19 February 2019
Corporate donors are beginning to shift their focus, from funding a wide range of projects for extended periods, to carefully selecting fewer projects that are closely aligned with their core business and are contributing to systemic social change. Sound exit strategies are crucial for ensuring that the NPOs and projects from which companies withdraw their support remain sustainable, says Trialogue Managing Editor, Zyaan Davids Anter.
According to CSI and sustainability consultancy Trialogue’s 2018 corporate social investment (CSI) research, most companies (39%) had one or two flagship projects. While this more focused approach is leading companies to engage their flagship projects more deeply and to commit their support for longer periods of time, it also means that companies are withdrawing support from less aligned non-profit organisations (NPOs) and projects – many of which have enjoyed long-standing relationships.
If not adequately planned and managed, the corporate withdrawal of support from an NPO or development project can have dire consequences – impacting lives, eroding relationships with communities and damaging corporate reputations.
Developing an exit strategy
Ideally, a company should plan its exit from a project or NPO at the outset of its involvement. It should engage project stakeholders, preferably before the start of a project, to promote a shared approach to responsible exiting and, since development work is complex and unpredictable, a reasonable degree of flexibility should be built into the exit process.
However, Trialogue’s 2018 CSI research found that 28% of companies did not have exit strategies for any of their CSI projects and that more than half of companies (59%) provided 12 months’ notice, or less, when exiting projects.
An exit strategy should be clearly and consistently communicated and include time-bound targets, assigned responsibilities and a budget that accounts for the transition costs – such as the upskilling of NPO staff or community members. A well-planned exit strategy should also incorporate aspects of capacity building and knowledge sharing with the NPO and broader community.
If a company does not plan its exit at the outset of its involvement in a project, it should phase its exit so that the affected NPOs and communities have time to prepare and build up alternative sources of funding. An external evaluation can help to determine gaps that the company could potentially address before exiting.
C-SAFE, in a paper titled What we know about exit strategies – Practical guidance for developing exit strategies in the field, recommends asking the following questions to help define and articulate an exit strategy:
- What are the objectives of the exit strategy?
- What exit strategy is proposed for the programme or project?
- What will be the overall criteria for exiting?
- What exit activities (which are different from programme activities) need to be implemented to meet the exit criteria and to achieve the objectives of the exit strategy?
- What are the partner and stakeholder responsibilities that should be carried out when the exit takes effect?
- What are benchmarks for measuring the implementation and results of each exit activity?
- Who should monitor each benchmark and when should this monitoring take place?
- What is the budget for the exit strategy? Be sure to include costs for each exit
- activity, as well as for monitoring.
Financial exits that inspire transformative support
Just because a company is withdrawing its funding does not mean that it cannot continue to support an NPO in other ways. For example, it could leverage the skills of its employees, through its employee volunteer programme, to provide the NPO with specialised services.
The company can also play a key role in connecting the NPO with alternative potential funders – possibly from other parts of the business or business partners, such as suppliers or customers. Companies can refer NPOs that they can no longer support to other companies that they may be better aligned to. There is great potential in companies collaborating and communicating, towards a shared ecosystem of development.
Apart from finding new funders, companies can also encourage and capacitate NPOs to find other means of sustaining themselves, such as developing social enterprises. Companies can also facilitate forums and create safe spaces in which NPOs can share information about their projects and discuss challenges with one another.
The NPOs may find that they have commonalities or can provide one another with support. Grouping and leveraging smaller, synergetic projects can have far greater impact than when organisations operate in silos or competition.
Transitioning from corporate support to government partnerships
In 2012 EveryChild – an international childcare charity – shifted its funding from international partners and country offices to an alliance model in which the policy and advocacy work of the member organisations could be joined for greater leverage.
In the paper that explored the implications of this shift in strategy, titled Working at the Sharp End of Programme Closure: EveryChild’s Responsible Exit Principles, author Lucy Morris shared the organisation’s realisation that exits can also inspire creativity, generate new opportunities for staff development, catalyse critical thinking about development and help people to focus on the most sustainable activities, rather than continuing with the status quo.
This was exemplified when the EveryChild Malawi office conducted a situational analysis of children living on the street. Rather than the organisation attempting to develop a strategy in response to its findings, the analysis was used to inform a government-led national strategy for children living on the street, which stood a far greater chance of being sustainable.
To mitigate the social and corporate risks involved in withdrawing support from an NPO or project, it is imperative that CSI practitioners keep their intended impact front of mind and ensure that the implementing partners that they work with share this vision. Internal and external stakeholder interaction, open communication and transparency are critical for smooth transitioning and exiting that does not result in antagonism or conflict.
Key questions to gauge the success of an exit strategy include whether programme or project impact has been sustained, expanded or improved; whether the relevant activities have continued in the same or a modified format; and whether the systems that were developed continue to function effectively.
Sources: https://reliefweb.int/report/world/what-we-know-about-exit-strategies-pr...Working at the Sharp End of Programme Closure: EveryChild’s Responsible Exit Principles: www.intrac.org Exit strategies and sustainability lessons for practitioners: www.intrac.org
To read more: This information was sourced from CSI that leaves a lasting legacy in the Trialogue Business in Society Handbook 2018. To download the full Handbook at no charge, go to https://trialogue.co.za/publications/.