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Creating a national social investment strategy

A comprehensive plan to tackle poverty, create jobs and strengthen the social sector

Challenge

While Colombia has made great strides in economic development, more than 40 per cent of the population still lives below the poverty line. In 2009, the government asked McKinsey to develop a plan to that would bring together the combined resources of public, private, and social sectors in a concerted, national effort to reduce poverty.

Among the challenges recognized early on by the government and the McKinsey team: low rates of volunteerism and charitable giving, lack of trust in non-profit organizations, and relatively few examples of social entrepreneurship based on for-profit models.

Discovery

The McKinsey team conducted detailed interviews with a wide range of stakeholders across Colombia: the leaders of development agencies, NGOs and foundations, government ministers and officials, CEOs, and more than 80 leading philanthropists.

The interviews revealed a strong desire across all sectors to tackle poverty and real potential to substantially increase rates of donations and volunteering. The McKinsey team estimated that philanthropic contributions over time could triple if barriers to participation could be removed.

The research also started to identify the root causes of low rates of volunteerism and charitable giving. For example, Colombia's legal framework made it easy to establish non-profits, but financial and regulatory oversight was relatively weak. One-third of NGOs in Bogota, the Colombian capital, had not filed regulatory or tax documents for more than three years.

Equally, potential donors cited lack of reliable, accessible information about missions, capabilities, and effectiveness of NGOs as a major concern. Strengthening the non-profit sector would require not only tighter regulation but, also the development of stronger intermediaries—on the model of GuideStar and Charity Navigator in the US—to foster transparency.

Overall, the McKinsey team proposed a comprehensive strategy based on 20 potential initiatives, organized around four themes: strengthening information-sharing and regulation; building non-profit capabilities; promoting individual and corporate investment, through mechanisms such as public-private partnerships; and promoting social entrepreneurship by for-profit entities. Nothing less than an integrated approach would be required to achieve these ambitious goals.

Impact

The plan was presented by then-President Alvaro Uribe at the first annual philanthropy forum in Colombia in 2010. While cross-sector transformation will take time to achieve, individual initiatives are starting to bear fruit. Among the new generation of public-private partnerships: a joint venture between the government-run Red Juntos ("Together Network") program and the Andes Export Company to process Inca berries for export. The venture not only created 100 jobs, but also encouraged personal saving and provided employees with access to credit—many of them for the first time.

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Lynn Taliento

Partner, Washington DC

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