dloHaiti receiving a distinction from Imagine H2O prize for consumer innovation. Credit: Imagine H2O

Editor’s Note:This guest blog is authored by Jim Chu, CEO of dloHaiti, a for-profit, investor-led initiative to provide cleaner and more affordable drinking water for underserved Haitians. Named after the Haitian Creole word for water, dloHaiti recently earned a top distinction from Imagine H2O — a global business plan competition and accelerator for water startups. In this blog, Jim discusses the merits of market-based approaches to WASH solutions.

Invariably, we are shown scenes of handpumps in poor villages in Africa or Latin America and happy children drinking water. We instinctively reach for our checkbooks, ready to fund worthy WASH projects that change people’s lives for the better. 

When statistics later reveal that most charity-driven WASH projects fail or that the majority of the handpumps in those pictures stop functioning within a few years, most of us usually don’t pay attention. (According to a 2007 UNICEF study, 40% of the handpumps in Africa no longer function and most handpumps have a functional life of 3-5 years.)  We like to believe that if we provide enough money — or the right technology or more equipment — we can solve most of the issues of the poor in developing countries. For many charitable projects, especially in WASH, this is a mistaken belief.

Sustainable water and sanitation infrastructure — whether it’s a large water treatment center, a network of pipes, or just a community handpump — requires the right institutions to make it work long-term. Whether you call it “capital asset management,” “community-managed systems,” or just “sustainability,” it means that the recurring income, technical skills, supply chain support, and the right financial incentives need to be in place to keep things working. For many donor-funded, NGO-driven projects, this is an important aspect that’s missing.

However, there are already well-established institutions in almost every country that can provide sustainability:  the government and the private sector. But many fear governments in poor countries. Isn’t it their failure to provide basic services to its citizens that is the root of the problem? Who wants to give money to governments whose leaders will just shift it to an overseas bank account? Even more, many fear private markets and business in particular. Providing water shouldn’t be about making money. Water is a basic human right, after all, so shouldn’t it be free?

Jim Chu in the field responding to floods in Pakistan. Credit: Monis Rahman

This line of thinking leads to a situation similar to that in Haiti, where I’ve been working in WASH since 2010. The government is starved of funds to drive any meaningful change, much less multi-billion dollar projects. The private sector thus provides much of the services for potable water to the population. Unfortunately, their model relies on water trucking and is wasteful, dirty, and expensive. The Haitian consumer suffers, paying 12 cents per gallon for treated potable water — that’s 80 times more than the average price of municipal water in the U.S. Meanwhile, well-intentioned NGOs put in place programs that are only stopgaps, or they stop working after funding dries up because there is no sustainable capital asset management model in place. Worse, their efforts can put well-run local water providers out of business. I call Haiti a WASH equipment graveyard; I’ve seen enough non-functioning and abandoned water systems in Haiti to lose all hope — and I confess that I’ve contributed to some of that myself.

Successful WASH projects need to have a clear strategy for ensuring that the right institutions, resources, and incentives stay in place to keep it self-perpetuating — or even expanding — once philanthropic funding ends. Governments clearly have a strong role to play, and the endgame is strengthening — and cleaning up — their capacity to properly regulate and eventually execute a comprehensive WASH strategy for their populations. NGOs cannot replace the long-term role of the government.

Philanthropic capital could also do more to leverage the private sector to achieve social goals. An impactful role for donors is to facilitate innovations that businesses can then implement at scale. Donors can also support entrepreneurs who are trying to solve hard social problems by creating better, cheaper products and services that serve the basic needs of the poor. 

So what’s standing in the way of applying more market-driven approaches in philanthropy? Some of the barriers to a productive business-philanthropic partnership are cultural. Whether it’s about risk-taking, understanding markets, or views on profit, a bar conversation between a Doctors Without Borders volunteer and a marketing manager at Apple has a good chance it will end in tears. But businesses should not be seen just as a source of philanthropic funding or a group to be disdained. The same people who are creating breakthrough consumer products or taking big risks to innovate for profit could be spending their time figuring out the best market-driven ways to lower the cost of water in Haiti.

Ultimately, we need more entrepreneurs who are willing to build new companies that provide financially sustainable solutions to the world’s water challenges. Imagine H2O, a global conduit for water entrepreneurship and innovation, is leading the effort to identify and support promising water startups. The organization’s business plan competition and accelerator program is a powerful path-to-market opportunity for entrepreneurs entering the water sector.   

My call to action — whether you are a donor, MBA graduate, or NGO volunteer —is to get business and people in business more involved in what they do best — innovating — to improve the lives of so many at the bottom of the pyramid.

Editor’s Note: This guest blog was authored by Trupthi Basavaraj and Rachel Findlay of the charity think tank and consultancy NPC, which provides strategic support to the Stone Family Foundation and has coordinated the Stone Prize for Innovation and Entrepreneurship in Water. Here they share some of the key lessons that NPC has learnt from running the Prize. A version of this story also appeared in Alliance magazine.

Chlorine dispensers used by communities in Kenya. Credit: Dispensers for Safe Water

Prizes have long been successful at inspiring technological innovation, from determining a ship’s longitude to creating a toilet that costs less than five cents per user per day to operate. What is less common is using a prize as a tool to stimulate innovation in service delivery. So when the Stone Family Foundation set up the Prize for Innovation and Entrepreneurship in Water, it was all about doing just that.

As a part of our wider strategy to support entrepreneurial initiatives in the water, sanitation, and hygiene (WASH) sector, we launched the £100,000 Stone Prize earlier this year. After an extensive eight-month process of identifying and short-listing candidates, we finally found our Prize winner — Dispensers for Safe Water (DSW) in Kenya — and four other organisations that we hope to support outside of the Prize.     

The Prize came about as a way to identify early stage water initiatives that the Foundation could support, and eventually help scale up. The search was for innovative approaches to delivering safe water in a sustainable and cost-effective manner to those without access in sub-Saharan Africa, and South and Southeast Asia. For the Foundation, running the Prize has been an exciting process, and one that has taught us several key lessons, three of which we have highlighted here.

Firstly, to attract the right type of initiatives and ultimately short-list candidates, it was important to set clear criteria — without being overly prescriptive. We identified six criteria for the Prize, but with a particular emphasis on two areas: a) innovation in technology or service delivery, typically in response to a specific need, and b) innovation in financial model, looking to harness the power of the private sector.

Dispenser’s valve releases metered dose of chlorine into jerricans. Credit: Dispensers for Safe Water

DSW meets both of these requirements. It addresses a clear need in rural Kenya: its water purification technology, a simple dispenser, is filled with chlorine and placed near a communal water source, allowing individuals to treat their water free of cost with the correct dose of chlorine. (To learn more about DSW's work, read this post.) But what makes this initiative truly exciting are two innovative financial models. First, the dispensers generate carbon credits by reducing the demand for boiling water using firewood, which DSW will eventually be able to sell. Second, DSW is able to bundle the dispenser as part of a wider package of agricultural goods sold by its partner, One Acre Fund. If successful, both models offer new ways of making water purification accessible and sustainable for low-income communities. It will also allow DSW to expand the Kenya Chlorine Dispenser System program into other countries.

Secondly, running a prize scheme is not just about funding. It’s also about generating publicity in a way that reactive grants programmes cannot. Getting publicity right is important not only for attracting applicants, but also for promoting the winning candidate and its approach. Our strategy was to identify the right partners and to leverage their extensive networks, reaching out to organisations both within the WASH sector and outside it. At the end of the first round, the Foundation received 179 applications from 39 different countries. We hope the Prize will not only help DSW gain recognition and attract further support from other funders, but also stimulate wider discussion on what innovation means for the water sector.

Finally, we also learnt that it was important to have the right reward in place. The promise of £100,000 for scaling up the winning initiative attracted a pool of strong applications, but as we narrowed down the candidates, it became clear that the level and type of funding offered through the Prize was not necessarily appropriate for all. As a result, the Foundation is now looking at the best way to support four highly commended candidates outside the Prize framework — this could be through providing investment or smaller grants to further test an aspect of the approach, or simply by helping to identify partners to move an initiative from pilot to scale.

For the Stone Family Foundation, the Prize has been a successful endeavour. It has enabled us to find some exceptionally strong grantees for the Foundation that we might not otherwise have discovered. It has also given us a sense of the wide range of innovations within the WASH sector, especially in countries such as Kenya, India, and Cambodia where the local environment has led to a growth in entrepreneurial initiatives. Much depends on what a funder is looking for and how a prize is structured, but we feel prizes can be an incredibly powerful tool for identifying and driving innovation.

Local resident, Francesca Nhantos, displays the piped water accessible to her from her home. Credit: WaterAid / David Winder

Editor’s Note: This post was authored by David Winder, chief executive of WaterAid USA. David talks about WaterAid’s work with local NGOs in Mozambique to make water and sanitation services affordable to poor, urban populations through innovative financing models. A version of this story originally appeared here. 

Having just returned to New York from Maputo, the capital of Mozambique, I'm reminded how lucky we are in this city to have reliable water and sanitation services. Thanks to investment in water pipes and sewers in the 19th century, diarrheal diseases that ran rife through our city a few generations ago have all but been eliminated, and we take it for granted that safe drinking water is available at the turn of a tap.

As in many other large cities across the developing world, Maputo is facing rapid growth of low income settlements and major challenges in providing the population with access to safe water and sanitation. The latest data (UNICEF/WHO 2012) show that only 77 percent of Mozambique's urban population has access to improved water sources. The situation is even grimmer when it comes to sanitation, with only 38 percent of the urban population having access to safe sanitation. 

The country has one of the highest infant mortality rates in the world with 86,000 children dying before their first birthdays every year. Diarrhea is one of the leading causes of child deaths and 44 percent of children under five are undernourished.

Increased investment in providing access to safe water and improved sanitation dramatically impacts child survival. In low-income areas of cities like Maputo, that is often a complex task. High population density, transient populations, and poor quality housing are part of the problem and present challenges to those striving to improve water and sanitation infrastructure.

Often in low-income urban neighborhoods the provision of piped water to homes is simply too expensive for ordinary families to afford. One way of tackling that problem is by helping local residents band together and negotiate affordable payment plans with water service providers with the help of local NGOs.

Last week I visited the community of Costa do Sol on the northern periphery of Maputo and found that a community water users' association, ACODECOS, established with the help of WaterAid and local partner organization ESTAMOS had achieved great success in expanding the number of household water connections over a five year period, with very positive results for the health of the community, particularly children. Data given to us by the Ministry of Health showed that the number of cholera cases had dropped from 371 in 2003/4 to only 21 in 2008/9.

One reason why this was achieved was ACODECOS' successful negotiation of a reduction in the household connection fee to $50 (from Aguas de Mozambique, a private company receiving 75 percent of its investment from government) that can be paid in installments.

Local resident Francesca Nhantos (shown in the photo at the top) told me that having piped water available in the home had transformed her life. "Before we had the standpipe, a water truck came to the village once a week and we had to pay 5-7 meticais (20 cents) for 20 liters of water and we weren't sure how clean it was so we had to boil it."

Laura Jose is washing her hands while Arminda Manuel, the local health promoter, is looking on. Credit: WaterAid / David Winder

As Arminda told me, other changes, such as the installation of latrines, hygiene education, the provision of drinking water and toilets in schools and the disposal of solid waste, have also helped to dramatically improve the health of the community.

With the absence of piped sewerage in densely populated low-income urban communities, disposal of fecal sludge from latrines also poses a major challenge. Last week, I visited a pilot project managed by Water and Sanitation for the Urban Poor (WSUP), an organization working closely with WaterAid. This project shows how offering loans to small businesses can help with the development of affordable waste management services.

Paulo Biane Vaiene from the Maputo community of Maxaquene is one such entrepreneur benefiting from financial assistance. His small enterprise UGSM Vaiene started emptying small septic tanks using a small pump and tank called a "gulper" that was pulled by a donkey. With a loan from WSUP, he was able to buy a truck that has allowed him to cover more clients and expand his radius of operations. Business is thriving, more households can now take advantage of his services, which cost around $20 and are required twice a year, and public health is safeguarded by the safe disposal of the waste.

Just as Paulino has demonstrated that fecal sludge removal can be a profitable business, there are opportunities to develop small businesses selling a selection of toilet designs to families. A range of viable technologies has been developed, but business models need to be developed with finance plans to ensure that options are affordable to all families regardless of income. We found that all needed construction skills exist in the communities, so the focus needs to be on ensuring these skilled laborers are able to find employment that not only helps their families out of poverty but also helps communities stay healthy and meet their basic needs.

These experiences show how innovative financing models can impact on health in low-income urban communities. When water connection charges are not only reduced but split into installments, poor families can afford to get linked to the municipal piped water system, and the support of small private service providers ensures families have access to effective and affordable fecal sludge removal services until the sewage network can be expanded.

These examples also show the importance of linking larger systems — such as pipes for the water utility or waste management and sewage systems — with community and household-based needs and approaches. Reducing poverty and protecting people's health and well-being requires a combination of efforts, from local capacity building and small business development to larger-scale infrastructure development. I was inspired by the efforts being made by NGOs and community-based organizations to build healthy communities. The skills, the demand, and the creativity are there. We have so many opportunities now to make the most of them.

Editor’s Note: Our new Spotlight On... series shines a light on funders and NGOs working to bring critical solutions to water, sanitation, and hygiene issues. This guest blog is the first in the series. It is authored by Adrian Fradd, senior consultant at New Philanthropy Capital, who is in charge of the day-to-day management of the Stone Family Foundation and provides strategic support to its trustees.

Credit: Photo courtesy of SNV Cambodia

Being a new funder in the WASH sector has sometimes felt like being the new kid in high school. It can be hard to know where you fit in — particularly when you’re not that big, or experienced, or well-connected. You have to decipher a whole new language and get up to speed on all the unspoken power dynamics and history. And there’s the danger you’ll fall in with the wrong crowd, try and be something you’re not, or get frustrated, drop out, and go it alone.

Of course the analogy only goes so far, and also has the effect of making people think I had a very unhappy time at high school. But I guess in a way it highlights some of challenges that a new, mid-sized funder faces when trying to work out its strategy, and the importance of initiatives like WASHfunders.org.

For us at the Stone Family Foundation, we still feel very much like the new kids, but we’re getting a clearer idea of the direction we’re heading in and the way we want to spend our annual WASH budget of £4m ($6.25m).

Our current approach is based on three main hypotheses. First, that market-based solutions, have the potential to provide sustainable, scalable, and efficient water and sanitation services to low-income households. Second, that more grant funding is needed to help these initiatives to transition from a successful pilot to operating at scale. And third, that the Stone Family Foundation is well-placed to fill this funding gap. We can provide grants of a meaningful scale, we have an appetite for risk, and we can take advantage of the business skills and experience of our trustee board and their contacts.

Since the end of 2010, we’ve started to put in place specific funding programs to refine, develop, and test these hypotheses. And as we seem to like to do things in threes, this has coalesced around three main initiatives.

The first, the major grants program, is focused on three countries, Cambodia, Zambia and Tanzania, where the foundation is making a small number of grants, with an average size of £1m ($1.6m). In Cambodia, it is funding a cluster of work in sanitation marketing — two programs are scaling up their work with local entrepreneurs, and then a third is exploring how to integrate sanitation marketing into a portfolio of approaches (such as targeted subsidies, CTLS, and government regulation) in order to achieve 100% sanitation coverage in a specific area.

The second, an innovation grants program, is looking to reach further down the food chain, identifying projects that are at an earlier stage of their development. In sanitation we are continuing with a proactive model — as promising ideas have been relatively straightforward to source — but with water, we’ve taken a different approach and have set up the Stone Prize for Innovation and Entrepreneurship in Water. (First round applications close on 22^nd March.)

And then the third, more nascent initiative, is a strategic grants program looking at how the foundation can help strengthen the resources and the support available to organisations looking to develop and scale their work. So for example, the foundation is funding Monitor Inclusive Markets to support a group of Indian organisations to test and strengthen the business model of their urban water purification. And it is exploring potential ways to open up sources of finance, by partnering with social impact investors and microfinance providers, as well as potentially supporting organisations to access carbon financing.

This is where we are at the moment. It’s all quite early stage, but also quite exciting, and we feel we’ve already learnt a lot, and are starting to refine and challenge some of our working hypotheses — for example, the specific role and potential of market-based solutions, and also the extra capacity the SFF will need to fund in this space.

As we learn more and our partners start to report back on the progress of their projects, we’ll post and blog the lessons on this site, and we’re happy to talk with others off-line and share our experiences in more detail — like why we chose Cambodia, Zambia and Tanzania as a focus for our major grants program. We’re also currently writing up a short report on what we’ve done to date, which should be out at the beginning of April.