Sharing Mining Benefits in Developing Countries - World Bank

Executive SummaryMining projects in developing countries are increasingly expected todeliver sustainable benefits to local, regional, and national stakeholders.With high mineral prices generating windfall profits and focusing growingattention on compensation payments and the necessity of earningand retaining their “social license to operate,” many governments andcompanies have been considering the use of foundations, trusts, andfunds (FTFs) as vehicles for sharing the benefits of mining operationswith the surrounding communities. If conceived as independent entitiesthey can provide opportunities for shared governance that can besustained long into the future. To achieve sustainable benefits, however,mining FTFs need to be integrated into the local context with a level ofcomplexity proportionate to their vision, funding, and capacity.The choice of a dedicated instrument, such as an FTF, can bring particularvalue where local capacities are limited, public services are absentor weak, and there is a need to demonstrate continued benefit from miningafter operations have closed. FTFs can be used to deliver communityinvestment programs for companies, facilitate the use of governmentpayments derived from mining for development, and manage compensationfunds.Comparing the experience of mining FTFs is made challengingthrough the varied definitions of foundations, trusts, and funds aroundthe world. In order to conduct any form of comparison it is necessary tofocus on the key attributes of the FTF, which typically have little connectionto their formal legal structure. The research conducted for this studyidentified six sliding-scale criteria that facilitate comparison and analysisof FTFs. The six criteria are as follows:• Programming approach—from grant making to fully operationalapproaches.• Financing structure—ranging from fully endowed funds to annual budgetallocations from a single source or multiple donors.• Geographic focus—extending outward from the project’s direct area ofinfluence to national and international programs.Extractive Industries for Development Series1