experiences with mining foundations, trusts and funds synergos march 4, 2010
TRANSCRIPT
Experiences with Mining Foundations, Trusts and Funds
Synergos
March 4, 2010
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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• Initiated by Oil, Gas, Chemical and Mining Policy Division of the
World Bank• Complements IFC toolkit (under development)
Research objectives1. Examine the range of foundation, trust, and fund mechanisms
used by the mining sector to deliver local benefit
2. Document their role and effectiveness in supporting sub-national (local or regional) development and sustainable livelihoods in the short, medium, and long term
3. Identify conditions for success and factors in failure
4. 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
• Desktop review of existing literature
– Foundation best practice– Research to date on mining-
related institutions– Information on individual
institutions -> review of sustainability reports/ websites
• Interviews with select foundation, trust, and fund representatives
• Technical review
Phase I
Scope60+ institutions in the developing world, or serving indigenous peoples in OECD countries, focused on local development
Phase II
• Additional desktop research
• Online survey of mining foundations, trusts, funds
• Country case studies: Peru, South Africa, Papua New Guinea
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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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Company-Driven
Multi-stakeholder
Government or Community Driven
Operational/ Implementation
Dev
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Ap
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Partnership
Donations/ Grant-making
Outsourced
Governance
Typology
Wide variation in structure and design of institutions, especially in terms of governance and approaches to
achieving development benefits
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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
Peru Aporte Voluntario, concession agreements
South Africa Broad Based Empowerment - trusts, equity shares
Philippines Minerals law – indigenous trusts
Australia Aboriginal impacts/benefits agreements
Laos Minerals law - trusts
Canada Aboriginal profit-sharing, equity trusts
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Emerging Trends (II)
• Regional, multi-site, multi-company institutionsWestern 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
• Obtaining, developing competent staff
• Operational efficiency/ effectiveness
• Financial sustainability
• Financial stewardship• Transparency &
accountability
Stakeholder Relationships
• Identifying need & defining objectives
• Governance • Community
consultation & participation
• Relationship with mine
• Government requirements
• Capacity building• Managing
expectations & assumptions
Operational Effectiveness
• Strategic/ effective selection of programs & projects
• Investment in sustainable livelihoods
• Monitoring & evaluation
Maximizing Impact
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Common Challenges/ Success Factors
Stakeholder Relationships
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
Company
Community Government
Foundation
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ChallengesStakeholder Relationships
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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ChallengesOperational Effectiveness
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
– 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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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?
Maximizing Impact
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Open Questions
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Open Questions
1. What has been the government role in promoting the use of these institutions and/ or their success?
2. 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?
3. How do women and other vulnerable populations participate in governance, project design and implementation?
4. How can institutions best build the capacity of stakeholders to participate in governance and execution?
5. What other dilemmas do institutions face in their relationships with various stakeholders? How can they reduce – or contribute to – community conflict or cohesion?
6. 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