A conversation with Open Society Foundations on September 9, 2014

Participants

• Ida Kenny Le Duc – Director of Philanthropic Partnerships, Office of the President, Open Society Foundations
• Andi Dobrushi – Executive Director, Open Society Foundation for Albania
• Cari Tuna – President, Good Ventures

Note: This set of notes gives an overview of the major points made by Ms. Le Duc and Mr. Dobrushi.

Summary

Good Ventures received updates from the Open Society Foundations (OSF) on three projects in Albania that Good Ventures is co-funding: the Energy Efficient Green Schools project, a project related to higher education reform, and the Youth Entrepreneurial Support project. Progress has been made on all three projects.

Energy Efficient Green Schools project

The Global Institute of Sustainability (GIOS) at Arizona State University recently completed research on 2,200 Albanian primary and secondary schools. From this research, GIOS will produce a feasibility study describing the costs and benefits of retrofitting and constructing sustainable, energy-efficient schools. This report will:

• Describe the current state of affairs and target the areas in the worst condition.
• Present 8 or 9 possible prototypes of green schools, adapted to different geographic environments.
• Provide suggestions for integrating sustainable development curricula into the Albanian education system.
• Estimate the funding needed for this work.

About 700 of the 2,200 schools examined are in very poor condition. These would cost about $150 million total to renovate. The Ministry of Education does not yet have funding available for this work, but it will be able to use the GIOS report to describe the needs, priorities, and costs to potential donors and investors (e.g., the World Bank, the International Monetary Fund, private foundations). Prior to the GIOS report, it was difficult for the Albanian Ministry of Education to offer concrete details to potential funders. The Albanian Government hopes to secure funding from several different donors for different portions of this work.

Schools and churches serve as the main community centers in Albania. By assisting the Ministry of Education in this process, OSF’s long-term vision is that these “green schools” will help spread the concept of sustainable development from students to parents and into the broader community.

Higher education reform project

The Albanian government is pursuing major reform of Albania’s university education system. The reform law will target three main areas:

• Governance: e.g., under the reformed law, university deans will be responsible for determining the use of government funding they receive and will be accountable to a supervisory board (currently, the government dictates how funding to universities is spent). Universities will also compete for new funds, to be granted to projects that reflect the needs of the country.
• Financing: e.g., the law will create a system to measure the impact of government funding to universities. It may take time for universities to learn how to record and report the relevant data.
• Operational and academic structure

Consultation process and drafting the law

The Albanian government used funds provided by Good Ventures to conduct a comprehensive consultation process with key stakeholders on the potential reform. The process involved the setting up an expert commission and a survey of politicians from different parties, as well as university professors and other key stakeholders. This process lasted from March through July. Based on this consultation, the government produced a report and a white paper, which is currently being reviewed to ensure that it is legally sound. A bill drafted from the white paper will be presented to parliament where a council of ministers will debate the bill.

The consultation process was designed to allow the reform to pass before the start of school in October, giving universities a full year to make changes in accordance with the law before the following academic year. It will likely take ten to fifteen years to implement the full extent of the reform.

An expert commission, headed by an Albanian professor at the London School of Economics, helped to design the reform. Because the commission was politically diverse and the government did not pressure the experts in a specific political direction, its output was credible and did not face objections from any particular group in academia. A government-sponsored media campaign has helped to influence public opinion in favor of the reform. The reform will likely face opposition from some people who benefit from the status quo (e.g., the law removes university professors’ ability to have paid contracts with several universities while only actually teaching at one).

OSF observed that this public consultation process provides a blueprint that could be adopted by other sectors of the Albanian government for other areas of reform. It demonstrated that having a standard process is more effective than allowing each individual official to decide on process.

Funding the consultation

The Albanian Ministry of Education initially sought funding for the consultation from the World Bank and USAID but found that it could take up to two years to reach an agreement with these groups (e.g., the World Bank said it could give an answer to the proposal by April 2015). The project would have lost momentum during that time. Good Ventures’ funding allowed the consultation to happen by the desired October date.

Good Ventures funds covered about 85% of the total cost of the consultation. The Albanian government provided additional funding. The government alone would not have been able to cover the cost of the experts involved. The credibility of OSF’s brand, including its relationships with key stakeholders within government and across the political and academic spectrum in the country, helped attract effective experts to the commission.

Funds saved by this reform will be used to offer merit-based scholarships to students.

Youth Entrepreneurial Support project

OSF’s Youth Entrepreneurial Support project aims to “establish a business incubator in Tirana, which will offer its services for talented start-ups in the new-technology field.” After initially slow progress, the project has recently made several key advances:

• Project manager: OSF has chosen a project manager to help get the incubator started. The manager has project-level experience working with Oxfam and local experience in Tirana.
• Financial partner: A Boston-based Albanian venture capitalist involved with the Harvard Innovation Lab has asked to partner with OSF to create a similar innovation lab in Tirana. The venture capitalist will provide funding to the incubator for up to ten projects in the first year, while OSF will provide seed funding, its project manager, and its local expertise.
• Location: A local community college has agreed to let OSF and the project partners use its premises for the incubator.

There have not been many previous business incubators in Albania, but there is strong interest from many Albanians. Mr. Dobrushi visited some relatively successful business incubator projects in Kosovo, trying to build partnerships and learn from their experiences particularly in terms of sustainability. Kosovo and Albania share a language and have similar cultures and traditions. The incubators in Kosovo have received $6 million in donor and government funding.

Previous difficulties

Over the last six to eight months, OSF engaged in some unsuccessful negotiations, including:

• Discussion with a local bank about providing startup funding for the incubator.
• Discussion of a partnership with a multinational corporation with a large presence in Kosovo.
• Lengthy negotiations asking government ministries for assistance. Mr. Dobrushi initially expected the Ministry of Social Welfare and Youth to provide facilities for the incubator. While the Ministry supports the incubator project it is not in a position to provide concrete support (e.g., use of a government building or help finding premises at a university).