Why should large aid organizations spin off more start-ups? What kind?

Here’s vlog number 3 – they’re turning into kind of lazy exec sums for blog posts. And a chance to study my kitchen….

I’ve been thinking about the idea of Oxfam and other large aid players deliberately ‘spinning off’ start-ups as independent organizations. The idea came up when I was writing ‘Fit for the Future’ last year, on the way INGOs need to adapt to work in complex, fast-changing systems, and has been niggling away at me ever since.

The argument for spin-offs is twofold: firstly, it frees a small, energetic start-up from the workings of a large Fairtrade Foundationbureaucracy, with its rules, sign off procedures and regular shifts in focus and priorities. It means you can just get on with things, try stuff out, adapt and evolve. In the UK, New Internationalist and Fairtrade Foundation started life in this way, and lots of successful organizations in developing countries can be seen in this light – starting with a good idea and an aid grant or two, and then building into mighty organizations like SEWA in India. More recently, we have got better at setting up independent ‘multi-stakeholder initiatives’ like the Ethical Trading Initiative.

The second argument is more subtle, and comes from Mike Edwards. Development in complex  societies, polities and economies is best served by a rich, diverse ecosystem with lots of diversity, innovation, creative destruction etc. But in many ways, business as usual in the aid business encourages monoculture – small numbers of INGOs, funding grassroots organizations that ‘look like us’ in terms of politics and narrative. Seeding the ecosystem with start ups is a way of spreading diversity in the system with long term benefits for the system as a whole (i.e. development).

What might be the best candidates for spin offs? Here’s a few ideas, but I’d love to hear yours:

New InternationalistParticular projects with a viable commercial business model, whether as producers of products or services. These can be global or national.

Watchdog bodies to follow up major campaigns: the excellent Bretton Woods Project was set up to keep a body of expertise on the World Bank and IMF alive even when wider attention to structural adjustment etc fell away. Control Arms is doing a fine job on keeping up the pressure on the Arms Trade Treaty. But as far as I know, there is no global campaigning body on the WTO or regional trade agreements like EPAs or the TPP (although there are thinktanks), which couple prove a real missed opportunity, should the need to revive trade campaigning return. Any new major campaigns should think about spinning off small specialist bodies as part of their exit strategy – what would a BWP equivalent on inequality look like?

Sectoral Specialists: Fashions and priorities come and go, but people will still need schools, hospitals, rights and roads whatever the latest development fad. It would be interesting to map out the institutional ecosystem and identify where some sectors are neglected, then encourage start-ups to populate the gaps. This could be the answer to my regular rants about why the aid business pays so little attention to ‘cinderella issues’ like obesity, tobacco and alcohol.

Against this suggestion is a clear institutional obstacle – why would Oxfam ‘give up’ its most interesting/innovative

Breaking Good?
Breaking Good?

programmes, leaving a rather tame rump of traditional activities that critics could slag off as same old same old? Giving Oxfam a chunk of shares in the spin-off, as in private sector spin-offs, doesn’t really work, but is there some other way to align incentives, eg by giving the parent organization some kind of reputational stake in the subsequent glory of successful spin-offs?

One answer might be to take a two tier approach – some degree of autonomy within the Oxfam brand for spin offs where there is a case for retaining an institutional link (this could include my long-standing suggestion for semi autonomous advocacy groups of ‘grey panthers’, and I guess this blog is one example!) And a second tier of fully independent spin offs.

Any other suggestions?


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13 Responses to “Why should large aid organizations spin off more start-ups? What kind?”
  1. Peter Morgan

    Are there no arguments against spin-offs, apart from the institutional “obstacle”? Separating off a “small, energetic start-up from the workings of a large bureaucracy, with its rules, sign off procedures and regular shifts in focus and priorities” also partially separates it off from the existing skills, resources, and ethical stance of the organization that spins it off. Small and energetic can, for example, more easily find the dirty in “quick and dirty”, and may more easily fail if a skill or resource that is later found to be crucial is not included in the package.
    Although sign off procedures can be inefficient, particularly if some are not relevant to a given situation, nonetheless they were put in place for what the institution thought were good reasons at the time. The “small, energetic start-up” argument for spin-offs is perhaps more an argument for seeking to ensure that the bureaucracy, committees, and other support and decision processes of a large organization are as light-footed as possible, on a case-by-case basis.

  2. Ken Smith

    I’m not quite sure what semi-autonomous is ? Does it give you plausible denial if the spin off does something some of your major donors don’t like ? or that many of your smaller donors don’t like ? Campaign against the tax practices of their pension fund ? Invite a controversial speaker to their meeting ?

  3. Anna Melland

    A note to share initial experience from BRIDGE and OxYGen as Oxfam’s recently established spin-off/ legacy organisations in Georgia and Armenia – which aim to continue Oxfam’s work in the South Caucasus with Oxfam’s exit in early 2018. A key challenge in business model viability is ensuring sufficient donor support to fund organisational overheads alongside direct costs associated with project delivery. In countries where there is no, or very limited, public fundraising culture which can effectively subsidise project implementation for donors (as happens with Oxfam and other large Northern based INGOs currently) it’s extremely challenging for local organisations to meet donor requirements/rules in this regard eg related to ICR , co-financing, and donors don’t seem to sufficiently understand the challenge – or how this relates to organisational sustainability. They have become too used to/take for granted business models that large INGOs can for now (just about) afford to pull off!

  4. We’ve done a bit of work on this in Baobab over the last few years, as contributions to INGO strategic reviews, and it may be helpful to share a bit of our learning so far, as a contribution to this debate.

    Products or services that can be marketed to generate a regular income stream look promising in principle for spin offs, but seem to happen very rarely with institutional support from the parent NGO. There’s lots of examples of entrepreneurial people leaving big NGOs to pursue a new venture based on their experience and connections (just look at the huge expansion in the number of INGOs over the past 20 years), but there seem to be few institutional incentives for the parent NGO to invest. Any good exceptions of big INGOs doing this successfully that readers know of?

    There seem to be more examples of watchdogs that are successfully spun off – usually following from an inter-agency campaign where the initial campaigning group of NGOs want to move on to other campaigns, but want to leave a legacy, or where this enables new partners from other sectors to get involved in the governance (e.g. EITI). I suspect there are likely to be more of these as the number of multi-sector partnerships to tackle specific development problems at scale expands. The ongoing active engagement of the parent NGOs usually seems to depend on whether it gives them access to networks and relationships that are useful for their wider work, or a personal interest of the lead contact person. As ever, the sustainability of the watchdog depends on a viable business model – most that last seem to be funded either by bilateral donors (common good funds), or by subscriptions from those they are watching over – any other sustainable watchdog business models people have come across?

  5. Vinod Parmeshwar

    Oxfam America successfully spun off Equitable Food Initiative – a new model to promote partnership among buyers, vendors and farm workers that: establishes a supply of safer and healthier food to consumers; is fair to workers; and is profitable to farmers, retailers and food service providers.


  6. Josh Ayers

    Thanks Duncan. I wonder if the experiential biases of a large INGO might hinder the creativity and fail-alot-till-you-succeed approach that is afforded by the greater community of do-gooders that has sprung up of late thanks to social media and the globalization of information and communication. We saw in Haiti, and in subsequent responses, the massive turn-out of small, agile, responsive, innovative and fit-for-purpose organizations that, if coordinated well, could have an even greater impact on humanitarian relief and development. My question is: why must large INGOs be the ones to spin off these kinds of organizations? Why can’t large INGOs vet and put their resources behind some of these winners? I’m not talking about partnering with local, indigenous CBOs that “look like us”, but rather supporting and championing these small, agile and – dare I say – Western organizations with purposes like advocacy, sector specialization, “cinderella issues”, or even research and development “labs” for trial and error. Why do INGOs always have to have children when there are plenty out there to be “adopted”?

    • Duncan Green

      Totally agree Josh, the ‘Fit for the Future’ paper argues that large aid organizations (supertankers) should actively seek to support smaller innovative ones (rafts). I guess that could be through judicious use of funding, but also adopting their approaches and ideas – when I was at CAFOD, I spent some time getting Oxfam to nick my ideas! Trouble is there is sometimes an unspoken ‘not invented here’ resistance which must first be overcome.

  7. I and a couple of researchers from the Centre for Development Studies at the University of Bath have recently ‘spun out’ an independent research organisation in order to enjoy a bit more flexibility than academic structures can offer. Bath Social & Development Research Ltd (Bath SDR Ltd.) was primarily set up to act as promotor and protector of the QuIP (Qualitative Impact Protocol) – the output of an ESRC/DFID research project. As the person responsible for disseminating the outputs of the research project I felt that ‘spinning out’ was the best chance the QuIP (and hopefully other CDS research in the future) would have of surviving and growing in use once all staff funding ceases and the journal articles and conference papers are filed away. There is little space or time within academic institutions to focus on the continuing practical application of research methodology, but arguably this how research can have the biggest impact. However, making the transition from fully funded research project to having to earn our keep by selling our services can be difficult – people are used to having free access to our time. Maintaining some sort of a dotted line link with the originating institution is also a grey area when we have spun out entirely independently. I’m glad to say that one of our first clients is, of course, Oxfam – ever interested in innovative research! We hope to share the results of our qualitative impact assessment in the next couple of months.

  8. Ken Smith

    I think we have to begin to talk seriously in our fundraising to the public about the reality of development and not just push simple messages that we have all the answers and all we need is their cash

  9. Ken Smith

    Well , I’m encouraged that the tide of history is moving in this direction. I think Anna’s comment above is saying that the old ways of fundraising are not going to work for Bridge and Oxygen in Georgia and Armenia. The websites of Oxfam India http://www.oxfamindia.org/ , Oxfam Mexico http://www.oxfammexico.org/ Oxfam Peru https://peru.oxfam.org/ all emphasise partnership and campaigning and don’t major on blunt fundraising messages.

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