What is the Private Sector’s Approach to Global Development in the Trump Administration?

Author: Michael Sweikar and Melissa Paulsen

A roundtable discussion at the 2017 Notre Dame Global Pathways Forum.

Written in response to roundtable conversations from the 2017 Notre Dame Global Pathways Forum.

The private sector has continued to take on more of a role in helping to address global development challenges in recent years. In fiscal year 2015, the U.S. Agency for International Development (USAID) had more than 360 active public-private partnerships with leveraged commitments of $5.9 billion, and now over 90 percent of financial flows from the United States to the development world come from private sector sources.  But what will be the private sector’s role in global development in the new Trump administration? 

This question, among many others related to engaging the private sector in global development work, was discussed in depth on April 24, 2017 when NDIGD convened a group of stakeholders in Washington, D.C., to discuss recommendations for the next generation of public-private partnerships.

NDIGD has played a part in convening a variety of actors to discuss shared values in public-private partnerships and examine multifaceted solutions that work for all stakeholders since its founding in 2011. Through discussions and dialogue with leaders from non-governmental organizations (NGOs), universities and government, including from USAID, the Overseas Private Investment Corporation (OPIC), the U.S. Department of State, TechnoServe, Catholic Relief Services, International Justice Mission, AVSI, FHI360, Mercy Corps, and others met with corporate representatives from companies such as Coca-Cola, Accenture, IBM, Booze Allen Hamilton, Arco Murray, GE,  Inovateus Solar, Boston Common Asset Management, Cummins, and others. 

Over a number of roundtable discussions, business, government, NGOs, and university stakeholders highlighted 10 important themes for partnership with the private sector that will continue to be critical during the Trump administration. 

1. The private sector will play a stronger role in global development under the Trump administration.

Private sector partnership is not going away—over the next four years, the private sector will be looking for more strategic partnerships to build their reputation and grow business. Despite concerns about cuts to the federal budget for foreign aid programs, many companies plan to remain steadfast in their efforts to support global development. The private sector will likely continue to expand its role because it benefits their new employee recruitment, staff retention, and expansion into new markets, moving from the paradigm of corporate social responsibility to one of shared common value.  

2. There is still a substantial need for government involvement in partnering with the private sector. 

Even if the private sector’s role in global development continues to expand, there is a clear need for significant government involvement with the private sector. Even when not leading, government can help push companies toward more rigorous monitoring and evaluation for global development efforts. Government also provides substantial networks, technical expertise, and can serve as a catalyst for building partnerships between local governments and global development actors. 

3. There is much more to be done in order to measure impact with the private sector.

The private sector has many interests related to its role in global development, including marketing their brand. In most cases, the private sector focuses on measuring outputs, instead of measuring impact in global development interventions, using impact evaluations. There are a variety of reasons for this, including cost and the potential for negative results in impact evaluations that may not help brand image goals. Companies that have managed to show positive impact through rigorous impact evaluation of their programs should be highlighted for these efforts. Their efforts can lead to additional companies moving in this direction.  

4. Silos still limit innovation in the private sector.

Silos can still be a barrier to innovation in many companies since engineers, accountants, scientists, sales teams, and the like are not always able to interact on a regular basis. Companies can help overcome this barrier via partnerships with other businesses, NGOs, government, and universities that require cross-cutting interaction. Partnerships with university programs such as “Integration Labs” and other mechanisms can present unique opportunities for companies to overcome their silos and better innovate.   

5. Government funding under the Trump administration should not limit innovation.

There has been considerable movement by USAID and other federal organizations in the past year to provide funding opportunities that promote game-changing innovations through USAID’s Global Development Lab and other mechanisms such as Development Innovation Ventures, Global Development Alliance grants, and unique opportunities to co-design with government. The work of USAID’s Global Development Lab should expand and be leveraged to consistently offer the ability for USAID and its partners to develop innovative solutions that can provide leapfrog solutions in development. 

6. Design thinking is becoming a preferred approach.

Within the private sector, NGOs, and academia, the design-thinking approach to project development is gaining more traction. Implementers realize that local “culture” and local stakeholder buy-in in developing countries is critical to achieve sustainability, so using a design thinking approach can be most effective in keeping the end-user in mind from the beginning of project planning and invested throughout the project life cycle.  

7. It is still challenging to measure the social impact side of impact investments.

One of the biggest challenges in impact investing is a lack of clear, consistent and easily identifiable social metrics to complement the more obvious financial metrics. There is no consensus in the impact investing community as to where the appropriate balance lies between return on investment and social impact. The approach for most organizations is to focus investments in institutions that can provide a high return but are providing goods/services in areas that are “seemingly inherently” impactful in terms of social return. The private sector, and others, want better approaches to measure social impact and determine how it balances with the return on investment. 

8. The Sustainable Development Goals (SDGs) will continue to be a hot topic of conversation for the private sector throughout the Trump administration.

In 2015, all 193 countries signed on to the United Nations Sustainable Development Goals (SDGs) for 2030, setting a broad and bold agenda for reducing poverty, promoting inclusive prosperity, and sustaining the environment. Regardless of the approach that the Trump administration takes to global development, it is clear that the private sector is keen on connecting their sustainability efforts to the SDGs. It also is clear that the SDGs will not be successful without a strong commitment from the private sector. For example, in the area of renewable energy, current pilots are trying to better compute returns for potential investors in order to attract financing from the capital markets that will be necessary to achieve affordable, reliable, sustainable, and modern energy for all (SDG #7).  Over the next four years, plan to continue to see companies that highlight their global development efforts in connection with the SDGs.

9. Impact investing has the opportunity to drive new and innovative sources of funds for development projects.

Well-known organizations like Mercy Corps and Accion have created their own seed-stage funds, whether within the fintech, agriculture, health, or a myriad of other sectors. Private corporations are looking beyond pure philanthropy and making blended investments. 

10. Social enterprise can serve as a bridge between the traditional nonprofit and for profit sectors.

Today’s development challenges require innovative business models, and the public and private sectors are redefining boundaries. Nonprofits are establishing for profit subsidiaries and for profits are no longer simply creating foundations. Social entrepreneurship will be no more constrained under the Trump administration than the ingenuity and resilience of the entrepreneurs determined to solve these seemingly entrenched problems. 

Michael Sweikar is the executive director for the University of Notre Dame Initiative for Global Development (NDIGD) — an integral part of the Keough School of Global Affairs at the University of Notre Dame — which promotes human development and dignity among people worldwide through applied innovations, impact evaluation, education, and training that help build just and equitable societies.

Melissa Paulsen leads the Education and Training Division for NDIGD, working with faculty to develop interdisciplinary approaches to education and training programs related to global development needs. She is also a concurrent assistant professor of the practice in the Keough School of Global Affairs.