Extractive Resources – An Alternative Source of Funding?


Aimi Zhou


The open session during the second day of the Global Summit on Community Philanthropy centred on a rarely discussed, but frequently controversial topic: communities receiving funding from extractive companies. Increasingly, communities are looking for alternative funding sources within their own countries while extractive companies are shifting their businesses strategies to build inclusive partnerships with host governments and local village communities.  

Among the participants of the discussion were community foundations, global foundations, environmental ministries, and community activists. Many were interested to hear how communities organise to work with large corporations, while others were keen to learn about how women are impacted.

Several of the participants were also curious to see how foundations that are divesting from fossil fuel can still support communities with relationships with extractive companies. The diverse interests reflected the different perspectives and backgrounds in the room and the varying reasons participants chose to attend the session.

The Global Fund for Community Foundations supported research in Ghana and Southern Malawi on two different ways communities are working with extractive companies. In Ghana, one mining company approached the local government and nearby villages to establish an independent community foundation. Through several years of efforts, 1% of its annual profits is now funneled to 10 communities across 4 districts.

The transfer and usage of the funding is monitored by all the communities and divided into thematic areas and an endowment fund to ensure sustainability in the long term. Villagers can also apply for funding through a rigorous and bottom-up process that includes community durbars and technical assessments.

Another approach in southern Malawi is quite different. The local communities are still exploring possible ways to work with a hydroelectric company to ensure electricity production becomes more sustainable and long term financing for renewable energy is available in the future. The way forward needs the participation of 400 communities and the resolution of complex legal and technical issues.

Although the discussions had to finish within an hour, lots of new ideas and confounding questions on the structure, formation, and politics of managing extractive resources were raised. The key lessons were that sustained effort and building trust between the government, company, and communities are vital. There needs to be open lines of communications and real support from both the local government and extractive companies.

The short session was extremely enlightening, especially in light of the talks at the Global Summit to look at resources and funding with different lenses. Working with extractive companies is certainly not the solution for all local communities, and might even be detrimental for some. But it does offer another perspective on how to shift decision-making and power directly to communities.

Aimi Zhou is partnerships officer for CIVICUS.

Tagged in: Global Summit on Community Philanthropy

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