Inclusive Development: making markets work

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Inclusive Development making markets work
The problem 65 of the worlds population, over
four billion people, still live on the equivalent
of less than 4 per person per day. The
revolution in global economic growth has failed
to serve the needs of this population. The U.S.
continues to be ranked as the most impoverished
of all developed nations.
The debate Top-down versus bottom-up approaches
to inclusive development, meaning economic growth
that benefits the least advantaged populations
The future Ending the divide between top-down
and bottom-up enthusiasts financial
institutions, corporations, international
organizations, governments and social ventures
collaborating to find innovative ways of making
markets work for the poor
The Project Create opportunities for GSB students
to participate in collaborative initiatives
between the public, private and non-profit
sectors for developing innovative approaches to
inclusive development
Focus Area 3 Cross Sector To provide basic
services via collaboration
Focus Area 1 Financial Markets To increase
access to capital and fund development causes
Focus Area 2 Corporations To invest in human
capital and institutional capacity
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Deliverables to GSB students
Have an idea for a speaker, event, or project?
Please get in touch with Stacy Taylor at
taylor_stacy_at_gsb.stanford.edu

• Column in The
• Literature Column on local and global inclusive
  development initiatives in The Reporter
• Speakers Partnership with Stanfords Center for
  the Study of Poverty and Inequality to invite
  practitioners to campus
• Connections with other fields Partnerships with
  GSB clubs to organize group discussions on the
  intersection between their club interest and
  inclusive development

• Field trips Excursions and career treks to local
  corporations and organizations that participate
  in inclusive development
• Projects Opportunities to consult with local
  organizations on development projects
• Class Single-credit class on the intersection
  between the private, public and non-profit
  sectors in the pursuit of development goals

Awareness
Building connections skills
Action

• Networking Networking sessions with social
  entrepreneurs and other practitioners in this
  field
• News and updates Distribution list with upcoming
  events and career opportunities
• Conference on skill-building Day-long series of
  workshops on applying business skills to
  development purposes across a myriad of
  professional fields including finance, corporate
  management and marketing

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Financial markets increasing sustainability of
poverty alleviation initiatives
Our focus
Why are financial markets important?
Increasing the flow of capital towards
development projects by using the financial
markets as a means for the broader public to
invest in development initiatives.
Financial markets represent an efficient and
substantial source of funding that has yet to be
channeled towards alleviating poverty in a
meaningful way. However, the potential is there.
Financial markets can be a sustainable means of
funding projects, companies, non-profits, and
social ventures focused on alleviating poverty.
Case study1
Calvert Foundation The Calvert Foundation
creates and sells financial products to investors
whose capital is pooled to provide low-cost loans
to social enterprises focused on alleviating
poverty all over the world. Calverts portfolios
focus specifically on Microcredit, Affordable
Housing, Small Business Development and Social
Innovations. Through its flagship product,
Calvert Community Investment Notes, Calvert has
been able to return up to 3 interest to
investors. Calverts notes are available for
purchase directly from Calvert or through
Financial Advisors.
What happens today?

• Public Finance departments within investment
  banks raise tax-exempt financing via the
  financial markets for development of public and
  nonprofit-sector infrastructure projects (i.e.
  Public schools, community centers, highways,
  etc.)
• Public Equity Markets access to equity markets
  is a far reach for most social enterprises and is
  a very new concept to investors. However, Equity
  Bank, a microfinance institution in Africa,
  successfully IPOed Nairobi Stock Exchange in 06.
  
• Low interest bank lending to social ventures and
  non-profits. Today, the majority of these loans
  are not sold to the broader public as notes and
  bonds.

1 www.calvertfoundation.org
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Corporations expanding economic opportunity
Our focus1

• The four ways in which corporations expand
  economics opportunity
• Creating Inclusive Business Models
• Developing Human Capital
• Building Institutional Capacity
• Helping to Optimize regulatory and policy
  frameworks, as well as business norms, to make
  the economic system inclusive of the poor

Why should corporations make inclusive
development a priority?
The prominence of todays global market economy
puts corporations in a better position than
governments to engage disadvantaged local
citizens.
What happens today?
Case studies1

• Case studies1
• Nestle and UNDP in Pakistan trained 4,000 women
  in rural Pakistan in sustainable livestock
  management and dairy production. Also established
  institutionalized , collateral-free credit and
  savings facilities.
• Coca Cola Sabco in East Africa Traditional means
  of distribution were costly and ineffective. In
  response, CCS designed a distribution system of
  small, locally-owned distributors which ensures
  that the the profits of The Coca-Cola System
  value chain are shared across a broad
  cross-section of the local population.

• - Corporations engage in Corporate Social
  Responsibility initiatives ranging from nonprofit
  donations to encouraging employees to volunteer
  to sponsoring social causes.
• Corporations adopt inclusive business models
  that benefit local economies and local employees.
• Corporations actively engage in knowledge and
  technology transfer and address institutional
  barriers to development.

1 FSG Social Impact Advisors, The Role of the
Food and Beverage Sector in Expanding Economic
Opportunity, 2007
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Cross sector approaches to creating access and
opportunity
Our focus

• Social enterprises that achieve financial
  sustainability while serving a social mission
• Public , private, and nonprofit sector
  collaborations to provide comprehensive,
  community-based programs for social and economic
  sustainability.

Why do we need cross-sector collaboration?

• It is true that economic growth is the fastest
  way to alleviate poverty. But poverty is more
  than a lack of income it is the inability to
  pursue opportunity and to fully participate in
  society. Hence, the existence of basic
  institutions such as education, health,
  representation and transportation, are integral
  to peoples ability to partake in economic
  growth.
• It is difficult for any one sector the public,
  private or nonprofit, to address this issue
  alone, as their spheres of impact and influence
  are limited. People are beginning to realize
  that a sustainable solution to poverty lies in a
  collaborative approach across the sectors. As a
  result, in communities across the world, state
  and local governments are working with local
  businesses and non-governmental organizations to
  implement a comprehensive approach development
  which targets institutional capacity and economic
  opportunity simultaneously.

Case studies

• The Scojo Foundation of New York encourages the
  development of small businesses by hiring and
  training vision entrepreneurs to sell
  eyeglasses in rural areas around the world.
• REDF of San Francisco is an investment fund
  investing in social enterprises (profitable
  businesses owned and operated by nonprofit
  organizations) that employ and offer life-skills
  training to low-income communities. As a result,
  REDF operates simultaneously in the business and
  social service sectors.
• Goodwill of San Francisco partners with
  Californias welfare-to-work program to run
  several for-profit enterprises. This enables
  them to maintain a triple-bottom line 1.) Value
  of Human Capital 2.) Environmental
  Sustainability and 3.) Economic Sustainability.