I would like to start from the motivations that led to the creation of the foundation, and some data. I know that you use the theory of change and maintain a close relationship with the business, as corporate foundations do….
I think the best place to start is with the history of the foundation. In 1972 Zurich Insurance celebrated its 100th anniversary. In order to celebrate this, they created what was called the Jubilee Foundation. It had a very small legacy, a donation made to it from the business, and used the income of that donation to basically fund very small scale operations in Switzerland. It was not particularly strategic. Basically people wrote in and said “we have this small problem, we’d like to renovate our church, we have this cross fund, we need to go to Lucerne festival…” and Jubilee Foundation would evaluate those requests and made payments. It wasn’t particularly focused. In 2008 the leadership of Zurich, along with other colleagues in the business, decided that they wanted to utilize the foundation much more strategically as part of the DNA – where Zurich comes from as a business, and thinking about its role in society. So, as a result of that, the Z Zurich foundation emerged out of the Jubilee Foundation.
This was a process we went through to rename the organization: we had a donation from the business made to it, and it was at that point that we determined that we would have a specific, strategic giving guideline, and started to look very specifically at areas where we could or should be investing or making grants and determined that they were in three broad categories. One was disaster management: in fact one of the key attributes of the business is risk management generally, and specifically disasters rising from natural resources, that were increasingly growing; as a result it made sense for us to focus on these disasters. The second one was then insurance relevant education and research: we had a very specific view that as an insurance company we had again some specific expertise that would enable us to provide input to insurance education and obviously investing in research which could help the business and also inform that process. The third one was – I guess a little bit of a catch all – anything else that seemed to be relevant from a social need perspective, so we still had this kind of bucket of potential investment options which we could draw upon. We started off with our first long term partnership arrangements in the field of climate. We also started investing in research. In 2011-2012 the business created its first corporate responsibility strategy which led to an evolution of the foundation’s approach. Up until that point corporate responsibility in Zurich at a group level has been very much around some philanthropy and working a little internally, on staff well-being.
Over the course of 2011-2012 a more strategic approach came out, and what it did was to put more pressure on the foundation in terms of what we wanted to achieve, so in 2012 there was another injection of cash into the foundation and that determined the desire to launch off the Flood Resilience program. The Flood Resilience program emerged in 2013 and this year reaches the conclusion of our first 5 year phase. During the last year we have been discussing where we wanted to go next, and one of the next step was to carry on our work in flood and to evolve from the learning of phase 1 into a second phase of Flood Resilience program. Over the course of the last 5 years we have found that the work we were supporting has started to focus around 2 elements: one was flood, in fact the biggest donation over that period of time, 37 million Swiss Francs went into the global flood program; the other aspect was to look at how Zurich businesses across the world could connect better with their communities, and so the foundation provided what we called local grants. There are currently 16 such Local grants globally, and we have spent around 30 millions on local grants so far.
The topic areas of local grants are the following: one is youth empowerment, looking at the challenges young people face and supporting organizations that provide support to young people. Just as an example, we work with Junior Achievement in Spain, where the youth unemployment rate is currently 39% of the population, so many young people are out of work, they don’t gain the skills or experience to get into work, so one of two things eitherthey never get job, or they leave the country, so either you produce this huge exodus of young people out of the country, or you have people sitting on the streets. That’s the problem that stood out, because with an aging population, people will reach the point where they want to retire, and businesses will find they are losing a lot of staff but they won’t have a pool of younger staff to bring in and replace them. We work with junior achievement to try to build up the skills and entrepreneurialism of young people to help them get the experience to be in a workplace, so they don’t have to leave the country and are able to put themselves in the job market, which is a significant challenge. The other idea has been around health and well-being, particularly looking at the impact of ill-health disabilities – mental illness for example – have on income generation opportunities. Zurich business did a piece of research, a year ago or so, about the risk of income protection gaps (IPGs); basically what we have looked at are some of the factors that people who no longer have income or have a gap in their income face, and the impact that has on family life. Part of the learning from that is that severe health or mental illness can have a deep impact and we need to ease this burden and close the gaps. So one of the links together with Zurich is that there is this increasing focus on health, well-being and the topic areas. It’s a kind of streamline in the direction of the foundation over the last 5 years.
You must therefore be careful both with the alignment with the business and with topic social issues, so that your strategic approach takes both these aspects into account?
Absolutely. I think our nature has to be a corporate foundation, because our funding comes exclusively from the business, it makes sense for the strategy that we follow, to be aligned with the strategy the business follows, so where the business sees that there are challenges and opportunities, there’s often a a society perspective as well. This helps us to shape where our focus should be, both in terms of the skills we can bring to those challenges, and the overall impact by supporting and developing society that can help resolve business problems as well.
Why did you decide to use the theory of change and to be so strategic in the design of the projects? Did you see some evidence, some results in such an approach, very keen on outcomes and effective results?
When our Resilience programs started we had a broad idea in mind about enhancing flood resilience at a community level, and we recognized that investing upfront in resilient building was more cost-effective than cleaning up the impact of floods after the event. Some of the evidence we had suggested that for every 1 dollar you spend in resilience building, you save yourself up to 5 dollars in relief and recovery effort. So putting money into relief and recovery is effectively costing you a lot of money which you could help to save or could help to make more effective by bringing it forward. We wanted to bring this broad view at a community level. So we set out with an alliance with 2 community partners: one was small, to test ideas out on the ground, and the other one was much larger and with much more reach, the intention being testing ideas with the small one, and with the larger one implementing them and bringing them to scale. It made some sense to me when we started up. As we went through the first year-year and a half, we started to recognize that we didn’t really understand how that dynamics would work or whether it would even work at all, and it was at that point that we started to think about what changes were we actually trying to drive here. We wanted to enhance community resilience, but what does this actually mean, what is the change we need to make happen? How could we contribute to that change? So the idea evolved to develop a theory of change properly for the program, starting from where we were, from these partners, from their operations: where should we go from there? We started to determine what next steps we think we should take to reach the change that we were looking for. The significant benefit was that they helped us to shape up how to evolve the relationship with the partners on the ground and how, more importantly, to set it up for the future. We started off with no idea about how we were going to measure resilience, to understand we were building it. If you want to change something, you need a baseline to start off with, and working through that process of developing the theory of change enabled us to see what kind of baseline we might need to create, to think about the tools and the processes, and then how to support partners to help us create those tools and processes. It would not necessarily have emerged very easily without the theory of change, the theory of change has made that possible. But what was more interesting isn’t what profit the theory of change brought to the program, more important was where the phase 2 came from. In the second phase of the program we have engaged all of our partners and provided them with a small amount of funding in the first 6 months of 2018. Part of the rationality of doing that is to build in advance, from scratch, what the theory of change for the coming program actually will find. We had a broad time for it, we have some ideas of how the aim will be done, but how do you achieve that, what kind of change you are looking for? So we spent some time as a group of partners sitting in a room thrashing out ideas about how the theory of change could be evolved. Where it can lead, interestingly, is a much stronger set of metrics. We will be able to measure the progress against that theory of change. Retrofitting it has been very challenging, but moving forward it will give us a real holistic view of what we try to do with the program, and how things are contributing to it will all come together in terms of metrics; our metrics will be able to measure the progress against those changes. That’s probably where it will be most valuable.
You have to invest a lot of time and energy before starting a program to understand what the correct design should be. This is a very responsible approach. You listen to all the partners, engage them and create your theory of change in order to be more measurable. The big issue is to tell not only how much money or how many programs you make for the community, but what added value you produce. Is all this what you’re also trying to achieve?
You’re entirely right. It’s a deliberate journey, in the last 6-5 years we tried to be aligned with the business. The role of a corporate foundation is to support in many ways the community investment strategy of the business. So the business recognizes that without a thriving and prosperous community it has no basis to operate, and it also has no reputational value to operate within it, so it has to buy in or connect, rather, with communities so that they can develop prosperity and therefore generate a need of the services business can provide.
The business has to create a social license to operate, to be able to operate within the community, because the community recognizes that they are valuable to the community and they can trust them. It might actually make sense for the business to nurture and look after the communities, and create that kind of environment where it can thrive in, and that’s the role of a corporate foundation, in my view. You need to find a way of channeling the money in a direct way, you can probably do that by simply setting up a small department in the business where you evaluate grant proposals and make donations and then offset them against tax, but it’s a time-consuming way; otherwise you can give the money into a foundation where there is much more influence over the strategy of that foundation. The corporate foundation does provide a strategic link between the business and its donations to the community, and the issues that the business and the community both care about, so it’s a very useful thing to be able to connect people together. It’s a struggle, I have to say, that organizations are going through: corporate foundations historically have been just simply philanthropic giving brands, no matter where, no one counts the money at the end of the day; I think you need to connect it much more strongly to business priorities, or business strategies rather, directly affecting issues at the community level, looking for challenges that are relevant to the development of the business at a community level. If I have a business, then I want to develop! So, what social issues are going to undermine this process, what makes it more difficult for me to do business, to hire people, to be a benefit for society? Finding those challenges is about connecting foundation with the business. I mean, there are a couple of advantages in having corporate foundation. One is that we are able to use some of the financing that we have to encourage employment engagement with the communities. We can help, at a different kind of level and generate meaning to people’s lives, by encouraging them to be able to volunteer locally or to fund raise locally, so we can use some of the grant for example to make matching payments driven by the activities that employees get involved in; we can also actively promote programs to find The Employee Champion of the Year, provide charitable donations to places they support, as part of the ways to incentivising employees to be much more engaged. I think engagement is always good, for the personal well-being of course, but there is also a strong link between people getting that kind of meaning out of their lives and recognizing that business is enabling them to do it. So having that kind of connection creates loyalty, creates a feeling of better well-being within the business itself, helps to motivate employees. So we have a happy and motivated workforce and then they will be more productive in a better place, particularly in the customer service, which is an environment where the relationship building with the customers is vital, they are going to be good ambassadors for the business because they are connected in this kind of way. This is another advantage of having a corporate foundation: it really creates this bond between employer and employees, to the extent that they feel very motivated to be there.