Water.org, nonprofit with a venture fund
Water.org isn’t your typical nonprofit – it has its own venture fund and a growing number of supporters in Silicon Valley who want to use their tech savvy to help provide clean water to 1 billion people around the world.
“When you think of nonprofits, you think of old, large, traditional, bureaucratic organizations. But today a new crop of progressive charities are aligning themselves with the valley, and there’s a mutual sharing of culture taking place,” said Michael Birch, an investor in the cause, founded by water expert Gary White and actor Matt Damon.
One product of this cross-pollination is the adoption of a venture capital model to jump-start projects without having to rely on lengthy grant application processes.
Water.org’s New Ventures Fund aims to “quickly green light investments for ideas that can be game changers,” White said, instead of spending one or two years applying for grants.
Michael Birch and his wife, Xochi, who created social network Bebo and later sold it to AOL for $850 million, have invested $1 million. They, like other investors, are invited to annual advisory meetings to make sure they’re plugged in to how the money is being used.
The goal is to raise $10 million by 2014.
“When you’re trying to innovate, you have to experiment. But traditional sources of funding require statistics and data, illustrating impact. Yet, in R&D that’s not possible,” Birch said. “That’s why I was keen to support some of these ideas that have long-term impact but are high-risk investments, perhaps, in the short term.”
With the New Ventures Fund, Water.org can initiate a project with a small amount of capital, illustrate its need and then bring in a foundation, company or international development agency to fund the rest.
For example, in Haiti, Water.org is partnering with local mobile phone provider Digicel on a pilot program that will offer Port-au-Prince residents information on clean water sources nearby through the ubiquitous cell phone. Water.org will use about $50,000 to launch the project, conduct surveys and determine local needs, White said. The remainder – about 10 times that amount – would come from another source, such as a foundation or international aid agency to actually deploy the idea in the field.
“It’s hard to get traditional philanthropists to sign up for risky innovations. You can’t measure the impact of these ideas immediately. But in the long run, they could be more cost-effective and sustainable than the common well project,” he said.
Markets to be tapped
Water.org hopes to use the New Ventures Fund to illustrate to investors that there are markets to be tapped.
White has been arguing for more ingenuity in development for some time, wanting to adopt an entrepreneurial outlook on philanthropy in order to build long-lasting solutions.
That comes from his more than 20 years of experience in the field, which have taught him that handouts don’t work.
White and Damon agree that donating more wells is not the answer. In fact, White said that many wells or latrines, granted by well-meaning organizations, are not even used for water and sanitary purposes. During a trip to Honduras, he saw latrines being used as storage units, filled with such things as grains and tools.
Instead of just providing wells or toilets, Water.org uses the microfinance approach to get local families to take out loans to build the water supplies in their villages. The concept, dubbed WaterCredit, was pioneered by White. Opening lines of credit that enable communities to pool funding for pipelines encourages communal responsibility, White said. It also can alter the family dynamic, as women spend less time fetching water and more time working on a side business.
Water.org has helped dispense more than 50,000 loans with the help of local banks, microfinance institutions and water-sanitation nongovernmental organizations in India, Bangladesh, Kenya and Uganda, affecting more than 300,000 people and maintaining a repayment rate of 97 percent.
This year, Water.org hopes to extend its WaterCredit program to a new market – Peru. With support from the venture fund, it will be able to do the field work in adapting the WaterCredit model to the local needs of the Peruvian population and see if it fits.
Because, despite all the global alliances, White said, the solution is a local one.
This piece originally appeared on www.sfgate.com on 20 July, 2012.