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From corporate partnerships to wage inequality: The ethics of NGO funding

From corporate partnerships to wage inequality: The ethics of NGO funding

Accumulate, accumulate!

A remarkable sea change has taken place in the world of activism. What were once grassroots movements have blossomed into huge transnational institutions, concerned with professionalism, branding and most of all: money. As a result, the likes of Save the Children and Amnesty International now have more in common with corporations like Apple and Coca-Cola than they may care to admit.

The benefit of such NGO corportisation is clear: much like their corporate funders, international NGOs are now capable of raising formidable amounts of money. In 2013 alone, World Vision bagged an impressive $932 million whilst Amnesty secured $324 million from a $112 million fundraising budget. But as the lines between the private and non-profit sectors have blurred , a number of bad corporate habits have been adopted.

Indeed, the social costs of these immense funds have been steep: dubious investments, dodgy partners and unpaid interns are all everyday elements of corportised funding strategies.

These strategies have been a boon for for projects in need of funding, but what has been sacrificed along the way?

Business as usual

Let’s not beat around the bush. The private sector is undoubtedly an excellent source of immense wealth–and potential donations. As former World Wildlife Fund-Canada CEO Gerald Butts eloquently put it, “Coke is literally more important, when it comes to sustainability, than the United Nations”. No huge surprise, then, that corporate-NGO partnerships have spread like wildfire. Through such deals, charities have raked in colossal amounts, with WWF netting $20 million from Coca-Cola alone. UNICEF has been one of the keenest advocates of this approach, bagging $142 million from over 200 major corporate partners, including the much-criticised deal with one environmental champion to celebrate “McDonald’s World Children’s Day“.

Whilst the benefits of such partnerships have been rightly recognised, certain organisations’ choices of partners have raised some eyebrows. Take retail giant Walmart, notorious for its supply chains that exploit women and young girls in Asia and its involvement in the 2013 Rana Plaza disaster that killed 1,129 and injured 2,500 in Bangladesh. With this is mind, Wal-Mart makes a strange partner indeed for an NGO like Save the Children, which claims to stand with marginalised people around the world.

It could be argued that the access to corporate boardrooms that such partnerships provide is key to improving business ethics and thus driving social change. But as documented in the seminal book Protest Inc., one of the net effects of corporate funding has been a dampening of NGOs’ criticism of big business. The more NGOs have embraced the corporate lifestyle, the less they have challenged their new partners. Save the Children’s partnership with legendary corporate criminal GlaxoSmithKline marked a palpable shift away from activism: STC previously campaigned against GSK after it blocked generic ARV access for millions of AIDS patients in Africa. More recently, the organisation’s U.K. branch dropped a planned campaign on fuel poverty, for fear of damaging a partnership with energy giant British Gas worth $2.27 million. This plays into a worrying trend where funding trumps all else, as corporatisation weakens activism and empowers big business.

Inequality begins at home

Vast sums of money are not the only trait NGOs share with corporations. Many organisations have now taken on the traditional top-down corporate structure, with a well-paid CEO perched atop a pyramid structure with a slew of volunteers and unpaid interns at the bottom.

As inequality slips into vogue, more and more NGOs have made it a focus of their campaigns. Leading the charge is Oxfam, who regularly releases reports condemning the rich elite’s vast share of wealth. Oxfam America President Raymond Offenheisen often speaks candidly on inequality, yet in 2013 he himself received payment of US$437,699 from the charity. According to an estimate from Forbes, this salary places Raymonds quite comfortably in that top 1% Oxfam so often talks about. This is no isolated case–research shows a 60% increase in the number of CEOs at U.K. aid organisations earning six-figure sums in the last three years.

Meanwhile, it’s quite a different story for the thousands who volunteer for such charities. Whilst many of them may not necessarily be seeking employment, those in need of paid work are routinely exploited. Many organisations, for example, are enrolled in the British government’s controversial workfare scheme, which forces job seekers to take weeks of unpaid work experience or face benefit sanctions. Likewise, the unpaid internships offered to graduates by many NGOs are nothing short of exploitative in a time when social mobility in the U.K. is at its worst in decades and young Americans face record levels of student debt.

Nor does paid work with charities necessarily provide a secure livelihood. Ironically, employment in fundraising at organisations like Plan, Amnesty International and Friends of the Earth is managed by a vast network of recruitment agencies and often pays less than a living wage. Whilst the top dog at the British Red Cross can bag over $300,000, some of those at the bottom of the pyramid are paid the equivalent of just $10.50 per hour in London, one of the world’s most expensive cities. Worse still are commission-based roles, used by respected organisations like VSO, through which fundraisers make less money if they miss their targets, forcing them to rely on high sales to make ends meet. This begs the question: are these disparities in pay undermining the fight against inequality?

None of this criticism seeks to slam the work NGOs do. After all, these fundraising methods are simply a way of generating as much money as possible–they’re a means to an end, and a noble end at that. But can dubious corporate partners and the exploitation of young people be justified because it’s all for a good cause?

In a time when U.K. donations are at their lowest in years, charities must confront these issues and set an example for the causes for which they are fighting. As former head of press at Save the Children Dominic Nut remarked, “The quest for money is beginning to destroy the mission.”

Featured image shows the exterior of a typical Walmart store. Photo from Walmart.

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Tom Jarman

Consultant at Zimele UK
Tom Jarman works for Zimele UK, a small charity in Wales, and blogs about international development at www.theslam.org

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9 thoughts on “From corporate partnerships to wage inequality: The ethics of NGO funding

  1. […] corporatisation of NGOs is now a well established phenomenon. Corporate partnerships, together with generous grants […]

  2. J.

    *sigh*

    You know, I love hating on CSR as much as the next crabby aid worker. But I thought this article was actually quite poorly-focused.

    “Whilst the benefits of such partnerships have been rightly recognised, certain organisations’ choices of partners have raised some eyebrows.”

    Eh? You mean some people are flirting? If you’re going to write stuff like this, you need to follow through with the deal-blow: “Corporation X is evil, and any NGO who accepts their funding is a minion of evil.” Or, failing the death blow, something someone in the real world can actually use: “Any corporation who meets criteria X, Y, and Z, is by definition, evil, and any NGO who accepts their CSR funding is the same by association.”

    In 2015, the issue of INGO CEO salaries is beyond tedious. I would agree that an NGO exec salary in excess of $300k/year sounds excessive. But compared to what? What is an acceptable range? Below what threshold would this complaint simply cease to exist? Everyone complains that NGO CEO salaries are too high, but no one seems willing to say what they should be. (People need to) either articulate a standard, or get off the air, on this point.

    “None of this criticism seeks to slam the work NGOs do.” Of course it is. You’ve at least insinuated that Save The Children exploits garment factory workers in Bangladesh via their funding relationship with Walmart. And in general, the “what NGOs do” is directly affected by “how they’re funded.” (Even you seem to be arguing this point.) Look, if you want to be controversial, or even just contribute to the discussion, make a statement that can be agreed or disagreed with: “Corporate funding for humanitarian aid and development necessarily erodes an organization’s ability to provide effective, sustainable programmes based on evidence of need…” Otherwise, it’s just verbose hand-wringing.

  3. […] Wirtschaftsunternehmen ist lange schon Thema im internationalen Diskurs. Bei Weltsichten ist der kürzlich auf WhyDev erschienene Beitrag von Tom Jarman nun auf Deutsch veröffentlicht […]

  4. […] in the blogosphere, but you can see bits of it at The Development Intern, and a few other places. This piece on WhyDev is a good specific example. While the author mainly juxtaposes this phenomenon against the recent […]

  5. Really appreciated reading this article, particularly having been a street fundraiser myself for a large organisation for a while and seen the impact of fundraising targets on individuals (and how this led good people to fraud) and the brutalness of hiring often young, quite desperate, staff who were most likely to be let off in the first week. However, they certainly treated staff a lot better and were more forgiving than the fundraising agencies that many charities employ.

  6. Great article. Seems like an extension of an older debate regarding NGOs relationships with governments. Do you work with a corrupt government if they can give you access to more people, even if they water down your product? It’s a problematic choice.

    1. I would make a distinction between the state and private sector in that working with governments is very important for successful development projects. Corruption continues to be an issue but it doesn’t necessarily make it impossible to have a productive relationship with local authorities.

      There are some great articles out there which challenge our perceptions of different forms of corruption in the world, for example see http://tinyurl.com/np5nvkd and http://tinyurl.com/c8xupoo.

  7. I’m very interested in funding models of NFP’s.. it seems there is a great need for innovation and restructuring or a reinvisioning of how such businesses run. They end up being completely unsustainable or at the other end of the spectrum, hypocritical.

    Social Purpose Business models seem better able to maintain their independence which creates more sustainable impact. Relying on government and charity is far too risky imo for social enterprises. I like that you raised charity donations are decreasing, it’s important for all traditional NFPs to build the precarity of the whims of funding into their long term strategy

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