Conference Presentation, Panel, Fireside Chat
Collaboration 3.0: Partnering for More than Money
Milken InstituteCaitlin McLean, Steve Woodhead, Kerry Stever, Natalie Revelle, Efrat Peled, Rick Leach
- Panel Composition & Context: The Milken Institute moderated a discussion on public-private partnership (PPP) models featuring leaders from Chevron, Aris, the Bill & Melinda Gates Foundation, Arison Investments, and World Food Program USA (WFP USA) to demystify structures for infrastructure, energy, health, and water sectors amidst declining public budgets.
- Aris (Kerry Stever) Model & TB Vaccines: Aris operates exclusively through partnerships to develop new tuberculosis (TB) vaccines, managing hundreds of contracts annually to source IP, advance the pipeline, and finance projects.
- Market Discovery: Aris conducted the first market analysis for new TB vaccines, revealing a potential market in the billions of dollars, contradicting the assumption that poverty-stricken diseases lack commercial viability.
- Impact: This data generation catalyzed renewed private sector investment interest by proving the economic potential of TB vaccine development.
- Chevron (Steve Woodhead) Strategy: Chevron leverages PPPs to弥补 its lack of organizational capacity for social execution, partnering with established leaders to maximize expertise in STEM education, teacher training, and programmatic infrastructure.
- Specific Commitment: Chevron recently announced a $30 million commitment to U.S. STEM education, collaborating with four partners covering advocacy, next-generation science standards, curriculum development, and engineering research.
- Selection Criteria: Partners are identified based on established leadership in specific niches (e.g., Project Lead the Way for curriculum, Achieve for advocacy) rather than a broad filter process.
- Metrics: Chevron employs a web-based monitoring and evaluation (M&E) platform tracking tangible social goals (e.g., teachers trained, students engaged, HIV transmission rates) alongside reputational business goals like "partner of choice" status.
- Challenge: Chevron faces reputational friction, exemplified by a partnership request from a community college district that simultaneously announced a fossil fuel divestment, highlighting the "left hand/right hand" coordination challenge.
- Bill & Melinda Gates Foundation (Natalie Revelle) Role: The Foundation views PPPs as essential for creating sustainable, scalable solutions by bridging the gap between high-risk private sector ventures and long-term donor funding.
- Volume Guarantees: The Foundation utilizes multi-year purchase contracts (volume guarantees) to de-risk business models, allowing private suppliers to reduce risk premiums and lower prices for target populations.
- Risk Transfer: By guaranteeing volume, the Foundation enables companies to serve low-income markets without requiring direct subsidies; if the guarantee is not used, donor agencies typically purchase the goods, sharing the cost savings with the private sector.
- Strategic Goal: The Foundation aims to shift the private sector mindset from Corporate Social Responsibility (CSR) to profitable business models that are sustainable and scalable.
- Arison Investments (Efrat Peled) Infrastructure Model: Arison operates as an investment group in 40 countries, viewing PPPs as the primary vehicle for large-scale infrastructure (water, energy, roads) where governments provide needs and the private sector provides execution and financing.
- Efficiency Success: In Manila, Arison reduced water leakage from 60% to 35% within five years, solving water scarcity for 3 million people without building new desalination facilities, while creating 450 engineering jobs.
- Investment Thesis: Arison targets low-to-double-digit sustainable returns by aligning with public goals to lower long-term risk, arguing that efficient resource use in both developed and developing nations is the global priority.
- Future Expansion: The firm is expanding into developed markets (U.S., Europe, South America) to upgrade existing infrastructure, noting that developing nations need new build-out while developed nations need efficiency upgrades.
- World Food Program USA (Rick Leach) Partnership Drivers: WFP USA, which feeds 90 million people annually, attracts private partners based on three primary drivers: brand alignment with social causes, employee morale/retention, and market entry facilitation.
- Market Entry: WFP's deep trust with local governments and populations provides a low-risk entry point for companies entering Sub-Saharan Africa and other developing regions.
- Logistics & Innovation: Partners like UPS provide logistical assets (planes, warehouses) for emergency relief, while partnerships with MasterCard enabled the shift from in-kind food aid to electronic cash transfers for refugees in Lebanon and Jordan.
- Strategic Vision: WFP aims to build private sector platforms for small-scale farmers to graduate from selling to humanitarian agencies to selling directly to commercial buyers (e.g., Walmart), thereby creating economic self-sufficiency.
- Cross-Sector Challenges & Risks:
- Mindset Shifts: Major hurdles include changing the perception that "profit is dirty" for the public sector and moving the private sector from CSR to core business integration.
- Reputational Risk: Companies like Aris and Chevron face risks in regions with hostile regulatory or media environments (e.g., pausing TB trials in India due to anti-industry sentiment) and must navigate complex public perceptions of their motives.
- Time Horizons: A significant friction point is the divergence between short-term public sector bureaucratic cycles and the long-term investment horizons (15–25 years) required for sustainable infrastructure and health projects.
- Metrics & Evaluation: Establishing robust, standardized M&E frameworks remains a "holy grail" challenge, particularly for quantifying the long-term social return on investment (SROI).
- Future Outlook & Opportunities:
- Gates Foundation: Plans to expand volume guarantee instruments beyond vaccines and family planning into agriculture and livestock, aiming to create a replicable toolkit for other aid agencies.
- Chevron: Focusing on convening power to leverage additional funding (e.g., securing $25 million in USAID funds alongside their $50 million Niger Delta commitment) and integrating STEM education into unique community contexts (e.g., NFL stadium partnerships).
- Arison: Continuing to innovate financial structures for water projects, such as the Bahamas project reducing leakage from 50% to 25%, and promoting these models to multilateral banks for regional replication.
- WFP USA: Exploring data collaboration with entities like Google and seeking to connect small-scale farmers to private commercial markets to end long-term dependency on food aid.
- Economic Efficiency: Panelists collectively emphasized that the future of development lies in efficient resource use and sustainable economic models rather than traditional philanthropy, with a focus on "killing the organization" by solving the root problems (e.g., hunger, disease) so long-term aid is no longer needed.