Partnerships with the private sector are at the forefront of today’s development priorities. Many major bilateral and multilateral donors have an office for private-sector partnerships or plan to open one. At the same time, multinationals across sectors are approaching donors to establish development alliances in emerging markets.
Despite the increasing prevalence of public-private partnerships, not much is known about their higher-level results. For monitoring and evaluation professionals, this gap represents a significant challenge: How can we create a meaningful system of M&E for public-private partnerships?
When partnerships are measured, those measures often focus on inputs and outputs – such as the number and value of partnerships signed – rather than outcomes and actual impact. In other cases, partners use unmeasurable indicators, such as “empowering women,” and therefore cannot collect reliable data, prompting some to declare that measurement in these cases is impossible.
Veterans of development work recognize these M&E challenges from traditional non-partnership projects. But partnership M&E carries an added burden: Not only showing development impact, but also proving the “value add” of working in a partnership.
Leaders across sectors are now raising critical questions about partnerships, such as: “What is the bang for the buck for partnerships? Are there increased returns for both development agencies and private businesses through partnerships and alliances?”
These questions can only be answered through a new and thoughtful system of M&E tailored to the unique priorities and structures of public-private partnerships for development.
There are four areas that a successful M&E framework would need to address, each of them based around a core principle of alliances for development.
1. Leveraging resources
Leveraging funds is a key goal of a public-private partnership or global alliance, but it is not the only one.
Development agencies engage with private sector companies in part because those companies bring to the table a wealth of other resources, such as a large consumer base, a global supply chain, or technical know-how. In many cases, the financial contribution of a company may pale in comparison to the impact of its cash contribution.
Imagine for example a company that contributes $500,000 to support a program training farmers to increase productivity. As part of that commitment, the company incorporates those farmers into their supply chain. If the training is successful, the farmers will over time generate stable income that is many times larger than the amount of that original contribution.
How can that larger impact be measured?
An effective M&E strategy for tracking leverage would not only monitor the funds disbursed throughout a project (which may differ from the amount publicly stated in original partnership), but also track the economic progress of individuals impacted by the project. In the case described above, farmers’ income levels could be compared over time. The result would be a more complete picture of the partnership’s impact, rather than just measuring how much money the company contributed.
2. Policy outcomes and innovation
To be truly effective, M&E for partnerships must go beyond traditional methods and more closely examine the policy benefits of partnerships.
What changes have been brought about by partnerships in both public and private sector organizations? How have these global alliances actually generated innovation, in terms of new products, resources or methods, in both developed and developing countries?
The idea is to discover the benefit of partnership beyond the leverage ratios (which benefit the donor agencies) and the bottom-line returns on investment (which benefit the businesses).
A well-planned M&E design can tackle these questions through thoughtfully designed surveys of businesses. From the political side, local and national government officials should be interviewed to provide their perspectives on policy outcomes and innovation. Having both views from the public and private sectors would lend a balanced assessment to this analysis.
3. Bottom-line benefits for companies
A key tenet of public-private partnerships is that they are “more than just corporate social responsibility.” These partnerships are meant to create “shared value,” to use the coined by Harvard Business School professor Michael Porter and FSG co-founder Mark Kramer.
Sustainability will come when companies achieve profitability while solving a social problem, for example, in marketing a new product to otherwise underserved base-of-the-pyramid customers. If this “win-win” for both development and business is not achieved, the partnership is not considered successful.
The challenge for M&E is to capture these internal business metrics without compromising business confidentiality or introducing a layer of data collection that companies perceive as an unwelcome audit.
The development agency involved in a partnership can overcome this challenge by asking three questions.
First, the development organization can ask the business, “What would success look like for you?” Maybe the company wants to increase market share through a partnership, diversify its supply chain, motivate employees, or deepen its relationships with emerging-market governments. The key is for the private sector partners to articulate in their own words what results would satisfy them.
Then the development organization should ask: “How will you track those indicators and how will you utilize the findings/results from the indicators?” Perhaps the business already has a standard way of tracking the goal they’ve identified and integrating best practices or lessons learned. Or maybe the business will need to come up with a new way of measuring progress and integrating results for performance improvement. The development organization may provide assistance in this area, but it should not dictate the method of measurement or how to integrate findings into improving performance
The third question to the business is, “Which of those metrics are you willing to share with us?” Development organizations must recognize the proprietary nature of much business information. In addition to signing some type of non-disclosure agreement, the development organization can assure the business that metrics can remain internal as needed. For external communications, the business and development organizations can work together to agree on what is disclosed.
Because of the limited data made public from any one partnership, the next step in M&E for partnerships may be surveying a number of companies involved in public-private partnerships. The aggregate data would anonymize each individual company; hopefully this anonymity would allow the companies to share more complete metrics.
4. Partnership governance
As anyone who has engaged in a public-private partnership for development will tell you, these alliances are not easy to manage. These are a new type of relationship, and there are few road maps for how, say, a technology company can work with a donor agency, or how both organizations can work together with an NGO.
For the programs that result from a partnership to be effective, the partnership itself must be effective. The parties must find a shared objective, so that they engage in the partnership not just because it is good thing for both of their brands, but because they are genuinely invested in that shared goal.
The challenge is how to monitor and measure what might be called the “health” of the partnership. Are the parties communicating regularly? Have they set up a governance structure that meets their needs? Have they defined a common goal?
An effective M&E framework for partnerships would provide a means of answering these questions.
As both the public and private sectors renew their commitment to doing more—and better – with less, M&E for partnerships is more necessary than ever to measure what is working, what is not, and why. Ultimately, M&E is a tool that can help institutions figure out whether to engage in partnerships, and how to do them better.
What is most needed now is coordination and collaboration between the development sector and businesses interested in partnerships, so that we can create an innovative partnership M&E framework that goes beyond measuring simple outputs.
In the development world, the type of collaboration needed in exemplified by a successful working group on evaluation is the OECD Development Assistance Committee Network on Development Evaluation, which brings together multiple donor agencies and some NGOs to discuss and find solutions to key issues for evaluation in international development (e.g., a glossary of common M&E terms, lesson learned reports, newsletters, and others).
Similarly, businesses and development organizations have worked together to produce business-friendly measurement systems, such as those listed in a recent report from the World Business Council on Sustainable Development. Such tools include the Impact Reporting and Investment Standards, which, for example, have established standards in the area of impact investing.
With these and other examples of cooperation around M&E in mind, the time has come to refocus our efforts in this important area. Each of us has a common and connected role to play to accomplish this goal.
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