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Flat-pack philanthropy

The Ikea Foundation wants to be one of the biggest philanthropic foundations in the world. CampdenFB talks to its boss.
Per Heggenes is the chief executive of the Ikea Foundation

It’s a beautiful spring day in London. The weather is mild, the sun is shining – but the leaves are struggling to make an appearance on tree-lined Holland Park Avenue. Within days, a drought will be declared in this part of England, along with much of the south and east of the country.

In a small, but busy, coffee shop on the upmarket street, located in the Royal Borough of Kensington and Chelsea, Per Heggenes, chief executive of the Ikea Foundation, is talking about other droughts. In the UK, when the drought is announced, people will complain about the hosepipe ban and wonder if the water shortages will affect the London 2012 Olympics. In the Horn of Africa, last year’s drought killed tens of thousands of people, with millions more needing humanitarian assistance.

At the time, the United Nations High Commissioner for Refugees, António Guterres, said help couldn’t “come a moment too soon”. Within weeks, the Ikea Foundation, the philanthropic arm of the Swedish flat-pack retailer, responded with a promise of $62 million (€47.9 million) over three years – the largest private donation the UN refugee agency had received in its 60-year history.

Heggenes, tasked by Ikea founder Ingvar Kamprad with giving away hundreds of millions of euros, says the plan was to build a new refugee camp at the huge Dadaab complex in north-east Kenya. Dadaab was originally designed for 90,000 people – by last summer, it had a population of about 440,000. “You can go to the Dadaab and you can speak to people born of people who were born in the camp,” he says.

But, as Heggenes has quickly realised, when you’re dealing with war-torn countries, famine, drought, unstable governments (or a complete lack of) and rebel groups, even the best of plans don’t work out.

“Shortly after [the announcement] I was down there for the second time to plan the development of this camp – we had started to move some refugees in, about 10,000 in a space that would hold 120,000,” he says. Around the same time, the kidnappings of aid workers increased. Then the Kenyan government sent forces into Somalia – the Al-Shabaab guerrilla retaliated by planting improvised explosive devices in the camps.

The situation meant it had become “almost impossible” for international aid workers to do their job – and the Kenyan government didn’t want to move any more people into the camp. “So we were prevented from doing what we had set out to do in Kenya,” he says. Heggenes learned an important lesson – “you have to be flexible”.

With no background in philanthropy, the last three years have been spent learning about the sector. Before joining the Ikea Foundation in June 2009, the 55-year-old Norwegian was a public relations man – working at Burson-Marsteller in Oslo, New York and London, heading corporate affairs for Wallenius Wilhelmsen Logistics and running his own consultancy. “I’ve been through a very steep learning curve. But having been a consultant all my life, I’ve learned to catch up quickly,” he says.

Heggenes also had much to learn about Ikea. “My experience with Ikea was probably the same as yours – as a consumer.” Before being headhunted for the job, he had never met Kamprad. Now, he says, he’s “learnt a lot” about the Swedish entrepreneur and his business.

That’s lucky, because despite his age, 86-year-old Kamprad (pictured, right) is still a force to be reckoned with at Ikea. He founded the company in 1943 and created a foundation structure in 1982 to ensure its “eternal life”. As part of this process, the Ikea Foundation was established. The Netherlands-based charitable organisation is funded by the Stichting Ingka Foundation – which owns Ingka Holding BV, the parent company of the Ikea Group. It initially focused solely on architecture and interior design, and donations were quite small. “It was very important for Kamprad to establish a strong financial base before he started to recommend to the board to increase the financial giving,” says Heggenes.

But in the late 2000s – after the company “had grown to a very different size” and following alleged child labour problems in Ikea’s supply chain – the board started looking at how it could donate more money. Instead of increasing donations to architecture and design, the board wanted to focus on the developing world and children in particular. The following year was spent dealing with a Dutch court to expand the foundation’s charter.

The next task was finding employees, including Heggenes, for a foundation that previously had no administration. It still operates with a tiny staff. “We are only 10 people,” says Heggenes. Instead, the Ikea Foundation works with partners – organisations like Save the Children and UNHCR.

By teaming up with partners, the foundation has greater reach, he says. “We are not interested in helping thousands of children; we’re interested in helping millions of children. In order to do that, we need partners who have a network of hundreds of NGOs on the ground, who can access thousands of villages in India, for example, and help people pull themselves out of poverty.”

The second reason is expertise – working in diverse areas of the world requires cultural sensitivity, language skills and local knowledge. “As a foundation, we do not have the expertise to tell someone what to do to change someone’s life in India, in contrast to the Gates Foundation, for example, which has 500 PhDs sitting in Seattle,” he says. But their partners often do.

“The third reason we work with partners is their links to local government. You can’t achieve lasting change, at the scale we’re looking for, without being very closely linked to the government,” he adds.

That’s not to say that after making a donation, the Ikea Foundation has no more involvement. “We measure every euro we spend very carefully, to see that we get the results we set out to get,” Heggenes says. Like Ikea, the foundation has a philosophy of “constant improvement”. “[Ikea is] never satisfied, it always looks for ways to make things a little cheaper, to reduce the packaging, to improve the logistics, to use less material. In the foundation we do the same thing – that’s why I focus on innovation and efficiency.

“I push my partners to think about how to do things smartly, how to do things cheaply,” he adds. The ethos for getting things done as cheaply and efficiently as possible comes straight from Kamprad, who is notoriously frugal. “You won’t find any yachts or castles or expensive cars or anything in that family,” says Heggenes.

Kamprad has also always pushed a long-term approach. It’s something the foundation has embraced too, often guaranteeing its partners funding for three to five years. “Organisations like UNHCR never have funding for more than a year – that’s the way it works, so they can never think about investments over the longer term,” he says. “But sometimes, you can do things in a different way that is cheaper and more cost effective if you have a three-year perspective than if you have to do it year to year.”

That was the plan for Dadaab, where the camp was to be used as a “laboratory for innovation” – “we were going to use this camp as a way to look differently at how you build a camp, how to provide the services”. When it didn’t work out, UHNCR asked if they could take some of the funding to develop a camp structure in Ethiopia – which has also seen a huge increase in Somali refugees. The innovation laboratory has been moved there.

The foundation often takes the proof of concept approach. “We will take a problem, we will find a solution to that problem, we will test that solution in multiple villages and states in a country like India, for example. And when we see that the solution works, we will go to the government and the government will scale it up,” he says. For this, it often works with smaller organisations and social entrepreneurs, who “think outside the box” – another value picked up from Kamprad. “As a foundation, part of our strategy is to be a matchmaker between small, entrepreneurial smart organisations, with a specific solution to a specific problem, which could be much more effectively implemented in the large network of the big organisations,” he adds.

Much of the work the foundation does is based in countries where Ikea has strong links. “We work in probably about 10 different countries in Africa, we are in eastern Europe and across Asia. But we are heavily invested in India, Pakistan and Bangladesh, which are typical supply chain countries for Ikea,” says Heggenes (pictured, right). This partly stems from the late 1990s, when Ikea faced allegations of child labour in its supply chain. The retailer responded by introducing a new strategy to tackle child labour, but does Heggenes think the supply chain is clean now? He says he can’t speak on behalf of Ikea, but adds: “I don’t think any company would ever be able to guarantee it… but Ikea is working very hard to drive policy and it spends a lot of money controlling suppliers to ensure there are no children working in factories.”

For the foundation, it’s not as simple as making sure there are no children employed in factories and cotton fields. “You have to provide better schooling – because if you want kids to go to school instead of work, you have to make sure the school is of a quality that it makes sense for kids to stay in education. And ultimately you have to do something to improve the family’s income in a sustainable way, so that people can live a higher quality life on a sustainable basis,” he says. It also targets women to improve children’s lives – in April it pledged €30 million to the United Nations Development Programme to expand its Swaayam programme, a self-reliance initiative that encourages women to get involved in businesses.

Elsewhere, like in the Horn of Africa, the Ikea Foundation focuses on a “combination of humanitarian and development aid”, says Heggenes. “We are trying to do both because we want the refugees to get out of the syndrome of dependence as quickly as possible.” As well as providing money for tents and food, the aim, like in India and the rest of Asia, is to give people opportunities for a better life and an income stream, “and most importantly, prepare them for not being refugees anymore”.

Since joining, Heggenes has pushed Kamprad, who’s often been described as secretive and elusive, to be more open – “there is nothing to hide”. But Kamprad, he says, is almost like a Steve Jobs of Sweden – and, because of this, is popular fodder for the press. Last summer, the foundation’s donation to UNHCR was linked in media reports to the publication of a new book that referred to Kamprad’s teenage involvement in Sweden’s far right Socialist Union. But, says Heggenes, there was no link. The foundation had been planning the donation long before the book was published. Kamprad’s teenage activities had also been public for years – he “apologised profusely” over 20 years ago and still says it was the “biggest mistake” of his life, says Heggenes.

The adverse publicity isn’t about to deter Heggenes or Kamprad. “He has a keen interest in helping the people in the developing world … he believes … there is still an enormous need for help.” Along with his son Jonas, Kamprad sits on the foundation’s board. His wife was also a member until her death last year. “He is still as interested in both the business and foundation as he always was. But his health stops him from being as engaged,” says Heggenes. “He is very inspiring to work for.”

Last year, the foundation gave away €65 million – up 44% on 2010. The aim ultimately is to give away €100 million a year. “We hope to get close to this goal this year.” Once reached, the Ikea Foundation will be one of the largest private foundations in the world, he says. It’s already the biggest private donor to Unicef and Save the Children, as well as UNHCR. But €100 million is a lot of money – is it sustainable? Ikea had revenues of €25.17 billion in fiscal 2011. “The intention from the board is for me to spend €100 million each year – there is enough money there for me to spend for many years,” he says. 

First published in CampdenFO, Issue 14

Illustrations by David Lyttleton

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