infrastructure in six countries around the world. These are commercial plays. Now, these are not high-returning, risk-adjusted rates of return, but they are businesses, and if they don't perform they don't get resourced.
So where does the philanthropy fit in this? Philanthropy fits on the front end, which is to say we are the ultimate in risk capital for the bank. We are intended and structured to take massive risk to generate thought leadership, to raise awareness and knowledge, to test innovation. As much as that plugs into the public good, that is our benefit.
Obviously, from this conversation we could talk a lot about the tax issues and the legal structuring issues, and corporate philanthropy is faced with a lot of issues around self-dealing. I'm happy to talk about that.
All of our investments are done for the public good. Citi can benefit, but so can MorganStanley, so can Goldman, so can JPMorgan. It doesn't matter to us. The main thing is that we are driving the financial inclusion objective.
Just a very quick note on Citi and then I'll turn it back to Masha.
The foundation gives out about $78 million. We are not endowed. We have a payout of funds, which means in many respects we have to generate value to the Board and to the senior leadership of Citi, because, in effect, we fund-raise for ourselves.
So we sit down, actually right about now, with the CFO to say, "This is the value we are providing to the company, to the shareholders. This is why you should give us money."
Even in 2009, when we didn't make any money—we lost a fair amount of money—they still gave us $61 million to give. So there is clearly a value proposition to the company. There is clearly some benefit to the communities in which we operate, to the governments with whom we partner.
We have about 820 grants, so it's a huge operation. That is actually down, I might add, from 3,000 grants. If you could get in the door, you could get money before, anywhere from $2,000 grants to $2 million grants. We have really moved it to professionalism and focus. Limited resources—we are again back up to $78 million—in about 87 countries.
Very broadly, we focus on economic empowerment and financial inclusion, obviously pretty straightforward. Our focus is our business capabilities, which is to say some other corporates don't necessarily give around what their business operations are. They may have a totally different interest. Ours are aligned around what our capabilities are.
Five portfolio areas: microfinance and enterprise development; financial capability and asset building; college success here in the United States; youth-education enterprises and livelihoods internationally; and, here in the United States, also neighborhood revitalization, which is an obligation of our Community Reinvestment Act. This is the pitch, the spiel, and it's just important background.
It's really important to recognize that philanthropy is one tool among many tools. There are restrictions that prevent us from doing certain things. I think the challenge for all of us is to recognize that we are operating in an entirely different environment. It's a very useful tool, but it's only one tool among many.
I think the other important side of the equation is the business. The business's ability to engage with the philanthropy, with the foundation, is absolutely critical. We could be the most advanced and effective innovative foundation in the world, but if we didn't have a responsive and a receptive business side, we wouldn't be able to operate nearly as well as we could. So through our commercial lines, they understand and work seamlessly with us to provide scalable and replicable solutions to these challenges.
With that, I will pause and turn it back over to Masha. I'm happy to answer any questions later.
MASHA FEIGUINOVA: Thank you. I will turn the floor over to Brian for his presentation, and then we will take questions together for Brian and for Graham.
Brian Walsh is the head of Liquidnet for Good, a corporate social engagement program of Liquidnet, a global institution trading network and a progressive financial firm. In his role, Brian spearheads the firm's efforts to generate social impact and deliver business values through a multipronged platform that aligns Liquidnet's brand and engages employees.
BRIAN WALSH: Thank you, Masha. I'm very excited to be here today.
I'm going to tell you a little bit about Liquidnet, just give you a little bit of background and context; a little bit about our project in Rwanda; our approach to corporate social engagement in general; and then also about our Markets for Good project. I'll set that up as almost a case study that we can then engage about. I'm real excited about getting the free consulting from all of you here today.
Liquidnet, as Masha said, is the global institutional trading network. What does that mean?
How many people here have money invested in a 401(k) plan or a pension fund or a mutual fund of some sort? Just a show of hands.
Odds are that the asset managers that are managing your money might be using Liquidnet. We have about 700 of these large institutional investors around the world that use our platform to trade large blocks of equities safely and anonymously with each other. We operate in 39 markets on five continents.
We have a relatively small footprint. We have about 300 employees, most of them here in New York, but we also have offices in Hong Kong, Singapore, Sydney, Toronto, and a couple of other places.
So we essentially use our technology system to make a marketplace more efficient. We have made the block-trading marketplace, the institutional investor marketplace, much more efficient.
We were started in 2001 by our current CEO and founder Seth Merrin. He wanted to change the nature of Wall Street. He wanted to change the nature of a financial services firm and bring in a new business model. So Liquidnet has kind of upended the traditional model and we brought disruptive innovation to how a financial services firm works and operates in Wall Street.
He also wanted to do the same about how we thought about giving back. In 2007, we started Liquidnet for Good. We didn't want to be a typical corporate philanthropy program that does some community work here and some projects there, just spread out and spread thin, and not really achieving anything but feel-good giving back. We didn't want to believe in that. We don't believe in feel-good philanthropy. We believe in real good change.
So what we did is we wanted to set up a program that we could leverage our core assets, which is really our people, and apply it to a big challenge globally. As I said, we have a global employee base, so we wanted to take on a global challenge.
While we do a lot of work in the local communities where we work—we have a robust local grant-making program and employee engagement and volunteer activities at the local level—we really wanted to take on a global challenge.
For us, we came upon this project in Rwanda. It's called the Agahozo-Shalom Youth Village. It's an innovative and comprehensive support mechanism to deal with orphans and vulnerable children, most of whom were orphaned as a result of the 1994 genocide.
Liquidnet from the very beginning helped get this project started. Our employees and their family members participated in the ideation sessions, in the early strategy sessions, about how to conceive of this project.
We broke ground in 2007. Our first class of 125 high school kids moved in in December 2008. That first class is going to be graduating this January. We're really excited about this project.
Over the past five years, we've sent over 70 employees to Rwanda, on the ground, to use their skills directly to support the project. For them, these are, if you can imagine, people from Long Island or Connecticut or New Jersey or New York, software engineers or financial services workers, traveling to Rwanda to work in a rural site on the ground to set up IT systems, to set up accounting systems, to do leadership training and capacity-building for the local Rwandan staff—it has really been a huge labor of love for our employee base.
It has also been a huge driver of our business success, because we have been able to attract and retain some of the best talent in the world, especially in this competitive market. And we have been able to continue to motivate and inspire our employees through the trauma of the past several years of the financial crisis.
People want to be a part of something larger than themselves. For better or for worse, the place where people spend most of their time in this day and age is at work. So if we can give them a mission that they can be a part of, something that they don't have to leave the office to do and to take part in, it's really valuable and it's really compelling. It's a huge driver for our business. That has really been our employee engagement focus, with this Rwanda project.
This project was very successful. We had it going for a few years, we had already welcomed our first class, when Seth, our founder and CEO, pulled me into his office and said, "Brian, I think Rwanda's going great, I'm really excited about it. What's next?"
I was like, "I don't know. I'm barely juggling this and managing all the other projects."
He doesn't take that for an answer, though. He said, "Given the resources that we have"—and he wasn't just talking about our budget—"given the resources of this company, I'm putting these resources at your disposal. I want you to figure out how to make the biggest social impact given the resources of Liquidnet." He said, "If you don't do this you should be shot, if you don't achieve something." I think he was being hyperbolistic. [Laughter]
He's a great boss, an entrepreneurial guy, has a great vision, and very ambitious.
So I thought, "Okay, great."
I took some time to look at what are the resources that Liquidnet has and really to understand what this company is.
Our view on corporate social engagement, which has evolved—again, we don't call what we do "corporate philanthropy." We also don't call it "corporate social responsibility." To us, CSR, corporate social responsibility, is reactive and it's very defensive. It feels like, with the word "responsibility," almost like you're atoning for your sins.
Liquidnet believes that it's a good company and that we're solving some real problems in the marketplace and we're helping millions and millions of individual investors through our core product. So we don't feel like we have any sins to atone for. We're not polluting the Hudson through our core business and therefore funding a cleanup green team to clean up after it. That's what we think of as CSR.
For us, we call it corporate social engagement because we want to really think about how do we leverage our whole range of resources, not just our financial resources but, as you said—I think you might have taken that from our website in your opening—our human capital, our brand capital, our convening ability. We are trying to apply all of those resources to big social challenges. But also to engage our people is first and foremost in our minds. So to try to understand what is our core competency and how do we take that core competency and apply it to social-sector challenges.
I have a background in the philanthropic space, working in consulting, advising a number of foundations and nonprofits. If there's one thing I've seen, and as any who have worked in the nonprofit space know, there are a lot of inefficiencies. I don't mean that individual organizations are necessarily inefficient. But I think that structurally the way that capital is allocated in the social sector is really, really inefficient and that there are a lot of challenges.
There are high costs in fundraising for nonprofits. There are high overhead costs in how foundations and philanthropic organizations give away capital.
So we thought: Wait a minute. Liquidnet is essentially a wholesale marketplace and we have used our technology to make this marketplace more efficient and we've brought efficiencies to this institutional market. What if we brought that mindset, that understanding of how markets work, that understanding of how technology can be used, and brought it to the social sector?
We could not say that all nonprofits need to operate more like businesses. That's not the point we're trying to make. But we're trying to say: How can we increase the efficiency of how capital is allocated in this space? How can we reduce those transaction costs for fundraisers? How can we ensure that funders are able to find high-quality organizations and move to a mentality where it's not about feel-good philanthropy but about real good, and that it's more about evidence-based outcomes to giving overall? So how can we really try to change the conversation of how we think about the social sector and how we think about effectiveness in the social sector?
So we launched an initiative that we call Markets for Good. We have been doing this for the past couple of years.
It started out as a Liquidnet-only initiative, and then recently we have partnered with our colleagues at the Hewlett Foundation and The Bill & Melinda Gates Foundation, and they are now coming on board with us. We are going to be rolling it out this fall as more of a cobranded effort to really transform how philanthropy works and how we think about information in the social sector.
I just want to build on Graham's excellent framing remarks. I do agree that corporate philanthropy needs to be rethought. It's not just about cash is king, although it's always nice to have cash and to be able to give away financial resources.
Private philanthropy in the United States right now is about $300 billion a year. Of that, 5 percent comes from companies; that's about $15 billion a year. That's great and that's important and that's necessary money.
But I would argue that that's not the important asset that companies have to give. Companies, again, are where most of our people work, that's where most of our talent is, that's where most of our technology is.
So let's unlock that talent, let's unlock that technology, let's unlock that creative capital, that brand capital, that all these companies have; not think about how do we encourage more companies to write bigger checks, but how do we encourage more companies to look within their own organizations, motivate their own employee base, and really think about the challenges they can solve as a company. Taking their core competency and applying it to challenges in the social sector will go a lot farther than just asking companies to write slightly bigger checks.
I think that the returns for companies will be even stronger, because you will have better employee loyalty, you'll have better customer loyalty, and you will have better, broader public engagement, both with the media but also, as Graham mentioned, with regulators and the like.
So I think that there is an enormous opportunity right now. The 2008 crisis really actually presented a great opportunity for companies to rethink how they engage in the broader society and not just think about how can we deploy our cash, but how can we deploy our whole range of resources, to have as big of an impact as possible?
MASHA FEIGUINOVA: Great. Excellent. Thank you very much for that example.
It sounds like you have a fairly tough boss, if he was threatening you with physical harm.
BRIAN WALSH: I'm pretty sure he was kidding. [Laughter]
MASHA FEIGUINOVA: It's the fear that counts. And so, in presenting this proposal to him, what were some of the challenges that you both were able to identify, and some of the perhaps pushback that you have received, either from him or from others in the company?
I would also open up this question to others in the audience in terms of promoting some of these engagements within your own companies or in the partnerships that you have set up. What have been some of the pushback and the challenges you have experienced?
BRIAN WALSH: Our project in Rwanda was wildly ambitious. We have now built a living community and high school for 500 teens, orphans, vulnerable youth, in rural Rwanda. It's an enormous site, about 150 acres, enormous building going on.
It's not just a boarding school. It's not an orphanage. It's a comprehensive youth village where these kids live and that's their home. So it's an ambitious undertaking. But it was a very specific, tangible undertaking.
Our Markets for Good initiative is wildly even more ambitious. We are trying to rethink and reframe how information flows through the social sector, because our thesis is that capital flows follow information flows. So if we can increase the flow of information throughout the social sector, we think we can increase the flow of capital throughout the social sector and lead to a better allocation of capital to the higher-performing nonprofits and to the higher-performing social businesses. That's wildly ambitious.
Also, it's not a tangible project that you can get employees to go visit, to go volunteer at. So a big challenge for us has been, first of all, how do we conceive of this problem, how do we line up the partners that we will certainly need to achieve this ambitious vision? And then, how to we effectively engage our employees in this very intangible kind of work?
I can answer those questions, but I just want to pose them for somebody else.
PARTICIPANT: Graham, you were talking about when you have to sit down with the CFO and you sit down with the board and you have to make your argument. You have to make your case for the value that you're providing to shareholders. I'd be interested in hearing about how you frame that argument. What is it that resonates with the board, the CFO, in terms of value to shareholders from a philanthropic mission?
GRAHAM MACMILLAN: There's no one answer. You make a really good point about the tangible project and the intangible. The internal audience at Citi is the more important audience.
I spend 70-75 percent of my time worried about internal communication, much more than I do in terms of external; because while you may have an external social license to operate, the internal social license to operate and financial license to operate is fundamentally more challenging.
You have to then start to peel back the layers of the onion, which is to say to the shareholders, the leadership, government affairs people, local community people on the ground—they all have different angles and different perspectives. The challenge in a company the size of Citi is that there are a lot of different people with a lot of different perspectives, and trying to be all things to all people is a very hard thing to do.
So what we have really spent the past four to five years on is focusing and concentrating, saying, "This is what we're good at, this is what we're going to do." That reflection of the numbers going from 3,000 grants down to 800 grants is a reflection of saying, "While we'd like to be able to be all things to all people, we can't."
We need to do basically two things. One is, from a visibility, thought leadership, innovation, and knowledge-building standpoint, the global grants. We're bifurcated really from global grants, with high-impact from a visibility standpoint, thought leadership standpoint, to local relationship-building.
Anybody in a corporation fundamentally—I'm sure there are some exceptions—cares about visibility. That's just a given. If you don't have visibility behind your projects, by and large, it's probably less valuable to the company. No, there's visibility on a variety of different levels.
Impact: we have a whole effort now under way around measuring impact and all the analytics behind that—key performance indicators, dashboards, and all of that sort of thing. But you can't do easily the cost/benefit ratio or the SROI [social return on investment] for the CFO of Citi. It's kind of apples and oranges.
So while you can demonstrate rigor in measuring your impact on a variety of different ways, I don't think you can replace the mentality that a CFO has. So you do the best that you can, but you can't come in it some sort of projection of returns. You have measurement and all of that. So I think you have to look at the visibility.
You also have to look at the performance of your investments within themselves. I think, most importantly, at the end of the day it's getting your entire company behind what you are doing and believing in it. That's a really big challenge.
So what we try and do, in addition to the grant-making, which is really frankly very inside baseball—I mean let's be realistic here. How many people actually spend time day in and day out worrying about financial capability? How many people even know what financial capability means? [Laughter] Exactly.
I know a lot about financial capability, the G20 knows about it, APEC [Asia-Pacific Economic Cooperation] knows about it. But the average Citibank checking account holder has no clue, nor does an average employee at Citi.
So what you do is you do what we call "more than philanthropy." It's sort of a theme along the lines of "it's not just writing checks." It's engaging employees on a variety of different levels, from a technical expertise standpoint to broad, sort of episodic, one-day events.
For instance, last week Citi celebrated its 200th anniversary on the 16th of June, which is an amazing accomplishment in and of itself. But the real accomplishment was we got 100,000 Citi employees to volunteer on that day. That gets them engaged as well.
Now, they were doing anything from volunteering at soup kitchens, which isn't aligned around a financial inclusion strategy, to cleaning up gardens and things like that.
So those are the three different ways I would say that you have those conversations. At the end of the day, the evidence is in what happens on the ground and as it reports back through the company, whether or not people find it valuable.
But I don't see any—there's no evidence to me that anybody finds it not valuable. It's very clear. The trick is, how do we amplify that and how do we increase it?
I think $78 million is useful, but I think we could use more. But more importantly, we can use the resources of the business, and how you align around that is the real challenge, because at the end of the day it's resource allocation. When you're in a really tight expense environment, which the financial services industry is in right now, if you're not generating revenue, then you're probably at risk. So that's a real challenge that financial services are faced with right now.
PARTICIPANT: Something you said that really caught my interest was, "Hey, we don't like this label 'corporate social responsibility'"—I lit up because I'm not sure I like it either—because you said it feels reactive, it feels like we're atoning for our sins.
I think that's part of the problem, that people who do want to do good, whatever that means—it's finding the right label to articulate to your shareholders and all your constituents about what you're doing. So my question is: How do we find the language to frame and to convince?
BRIAN WALSH: The language for which audience? I think the language is an important question. As Graham pointed out, there are multiple audiences we are trying to reach here.
Companies have a very tough role to play here, because they have their internal audiences, their employees, their leadership, their board; they have external audiences, the communities where they operate, their shareholders, the general public, government regulators.
I think that it's very important for a company to be very clear and transparent to all of those audiences, to say the same thing to all of them, and to demonstrate value to all those audiences. So you are saying the same thing to the board that you're saying to the government, that you're saying to your employees, that you're saying to local community members.
You're saying: "This is our role as a company and this is what we believe in, these are our values, and this is how we are generating value for society."
I think it's beyond just thinking that a company exists merely to generate financial returns for their shareholders. That model of thinking is outdated. A company exists in a very specific place and time. It has a responsibility to a range of stakeholders.
That doesn't mean that a company can sacrifice its financial responsibility and its fiduciary responsibility. But it means that a company can be enlightened about how it thinks about its touch points across that spectrum and how it thinks about how can it best leverage what it does best to have, not just financial value created, but social value created as well—and social value created not just in the sense of minimizing negative contributions, but creating a platform to encourage positive contributions as well.
So it's not just about harm reduction or risk mitigation. It's about how do we be actively engaged with the broader society? The nature of our social contract, our social framework, right now is such that companies play an important role in society, and there's no getting around that. How do we do that as thoughtfully and sustainably into the future?
I think that for us the corporate social engagement language works. It hits all of the different audiences we are trying to reach. I think that the Porter and Kramer Created Shared Value is helpful. I'm not sure if that completely resonates with me, but I think it's a helpful construct to think of this.
But ultimately I'm a huge fan of Jed Emerson's too, and blended value is an important paradigm change that has happened as well. It has been influential for giving birth also to the whole impact investing movement as well.
PARTICIPANT: Philippe Burke. I'm with Apache Capital. Just terrific presentations. I'm really enjoying this very much.
My line of questioning was very similar to the previous set of questions that we heard around this whole issue of having a social license to operate. I'm just wondering about a few related questions.
One is, if I were a shareholder of Liquidnet and you explained to me that it really does make sense for us all, not just for shareholder profit maximization, but we're operating as a certain community and we have obligations to our customers, to the society that gives us a license to operate, our customers and our employees, we want retention—those are terrific arguments.
I think, even though it may be hard to measure them, we all know that they're not zero, and they have been treated as having zero value by many companies up until now. So we could argue how they should be measured, and maybe there's a better way to do it. But the fact that we're going in that direction makes a lot of sense.
But I'm just wondering about a few items.
One is, how do you eliminate, for instance, the free-rider problem? Like, for example, at Citibank, as a shareholder I might be thinking, "Gee whiz, I'd much rather have the guys down the street at JPMorgan do all of this so that you could focus your effort on what you do best, which is, let's say, making loans, make the maximum amount of money for me, and then I'll get a bigger dividend, and then I could use my money and give it to someone who I think would be a lot better at solving problems in Rwanda."
So this whole issue of who should be doing it, first of all. Is a group of loan officers—a bank is a lot more than that—but is a bank with a bunch of loan officers really the best party to be engaging in this, number one?
Number two, I would rather have those efforts spent on someone else's dime maybe. So are we approaching the area where this really should be government effort, it should be society-wide, rather than led by individuals and corporations who have far more constrained sets of obligations to their particular stakeholders?
GRAHAM MACMILLAN: You raise myriad issues in that point, and they're all fantastic. I'll pick off a couple of them and maybe Brian can pick up some of them as well.
The challenge in some respects—first of all, the point about government. I think, as we're all very aware, government increasingly is turning to the private sector to take on the responsibilities that government heretofore has been responsible for, because of austerity or because of principle, and whatever.
You look, for instance, at USAID. I don't know what percentage of their budget is now managed through contractors, but they don't do what they used to do. It's a really interesting challenge.
So I think government, to that question, increasingly works in partnership with the private sector, because they do realize there are efficiencies. I agree with that. I think that there is a role for government in certain actions that private sector shouldn't be engaged in. Where that line is is not always clear. But I think, increasingly, having the private sector engaged in areas where the public sector, government, is responsible is not necessarily a bad thing. A little competition goes a long way.
In terms of deciding between who should be doing what, from one bank to the other or one company to the other, that's an interesting challenge. Maybe what I'll do is spin that around to suggest there is a challenge with corporate philanthropy from an inurnment standpoint.
I'm talking about impact investing, for instance, where, in effect, there are three buckets of money these days:
- There's the money that's the risk-adjusted return, maximum return on investment. A lot of people here in this room, hopefully, have some investments in that profile.
- Other people also have a profile of philanthropic investment. The only return is some social and maybe the tax deduction on top of that.
- Increasingly, this third bucket is "We want to recycle our money."
I was at the Committee Encouraging Corporate Philanthropy a couple weeks ago on an impact investing panel. I'm using this more as an analogy or as an illustrative example. It was an overflowing room, I think 60, 70 people in a pretty small room, because these companies are so interested in trying to recycle their capital in effect, getting some nominal return—well, maybe they're actually trying to get more than 10-plus percent return, which would be quite impressive.
But the challenge is: How does philanthropy play a role in that? To a certain degree, I think your question is valid, in the sense that there is a role for philanthropy and there is a role for executing on projects. Sometimes the line between the two is quite blurry.
So why is a company like Citi trying to, in effect, do both? Should it just get into the business of doing loans, and obviously a few other things, or should it also do philanthropy, or something even in between? Obviously, we are arguing for the latter, because what we are doing in the long run, strategically, is addressing in many respects a future market, and also an imperative given to us by governments and regulators.
We can't not do it. We are required in the United States, through the Community Reinvestment Act, to do lending in communities that we take deposits from. That's a whole other set of challenges.
It's a complex set of questions. It comes back to this efficiency issue and the marketplace. I do think philanthropy is distortive, and corporate philanthropy is even more distortive, and it's risky. So how do we deal with that? I think we just build and build on top of it.
The best way to do it is with transparency information and dialogue, what works and what doesn't. I think conversations like this help to add to that.
I'll close with that. I only have a few minutes to get through a complex series of questions. Maybe Brian has some more thoughts.
BRIAN WALSH: I think you're absolutely right in thinking about—the problems we face as a society are so great that it's no longer just up to the do-gooders to take them on.
So I think that in society we have three main sectors. We have the public sector, the government, that creates the enabling environment, the basic infrastructure, the basic social safety net.
Then we have the private sector, where it's all about financial value generation, creating products and services that meet the needs of consumers while employing workers and creating value for shareholders.
Then we have the social sector, which is this third sector, trying to create social value that meets the market failures that the private sector has created and picks up the slack where the government isn't there as well.
We need all three sectors working as effectively as possible, and all three sectors at full throttle. Within any society, within any time, there is a different balance between the role of those different sectors.
In the United States today, there's a drive towards a smaller public sector and a larger private and social sector. In Europe, there—well, they're actually going through a transition right now, but they had a more generous welfare state and perhaps a smaller social sector and a smaller private sector. It's up to each society to figure out how to get this balance right.
But I think one of the key challenges of our day is how do these sectors work effectively with one another and how do they interact.
Most people, I would say 90 percent of people, spend their careers in one sector. So they understand the dynamics and the challenges and the mores and whatnot of that one sector, whether it's the private sector, whether it's the social sector, or whether it's the public sector.
Maybe 5 or 8 percent of people spend their lives in two different sectors. Graham, you were in the social sector and how you're in the private sector, although you, like me, are kind of the social-sector guy in the private-sector company.
And there's a lot of people, certainly, who spend their careers in the private sector and then move to the public sector.
We have very few people who are trilingual, if you will, who have experience working in the public sector, understand the dynamics and the pressures of government and what that implies, who understand the social sector and the challenges of the nonprofit world, and also who understand the nomenclature and the behaviors of the private sector.
So I think that if we can encourage better insights from all three sectors and better dialogue between these sectors, I think we will go a long way towards solving a lot of our challenges.
MASHA FEIGUINOVA: Great.
I'm very keen to incorporate Sarah into this conversation.
Sarah Kroon Chiles is the vice president of strategic partnerships at Thomson Reuters Foundation, working to deepen the impact of the foundation's programming through partnerships and other initiatives. Before Thomson Reuters, Sarah was the vice president of SeaChange Capital Partners, a philanthropic network focusing on growth capital in the education nonprofits.
SARAH KROON CHILES: Thank you, Masha, and thank you all for being here. Thank you to the Carnegie Council as well.
I am very happy to finally be invited to speak because there have been lots of interesting points made as part of this discussion today. We have heard a lot about the trends in the sector and, really, just kind of the tip of the iceberg in terms of the rapidly changing environment around corporate philanthropy.
I am going to focus on the specifics of the Thomson Reuters Foundation. As Brian mentioned, I am very hopeful to get some great free advice from all of you as we look to expand some of our programs, one in particular.
For those of you not familiar with Thomson Reuters, we are a global information company. We were formed just about three years ago when Reuters was acquired by Thomson. Obviously, Reuters is in the news and journalism business, combined with Thomson, who provides information and database technology to many different professional fields, including finance, the law, tax and accounting, and health care.
We're a kind of legacy Reuters foundation, but we were formed upon the merger three years ago. We were tasked at that time from our then-CEO Tom Glocer to really work to develop initiatives that would reflect the whole company.
Kind of legacy programs that we had already up and running from Reuters Foundation included a vast set of programs around training journalists around the world. We currently run about 110 journalism training programs every year that cover issues from how to cover "follow the money" and uncover government corruption, to covering women's health issues, to climate change—you name it.
We also run the Reuters Institute for Journalism Research at Oxford University.
Reuters Foundation also runs AlertNet, a humanitarian news website. We have 25 journalists on the foundation staff itself.
We also, as Reuters Foundation, were a grant-making institution. Because we were very focused on the humanitarian aid community and working in conflict and post-conflict countries, especially directly following natural disasters, we did provide a lot of grants in those areas.
When our foundation CEO came on board, Monique Villa, she took a look at some of the grant reports that we were getting back from that grant-making and was very disappointed to look at the impact of donating blankets and the like immediately following natural disasters, and also did not see the direct connection to the business, to Thomson Reuters.
At that point, we re-imagined what the purpose of the Foundation was for. It was both, as Tom Glocer directed us, to bring these two companies together, Thomson and Reuters, and to assist in building an employee culture across those companies, but also to really look at what we do well as a company and think about how we could reposition that for charitable purposes.
We developed an idea around the fact that information itself is a form of aid that can have a greater impact than distributing blankets directly after a disaster. As part of that, we ceased our grant-making and really have become an operating foundation and a business unto itself.
Many of the staff of the foundation, of which there are 50 now globally, come from a mixed background of working, whether it be as journalists in different media organizations or from a business management background, to have moved into this corporate philanthropy sector.
To this end, we run a lot of different news websites that cover issues that we don't see covered as intensely as we'd like in traditional media outlets. So we cover, as I said, humanitarian aid issues. We now have the largest website covering those issues in the world. We also cover climate change, women's rights issues globally, and anti-corruption issues as well.
All of the news that we put out on our websites is also distributed through our Reuters channel. So it goes to Reuters.com and through the newswire as well.
Then we quickly turned out attention to the Thomson side of our business and needed to find a program that really leveraged the expertise of a lot of this information that we provide to other professions. One of our largest businesses is Westlaw, a company focused on providing legal information to lawyers, law firms, in-house legal teams, and the like.
We began really investigating what are the needs globally to expand the rule of law. We developed this idea for TrustLaw, which at the core is an electronic platform that connects lawyers from law firms and in-house legal teams with vetted NGOS, social entrepreneurs, and sometimes even governments who are in need of legal assistance who can't afford to pay.
We launched about two years ago with about 100 members. The service is free to all who participate. We're now at about 800 members in 140 countries. A member is a law firm, not a lawyer, so there are thousands of lawyers who are using the service.
We operate it as a business, as I said, so we really think of it as a service, with our clients and customers being both the lawyers as well as the NGOs and social enterprises that are accessing the network.
We work on all sorts of different pro bono projects, from organizational-level issues, HR, IP, what have you, to running large-scale cross-border programs that we think have the ability to really impact a field. Some examples of those are we are right now working in impact investing. My background is in social entrepreneurship and social finance, so we have been doing quite a bit in this space.
We are working with The World Economic Forum and Schwab Foundation to look at the regulatory environment for impact investing and social enterprise in 18 different countries, and we'll likely expand that to more.
We also on flow-of-capital issues have issued several different guides and reports on program-related investments to help clarify the tax and regulatory issues related to making these kinds of investments for foundations both here in the U.S. as well as in India, the UK, and likely in China.
I'm going to stop there with the description of the foundation as well as TrustLaw.
But just to tee up this discussion, TrustLaw has become much more successful, has seen such a high volume of usage, much more so than we ever thought. We have a limited budget at the Foundation. We are given our budget on an annual basis, just like Citi, although we were very lucky to have a three-year commitment this time.
You may be surprised to hear that our Foundation's budget is just at $8 million, with a portion of that actually coming from fee-for-service revenue. So we're challenged now by limited budget, limited staffing, as we have become a very truly global platform for connecting lawyers and NGOs. We need to bring on more people to service these connections and these projects. But at the same time, we are very entrepreneurial at the foundation, and we are looking to many of the other business lines at Thomson as to how we might expand and build on the success of TrustLaw.
This is one of my lead initiatives, is to figure out the feasibility of expanding and what that would mean for us. I'm interested to hear what these strategic minds may have to say on this question.
MASHA FEIGUINOVA: Fantastic. Thank you.
Just to get the discussion going a bit further, it's incredibly impressive that the Thomson Reuters Foundation was able to make the switch from being a grant-making foundation to an operating foundation. I would assume there were some challenges inherent in that. I was wondering if you could comment on that transition, perhaps using Westlaw as an example. Also, what kind of support did you receive from the business units, the challenges from the business units? And, now that TrustLaw has proven to be a success, what kinds of responses are you getting from the corporate side?
SARAH KROON CHILES: I'd say that it actually wasn't as challenging as you might expect to cease grant-making. Because most of our grant-making was around natural disasters, we were not providing the core funding to our grantees. Although the Red Cross, for example, most likely missed that grant money at times of disaster, as we saw in Haiti, they do continue to receive philanthropy directly following crises of that magnitude.
But I would say that we also as a company continue to support local organizations through business lines and local offices. So that is still continuing to happen. It's just not as strategic as it had been at one point through a central location like the Foundation.
But in terms of how the business lines look at TrustLaw, we are a very independent entity from the business. But this is an instance where we have just received tremendously positive responses from particularly our salespeople. This is a way to get the Thomson Reuters brand out to their major law firm clients and offer them different services that WestLaw has not traditionally offered obviously. We have been able to do some joint marketing and other things that have been tremendously beneficial to the business.
We actually have several people from WestLaw who work kind of on a pro bono basis with TrustLaw to help us with our marketing and access different relationships.
JULIA KENNEDY: What you bring up is something that has come up in other workshops that we've had, where an organization sort of hit the gusher in a way, and it's almost like a small restaurant that suddenly gets a lot of business.You'd think that would be a good thing, to tap into something.
This is something that iMentor has talked about at a past workshop—where a small restaurant sometimes hit this point when you get buzz and you have a line out the door and there are people wanting to get in on whatever service you're providing, whatever niche you've found that is a need that has been unmet. But then, suddenly, you have costs that come with that to be able to service all of these attorneys that want to provide pro bono services to the developing world.
I'm wondering if there are others around the table who maybe have in their experience hit on a gusher and then tried to figure out whether the answer is increased staffing, or is the answer honing and narrowing your mission and deciding "We're going to provide services within this ring fence," or really opening it up to a wide variety of people. We have so much expertise in the room, I'm curious if you can help us with this.
SARAH KROON CHILES: One thing is we have looked at forming different kinds of partnerships with other corporate entities who have a charitable interest in the same areas that we have.
For example, we've just entered into a partnership with General Electric to expand our anti-corruption and good governance coverage on our TrustLaw website, which is wonderful. We have been able to hire a top-notch, very seasoned journalist to ramp up our coverage of this and build out a network of freelance reporters really, truly around the world. I think that is one area where we can increase our resources and be able to attract experienced staff and build out the human resources that we need.
In terms of TrustLaw itself, it is an electronic platform, so it has some nice efficiencies in the model itself. It does mean, one thing that we have learned very quickly, that we really need to be in each of the markets that we serve, because the regulatory environment, the legal issues affecting the social sector in every country, are very different. So we travel very extensively and have begun to locate our staff in different hub regions around the world.
But I think at the core the TrustLaw model is rather efficient in how we can make these connections. Really the lawyers are the ones who are doing the hard work. We can assist in project management and also leverage our on-the-ground experience and networks to bring that to bear.
But in terms of what we are thinking about for future directions and expansion for TrustLaw, the obvious fit for us is to expand the professional services that we can provide on a pro bono basis.
To your point, Brian, I think there is a lot of interest now—it has been mentioned several times—in corporations across industries and sectors to actively engage their employees in service projects, particularly in skills-based service work, where they can put their expertise to bear on a social challenge.
I think the technology has already been developed and created. It would be about us building those networks of different professional services that we could provide there and looking at the Thomson businesses and the sets of customers that Thomson Reuters has.
The obvious industries for us to take a closer look at in terms of feasibility and interest would be financial services, tax, and accounting. We do have some products and services that are targeting the chief marketing officers and others within different companies, so marketing services may be an area we can go into as well.
PARTICIPANT: I'm Krishen Mehta from Global Financial Integrity, a Washington-based organization.
I guess from society's perspective one of our concerns is the best value that your foundations can provide is the influence it has on your corporate leaders, in terms of their change in behavior, how they view society. I think we as society view ourselves as a shareholder, though I'm not sure that is constantly always reciprocated from business's perspective. I think the more businesses engage in society in these various measures that you've talked about, the more it has a potential of affecting your values.
I'm wondering to what extent that is a tangible area that you also see as a significant area of influencing value, and that's how you evaluate yourself, and you are focused in that direction as an important strategic output of your efforts.
BRIAN WALSH: I can just speak from Liquidnet's experience. We are a values-based business. We are run on a set of core value that are very instrumental in how we think about all of our operations and all of our strategies as a company.
That comes from the very top of the leadership. We have executive buy-in at the highest levels. We have support from our board of directors. Our senior management team is very supportive of our corporate social engagement. So the inspiration comes from our CEO and founder, but the support comes across the upper echelons.
Then the passion comes from throughout the employee base. It has to resonate and be meaningful for the entire employee base.
I actually think that, because we are such a values-based business and that is how we think of our operations, that's how we think of our business models, it permeates throughout our culture. You see that, and that becomes an attracting mechanism for the types of people we want to work with us and the types of talent that we want to attract.
So it becomes a self-reinforcing mechanism, a feedback loop within the company, that we have this positive culture that is, yes, values-based when it comes to our corporate social engagement, but also values-based when we think about how we operate and all of our business lines. I think that you can't separate those two out.
I think they are two sides to the same overall equation of this is a company that is trying to do good in the world through its core business operations but also through its corporate social engagement. I think that is the best way to do it, that you can have a corporate social engagement or corporate philanthropy program influence the core culture of a company.
I think that's where the true value for corporate philanthropy or corporate social engagement lies, is how do you have that influence—not just this is an area where we do good work for society, and that's the department that's somewhere down the hall or somewhere on another floor or somewhere in another city, but it's integrated and embedded into the very notion of the company itself. I think that the true promise of corporate philanthropy or corporate social engagement, is to embed the values of giving back into the entire organization.
SARAH KROON CHILES: I think Thomson Reuters is a bit unique, in that we are about providing information and transparency in both news and markets and in that way promoting democracy. The flow of information is core to that. So I think what we do is really a part of the core values of the company.
Having said that, we work very hard at the foundation, as I said, to leverage the employees and their business lines on a lot of the projects that we work on. I think that it's a wonderful kind of win/win for everyone involved, because it's not only about professional development and also pride in the company that the employees gain from that, but there is also introduction to new markets, because so much of what we do is at this point of where the sectors are really blurred.
For example, our work on impact investing and looking at how you could make financial investments that achieve both a social return as well as a financial return, that's actually a new market for Thomson businesses to potentially move into at some stage. I think we are in many ways introducing the business to what may lie ahead for them and the demands that they could see from their current customers.
PARTICIPANT: Elena Pak, I recently joined United Way of New York City and previously served as the program director and director for corporate and individual engagement at the Atlantic Council of the U.S. in D.C. and New York.
I wanted to comment partially to Julia's question about resources and how to incorporate both different issues and tighten the mission. For United Way, I would say it is both. We definitely are not expanding our staff, but what we are doing is we are tightening the issues and the mission.
But my question to all participants is about corporate philanthropy and ethics and seeing how to engage different corporations and nonprofits in order to really address and make the social change we have all been talking about. We are all mission-driven and our missions are different.
I am working with very many corporate representatives of nonprofits, over 700 community-based organizations only in New York City. Very often I see a lot of repetitive efforts, repetitive efforts in terms of data collection, in terms of trying to change the rule of law. There are several companies, several banks or organizations, that are investing in a similar issue but it's not a combined effort.
My question is how to either organize the different media to elevate the discussion and really push it to the policy change, whether it's global, whether it's local networks, whether it's across the nation. Beyond the Global Compact effort, beyond the Corporate Relations Council, would you think or suggest any other medium where the companies we can see here could try to join their efforts?
BRIAN WALSH: We're talking about inefficiencies and redundancies in the nonprofit space itself. I think your specific question is slightly adjacent to that. It's more about how do we band together these different companies that are trying to effect change at the regulatory level.
PARTICIPANT: They have corporate perspectives, so corporate philanthropy is still biased. It is a wonderful effort, but—
BRIAN WALSH: I'll address that question first and then I'll answer yours.
I think that there are some great convening organizations already out there. Graham already mentioned the Committee Encouraging Corporate Philanthropy, which is doing great work in seeing the evolution of corporate philanthropy over time. They started to essentially just encourage companies to write checks, and they have evolved to recognize and celebrate and be a convener for companies to think about their broader capabilities and their broader rates of impact.
I do think that we don't even to necessarily start a new group. Maybe we can work with some of the existing groups that are already trying to do that important convening work.
But about the repetitive and duplicative efforts across the spectrum, that's one of the key challenges that Markets for Good is trying to address: How do we have better information about which organizations are doing which things, and what are their interventions, what are their strategies, what are their capabilities, what are their outcomes, what are their ultimate impacts?
How do we share that information? How do we find out where that information currently exists and try to combine that information from just raw data or research reports that are sent in a PDF or stored in a binder in a program officer's office? How do we unlock all of that data and take that data and turn it into meaningful information that can be used and become actionable information that can be acted on so that all the different actors in a social sector can make more informed decisions?
So if you are a nonprofit manager, you can make more informed decisions about how to manage your operations and how to improve your performance. If you are a funder, you can make more informed decisions about what to do with your capital and where to deploy your capital to have the best returns. If you are a beneficiary of nonprofit services, you can have more informed decisions about what resources are available to you in your community. If you are a government regulator, if you are in the public sector in general, you can have better information about which organizations are having the most impact that you can perhaps partner with.
We talked about $300 billion in philanthropy, but we don't as often mention the $1.5 trillion that comes from other sources of revenue for the nonprofit space, especially through government contracts for service.
So how do we unlock this data that is out there and turn it into meaningful information for all of these actors to make better decisions, more informed decisions, so we don't have as many duplicative efforts and that we have more of a value-driven allocation of resources, so that the highest-performing enterprises, the ones that are most effectively meeting their missions and achieving social good, are rewarded with more resources to accomplish their mission?
That's the ultimate goal of Markets for Good. As I said, it's quite ambitious, so we are trying to take it step by step.
PARTICIPANT: I'm Lynn Stekas. I'm a philanthropic consultant. Prior to that, for 23 years, I ran a corporate foundation. I have two comments.
First of all, based on your question and your question, I think many more companies around the country are doing philanthropic collaboratives, very much the way Brian was describing Markets for Good. Many of the food companies in the country are now working collaboratively to work on childhood nutrition and hunger, and they are actually reaching out to the government to do that as well. So there are a lot of collaboratives starting to happen among corporations where you would not have seen that in the past.
Collaboratives and partnerships are very difficult to develop and to keep on track and to keep ego and brand and all of that in check. But I think what I am seeing with the clients that I work with and what I'm seeing in the field is that that is where it is evolving and that is where it is changing, and I think for the good and for the better. So it is happening.
But I do think that the thing you have to realize is that those kinds of partnerships and collaboratives are hard to start and they are hard to maintain. You can't just throw money at them and say, even with nonprofit organizations, that you want them to collaborate. You have to really invest time and effort and energy in them. But they're worth every single penny and energy to do that.
That is what I am seeing out in the field. I would love to encourage that more in the practice that I do, in the collaborations that I work with with companies.
Second, there's a whole untapped resource that sometimes we overlook. Those are grad students, grad students in the law, grad business students, MBA students. And I don't mean like one day a week or a little project. I'm talking about internships that are two and three days a week for the entire semester, and giving them projects and supervising them and writing job descriptions that really do help you deal with some of the issues and solve the issues.
If it's a year-long project—I had grad students all the time in my foundation from Columbia, and I can't tell you what they did. Unbelievable! Plus then what you're doing is creating an entire cadre of young people that you are turning on to this sector, which I think is the best sector to work in. They're really talented.
So I would encourage companies to look at that in a very clear way and be very clear about a job description and responsibilities, and someone there to supervise them and mentor them in a way. I don't mean that they have to be mentored every single day. Let them run with it, but be clear.
I think people don't do that. I think that is an incredible source of talent and peopledom and will help you solve some of the issues within business.
I just wanted to make those two comments.
GRAHAM MACMILLAN: Just because you're privileged to be able to stir things up, I'm going to try and stir things up a little bit. [Laughter] To the point about collaboration and efficiency, particularly among corporates or corporate philanthropies—and corporate philanthropies are basically just the entity within the business —there are opportunities to engage and there are opportunities to steer very far apart from one another, and that can happen all at the same time.
I'll give you an example of where there is collaboration across industries around a particular issue: Create Jobs for USA.
Who went to Starbucks before they came in here this morning? The wristbands, right? That's Starbucks' big banner thing, $5 million, give or take.
Well, there are several other corporations—Google, Citi, I think Gap—that are all behind that, logically, because we are all supportive of creating jobs. But we all represent different industries, so we can all be in the same boat together.
It would be harder to do if it were all financial services companies. In financial services, any company, if it's a flagship program, does not necessarily want other corporations to be a part of it.
There are certain industry-building efforts where corporates love to partner. The Global Impact Investing Network is a perfect example, where you have all the major banks partnering together, trying to build an industry.
Or you have an example where you have a theme. Veterans, I think, is a perfect example of where it's agnostic by industry, by company, it's the right thing to do.
So there are opportunities to be collaborative and more efficient, but yet there are also forces that exist that make it impossible. It's so varied and across so many different areas where I think you can be optimistic, but I also think you need to be pessimistic to that point.
Hopefully that's not too discouraging, but slightly encouraging too.
PARTICIPANT: Thank you. I was thinking a little about the Reuters question, about your effort in anticorruption and the fact that you're in the information business. And you mentioned also your effort to promote democracy.
I suspect you have to be very careful how you thread that needle sometimes, because you could easily think of situations where you decide you want to have a certain social impact. I heard about an initiative in which I forget which company had put a satellite over a refugee camp in Sudan, I think it was.
GRAHAM MACMILLAN: But imagine with the resources that you have if you had an effort like that and at the end of every day you said, "Oh, look at that. We have pictures showing that three kids were killed, two women were raped, and four guys were killed on their way to picking up wood." You're not making any normative statements or judgments around it; you're just simply reporting it.
And you had other efforts like that around the world, where you literally just reported what was considered by the consumer of that information as being completely unbiased. You could have an enormous impact in creating social change, especially if you are aggressively at the same time disseminating that information through the social media.
I'm just wondering, is that part of what the foundation wants to do? How far do you want to go? You could see how it could be very effective, and you could create a real gusher. You could have just an absolute fortune. People would throw money at you from the State Department down if you could literally create regime changes in different countries. Is that where you want to go? [Laughter]
MASHA FEIGUINOVA: For the record, is Thomson Reuters involved in regime changes? [Laughter] What are your official comments on the record?
SARAH KROON CHILES: This is being recorded.
I don't know if could speak to the Thomson Reuters corporate strategy around that. But I know we are really neutral brokers of information. That is how we see ourselves. So we provide the information but we are not advocating for the change. But we, hopefully, are arming the advocates with the right kind of information they need to strengthen their case.
I also wanted to address your point. At the foundation, when we think about how we can leverage our news business and the Reuters principles, which are really core to the business and the foundation, we also look at how we can arm people. We want to shine a journalistic light on very important issues for the global community. But we also want to arm the affected populations with information that they need to advocate for their own rights and make change happen in their communities.
One initiative that I didn't mention is our EIS program, which is the Emergency Information Service, which we launched in Haiti just after the earthquake. We sent journalists to Haiti within 72 hours of the earthquake, not to report for the global community, but instead to report for the Haitians, for the affected communities, to provide the information that they needed, the actionable information, to access clean water, to access the health care that they needed, to send out via SMS where there were hospital beds available, where the food was being distributed.
I think we may not have the satellite systems operating yet through the Foundation, but we are doing what we can to get to local populations using different kinds of technology that are more accessible to them to provide them with the information, whether it be for women to really know their legal rights and to be able to use those to advocate for improvements in their own lives, or something else. That's really where we have been focusing our attention.
MASHA FEIGUINOVA: I see that we have just about a minute or two before the end of the session. Perhaps I could invite the speakers just to say a sentence or two on—and I'm going to borrow Brian's terminology—corporate social engagement, of where you see the trajectory of this work in the next, let's say, three, five, ten years, presuming that we do not have major shocks in our economic system, which is of course likely and predictable.
Brian, since I've stolen your terminology?
BRIAN WALSH: I just want to thank you, Masha, and I want to thank the Carnegie Council for inviting me here.
Just to sum up, I think that corporate social engagement is really re-conceiving a company's role in society and thinking about the full range of resources. Cash is not always king. Cash is nice and financial resources are nice, but I think that if we just focus on the financial contributions the companies make to society that we're missing a broader opportunity to engage the full complement of a company's resources to achieve social impact by engaging their employees, engaging their technologies, engaging their business networks, engaging their convening abilities, engaging their corporate voice, engaging their channels and distribution networks.
I think that there is enormous opportunity to tap into and leverage the resources of companies to effect meaningful, sustainable change.
GRAHAM MACMILLAN: Thank you, Masha. I really appreciate the opportunity, and to the Council as well.
I just think you're going to see more businesses doing what looks more and more like philanthropy. I don't think we mean grant-making, but operating in this particular space.
I think the phrase "corporate social engagement" is apt and appropriate, because it doesn't connote philanthropy. It connotes an engagement with a particular sector or set of constituents.
I also hope we see smarter corporate philanthropists. I go back to my point. Philanthropy, whether it be corporate, private, otherwise, individual, is very distortionary. The more that you guys and other efforts can create more efficient markets around this space is good.
But also it's a talent issue. I would like to see more businesspeople going into corporate philanthropy. That's another thing that we didn't talk a lot about, is the leadership of corporate philanthropy. Look where they're coming from. Ninety percent of the time they're coming from HR. That doesn't necessarily give them expertise in a particular subject matter.
That is changing, though. The more that that continues to happen, as well as new people come in who come from business or law or engineering, that I think strengthens the bench. More of that needs to happen.
SARAH KROON CHILES: I think, building on both those points, I'd say that the corporate philanthropy is starting to operate more and more like a business. Whether it's because of the talent that's coming in or it's because of the economic situation that we're in, I think we are more and more focused on leveraging a whole host of different resources to effect the change that we want to see and have a real significant impact.
I think we are going to see a lot more in terms of collaborative efforts to attack specific social problems or to improve an environment in a specific country or region.
Just as Bill Gates says that even all of his money is not enough to solve the problems that he is focused on, none of us has the resources, none of these institutions has the resources, to solve the very significant challenges facing society. We need to work together.
At least in my experience, I'm really seeing that happen. Whether it's cross-sector, governments working more and more engaging the private sector and the NGO community, or it's the blurring of the lines, where you need to innovate new business models to have an impact on these social problems so that we can use market forces for good, I think that's really where we are going to see the most change and the most impact.
MASHA FEIGUINOVA: Fantastic. Thank you very much. Thank you to Carnegie again.
JULIA KENNEDY: Thank you all for coming.
Thanks to Masha for moderating, too.