In March 2012, Jonathan Fanton spent a week in Moscow and St. Petersburg meeting with higher education administrators, teachers, students, and not-for-profit groups to discuss the role foundations and corporations can play in correcting social injustice and promoting reform across the world and  Russia’s relationship with private institutions. Below is a report on his week abroad. 

The European University St. Petersburg (EUSP) invited me to visit the University in my capacity as a member of its International Advisory Board.  It is starting a program in Philanthropy and Corporate Social Responsibility and thus asked me to deliver a lecture on how philanthropy can improve public policy.

I traveled to St. Petersburg by way of Moscow where I held a seminar with the Russian Union of Industrialists and Entrepreneurs.  The Union has promulgated a thoughtful social charter on corporate citizenship to which major companies have subscribed.

In Moscow the MacArthur Foundation office organized an interesting set of meetings including Dmitri Trenin, Director of the Carnegie Center, and Andrei Kostunon, Director of the Eurasian Center, two very thoughtful analysts who helped me make sense of the changes underway in Russia.  I also met with MacArthur Human Rights grantees including Paul Chikov of Agora, Tatyana Lokshina of Human Rights Watch, and Mara Polyakova, Director of the Independent Council of Legal Expertise.  A highlight of the trip was a leisurely Sunday afternoon conversation with Ludmila Alexeyeva, a leader of the Moscow Helsinki Group who first introduced me to the Russian human rights movement.

MacArthur’s largest investment in Russia is in higher education, building research centers at public universities and supporting three high quality private universities.  I met with the leaders of all three universities and with Mikhail Strikhanov who had been our principal contact in the Ministry of Education.

In St. Petersburg most of my time was devoted to the University: meeting with students and faculty, holding a seminar on strategic planning for the administration, giving my lecture on corporate social responsibility and participating in a ceremony celebrating the anniversary of the reopening of the University after it had been closed for fire code violations.  Most people think the closure was a warning from the government not to get too close to the opposition.

While in St. Petersburg, I met with the Center for Independent Social Research, one of the think tanks MacArthur supports in Russia.  I also met with Strategy, a human rights group MacArthur supports to strengthen the system of regional ombudsmen.

Text of the speeches is available here:

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March 20, 2012

On March 20, 2012, Jonathan Fanton delivered a keynote address on global trends in philanthropy and corporate responsibility to students and faculty at the European University at St. Petersburg, a leading private institution in Russia that trains graduate students from across the globe in the humanities. For more information about the European University at St. Petersburg, click here

I am delighted to be here at the European University St. Petersburg, an institution I have worked with since its founding.  I first knew it when I was President of the New School for Social Research, whose graduate faculty began as a University in Exile rescuing leading scholars threatened by Nazi and Fascist forces.  Like the New School, European University St. Petersburg has graduate education in the Humanities and Social Sciences as its core mission.  When I became President of the MacArthur Foundation I was pleased to deepen the Foundation’s commitment to European University St. Petersburg, which adds to eleven grants valued at almost $10m since 1995.

Yesterday I met with your talented Rector, Oleg Kharkhordin and his leadership team.  MacArthur supports universities all over the world so I can say with authority none has more determined, creative and effective leadership than European University St. Petersburg.  At our meeting we discussed the University’s strategic plan which is ambitious, inspiring and realistic.  I see a bright future for European University St. Petersburg and I promise to work with you as you build Russia’s pre-eminent graduate university in the social sciences and the humanities, a university admired the world over.

Academic programs at European University St. Petersburg honor Russia’s culture and history, illuminate Russia’s current political and economic challenges and prepare students for global engagement in the public, private and not-for-profit sectors.  The new program in philanthropy and corporate social responsibility is a good example of how European University St. Petersburg is responding to changes in Russian society.  I want to talk with you today about global trends in philanthropy and corporate social responsibility.  One of those trends is a focus on root causes of problems and I will explore with you how foundations can improve public policy.

I hope this is a topic your new philanthropy program will address.  Direct assistance to people in need, to health care institutions, to conservation efforts, is good and necessary.  But attention is also needed to the root causes of society’s problems and to changes in government policy that will help many more people.

But first let me tell you about the MacArthur Foundation and its work in Russia.

MacArthur is one of the ten largest foundations in the United States with assets of $5.5 billion and gives $220 million a year in the United States and sixty countries across the world.  It has offices in Moscow, New Delhi, Abuja Nigeria and Mexico City.  All of the assets derive from the wealth of John D. MacArthur, who made his money in insurance and real estate.

It’s governed by an independent board of trustees; the Foundation has no connection to the U.S. government, or any for-profit activity.

In the United States we work on improving opportunity for low income families, preserving affordable housing, improving public education, and reforming the juvenile justice system.

MacArthur’s work outside the U.S. focuses on biodiversity conservation, international peace and security, population and reproductive health, human rights and international justice, and the global migration and mobility of people.

MacArthur’s largest financial commitment outside the United States is here in Russia, where we have had an office since 1992.  We came to Russia in the spirit of partnership and respect for its people and its prominent role on the global stage.  Our early work supported cooperative research between Russian and American scientists and policy experts on disarmament.

This work contributed to the development of cooperative threat reduction programs that have done so much to make the world more secure and maintain positive momentum in the U.S. -Russian relations over the years.  MacArthur’s first decade in Russia also featured a research and writing grants competition that supported more than a thousand scholars.  And early grantmaking in the conservation field helped strengthen Russia’s network of protected areas and encouraged the growth of sustainable forestry.

But the centerpiece of MacArthur’s work here has been a 20 year, $100 million commitment to strengthening higher education and scholarly infrastructure.  MacArthur provided support to 24 state universities – from St. Petersburg State University to Tomsk State University to Far Eastern State University – and three private universities: the New Economic School, the Moscow School of Social and Economic Sciences, and, of course, the European University at St. Petersburg.

We also worked with independent think tanks like the Center for Social Policy and Gender Studies and the Center for Independent Social Research St. Petersburg, which are tackling challenging social issues like gender discrimination and the effect of globalization on rural communities.

MacArthur’s investment in universities and scholarly life reflected our belief that a robust and independent intellectual community goes hand-in-hand with democracy.  Can you think of any democratic country without academic freedom?  Or the reverse, an authoritarian regime that tolerates strong, independent universities?

MacArthur also supports organizations in Russia working in the field of human rights and the rule of law.  During the past twelve years, we have supported more than eighty civil society groups working on these topics – in Moscow but also in the regions, from Rostov to Perm to Tatarstan.

The focus for many years has been police reform, strengthening the ombuds offices throughout the country, and supporting those who take human rights cases to the European Court of Human Rights when appeals within Russia have been exhausted.

The issue of rule of law is a central theme of MacArthur’s work in the U.S. and in all the countries where MacArthur has offices.  Everywhere we work we believe that higher education and the rule of law are pillars of an open society where citizens are free to develop their individual potential as they contribute to economic growth and prosperity.

In recent years, MacArthur’s higher education work in Russia has been winding down.  But I am pleased to note that in September 2011 the MacArthur Board of Directors reconfirmed the Foundation’s deep and long-term commitment to Russia.

It is, of course, very pleasing to see Russian philanthropy grow and likely someday take over from MacArthur and other Western donors.   That growth is documented by a recent Report on Institutional Philanthropy in Russia by the Russian Donors Forum.  It found 300 active foundations in Russia, about 20 major ones.  The top three programs are assistance to vulnerable groups, education and culture, and health care.  It is estimated that the 100 corporate and private foundations the Report studied in detail made $800 million (22 billion rubles) in gifts in 2010.  And it is encouraging to see recent changes in the tax code that encourage philanthropy and the establishment of endowments.  So European University St. Petersburg is timely with its plan to start a program of research and teaching on philanthropy and corporate social responsibility.

I hope the new program will look at Russian philanthropy in global perspective.  Philanthropy across borders is on the rise and opportunities to partner with private foundations and corporate donors from other countries are expanding.  The Foundation Center, a research organization based in New York, reports that in the period 1990-2008 total foundation giving in the U.S. grew from $9 billion to $47 billion.  Giving to countries outside the United States grew faster than giving within the United States and constituted 25% of all giving.  The total number of foundations grew from 32,000 to 75,000 in this period and new foundations were more likely to give abroad.  For this analysis I am indebted to a thoughtful article by Anne Peterson and Gail McClure published in Foundation Review.  They concluded the propensity of new foundations to give internationally was not “surprising as many of the new foundations were funded by profits from the global finances, media and especially technology sectors.”

During my time at MacArthur the share of its grantmaking that went to international programs rose to 47%.

The top three areas of focus for U.S. foundations giving abroad are health, international development and the environment.  About half of the international giving overlaps with the U.N. Millennium Development Goals, focused on topics like reducing child and maternal mortality, combating HIV/AIDs, empowering women.  It should be noted that a sizable share of international giving by U.S. foundations goes to international organizations like the World Health Organization or U.S. based NGO’s working abroad.

The rise of global philanthropy is not limited to the United States and Russia. A recent article in the Index of Global Philanthropy (2010 Index of Global Philanthropy & Remittances, “International Philanthropy Outside the United States: Giving Goes Global” p. 42) found a dramatic rise in private philanthropy in OECD nations led by the United Kingdom, Germany, Canada and the Netherlands. And there is an increase in philanthropy from wealthy individuals and corporations in wealthy countries in the developed world. I think of Fondazioni 4 Africa, a joint venture of four Italian banks working in northern Uganda to help people displaced by the Lord’s Resistance Army. Or the Canadian cosmetic company M.A.C., which works on HIV-AIDS prevention in Sub-Saharan Africa. Or Irish philanthropist Niall Mellon whose Fund builds housing for poor townships in South Africa.

I hope in the future to hear more examples of Russian philanthropy working in Africa and other parts of the developing world.

So what are some future trends in global philanthropy?  Most U.S. foundations belong to the Council on Foundations, an organization similar to the Russian Donors Forum.  The Council surveyed its members involved in international grantmaking to ascertain their top ten predictions for 2012.  Here is a sample, summarized in an article by John Harvey in Global Philanthropy.

• Global Philanthropy will continue rapid growth, especially in countries like China, India and Brazil.  I was surprised Russia was not listed.
• As U.S. companies do more business overseas, they will give more money away abroad.
• There will be increased partnerships between U.S. and overseas foundations and among foundations, governments, corporations and multilateral organizations.
• The transition underway in the Middle East and North Africa will draw more money and engagement from U.S. philanthropy.
• Foundations will supplement their charitable giving with low interest loans that advance their program goals.

Let me inject some predictions of my own here – not just for 2012, but longer term trends.

• I hear the term philanthro-capitalism more and more these days.  There is an increasing interest in using business – or market – opportunities to solve social problems.  I am working with a group of business people dedicated to bringing safe water to poor communities in Africa by helping communities build, own and operate water purification systems which will cover their costs.
• There is donor fatigue with experimenting with models for improving primary education, creating jobs, combating poverty.  Foundations want to understand how models can be applied at a wide scale.
• And there is greater interest in addressing the root causes of problems and that should improve the prospects of funding for research and universities.
• Finally, Foundations will increasingly be using new technology and social media to advance their philanthropic objectives.  There is a growing appreciation that solutions to problems need to take account of local history, culture and conditions.  New technology is changing the dynamic from pushing policy at people to pulling information and insights from ordinary citizens.

I hope your new program in philanthropy and corporate social responsibility will study these trends, especially the interest in getting at the root causes of issues and how philanthropy can improve public policy.

I want to devote the remainder of my talk to this topic by illustrating six ways philanthropy can improve public policy drawn from my experience at MacArthur.

Promoting pluralism of thought, action and innovation is a central contribution philanthropy can make to society.  Foundations are at their best when they take the long view, support basic research and experiment with models for change.

I think universities are the best partners for foundations wanting to improve public policy.  You will see that universities are central to most of the examples I am about to give. Foundations are not direct actors in the political process, prohibited by law in the U.S. and most countries from lobbying government officials.  But they can support research that illuminates policy choices and they can educate the public about the findings of research they support.

And I believe it is good policy for foundations to give unrestricted support to universities to strengthen their research capacity and trust the faculty to do research relevant to society’s needs.  My belief found confirmation in looking at the research interests described in your strategic plan, topics like the transformation of cultural phenomena of the Soviet era under new socio- economic conditions, the development of financial markets and institutions in Russia, the economics of health care and more.

So here is my list of how philanthropy can help society address the root causes of problems but also seize opportunities.

First.  Foundations help frame issues in new or better ways.  For instance, from its earliest days, MacArthur has focused on issues related to peace and international security. After the Cold War ended, we were one of the first foundations to take an active interest in the dangers posed by weapons grade material at risk of falling into the wrong hands.  We supported several research projects at Harvard, Stanford and the Brookings Institution.

These projects framed the debate on nuclear weapons, to powerful effect.  They articulated the concept of “Cooperative Threat Reduction” and introduced this idea into the strategic dialogue between the United States and Russia.  They formed the intellectual spine for the Nunn-Lugar Program, which brought the United States and Russia together to dismantle and secure nuclear weapons and stockpiles.  To date, the program has deactivated or destroyed about 7,601 nuclear warheads (82% of its 2017 target) in the former Soviet Union. It has also eliminated 792 ICBMs and upgraded security at all sites in Russia where nuclear weapon-related materials are stored.

Second.  Foundations commission research that provides a base of evidence for making policy-related decisions.  MacArthur is well-known for its long-term, multidisciplinary research initiatives, which have produced path-breaking work on topics like aging and wellness, juvenile justice, and mental health policy, among others.

These networks, that draw together scholars from several universities, are sometimes active for as long as a decade. The MacArthur approach to research allows smart people to ask big questions in a fresh way and then tackle them with perspectives from many disciplines.  Our support for these research networks is made with the goal of creating a robust evidence base for sound decision making by policymakers.

For example, the Network on Adolescent Development and Juvenile Justice, based at Temple University, studied the outcome of youths in trouble with the law who were tried as adults compared with those handled through a juvenile court with alternatives to incarceration.  Those tried in a juvenile court were 60% less likely to commit another crime when released.
We see signs that this research is helping lay the groundwork for significant change.  In October 2004, the U.S. Supreme Court drew on our Network’s findings in Roper v. Simmons, which prohibited the death penalty for those 18 and younger.  Several states, including Illinois, have closed down youth prisons and shifted resources toward community-based programs and services.

And the reforms developed by MacArthur are being implemented outside of the United States. For example, I hosted a delegation from China’s Supreme People’s Court in 2008.  The judges liked what they saw which contributed to reforms underway in China. A proposed law pending in the National People’s Congress would recognize juvenile offenders as a distinct group and establish a mechanism to provide rehabilitation programs rather than jail time.

Third.  Sometimes foundations take on demonstration projects to show that applying what we learn from research can actually work. The hope is that government or the private market steps in to scale up.  MacArthur’s work to conserve landscapes high in biodiversity is a good example.  In 1999, we began funding a pilot project on the island of Fiji, called the Locally Managed Marine Area Network, which links conservation organizations, university researchers, and local leaders in three villages to improve the management and protection of coral reefs and marine resources.

By involving scientists as well as village leaders, the network encourages adapting cutting edge research and conservation techniques to local circumstances and incorporating them into traditional practices.  A breakthrough for the project came in 2003, when the Great Council of Chiefs decided to apply the MacArthur conservation approach as a national fisheries and marine policy for all 300 islands within the Fijian archipelago.

Fourth.  Foundations can help articulate fundamental norms that guide decision making.  After the Rwandan genocide and at the urging of UN Secretary General Kofi Annan, the MacArthur Foundation funded the International Commission on State Sovereignty and Humanitarian Intervention, organized by the Canadian government.

The Commission’s report articulated a primary duty for the international community in cases of genocide, ethnic cleansing, and crimes against humanity – a “responsibility to protect.”  When a state fails to protect its own people – or worse, assaults them – the international community has an obligation to act, even intervene.  At the September 2005 World Summit, the United Nations (UN) General Assembly affirmed this principle in its Outcome Document.

In recent years we have seen the Responsibility to Protect successfully put to the test in limiting post-election violence in Kenya and heading off a civil war in the Ivory Coast. It may yet play a role in the Syrian conflict as Kofi Annan seeks to mediate and gain Russia’s support for the Responsibility to Protect.

Fifth.  Foundations build institutions that are the source of respected public analysis and provide a watchdog function.  MacArthur has given core support to several institutions that provide important policy advice: the Center for Budget and Policy Priorities; the World Resources Institute, the Center on Science, Technology and Security, the Global Fund for Women, and more. In Russia, the Independent Institute for Social Policy advises the Russian government on the critical topic of pension reform.  The Center for Energy Efficiency is a key implementer of World Bank projects on energy efficiency in Russia.  And the Centre for Independent Social Research continues to support the sustainable development efforts of indigenous communities of the Russian North.

MacArthur may not always agree with the positions they take, but we believe the policy process is stronger by the quality of analysis they bring and the informed debate that they stimulate.

Sixth.  My last example speaks to one of the trends I mentioned earlier:  building public understanding and support for sound policies in economic, social and international affairs.  We are living in an age where the public has direct access to a huge amount of information.  And at a time when people use Facebook, Twitter, You Tube and other social media to share ideas and to come together to express support or opposition to official policy.  MacArthur has helped civil society groups in conservation, women’s health, rule of law, neighborhood development in the U.S. to employ those new technologies to build support for policies they are advocating.  And MacArthur has helped groups use technology to deepen their effectiveness, for example, using cell phones to transmit vital information to reduce maternal mortality, to strengthen election monitoring in Nigeria and Bangladesh, or to document ethnic cleansing in Darfur.  Another project, this one in the U.S., aims to create a platform where the public can comment on draft laws and regulations before they are enacted.

Access to the Internet has changed the way people relate to each other and to power.  And therefore Internet freedom is essential to democratic development.  MacArthur supports a Harvard University research project that measures Internet freedom in countries around the world. The OpenNet Initiative reports that the number of internet users had reached 38 million in Russia by 2008. Expert opinions are divided about how free the internet is in Russia, with Freedom House ranking it partly free, noting a decline since 2009.

Technology is a good example of how private philanthropy, with all its flexibility, can spot a need early and move quickly to meet it.

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Let me close with a puzzle.  MacArthur wants to be viewed as independent and objective, not ideological or political.  We see our mission as bringing quality information and sound evidence to bear on the policy formulation process.  But we also have views – we think an international criminal court is a good idea; that young people should have access to juvenile justice systems with redemptive options; that biodiversity preservation is important; that weapons of mass destruction should be controlled.

Do those views challenge the claim of objectivity?  Perhaps.  But we look at our views as hypothesis to be tested, and we are open to funding research and policy analysis that question those hypothesis.

We think it is important that the Foundation’s highest value is the continuous search for sensible policies, understanding that our initial hypothesis may be wrong or – at least – can be improved upon.  Effective advocates are usually committed to a fixed view; effective foundations are not.

And so we navigate the tension between making major investments based on a theory of sensible policy and encouraging those who challenge that theory.

I think philanthropy and public policy would be a good topic for the new program at European University St. Petersbug.  No doubt as private philanthropy grows and matures in Russia there will be policy engagement, engagement that needs to be carefully developed so it is not misunderstood as partisan meddling in politics.  It will take time for the society, especially those in power, to be comfortable with philanthropy’s effort to improve public policy so the sooner the discussion gets serious, the better.  I can think of no better – more rigorous and trusted – setting for this conversation than the European University St. Petersburg.

Jonathan Fanton discussed the issue of Corporate Social Responsibility in the United States and in Russia as part of his trip to the European University at St. Petersburg. Here are his remarks. 

March 18, 2012

I welcome this opportunity to learn more about the concept and practice of corporate responsibility in Russia.   Natalia has shared with me the Social Charter of the Russian Union of Industrialists and Entrepreneurs, which is an impressive document: clear, comprehensive, compelling.  I have also looked at the Reference Performance Indicators which is extremely well done.  I look forward to hearing how it is working in practice.

As you know, I have deep interest in Russia from my decade as President at the MacArthur Foundation, which has had an office here since 1992.  Over that period MacArthur has supported 150 organizations and institutions with about $120 million in grants, MacArthur’s largest financial commitment outside of the United States. We come to Russia in the spirit of partnership and respect for its people and its prominent role on the global stage.  Our early work supported cooperative research between Russian and American scientists and policy experts on disarmament.

This work contributed to the development of cooperative threat reduction programs that have done so much to make the world more secure and maintain positive momentum in the U.S. -Russian relations over the years.  MacArthur’s first decade in Russia also featured a research and writing grants competition that supported more than a thousand scholars.  And early grantmaking in the conservation field helped strengthen Russia’s network of protected areas and encouraged the growth of sustainable forestry.

But the centerpiece of our work here is a 20 year, $100 commitment to strengthening higher education and scholarly infrastructure.  MacArthur provides support to 24 state universities – from St. Petersburg State University to Tomsk State University to Far Eastern State University (in Vladivostok) – three private universities: the New Economic School, the Moscow School of Social and Economic Sciences, and, of course, the European University at St. Petersburg.  We also have supported eleven independent policy institutes, three journals and five scholarly networks.

Much of our work is carried out in partnership with the Ministry of Education and Science. The Potanin Foundation and major Russian corporations such as Alfa
Bank and RUSAL have joined MacArthur and other Western donors in support of universities in Russia.

MacArthur also supports organizations in Russia working in the field of human rights and the rule of law.  During the past twelve years, we have supported more than eighty civil society groups working on these topics – in Moscow but also in the regions, from Rostov to Perm to Tatarstan.

We are deeply committed to European University St. Petersburg, which is sponsoring my trip to Russia.  I travel to St. Petersburg tonight to give a lecture at the University.  I serve on the International Advisory Board of the University, which I have known since its founding when I was President of the New School for Social Research in New York.

I am pleased to see the creation of the Severstal Chair in Corporate Social Responsibility at the University and the plan to develop a program in corporate social responsibility and social partnerships with executive seminars for business and NGO leaders, as well as government officials.  European University St. Petersburg will quickly become a center for high quality research on the theory and practice of corporate social responsibility and philanthropy.

I am pleased to see the growth of corporate social responsibility among Russian companies.  I note the introduction to the performance indicators talks about a tool kit which “helps companies adapt and apply proven international standards and regulations of corporate responsibility and social accountability such as the United Nations, Global Compact, Global Reporting Initiative and others.”

I was glad to see the Social Charter contains references to human rights including non-discrimination, equal opportunity, freedom of speech, labor rights, as well as rights to a safe workplace, health, a clean environment and education.

The Social Charter is a good indicator that Russian businesses are taking their rightful place among the large corporations of the world in caring about how they can help improve Russian society and contribute to alleviating poverty and suffering in the developing world.

As the Social Charter makes clear the term corporate social responsibility is broad, encouraging promotion of workforce health and well-being, good environmental practices including energy efficiency, ethical procurement practices and more.  I believe corporate philanthropy is central to corporate social responsibility, and that is the topic I want to talk with you about today.

As President of MacArthur, I was open to partnerships with corporations.  In the United States we helped organize a group of foundations and corporations to promote economic and social development in 23 cities across America.  Called the National Community Development Initiative, the partnership developed affordable housing, created jobs, established community centers to provide health and education to America’s poorest neighborhoods.  Big banks, J.P. Morgan Chase, Bank of America, CITIBank, joined MacArthur, Ford, Rockefeller and other foundations.  Since inception it has made grants and program related loans worth over 600 million dollars.

And overseas MacArthur joined with international and local businesses to support higher education in places like Nigeria.  MacArthur and Shell chaired a capital campaign for the University of Port Harcourt in the Niger Delta that raised money from Shell, Schlumberger, Total Fina Elf, as well as Nigerian companies like Allstates Bank and Mobile Telecommunications of Nigeria.  At that University our partnership built an IT Center, created a Gas and Petroleum Institute, enhanced the central library and built dormitories.

I like the Port Harcourt example because it brings together international companies doing business in Nigeria, local Nigerian companies and international foundations and local individual donors.

So as Russian companies develop a more robust philanthropic program, I hope they will be open to partnerships with others, at home and abroad.  But I do believe charity begins at home and I am glad to see wealthy individuals and corporations supporting European University St. Petersburg, companies like Coca-Cola (Chair in Visual Studies), Novartis (Chair in Sociology of Public Health, Barclays (Chair in Financial Economics) and MDM Bank.  European University St. Petersburg and a few other leading private universities are offering education and research programs that meet the highest international standards and are connecting Russia to leading intellectual centers around the world.

But as one of the most powerful countries in the world, Russia, and its corporations and wealthy individuals, have a duty to help less fortunate people in the developing world.  I want to tell you the story of an organization I work with which would welcome partners from Russia.

The organization is Safe Water Network and its mission is to provide safe water to the world’s poorest people.  Consider these facts:

• Nearly one billion people do not have access to safe, affordable water.
• 3.6 million people die each year as a result of unclean water and poor sanitation.
• 1.4 million of those deaths are children.

Only three years old, Safe Water Network works in India, Kenya and Ghana in 70 villages serving 250,000 people.  Unlike big water projects from international agencies like the World Bank and the United Nations which sometimes fail, Safe Water Network works with local villages to develop water purification facilities that are locally owned and managed, and cover their operating costs.  The theory is that when local communities take responsibility, the project is likely to be sustainable unlike the mega projects that breakdown when the international aid agencies leave.

The history of Safe Water Network is interesting.

It was co-founded by the actor and philanthropist, Paul Newman, in 2007.    Yes, this is the Paul Newman of Butch Cassidy and the Sundance Kid, The Road to Perdition, Cool Hand Luke and The Color of Money.  He was a friend of mine and a person I admired greatly.

Mr. Newman quietly devoted himself to advancing many social causes, and had an uncanny ability to break new ground.  The idea for Safe Water Network emerged from his association with the Committee Encouraging Corporate Philanthropy (CECP).  Mr. Newman cofounded CECP in 1999 and today, the group is a global network of CEOs dedicated to increasing the level and quality of corporate responsibility.  With over 180 members, 63 of which are in the Forbes 100, CECP inspires and challenges executives to find innovative ways to meet community needs, and to lead the way towards better alignment of their business and society’s needs.  In 2010 its members donated over $15 billion to charities, approximately 1% of pre-tax profit.

Although this $15 billion represents 40% of all reported U.S. corporate donations, it does not reflect private giving by executives through their own foundations.  The Conrad A. Hilton Foundation, for example, is a philanthropic trust, separate from Hilton Hotels.
Paul Newman set the bar high for corporate America.  His own company, Newman’s Own, quickly established itself for healthy, organic foods, from salad dressing to cookies.  But more impressive than its commercial success was his insistence that every cent of after-tax profits and royalties be given away.  To date, through the Newman’s Own Foundation, over $300 million has been donated to thousands of charities around the world.  That number continues to rise as the popularity of Newman’s Own products grows.

I remember talking with Paul over dinner one night about his impatience with the Committee to Encourage Corporate Philanthropy.  He didn’t think its members were doing enough, lots of talk but not enough action.  And here is a key point. Paul Newman was not satisfied with only corporate donations.  He felt corporate leaders should be personally involved with social problems, with making the world more just, humane and peaceful.  And he thought companies had more to give than money.  They had expertise in building infrastructure, training people, marketing good ideas, research and strategic planning.  And more, they had employees who could volunteer their time.

Paul Newman was a quiet, modest man – but he had passion, strong moral convictions, restless energy and was a gifted businessman.  He liked getting things done.  So he decided to take on the challenge of providing safe water to the poor.  He recruited fellow members of the CECP, John Whitehead of Goldman Sachs, Hank Greenberg of AIG and Teresa Heinz-Kerry, all of whom made a personal contribution to establish Safe Water Network.

The mission is not only to provide safe water directly but to pioneer a model that others could copy, indeed that governments and companies could grow to a large scale.  As I said earlier, fundamental to the model is a respect for the talents of local communities and a commitment to turn over ownership and management to village councils and local entrepreneurs once the water purification station is breaking even.

Safe Water Network has attracted major companies to give money and expertise to the project.  It is a good example of corporate social responsibility at its best.

Early partners and funders included such organizations as PepsiCo. IFC, Merck, John Hopkins University, the Tata Group and IBM.  Each is an active participant in Safe Water Network activities.

Safe Water Networks’ relationship with PepsiCo is a good case study.  PepsiCo employees are in the field, working alongside Safe Water Network experts and its local partners, to develop and test cost-effective ways to operate and maintain water stations in remote, underserved markets.  Using Safe Water Network field installations as a real world laboratory, PepsiCo engineers, operators, researchers and marketers monitor, evaluate and improve system performance, quality assurance and taste.  PepsiCo’s deep technical expertise contributes to the process of testing, refining and testing again for continual improvement.

Another aspect of the PepsiCo relationship is to contribute to the documentation of this field learning and to organize and package this expertise in innovative ways so that operators in thousands of villages around the world can learn to manage and maintain a water system properly.

At the same time, PepsiCo and Safe Water Network are making an immediate impact on people’s lives.  Not only are they training and supporting local citizens to assume complete responsibility for the management and operation of their system, they are providing safe, affordable water to nearly a quarter of a million people.

The drug maker, Merck, is another example of how a global corporation contributes both dollars and expertise to solving a difficult challenge.  Merck brings its world-class technical and marketing capabilities to understanding consumer behavior and preferences in underserved markets.  Together with Safe Water Network, they seek to change habits to improve health and hygiene practices, in areas where there are significant cultural, educational and economic hurdles.  Short and long-term studies are also being conducted to measure the impact of clean water on health and livelihoods.

IBM brings its technical know-how to Safe Water Network’s data management challenge.  Using RFID (radio frequently identification) technology, IBM technicians apply their digital expertise to rural India and Ghana to help Safe Water Network deliver timely information on key metrics like customer sales, usage rates and payment status.  This data automatically converts into P&Ls, eliminating errors and ensuring managers have the right information at the right time.

The Business Analytics Platform also provides operational systems data such as pressure, volume and capacity, which proves useful both at the local level and for managing a cluster of stations, where one skilled operator can monitor many stations at once from one location.

In each of these examples, private-sector employees are bringing critical expertise to complex challenges under difficult conditions.  But this immersion experience also provides companies like Pepsi, Merck, and IBM, valuable insights into the practical approaches required to be successful in areas lacking infrastructure and skilled labor.

So I think Safe Water Network is a good example of the new frontier in corporate social responsibility where the money, in kind donations and employee involvement does good, but also is good for the company.  I would love to see a Russian company part of the Safe Water Network and welcome your suggestions about possible candidates.

Let me end where I began, by recognizing the important role European University St. Petersburg has to play in working with you to document and define the growing field of corporate social responsibility.  And I look forward to helping make connections to United States foundations ready to work with Russian corporate philanthropy here in Russia and in places like Africa.