Transcript Slide 1

Experiences with Mining Foundations,
Trusts and Funds
Synergos
March 4, 2010
Overview
• About the Project
–
Research Objectives
– Current Status
• Findings to Date
• Open Questions
• Opportunities for Collaboration
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About the Project
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About the Project
Context
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Initiated by Oil, Gas, Chemical and Mining Policy Division of the
World Bank
Complements IFC toolkit (under development)
Research objectives
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3.
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Examine the range of foundation, trust, and fund mechanisms
used by the mining sector to deliver local benefit
Document their role and effectiveness in supporting sub-national
(local or regional) development and sustainable livelihoods in the
short, medium, and long term
Identify conditions for success and factors in failure
Elicit lessons learned/ implications for companies, governments,
communities and civil society on the formation of appropriate,
effective, and impactful institutions of this kind
Emphasis on understanding the role of government;
potential to make policy recommendations
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Current Status
Phase I
• Desktop review of
existing literature
–
Foundation best practice
– Research to date on miningrelated institutions
– Information on individual
institutions -> review of
sustainability reports/ websites
• Interviews with select
foundation, trust, and
fund representatives
• Technical review
Phase II
• Additional desktop
research
• Online survey of mining
foundations, trusts,
funds
• Country case studies:
Peru, South Africa,
Papua New Guinea
Scope
60+ institutions in the developing
world, or serving indigenous
peoples in OECD countries,
focused on local development
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Findings to Date
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Historical Trends
1930s
‘Traditional’ corporate foundations -> philanthropy in
host communities
1970s
Large operational foundations -> national development
(Africa)
1980s
Focus on education & employees
Mid
1990s
Tri-sector partnerships & sustainable development
Dramatic increase in number of foundations, trusts and
funds since 1990: 27 established after 2000
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Current Picture
• 60+ institutions, with around 40 located in the developing
world – Asia, Africa, Latin America
• Most initiated by companies (large multinationals)
• About half tied to individual mine sites
• Most established early in mine life
• Evidence of regional variation in drivers and structure
(South Africa, India)
• No examples of foundations in aboriginal communities trusts, funds, equity shares
• From $<100k to $64 million in annual spend, with
endowments as large as $504 million
Part of a spectrum of ways that companies and
governments are trying to invest revenue from
mining effectively to produce development benefit
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Typology
Development Approach
Wide variation in structure and design of institutions,
especially in terms of governance and approaches to
achieving development benefits
Outsourced
Donations/ Grantmaking
Partnership
Operational/
Implementation
Governance
CompanyDriven
Multistakeholder
Government or
Community Driven
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Drivers: Why Foundations, Trusts, & Funds?
• Rising expectations about private sector contribution to
development as a condition for social license to operate
• Long term development projects
• Foster partnership/ collaboration
• Delivery of development programs in absence of other
institutional capacity
• Participatory, transparent, and accountable mechanism
for investment of resources for development
• Mitigate ‘resource curse’
Hypothesis: more opportunity for ‘shared’ ownership and
accountability between stakeholders than company or
government-only initiatives?
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Emerging Trends (I)
• Government use of legal tools (legislation, regulation,
concessions) to encourage establishment of
foundations/ trusts/ funds
Canada
Aboriginal profitsharing, equity
trusts
Peru
Aporte Voluntario,
concession
agreements
Philippines
Minerals law –
indigenous trusts
Laos
Minerals law
- trusts
South Africa
Broad Based Empowerment trusts, equity shares
Australia
Aboriginal impacts/benefits
agreements
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Emerging Trends (II)
• Regional, multi-site, multi-company institutions
Western Australia Programs
Mineral Foundation of Goa
• Maintaining, even increasing programs to
mitigate impact of site closures due to financial
crisis
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Common Challenges/ Success Factors
Stakeholder
Relationships
• Identifying need &
defining objectives
• Governance
• Community
consultation &
participation
• Relationship with
mine
• Government
requirements
• Capacity building
• Managing
expectations &
assumptions
Operational
Effectiveness
Maximizing
Impact
• Obtaining, developing • Strategic/ effective
selection of programs
competent staff
& projects
• Operational efficiency/ • Investment in
effectiveness
sustainable
livelihoods
• Financial
sustainability
• Monitoring &
evaluation
• Financial stewardship
• Transparency &
accountability
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Common Challenges/ Success Factors
Stakeholder
Relationships
Company
Foundation
Community
Government
Foundations/ trusts/ funds can address the
mutual interests and objectives multiple
stakeholders, but also serve as a space in
which conflict or tension between different
agendas can play out
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Stakeholder
Relationships
Challenges
Governance
• Traditional models of decision-making may not
be participatory or transparent
• ‘Elite capture’
Capacity
• Level of organization in community -> long term
vision of need
• Skills/ experience to effectively participate in
foundation governance or project execution
• Local government capacity -> exit strategy/
sustainability
Managing
expectations &
assumptions
• Community: short vs. long-term benefits,
concept of impact, familiarity with ‘foundation’
• Company: supporting social license to operate
vs. independence
• Government: degree to which mandates
structure/ approach, alignment with government
development plans
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Operational
Effectiveness
Challenges
Achieving Financial Sustainability
• Innovative models for trust funding and management
tied to project cycle, ‘sustainability’ of financial resources
• Long-term planning and management
• Leveraging resources
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Co-financing and fee for services in projects
Multi-company funding (including suppliers0
Bi-lateral funding
Few examples of foundations, trusts, funds that have been
able to attract public or private financing
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Maximizing
Impact
Challenges
Monitoring & Evaluation
• Infrequent use of baseline assessments to establish
needs
• Little formal re-evaluation of need over time
• Measuring program ROI
• Measuring long-term, cumulative, and regional or
national impact
Investment in Sustainable Livelihoods
• Focus on investment in basic services or education
• Little investment in economic development programs
aimed at creating alternative livelihoods -> why?
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Open Questions
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Open Questions
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4.
5.
6.
What has been the government role in promoting the use of these
institutions and/ or their success?
What are the benefits/ disadvantages of different models of
foundation/ trust/ fund ‘governance’?Of different development
approaches (operational, partnership, grant-making,
outsourced)? Are some more effective than others?
How do women and other vulnerable populations participate in
governance, project design and implementation?
How can institutions best build the capacity of stakeholders to
participate in governance and execution?
What other dilemmas do institutions face in their relationships
with various stakeholders? How can they reduce – or contribute
to – community conflict or cohesion?
How and when should foundation/trust/ funds objectives adapt
their to changing regional/ local development objectives?
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Opportunities for Collaboration with
Philanthropic Sector
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Opportunities for Collaboration
• Transfer of expertise/ best practice
• Qualified personnel
• Joint investment of resources for project
implementation
• Financial support
• Networking with donor/ foundation community
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Contacts
Julia Nelson
Manager Advisory Services
Business for Social Responsibility
415.984.3251
[email protected]
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