Ending development’s power imbalance: Why Pact is creating a first-of-its-kind ‘Shareholder Council’

May 22, 2019

For decades, the international development sector has worked to overcome global poverty, inequality and marginalization. With many partners, including governments, the private sector and local civil society organizations, INGOs have made much progress. Billions of people are healthier and more prosperous because of the sector’s work. 

And yet something has been missing.

The traditional project-based development system limits people affected by poverty and marginalization from truly taking ownership of their futures. Despite incremental steps to bring more people to the table, particularly those whose lives are directly impacted by the very development programs being implemented in their communities, the sector remains trapped in its paternalistic roots.

“Paternalism communicates, implicitly if not explicitly, ‘you are broken, and we will help fix you,’ or ‘you are broken, and we are going to show you how to fix yourselves,’” said John Grimes, Pact Board Member and President of Mission+ Strategic Solutions.

In 2016, Pact’s leadership and Board of Directors took a bold leap into a somewhat unknown future – one where the organization does development very differently. From crafting a new story with the people it serves at its center to developing new business models that will allow Pact to better respond to community needs and increase impact, the organization is changing the way it thinks about and delivers on its promises.

Most importantly, Pact is attempting to break the inherent power imbalances its own organizational structure perpetuates to empower local knowledge, local voices and local agency.

In 2018, Pact took an unprecedented step when its Board of Directors voted to establish a Shareholder Council. The basic premise of the Council is that it will be made up of people from the communities Pact serves, and will have a role in deciding priorities, approaches and accountability for results at Pact.

“We are working to jettison this [paternalistic] mentality,” said Grimes, who believes that people will only own their futures when they are truly able to chart their own course. This requires being at the table with the authority and power that comes with being a decision-maker, Grimes said.

A lot of organizations have the intention to be more fully indebted to the people they serve, but they fall short on implementation, Grimes and other Pact leaders observed.

“The establishment of the Council is the ultimate manifestation of the idea that the people we serve have not only a voice but agency,” explained Mark Minelli, Pact Board Member and President and CEO of Minelli, Inc. “Our shareholders will have the means to ensure that the focus of the organization will be grounded in, and responding to, a rapidly changing world and the ongoing needs of our shareholders.”

While there have been many steps along the way to creating the Council, adapting the term “shareholder” was among the most consequential, Board members said. With deep private-sector experience on the Board, it was not an easy hurdle to overcome. Prioritizing governance as a means to own your future required reimagining what it means to govern.

“Shareholder” traditionally means someone who has some level of monetary ownership in an enterprise, and a vote in its strategies and performance. For INGOs, boards serve as proxies for taxpayer-shareholders who have invested in INGOs through government funding. By creating the Shareholder Council, Pact is declaring that the people and communities with whom it works have a moral, rather than a monetary, investment and ownership.

“This is charting new territory,” said Grimes. “It requires us to constantly challenge habits of thought deeply ingrained in both the for-profit and nonprofit sectors. It requires we adopt a new understanding of governance, even as we adhere to the fiduciary responsibilities imposed by traditional legal frameworks.”

While the term shareholder reduces the notion of “them” and “us,” it isn’t a panacea, believes Mark Fitzgerald, Pact Board member and Principal at KPMG.

“Representation has unique challenges when we consider the diversity of people and communities that Pact serves,” said Fitzgerald. “Every country has wealth, poverty, elites and vulnerable and marginalized groups. We need to be mindful of the complexities as we develop the processes for nominating and selecting Council members to ensure to the best of our ability that members are truly representative of their communities and our wider shareholders.”

In addition to working out the practicalities of accessing the “right” people, determining where and how often they will meet and how to handle travel and expenses, Pact is operating within legal and operational frameworks for U.S.-based nonprofits. As it navigates these new waters, these frameworks are proving somewhat constraining, and ready-made answers are not easy to come by, leaders said.

“No one has ever tried to do this before, so we didn’t exactly have nice, tidy case studies to guide us,” said Minelli. “It is very different to place this idea at the core of the organization.”

Added Fitzgerald: “We still have questions that need answers, and we want people to help us answer them.”

Navigating all of this—new language, new habits of thought and new ways of balancing both legal and moral accountability—has been, and will continue to be, challenging. A lot of questions remain, but the organization and its Board of Directors believe it is absolutely the right way forward, Board members said.

“This [our vision] will not happen simultaneously everywhere, but individual by individual, and community by community, wherever we have the privilege of standing in partnership with people to work together to advance our collective potential, it will happen,” said Grimes.

For Pact, it is also a mechanism for upholding the moral contract that must exist between INGOs and the communities and individuals with whom they work.

“We are creating new ground to support the overall vision for Pact. We believe in it—how we define our shareholders and people owning their future,” said Fitzgerald. “If we truly believe these things, the Shareholder Council is the right thing to do. If there are constraints, we must figure out how to navigate them and change the system as we can.”

This article originally appeared in Pact's e-magazine, All In