The Managing Director of danone.communities, Danone’s incubator of social businesses all over the world, explains to down to Earth how the fund works.
E. Marchant during the experts meeting at GCM Tour 2012 in Paris, May the 15th.
As the danone.communities fund continues its Global Communities Meeting Tour, we at down to Earth thought it would be interesting to let you know more about how the fund’s projects are selected, and what type of governance applies to them. But first, a few words on danone.communities: it is an incubator of social businesses. Through a mutual fund, it finances and brings technical assistance to projects that help fight poverty and malnutrition, all over the world. The fund has existed for almost five years and is now supporting 10 projects in France, India, Bangladesh, Senegal and Cambodia. We asked Emmanuel Marchant, its Managing Director, a few questions on how the whole mechanics work.
How does danone.communities select the projects that it supports?
They come to us in two main ways. Firstly, we carry out systematic screenings when there is a particular topic that we have decided to cover. This is what we did when we decided to screen five countries in Africa to find a first project in that region, and the project chosen was Laiterie du Berger. At the same time, and this is an avenue which keeps growing, our network brings us projects that could potentially fit danone.communities’ goals. This was the case for the Naandi project in India, for example.
Then, there are two initial selection filters. One is the strategic orientations that the Board gives us: for instance, over the past few years it was decided that we would try to focus on certain activities (access to water and nutrition) and geographical zones (Asia and Africa), and also to explore the implementation of social business projects in the developed world, which we did with Isomirin France. The second filter is a comprehensive range of criteria that we created 5 years ago. Those two filters are only the beginning and after that, other decision-making bodies are brought into play to establish whether or not we should fund the project (see at the end of article – ed.).
Among these criteria, there is the fact that Danone must be able to contribute to the project by providing its expertise and delegating a part of its workforce. How do these synergies work?
This question brings us back to the question “What is a danone.communities project?” It is four main things: a social business that fits into Danone’s mission and calls for co-working and innovation. So Danone has to be able to work in partnership with the project managers and contribute something new. Danone.communities is not only about funding; we co-build new solutions. We provide technical assistance to each and every project. In Bangladesh for instance, we sent a Managing Director for Grameen Danone from Danone. In Senegal, we sent a young woman to work as Marketing Director for La Laiterie du Berger and as project manager for Lemateki. But we also intervene on a less structural level, with occasional help when it is needed. For instance, we have senior co-workers who go out on the ground for around 8-10 days, meaning that when they get back they can coach the teams from a distance for a significant period of time.
You mentioned the fund’s strategy; what is its strategy going to be in years to come? What is ahead for danone.communities?
The Board has decided that, for the next eighteen months, we are not going to fund any new projects. This will enable us to focus on the ten that we already have, strengthen them and prepare their replication. That last part is very important to the Board. We are realising that we have constituted a cluster of projects around access to water which are now reaching maturity, and we are starting to wonder how we are going to replicate them. Something else we will be reflecting on in the future is that we have a sort of “Asia-tropism” and only one project in Africa. We will see whether partnering up with African projects is something we should look into in years to come.
The danone.communities criteria
There are three main aspects:
- Convergence. The projects must improve the health and living conditions of the poor, with a measurable social impact, and fit into Danone’s mission “to bring health through food to as many people as possible”. Danone must be able to provide its expertise through the delegation of competencies, and the project must be harmonious with the others that are already supported by the fund.
- Pertinence. The projects should be financially viable and managed by professional, experienced partners who are committed long-term. There must also be reasonable chances of success.
- Efficiency. This covers a wide range of aspects: the project should have high potential for social impact, be innovative in the sense that it comes up with the best possible solution to an issue, be replicable and be managed in order to ensure the fund’s sustainability.
The danone.communities selection process
In order be selected, a project goes before four main bodies:
- The Social Innovation Committee, which looks at the project in great depth, examining the file, meeting the project managers, etc. In particular, the SIC establishes whether the project complies with the danone.communities criteria and recommends it to the Orientation Committee.
- Then, the Orientation Committee, a “meeting point between danone.communities and the bankers”, determines whether the project can be funded by the SICAV.
- The Danone Board Social Responsibility Committee checks that the project balances Danone’s interests with those of danone.communities, mainly in terms of governance. For instance, it investigates possibilities of a conflict of interests occurring, but also examines the potential synergies.
- The danone.communities Board establishes whether the project fits into the Fund’s overall strategy.
The final decision is then taken by OMNES – that is the fund manager – in its investment committee.
Originaly published on Down To Earth.