How Companies Can Move Beyond Philanthropy in Developing Countries

Will it be up to companies like Nestle, Marks & Spencer and PepsiCo to lead the way in an ever more thirsty world? As governments and companies grapple with the growing global water crisis, more creative solutions are important if we are going to feed a growing world with less. Here in Stockholm, this week's World Water Week, which has focused on food security, has echoed with calls to gain "more crop per drop" and turn wastewater into revenue have reverberated throughout the Stockholmsmassan convention hall where 2500 delegates have assembled this week.

For years the developed world's standard M.O. has been to fund philanthropic projects in poorer countries across the globe. The results overall are mixed and have certainly been controversial. But despite one's views of the "donor community" and whether one believes that charity and aid are effective, the stubborn fact is that needs have become greater, costs more expensive and for philanthropies and foundations, the funds must be stretched even further.

To that end, companies that wish to expand their businesses in emerging markets are foolish if they believe growth just means hiring more staff and building more plants. Collaboration with local communities on challenges including sanitation, water shortages, agriculture and nutrition is now a "must have," not a "nice to have." PepsiCo's work in countries from Mexico to India and even in established markets such as the United Kingdom is an example to which other companies within and beyond the food and drink sector could look as they ponder expanding their businesses overseas.

PepsiCo's work with Water.org in India is a compelling study of how community  work and local engagement not only build trust but are also smart business. Water.org has long strived to move beyond the digging and building of community wells that had become the standard practice of international aid organizations working on water scarcity. Instead, co-founder Gary White and the staff of have focused on market-driven solutions that provide both clean water and economic opportunities. Water.org’s approach is to provide microloans that allow citizens to pay for access to municipal water supplies, rainwater harvesting systems and toilets. A new community well is a positive step for an underserved community, but it still requires tedious labor to haul water from the pump to one’s home--and the failure rate of these wells ranges anywhere from 40 to 60 percent. Water.org’s approach, according to White, completes another step in working with the world’s poor to meet their water needs.

But Water.org is a relatively small NGO, and working with larger foundations presented a bevy of challenges, from winning grants to even gaining that precious few minutes of face time with a decision maker at an international aid organization. In 2006, Water.org first approached PepsiCo about developing a relationship; two years later the PepsiCo foundation awarded a grant to the NGO with the instruction to devote about half to traditional well digging projects and the rest for more “out-of-the-box” programs.

The result was success far exceeding Water.org’s expectations and last October, the PepsiCo Foundation committed $8 million to expand initiatives including the WaterCredit program. From offering women the opportunity to build and install private toilets to improving the safety of drinking water and sanitation facilities. According to both organizations, the grant will help 800,000 people gain access to clean water by 2016. And with PepsiCo as a partner, Water.org wins because it can develop even more relationships with corporations and large foundations.

For PepsiCo, its partnership with Water.org and other organizations in India is more than checking a box off a philanthropic to-do list. Whether the company expands its business in India or ventures into new markets such as Africa, it is in PepsiCo’s best interest to work with NGOs and government agencies to eliminate poverty--and the fight against water scarcity is a start.

Furthermore, the efforts to address poverty at its source engage local communities, inspire employees and strengthen NGOs. All parties benefit because they can share expertise, fill in the gaps where other organizations lack capacity and build upon each other’s ideas. Water will be this century’s largest crisis because unlike energy, there is no alternative to water: all the world’s H20 is already on earth. Not one person or organization can tackle all of the complexities of water stewardship alone. The synergy of the public and private sectors, NGOs and community groups is crucial if the vexing problems that water poses will ever be addressed.

Leon Kaye, based in Fresno, California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business and covers sustainable architecture and design for Inhabitat. You can follow him on Twitter.

Disclosure: PepsiCo covered the cost of Leon Kaye’s attendance at World Water Week.

Photo courtesy Water.org.