Intangible assets: Creating value for communities

Fundamental changes sweeping the global economy point to one emergent reality: knowledge and other intangible assets have now become the most important of resources. This can be observed in the corporate sector where market values have continuously grown way over book values.

Indeed, intangible assets have become more important than tangible assets as repositories and creators of market value.

The same can be observed in communities. An analysis of seventeen successful and innovative development projects in the Philippines revealed that their underlying success factors were not technical or tangible factors but largely “internal changes in the participants” such as a “we” feeling among the community (cohesiveness, or high social capital), a strong feeling that “this project is ours” (sense of ownership), and strong commitment (the motivational aspect of human capital).

At the national level, the intangible quality of “social trust” had been correlated by Fukuyama with lower transaction costs and higher level of economic development. In a U.K. government review, various studies noted that high social capital is associated with better health, improved longevity, better educational achievement, lower rates of child abuse, and less corruption in government.

The lesson is clear: development is not just about technology, money and physical infrastructures, development is also and perhaps more so, about “inner infrastructures” such as trust, commitment, goodwill, sense of ownership, self-worth, etc. Sustainability is not only economic viability, it is also human and social empowerment as well as caring for the earth and all its life-giving natural support systems.

Hence, it is by leveraging the intangible assets of a community that anti-poverty projects can succeed.

A project can interact with the community's assets and vulnerabilities in various ways.

Using intangible assets to build tangible assets and more intangible assets.  A project can use, take advantage of, or leverage on combinations of existing community intangible assets to build tangible assets. The aspirations of the community members for a better life, coupled with a strong community organization that has generated a lot of goodwill with a funding organization, and the trust that the community has among each other, are all used to make a project achieve its objectives.  
Address weaknesses in intangible assets.  The project neutralizes, makes up for, fills the gap, or address one or more weaknesses in community intangible assets.   A project may strengthen the systems and processes of a community organization to reduce opportunities for corruption, or recruit a different leader with widely known integrity to guide an organization in rebuilding the tarnished image of the community.  Healing ethnic, religious or social conflicts across different or among heterogeneous groups (“bridging” social capital) or facilitating growth of trust, goodwill and cooperation within a homogeneous group (“bonding” social capital) may be needed prior to any development project.
Using tangible assets. The project uses, takes advantage of, or leverages on whatever little tangible assets a community may have.  A project, for example, may use grant money to start an enterprise most appropriate to the unique cultural and human capital of the community.
Sustainable build-up of structural and stakeholder capital.   To increase chances of sustaining project gains, a livelihood project, for example, may have set up a reliable export marketing channel, or may have trained local leaders in managerial and entrepreneurship skills.
Seeking affirmative and equitable access rights.   Access rights for the community to land, natural, scenic, cultural-historical and other resources can be obtained from the local or national government, or from private property owners.  Such rights are a form of capital because it enables the community to use it for production purposes.
Seeking legislative or policy reforms.  There are systemic drains outside the control of local communities which contribute to local poverty.  These include drain in natural capital, in human capital, in fiscal resources, and in private financial resources. The government can take affirmative action to remove or reduce these drains.