Welcome to the April 2016 issue of the Global Washington newsletter.
IN THIS ISSUE
- Letter from our Executive Director
- Question of the Month
- Issue Brief: Impact Investing: Bridging the Gap to Meet Global Needs
- Featured Organization: Global Partnerships Invests in Opportunity
- Changemaker: Steve Hollingworth, Chief Executive Officer, Grameen Foundation
- Welcome New Members
- GlobalWA Member Events
- Career Center
- GlobalWA Events
Letter from our Executive Director
Several thought leaders in financing for development believe impact investing is the wave of the future and one way to help fill the trillion dollar gap needed to reduce poverty. This relatively new financing approach blends financial returns with social or environmental returns. Investors in the Pacific Northwest, including nonprofits and foundations, are promoting impact investing as a smart and sustainable approach to international development. You can read more about the topic and GlobalWA members doing impact investing in the issue brief below.
Our region is home to smart leaders in impact investing as well as other amazing leaders working on a variety of solutions to global poverty. In fact, this recent New York Times article features Seattle as a growing hub for global development. This is what Global Washington is about, and we’re bringing the community together on May 12 to celebrate. It will be an evening of delicious food and drinks, fun entertainment and auction items, and great company. I hope you will join us to toast the hard work our members do every day.
Question of the Month
Does your organization have anything planned for World Malaria Day next week? If so, tell us about it!
Impact Investing: Bridging the Gap to Meet Global Needs
By Andie Long
When it comes to financing solutions that address global poverty and inequality, there remains a persistent gap. Traditional funding sources have remained static or in some cases shrunk, just as needs have exploded worldwide. It is this gap that a growing form of financing, impact investment, intends to fill.
While 18th century economist Adam Smith identified self-interest as the “invisible hand” of the market, proponents of impact investing have dubbed it the market’s “invisible heart.” First coined in 2007, the term “impact investment” refers to “investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return,” according to the Global Impact Investing Network (GIIN). Unlike socially responsible investing, which aims to do no harm, impact investing intentionally looks for investments that can do the most good.
Put together, all of global philanthropy and aid funding amounts to billions of dollars. At the same time, the costs of solving problems such as access to healthcare, affordable housing, education, nutritious food, clean water, and more, add up to trillions of dollars. These challenges have only accelerated due to climate change and shifting geopolitical forces, all of which have ratcheted up the pressure on vulnerable communities around the world.
The annual impact investor survey report, released last year by GIIN and J.P. Morgan, surveyed 146 investors and found that collectively they manage over $60 billion in impact investments. If impact investments made up just 1% of total investments worldwide, it would amount to $2 trillion. This is what makes impact investing such an intriguing option.
There exists a wide range of businesses that attract impact investment funding today, from small women-owned enterprises and cleaner, more cost-effective energy solutions, to integrated mobile offerings that support small-holder farmers. Such investments vary according to investors’ risk tolerance, time horizons and expected rates of return.
While financial returns are relatively easy to measure, tracking and measuring the social and environmental returns on investments takes a bit more finesse. The leading measurement systems that impact investors use are B Analytics’ Global Impact Investing Rating System and the Impact Reporting and Investment Standards, managed by GIIN.
Nobody believes that impact investing alone is the answer. Grant money is still needed to take the risk out of new ventures and to explore untapped opportunities. Often, however, there is quite a bit of overlap between philanthropic spending and impact investing. A ruling by the IRS last year reassured private foundations that they may use their endowments to make investments that generate below market-rate returns without jeopardizing their favorable tax status. As a result, more foundations may be expected to add impact investing to their giving portfolios.
Depending on their size, expertise and focus areas, international non-governmental organizations (INGOs) also may be uniquely positioned to incorporate impact investing into their work. Jenny Everett, the deputy director of the Aspen Network of Development Entrepreneurs, has suggested that INGOs could add the most value by financing loans in the $25,000 to $500,000 range, the smaller end of the scale from what most institutional investors would normally finance, due to the perceived risk and management such loans would require. Additionally, INGO’s can help entrepreneurs develop their skills and their business models to the point where impact investors might deem them ready for larger investments.
Washington state has a number of organizations involved with impact investing in various ways. Below are descriptions of GlobalWA members that incorporate this unique approach in their work throughout the world. Learn more about these members and others on GlobalWA’s interactive map.
Global Partnerships is a nonprofit impact-led investor whose mission is to expand opportunity for people living in poverty. It invests in social enterprises that deliver high-impact products and services to poor families and communities in Latin America, the Caribbean and Africa. Its partners provide access to financial services, healthcare, education, training, clean energy and connections to markets. This access empowers people living in poverty to create better lives for themselves and for future generations. Since 1994, Global Partnerships has impacted more than 3.6 million lives by investing $183 million in 86 partners across 13 countries. www.globalpartnerships.org
Over the past decade, Grameen Foundation has helped fuel the growth of social enterprises that create income-generating opportunities for women and the poor, and deliver products or services that improve their lives. It has supported multiple social impact funds, and, as a founding sponsor of the Fairtrade Access Fund, a $25 million debt fund in developing countries, Grameen Foundation and its partners have enabled farmers’ organizations and members to affordably invest in processing facilities, farm improvements and new equipment. Grameen Foundation has also invested in social enterprises in Kenya. There, investments ranging from $250,000 to $750,000 have helped fill the start-up “pioneer gap,” where funding is most urgently needed. www.grameenfoundation.org/
In 2015, Mercy Corps launched its Social Venture Fund, a seed and early-stage impact investment fund, focused on capitalizing and accelerating for-profit social ventures in Kenya, Uganda, Indonesia and Nepal. Focus areas include agriculture, financial services, last-mile distribution, and youth and female employment. Social Venture Fund investments range from $50,000 to $300,000 (equity, debt or quasi-equity), and businesses selected for investment are those with the potential to scale nationally and regionally to sustainably impact over 1 million people. www.mercycorps.org/innovations/social-venture-fund
Unitus Seed Fund is India’s leading venture fund supporting startups “innovating for the masses.” Since 2013, the fund has made a total of 23 investments across sectors including education, healthcare, fin-tech, agriculture, retail and e-commerce, mobile and consumer. The fund’s latest impact report shows a doubling of portfolio reach, touching more than 650,000 low-income lives across 22 states in India. Founded in 2012, Unitus Seed Fund is part of the Unitus Group, a premier financial services group operating in India and other emerging markets since 2000. Unitus Seed Fund is based in Bangalore and Seattle, and is a member of the Capria Network. http://usf.vc/
Upaya creates dignified jobs for the poorest of the poor in India by investing in an ecosystem of profitable and scalable businesses in the poorest communities. Upaya runs a 24-36 month accelerator program that provides early-stage entrepreneurs with business development support and financial resources to launch and scale their businesses. The ten entrepreneurs currently in the portfolio employ over 2,500 women and men. Upaya tracks 25 social metrics, such as changes in household income, meals consumed per day, housing condition and children’s school attendance, to ensure employees are making progress out of extreme poverty. www.upayasv.org
3rd Creek Foundation (3CF) is a private family foundation dedicated to helping individuals achieve economic independence. A sister organization to 3rd Creek Investments, Inc., 3CF funds poverty alleviation programs in South Asia and East Africa through grant-making and impact investments. What makes 3CF unique is its size: 3CF makes impact investments of up to $20,000 per enterprise, reaching early stage social enterprises that often struggle to find financing. 3CF believes that employing effective, market-based solutions is key to helping individuals break out of poverty and sustainably improve livelihoods. www.3rdcreek.com/3rdcreekfoundation
Global Partnerships Invests in Opportunity
By Andie Long
Seattle-based Global Partnerships is an impact-led investor whose mission is to expand opportunity for people living in poverty. They invest in social enterprises in Latin America, the Caribbean, and Africa that deliver market-based products and services that empower people to earn a living, provide for the basic needs of their families, and improve their lives.
One of these social enterprises is Friendship Bridge, a nonprofit organization that empowers impoverished Guatemalan women to create a better future for themselves through microfinance and education using a village bank model. Village bank members gather on a regular basis to make deposits and to review outstanding business loans used to finance such things as restocking inventory for a grocery store, buying bulk food items for a restaurant, or expanding a business space.
All village bank members are women, and the training sessions that Friendship Bridge provides – from business and financial education to health and nutrition seminars – are geared toward meeting their needs. Health seminars, for example, might focus on dispelling misconceptions that can keep women from getting the right care. One common misconception in parts of rural Guatemala, is that if a woman is single, divorced or widowed, she doesn’t need a regular Pap smear test. This simple health screening, which can detect very early stage cancer cells on the cervix, has saved many thousands of lives around the world. In Guatemala, cervical cancer is the second most common cancer among women, and it certainly makes no distinctions in terms of the marital status of those it affects.
Besides microfinance and value-added services, such as those provided by Friendship Bridge, Global Partnerships also invests in social businesses. These include organizations like farming cooperatives that provide technical training, financing for high quality agricultural inputs and access to markets, so that smallholder farmers can increase their incomes. And businesses that sell solar lights in rural areas, allowing rural households, like their urban counterparts, to reap the benefits of clean, renewable, and affordable lighting. Solar lights, in fact, are one of the sustainable solutions that Global Partnerships’ research team identified early on that fueled its recent expansion into East Africa.
Global Partnerships opened its Nairobi, Kenya office in June 2015 to begin making impact investments in sub-Saharan Africa. “Africa still sees the most prevalent and persistent poverty rates in the world,” says Rick Beckett, the President and CEO of Global Partnerships. “They also have limited access to electricity, so solar lighting is highly relevant.”
These investments are supported through philanthropic capital, which Global Partnerships uses to conduct rigorous and thoughtful research to identify high-impact products and services like solar lights that can significantly benefit poor and marginalized groups in the developing world. These philanthropic funds also support the resource-intensive impact measurement that ensures these investments not only generate financial returns, but also create a positive social impact.
“There are not enough philanthropic dollars in the world to reach hundreds of millions of people on an ongoing basis,” says Beckett. “So you need both philanthropic capital, which is risk tolerant, and social investment capital, which values people and the planet in financing things that work.”
”Most of our investors, about 85 percent, are also donors,” says Beckett. “They see the value in blending different types of capital to make a true impact.”
Since 1994, Global Partnerships has impacted the lives of 3.6 million people across 13 countries in Latin America and the Caribbean through more than 300 investments made to 86 partners, totaling $183 million. With the expansion to Africa, they aspire to raise that impact to a total of $500 million in impact investments, impacting 30 million lives within the next ten years.
Steve Hollingworth, Chief Executive Officer, Grameen Foundation
By Andie Long
Steve Hollingworth, the Grameen Foundation’s newly appointed CEO, draws heavily on his Midwestern values in seeking ways to alleviate global poverty. The first, and most important, he believes is empathy.
“A deep sense of empathy would help people understand the tremendous loss of human potential from having close to a billion people go hungry every day,” says Hollingworth.
Growing up in Elgin, Illinois, a mid-sized city about an hour northwest of Chicago, Hollingworth had little exposure to global poverty. All that changed in the late 1970s when, as an undergraduate at Augustana College in Rock Island, Illinois, he enrolled in a study abroad program in Bogota, Colombia, through the Universidad de los Andes. There he studied the economies of Latin American countries.
Hollingworth recalls the first time he witnessed the extreme injustice and despair of poverty in the faces of Bogota’s abandoned children. Referred to locally as gamines, they often huddled in the city’s sewers at night, and roamed the streets by day.
For the first time, Hollingworth also met people engaged in humanitarian work, people who countered the desperation of the gamines with a passionate commitment to social inclusion and justice. Accompanying these development workers, Hollingworth met many street children of Bogota, and learned of their stories.
It was this singular study abroad experience that set the course for Hollingworth’s entire career.
Back home in Illinois after his study abroad, Hollingworth announced his intention to go into the humanitarian field. He remembers everyone – his mother, teachers, friends – trying to talk him out of it. They worried about his safety and security, extended periods away from home, and how well he would be able to provide for his own family.
They needn’t have worried. Hollingworth has spent the last 30 years working in international development, serving the needs of the world’s poorest people, and at the same time being a devoted husband and father. Hollingworth and his wife, Ann Griffith, have three children: two daughters, Gwennan (now 31) and Angharad (29), and a son, Aled (27 years old). It is his wife, Ann, whom Hollingworth says has most influenced his life.
“Ann has had a lifelong commitment to international development issues,” says Hollingworth. “She comes from a family that has a strong ecumenical Christian background, and a very broad set of caring values. She’s always been informed and involved in issues related to poverty and human rights.”
In his continued search for solutions to poverty, Hollingworth holds two other deeply ingrained, and intertwined values: community and solidarity. “Our common good is more important than the individual enrichment of very few people,” he says.
As one example of how this manifests at the Grameen Foundation, Hollingworth references MOTECH, a digital technology system that Grameen Foundation first designed to use in Ghana and then later expanded into an open-source mobile platform, offered freely to other organizations that want to provide timely health information on a broad scale.
Why make such a useful product freely available? “It’s a community good,” Hollingworth says. “It’s not for proprietary interest.” Grameen Foundation itself is partnering with the government of India, using MOTECH to deliver crucial health information to pregnant women and new mothers in areas with high maternal and infant mortality. The program has already reached one million women, and aims to reach more than ten million.
Hollingworth notes that most nonprofit organizations can spend no more than US$4-$15 per beneficiary per year. Therefore, the overriding calculation is how to do the most good with limited resources. While open-source technology can help spread viable solutions across partners and networks more affordably, Hollingworth also cites the cost-effectiveness of investing in women.
“There’s a universal conclusion that if you want to arrest poverty, the most important thing is the ability of women to control the size of their family, contribute economically, and make decisions about the health and education of their children,” says Hollingworth. “If they have that power, it greatly reduces the chances of poverty in the next generation.”
Prior to coming to the Grameen Foundation, Hollingworth spent four years as the CEO of Freedom from Hunger. Before that, he held progressively more senior roles at CARE, including four years as chief operating officer, and also serving more than two decades in the field, including as country director in India, Sri Lanka, and Bangladesh – the largest CARE mission in the world.
Welcome New Members
Please welcome our newest Global Washington members. Take a moment to familiarize yourself with their work and consider opportunities for support and collaboration!
Restless Development USA works to establish strategic partnerships with international development agencies, the U.S. government, United Nations agencies, the private sector and NGOs to advance youth-led development policies and practice and to raise interest and investment for Restless Development’s global work. restlessdevelopment.org/usa
April 21 – May 26: Shoreline Community College // Great Discussions – Eight Thursday Evenings
April 28: 501 Commons // 5th Annual Directory Networking Party
May 5: World Affairs Council // The Future of Water Worldwide
May 14: Mobility Outreach International // 13th Annual Steps to Healing Auction and Gala
May 14: Global Visionaries // 15th Annual Auction and Gala
May 15: Water1st International // Carry5 Walk for Water
May 17: Washington Nonprofits // Washington State Nonprofit Conference
May 20: GSBA // Scholars Dinner
Partnerships Manager – Adara Development
Donor Relations, Corporate Sponsorship and Events Officer – Global Partnerships
Sanitation Program Manager – Splash
For more jobs and resources, visit http://globalwa.org/resources/careers-in-development/
April 21: Networking Happy Hour
May 12: Spring Member Celebration
December 8: Global Washington’s 8th Annual Conference