Category Archives: Private Sector Partnerships

Great cities in the making?

McKinsey & Co began a programme of research in 2011 entitled the Cities Special Initiative. One result of which is a report How To Make a City Great. The short video below offers the company heads a chance to explain their thinking on the project and developing cities around the globe in general.

McKinsey, despite their reputation for defense of naked capitalism and overwhelming shareholder benefit, have a strong record in fostering participatory public sector projects. This report nicely captures some of the philosophy around community and public sector engagement, as well as clearly recognising that pure economic growth in the city or city region does not always automatically deliver social justice or environmentally friendly development. It is refreshing to hear it.

We have recently published an article arguing that the social business sector, or the general economy, may be entering a new social business modality…a revolution in approach, if you will. Read more about community economics here.

It is doubly refreshing to see scions of corporate advance taking a collaborative, community engagement and environmentally concerned tack in this report. The report offers a number of key concepts that cities around the globe embrace, in order to become more economically and socially successful than their peers.

  • Achieve smart growth
  • Do more with less
  • Win support for change
Making  a great city anywhere...
Making a great city anywhere…

Achieving smart growth is based on four key principles, adopting a strategic approach to development, planning for change  with the environment a key part of that change, and delivering work that insists on opportunity for all.

Download the report in pdf format here

Cities do more with less when they manage project expenses with real vigour and rigour. When partnerships are fully explored with realistic outcomes and humanity in their engagements. They make accountability for the project investment paramount and finally, embrace new technology in data, communication, marketing and collaboration.

Cities, the report argues, do best in winning support for change when they build projects and sub-projects around a personal vision, affording charismatic ambassadors for the work to lead from the front. Building teams that are committed and skilled in their areas of expertise, whilst still making all accountable are key drivers to success. And finally, although we have heard this many times in the past in a variety of settings – strive to forge stakeholder consensus, listening, reflecting and empathetically working together to achieve city wide advance.

The report offers some great examples of how fresh thinking can triumph. The city of Toledo, whilst only ranking 182nd in a Forbes list of Best Places for Business in the US, still managed to attract $6 million of Chinese industrial manufacturing investment recently, by sending their committed and persistent city mayor to China three times.

Conversely, the Chinese city of Chengdu, regardless of the rigidity and conservatism of regional government in the country, has a dynamic mayor who has changed the department of Migrant Control, a large issue for Chinese cities, into a department of Migrant Integration – with a clear mandate to increase uptake of education, health resources and community resources – adding to the expanding city’s human capital and enterprise creation.

These issues of quality of life for residents and for economic growth really matter. Urbanisation is not diminishing, it is increasing. By 2030, 5 billion people, 60% of the world’s population will live in cities. 1 billion live in slums, so that not only is affordable housing a key priority, but economic growth – ethical, environmentally careful and socially inclusive – are also compound elements of a great city.

We think the ‘talking heads’ at McKinsey are, in the short film above, describing a city based on the principles of social business. They are just not saying so. The global examples offered in the report text are wholly contingent with the idea of enterprise creation, albeit with social equity and quality of life as an admixture of success.

Also interestingly, if we take the key thematic lines of the report about doing more with less, accountability and good, practical team work across development agendas, we think there is a template for rural communities emerging, who could use these key philosophies to enhance non-urban employment, communications and technological access too.

Which community would not want that, urban or ex-urban?

The SEEM Team – thinking about good ideas

Ethical business with a social dimension...
Ethical business with a social dimension…
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Mobilising private capital – the Canadian experience

Sometimes looking over the wall at what your neighbours are doing to the landscape of their garden can give you ideas for your own. In this short article we have looked across the Atlantic Ocean to see how, in the last couple of years, the Canadian Social Finance sector has responded to community and governmental demand for increased active social investment from the private sector.

Encouraging social investment: Canada
Encouraging social investment: Canada

Towards the end of 2010 the Canadian Task Force on Social Finance issued a major report – Mobilising Private Capital for Public Good. The Premier of Ontario, Dalton McGuinty, defined the work as being to ‘…help social enterprise and social purpose business adopt social innovation business models; and develop recommendations to enhance public and private sector support for social finance to unleash its full potential in Ontario‘.

Download a pdf copy of the report here

The report offered seven recommendations to the burgeoning Canadian sector…

1. The public and private foundations should aim to invest at least 10% of their capital in ‘mission-related’ investments by 2020. They should report annually on their progress.

2. The country should establish an Impact Investment Fund, supporting existing activity and encouraging increases in scale and new fund creation for the sector. Regions with no fund should be encouraged to create one.

3. New bonds and legislative change should occur, to foster and incentive flows of private capital tot he social finance sector.

4. Pension funds should deploy their assets into social investment, with government ensuring that the pension funds are mandated to do so, and to offer pension Funds incentives to balance and mitigate any additional risk.

5. Policy and regulation should change to support social revenue generating activities in the charity and not for profit sectors.

6.Tax incentives for social investing should be exploited, encouraging capital to be channeled to social enterprises offering maximum social and environmental impact with their activities.

7. Business development programmes, training and business support initiatives from central government should be tailored to specifically engage with social businesses and not just ‘mainstream’ SME organisations.

Whilst it can be argued, looking at the Canadian shopping list, much work of a similar nature has been started in the UK. However, the push towards incentivising pension funds, delivering mainstream flexed business support directly to the social sector and the adoption of a very broad and generous tax incentive led attitude to social impact investing would add new dimensions of transformation to the UK sector.

The report, Mobilising Private Capital for Public Good, develops the recommendations above and offers examples and capital forecasts for their deployment. Interestingly, the outputs recommended were assessed in a follow-up report one year after publication.

After a year - what happened? Canada
After a year – what happened? Canada

This action and output summary, Measuring Progress During Year One, shows that some 50 million Canadian Dollars (CnD) of new mission investment had been generated by the private sector. New government and private fund partnerships had created 284 million CnD of additional impact related investment, with some 215 billion CnD of assets under management by pension funds who are now signatories to the UN backed Principles for Responsible Investment.

Download a pdf copy of the report here

The follow up report highlights some achievements and illustrates how the Canadian debate is starting to have a transformational effect of the country’s social impact investment landscape. In the final analysis there is still huge opportunity in this dynamic economy to take the social investment message forward.

In concluding the report illustrates a late 2011 survey on SME take up of government backed services for the SME sector. Only 5% of the SME survey clearly identified themselves as having social outcome considerations. 93% of the survey cohort expressed ‘ambiguity and  confusion’ over social investment issues. With 2% of the government services used by those surveyed explicitly excluding non-profits and the social sector.

Canada has a long and successful history of not for profit and social impact development. These reports show that even with history, public opinion and buckets of radical thinking there is still much to be done.

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Ethical business with a social dimension...
Ethical business with a social dimension…

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