1. Experiences with Mining Foundations, Trusts and Funds Synergos March 4, 2010

2. 2 Overview About the Project – Research Objectives – Current Status Findings to Date Open Questions Opportunities for Collaboration

3. 33 About the Project

4. 4 Context Initiated by Oil, Gas, Chemical and Mining Policy Division of the World Bank Complements IFC toolkit (under development) Research objectives 1.Examine the range of foundation, trust, and fund mechanisms used by the mining sector to deliver local benefit 2.Document their role and effectiveness in supporting sub-national (local or regional) development and sustainable livelihoods in the short, medium, and long term 3.Identify conditions for success and factors in failure 4.Elicit lessons learned/ implications for companies, governments, communities and civil society on the formation of appropriate, effective, and impactful institutions of this kind Emphasis on understanding the role of government; potential to make policy recommendations

5. 5 Current Status Desktop review of existing literature – Foundation best practice – Research to date on mining- related institutions – Information on individual institutions -> review of sustainability reports/ websites Interviews with select foundation, trust, and fund representatives Technical review Phase I Scope 60+ institutions in the developing world, or serving indigenous peoples in OECD countries, focused on local development Phase II Additional desktop research Online survey of mining foundations, trusts, funds Country case studies: Peru, South Africa, Papua New Guinea

6. 66 Findings to Date

7. 7 Historical Trends 1930s‘Traditional’ corporate foundations -> philanthropy in host communities 1970sLarge operational foundations -> national development (Africa) 1980sFocus on education & employees Mid 1990s Tri-sector partnerships & sustainable development Dramatic increase in number of foundations, trusts and funds since 1990: 27 established after 2000

8. 8 Current Picture 60+ institutions, with around 40 located in the developing world – Asia, Africa, Latin America Most initiated by companies (large multinationals) About half tied to individual mine sites Most established early in mine life Evidence of regional variation in drivers and structure (South Africa, India) No examples of foundations in aboriginal communities - trusts, funds, equity shares From $<100k to $64 million in annual spend, with endowments as large as $504 million Part of a spectrum of ways that companies and governments are trying to invest revenue from mining effectively to produce development benefit

9. 9 Company- Driven Multi- stakeholder Government or Community Driven Operational/ Implementation Development Approach Partnership Donations/ Grant- making Outsourced Governance Typology Wide variation in structure and design of institutions, especially in terms of governance and approaches to achieving development benefits

10. 10 Drivers: Why Foundations, Trusts, & Funds? Rising expectations about private sector contribution to development as a condition for social license to operate Long term development projects Foster partnership/ collaboration Delivery of development programs in absence of other institutional capacity Participatory, transparent, and accountable mechanism for investment of resources for development Mitigate ‘resource curse’ Hypothesis: more opportunity for ‘shared’ ownership and accountability between stakeholders than company or government-only initiatives?

11. 11 Emerging Trends (I) Government use of legal tools (legislation, regulation, concessions) to encourage establishment of foundations/ trusts/ funds

12. 12 Emerging Trends (II) Regional, multi-site, multi-company institutions Western Australia Programs Mineral Foundation of Goa Maintaining, even increasing programs to mitigate impact of site closures due to financial crisis

13. 13 Common Challenges/ Success Factors Obtaining, developing competent staff Operational efficiency/ effectiveness Financial sustainability Financial stewardship Transparency & accountability Stakeholder Relationships Identifying need & defining objectives Governance Community consultation & participation Relationship with mine Government requirements Capacity building Managing expectations & assumptions Operational Effectiveness Strategic/ effective selection of programs & projects Investment in sustainable livelihoods Monitoring & evaluation Maximizing Impact

14. 14 Common Challenges/ Success Factors Stakeholder Relationships Foundations/ trusts/ funds can address the mutual interests and objectives multiple stakeholders, but also serve as a space in which conflict or tension between different agendas can play out Company Community Government Foundation

15. 15 Challenges Stakeholder Relationships Governance Traditional models of decision-making may not be participatory or transparent ‘Elite capture’ CapacityLevel of organization in community -> long term vision of need Skills/ experience to effectively participate in foundation governance or project execution Local government capacity -> exit strategy/ sustainability Managing expectations & assumptions Community: short vs. long-term benefits, concept of impact, familiarity with ‘foundation’ Company: supporting social license to operate vs. independence Government: degree to which mandates structure/ approach, alignment with government development plans

16. 16 Challenges Operational Effectiveness Achieving Financial Sustainability Innovative models for trust funding and management tied to project cycle, ‘sustainability’ of financial resources Long-term planning and management Leveraging resources – Co-financing and fee for services in projects – Multi-company funding (including suppliers0 – Bi-lateral funding Few examples of foundations, trusts, funds that have been able to attract public or private financing

17. 17 Challenges Monitoring & Evaluation Infrequent use of baseline assessments to establish needs Little formal re-evaluation of need over time Measuring program ROI Measuring long-term, cumulative, and regional or national impact Investment in Sustainable Livelihoods Focus on investment in basic services or education Little investment in economic development programs aimed at creating alternative livelihoods -> why? Maximizing Impact

18. 18 Open Questions

19. 19 Open Questions 1.What has been the government role in promoting the use of these institutions and/ or their success? 2.What are the benefits/ disadvantages of different models of foundation/ trust/ fund ‘governance’?Of different development approaches (operational, partnership, grant-making, outsourced)? Are some more effective than others? 3.How do women and other vulnerable populations participate in governance, project design and implementation? 4.How can institutions best build the capacity of stakeholders to participate in governance and execution? 5.What other dilemmas do institutions face in their relationships with various stakeholders? How can they reduce – or contribute to – community conflict or cohesion? 6.How and when should foundation/trust/ funds objectives adapt their to changing regional/ local development objectives?

20. 20 Opportunities for Collaboration with Philanthropic Sector

21. 21 Opportunities for Collaboration Transfer of expertise/ best practice Qualified personnel Joint investment of resources for project implementation Financial support Networking with donor/ foundation community

22. 22 Contacts Julia Nelson Manager Advisory Services Business for Social Responsibility 415.984.3251 jnelson@bsr.org jnelson@bsr.org