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?
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: Leading up to the U.S. Philanthropy and WASH seminar at World Water Week next Wednesday, August 29th, in Stockholm, we decided to pose three questions to the panel’s esteemed group of foundation and NGO leaders to give you a preview of their conversation. We will post a new interview each day this week so check back daily or sign up for e-mail updates. In this post, David Rothschild, principal of the Skoll Foundation’s portfolio team, speaks about the Foundation’s focus on social entrepreneurship and rethinking traditional funder-grantee relationships to drive large scale change.
1. Describe what your organization does and what your role is.
The Skoll Foundation drives large scale change by investing in, connecting and celebrating social entrepreneurs and the innovators who help them solve the world’s most pressing problems. Jeff Skoll created The Skoll Foundation in 1999 to pursue his vision of a sustainable world of peace and prosperity. Social entrepreneurs are society’s change agents — creators of innovations that disrupt the status quo and transform our world for the better. By identifying the people and programs already bringing positive change around the world, we empower them to extend their reach, deepen their impact, and fundamentally improve society.
We are now one of the leading foundations in the field of social entrepreneurship. Over the past 12 years, we have awarded more than $315 million, including investments in 91 remarkable social entrepreneurs and 74 organizations on five continents around the world that are creating a brighter future for underserved communities. In addition to our grantmaking, we fund a $20 million+ portfolio of program-related and mission-aligned investments. In 2003, we partnered with the Saïd Business School at the University of Oxford to launch the first academic center dedicated to social entrepreneurship, the Skoll Centre for Social Entrepreneurship.
The Skoll Award for Social Entrepreneurship celebrates organizations with high impact innovations that have a proven track record and are poised to scale their impact. Each year the foundation awards 4 to 6 organizations, led by an individual social entrepreneur. The award comes with 3 years of core support funding, usually between $750k and $1.5m total. Along with the award comes significant recognition; the organization becomes part of our family of Skoll Awardees, qualifying it for other opportunities. More information about the Skoll Awards, applications, and criteria can be found here.
Beyond investments and partnerships, we also host the annual Skoll World Forum, the premier conference on social entrepreneurship, and share the stories of social entrepreneurs through partnerships with leading film and broadcast organizations, such as the PBS NewsHour and the Sundance Institute, which help drive public awareness of social entrepreneurship and its potential to address the critical issues of our time.
As a principal of the portfolio team, I manage a variety of key relationships, including funded social entrepreneurs, domain experts, policy makers, corporate partners and co-funders. I develop and structure funding opportunities to drive large scale change in the focus areas of the foundation, with a special emphasis on water and sanitation, as well as tropical deforestation.
2. Tell us one provocative question or issue you hope to tackle on the U.S. Philanthropy and WASH panel, and why.
How can funders and potential grantees get past the “hogwash?” “Reporting” in the traditional sense goes just one way — from grantee to funder. This often ends up as data for the archives. How can we capture information in a way that’s useful for better decision-making by both funders and grantees?
The organizations doing the work on the ground are the ones implementing WASH strategies — they are the ones testing new ideas and approaches, learning from mistakes, and engaging directly with the communities and individuals that need improved WASH outcomes. Ideally, they are constantly innovating and adjusting. Yet traditional funder-grantee relationships can discourage or even stifle innovation. Funder-grantee relationships can be blurred by the desires of funders to only hear about the “impacts” their specific funding is driving, or by NGOs painting an unrealistically rosy picture hoping that funding may follow. Real world learning that leads to improved outcomes often results from talking openly about mistakes and actually making the big course corrections that can be so hard to do. When a funder and grantee have signed a grant agreement focused on specific activities targeting explicit outcomes, a grantee can become wedded to those activities, even if a course correction would actually improve those very outcomes. And if that is true, then what are the impacts that foundations really reward? What’s the behavior change that could unwind this perpetuation of only rewarding successful short-term implementations? How can funders and grantees use reporting processes productively to inform decision-making and achieve desired long-term outcomes? Can we do more to fund on-the-ground, real-time innovation? What are some of the best practices that ensure funder-grantee relationships that drive large scale change — the high impact outcomes we all want?
3. What are you most looking forward to about Stockholm and/or World Water Week?
I haven’t been to World Water Week for a few years, so I am looking forward to reconnecting with friends and colleagues, meeting some new folks, and learning about the latest research, innovations, and progress in the field.