Can An Oil Company Get To Heaven?

“In thirty years at Shell no one has ever called me an angel or a philanthropist”, joked the oil giant’s head of exploration Malcolm Brinded at a celebration marking the 10th anniversary of the company’s corporate charitable foundation, which he chairs. Yet over the past decade, according to a report launched in London on 14th October, the Shell Foundation has been pioneering ‘angel philanthropy’ with the $250 million endowment that it received from its corporate parent.

Part of that pioneering, according to Chris West, the Shell Foundation’s director, is owning up to mistakes. “We all know development is hard”, Mr West explained, “we want to inspire others to admit to mistakes.” Indeed, the report is refreshing in its admission that, in its early days “80% of the initiatives we supported failed to achieve scale or sustainability.”

What did the foundation do wrong? Above all, what many other funders are still doing: issuing calls for proposals and making short-term grants of less than $300,000 for less than three years. Such so-called ‘spray and pray’ strategies may satisfy stakeholders who get a share of the largesse and provide neat case-studies for annual reports but, in the Shell Foundation’s experience, they don’t achieve lasting change. The lesson the Shell Foundation took from these initial experiments was that “backing a multitude of short-term, solely NGO-run projects that were not market-based was not likely to generate the scale of impact or lasting change without a continued need for subsidy.”

As a result, the Shell Foundation is now focusing on a few initiatives that it believes are scaleable because they are based on entrepreneurial principles.

One that has caught the headlines in recent weeks is a partnership with Envirofit, a US-based nonprofit, to produce and market clean cooking stoves for the developing world, to save the poor money and reduce deaths from pollution. A new initiative launched at last month’s Clinton Global Initiative meeting in New York aims to take this to scale by rolling out 100 million stoves by 2020 through the UN Foundation, with backing from the US government and other donors.

Other Shell programmes include EMBARQ, a sustainable transport project in partnership with the World Resources Institute, that has got millions of people out of cars and onto buses and trains in cities like Istanbul, and GroFIn, which is trying to raise $1 billion to invest in entrepreneurs in developing countries by 2020.

The Shell Foundation report is a useful guide to the future of corporate philanthrocapitalism. Looking forward it sees three new trends. First, a shift from project-by-project grant-making to sustained partnering with disruptive organisations with the potential to transform the landscape. Second, greater use of debt and equity as tools to grow socially-impactful organisations to sustainable scale. Third, ever more focus on performance.

“More than money” is Mr West’s guiding mantra at the Shell Foundation, which counts its access to the business skills of its parent company as one of its core assets. True, to some extent, the hiving off of its philanthropy into a separate non-profit entity, and the lack of clear alignment of the foundation’s activities with the company’s core business strategy, makes the Shell Foundation somewhat old-school (in its structure, not its programmes). Yet, as Mr Brinded was careful to spell out, the foundation provides significant benefit to the business in terms of staff morale and learning for the company’s own CSR investments in local communities.

When the Shell Foundation was created 10 years ago, the company was still near the top of the anti-globalisation protestors ‘hit-list’, not least because of the rich resonance of the ‘Shell to Hell’ slogan. Has the Shell Foundation turned the company’s reputation around and sent it to heaven? No – it’s executives shouldn’t get used to being called angels. But it does show that corporate philanthropy that is run professionally and independently of the PR departments that still dominate much CSR, has a much greater impact. Let’s hope that in its admission of mistakes as much as it successes, the Shell Foundation has set a benchmark for other multinationals.