This article by was originally published on the Latest from Alliance blog on 16 May 2013. The original article can be found here. For more information about Alliance magazine, please visit www.alliancemagazine.org.

By Ross Baird

The inaugural Asian Venture Philanthropy Network (AVPN) summit, more than any other gathering I’ve been to, provided concrete answers to the question: ‘how do business and philanthropy mix?’ Typically, they don’t. Kevin Jones, founder of the Social Capital Markets conference, often describes this as the ‘two pocket phenomenon’: ‘I do good with my philanthropy in one pocket; I make as much money as I can with my commercial pocket, and they don’t mix.’ Yet social entrepreneurship, impact investing and venture philanthropy broadly blur the ‘two pockets’ into one by solving social problems with business models. If business – primarily entrepreneurship – and philanthropy blur into one pocket, the conference addressed the question: what’s the role of each?

The consistent message: in social change, philanthropy provides opportunity; entrepreneurship turns opportunity into reality. I saw three core arguments throughout the conference:

1) Philanthropy and entrepreneurship are means; the problem you’re solving is the end.

Prashant Jhawar, CEO of Usha Martin Group, spoke on the final day about how his family thinks about venture philanthropy and impact investing. His take: don’t just do these things for the sake of doing them, or because you think ‘venture philanthropy’ or ‘impact investing’ is an interesting idea. First, identify the problems you want to solve, then use the appropriate tools to solve them. For Prashant, access to education for low-income families in India is a passion – grants are appropriate in some circumstances; investments in others. But staying grounded in what you are trying to do – and using money and structures as tools, not ends – keeps you from being all talk, no action.

2) Markets can solve the problem you identify, but not all markets are efficient; this is where philanthropy comes in.

Harvey Koh, co-author of the Monitor-Deloitte report From Blueprint to Scale, spoke in the initial plenary of the importance of solving the ‘Pioneer Gap’ – the stage in enterprise development where promising models are tested, receive customer feedback, and go to market. In the ‘two pocket’ world, business provides risk capital to enterprises in the Pioneer Gap. In Silicon Valley consumer technology, where markets are proven, hundreds of prior ventures have hit IPO, and the path to financial success is well trodden. Risk capital in the ‘Pioneer Gap’ typically comes from the ‘commercial pocket’; angel investors in traditional US venture capital provide 50 per cent of all start-up financing in the US.

Yet in the impact investment world, the ‘Pioneer Gap’ is not an efficient funding market: fewer than 5 of over 300 self-identified impact investors invest at less than $250,000 per deal. In a ‘one pocket’ world, philanthropy has a disproportionate role in businesses addressing social change. As an example, Harvey discussed the success of Husk Power, which operates micro-grid power stations in rural Bihar and seeks to bring power to 70 million people who currently live off-grid, and attributed its success to catalytic philanthropy. While Husk Power has received impact investment from Acumen Fund, Bamboo Finance, LGT Venture Philanthropy, and several other conference attendees, it was able to prove and validate its model through $2.3 million in grants from Shell Foundation – necessary to prove micro-grid as a technology and Bihar as a viable market, which traditional investors were unwilling to test. In inefficient markets, philanthropy can de-risk market conditions so that entrepreneurs have the opportunity to thrive.

3) Philanthropy’s primary value is to establish a baseline of opportunity; entrepreneurship provides a chance for growth.

I spoke on a panel where Chester Wooley, CEO of Unitus Impact and a founding board member of SKS Microfinance, and Happy Tan, CEO of Grameen Foundation Asia, reflected on the microfinance crisis in Andhra Pradesh, India, in 2010. The takeaway: one of the biggest risks with microfinance has been mismanaged expectations. Anyone who thinks that microfinance can ‘solve poverty’ is setting up for failure – microfinance can provide a very specific service (financial inclusion) that enables individuals to afford better goods and services at lower prices, but cannot, by itself, provide an income, an education/skills level to achieve that income, and a basic level of health to earn an income.

Financial inclusion, as an example, cannot solve poverty: worldwide, for the very poorest, much of the basics – health, education, social services, housing – are in fact being provided by government, with some input from philanthropy (in some places, very well – in some places, poorly). If those basic conditions are met, financial inclusion innovations have tremendous power to lift individuals out of poverty. Antony Bugg-Levine, CEO of the Nonprofit Finance Fund (who literally wrote the book on impact investing as a former managing director of the Rockefeller Foundation), sums it up this way in his article ‘Complete Capital’: philanthropy provides the safety net, while entrepreneurship and investing provide the chance for growth. In our organization, Village Capital, we see this as well: we operate business acceleration programmes for entrepreneurs – providing a basic level of financial and operational stability for ventures – supported by philanthropy, and we make investments in highest-growth ventures, backed by investors looking for a return on capital.

In three days of intense discussions around how to solve complicated problems, I saw some clarity. And when we’re solving the largest problems of our lifetime – an unprecedented number of wealthy living alongside an unprecedented number of desperately poor, and an increasingly resource-constrained world – with the very powerful tool of business and the critically helpful supplement of philanthropy, we need all the clarity we can get.

Ross Baird is the executive director of Village Capital.

The Global Alliance for Community Philanthropy is requesting concept notes from organisations to serve as a Secretariat for a five‐year, multi‐stakeholder collaborative. Envisioned responsibilities and qualifications are listed in the PDF linked below. Concept notes must be submitted by 5th June 2013.

In 2010 and 2011, the Aga Khan Foundation USA and C.S. Mott Foundation arranged several global convenings to discuss the current practices of Community Philanthropy in Africa and Asia, resulting in the report, The Value of Community Philanthropy, authored by Barry Knight. In 2012 and 2013, AKF and Mott have been joined by additional donor partners, including the Rockefeller Brothers Fund (RBF) and USAID, to form a multi‐donor and multi‐stakeholder alliance to study and support Community Philanthropy.

The Global Alliance for Community Philanthropy is a developing collaborative that aims to influence international development actors to better understand and promote the role of community philanthropy in the sustainability and vibrancy of civil society and in achieving more lasting development outcomes. The Alliance will learn from both ongoing and pilot projects that build assets, trust, and/or the capacity of local community philanthropic organisations around the world.

The Alliance will support research and implementation of activities that enable and sustain civil society institutions and support better development outcomes through different approaches towards Community Philanthropy, with a focus on building the assets, capacity, and trust of communities and civil society. Research and programming will therefore support four primary goals:

• Greater sustainability of civil society through control of assets by local people;
• Greater ability of local actors to engage in decision‐making processes;
• Enhanced community‐level civil society organisational and leadership capacity;
• Greater accountability within communities and civil society in order to establish trust.

The Alliance has recently released a Request for Concept Notes from organisations around the world who are interested in serving as a coordinating secretariat. Concept notes should be submitted by 5th June 2013.

More detailed roles and responsibilities for the Secretariat, and submission details are available here: CP Alliance Secretariat: Request for concept notes »

Millennium Development Goals:
Taking stock, scaling up, reaching out

By Christopher de la Torre

A Special Policy Dialogue hosted by the United Nations Economic and Social Council (ECOSOC) on 23 April brought together a diverse group of stakeholders in the sector to brainstorm new ideas for advancing global development beyond the Millennium Development Goal (MDG) 2015 target date. WINGS co-organised the event with ECOSOC, UNDP, UNDESA, and the OECD Global Network of Foundations Working for Development (net-FWD).

MDGs form a blueprint to mobilise efforts to improve the lives of the world's economic poor, and range from halving extreme poverty rates and containing the spread of HIV/AIDS to providing universal primary education.

The goals are ambitious but necessary, and success dictates an increase in transparency and collaboration across sectors. It was clear during the one-day meeting how much work is left to do to achieve these goals, yet a general sense of optimism characterised the exchange—this in the face of limited resources and a seemingly unsurmountable store of global data. Salient themes included partnerships, scaling up, accountability, measurements, and innovation.

The first session, moderated by Matthew Bishop of The Economist, looked at what has and hasn't worked thus far. Bishop rebranded coalition as posse—an ad hoc group that forms around a specific issue—underscoring how success in the field hinges on key partnerships and collaborative efforts.

Sigrid Kaag (UNDP) believes that "partnership is about having a shared vision and agreeing on a way forward," and to Dr. Gannet El Samalouty (Sawiris Foundation for Social Development), addressing global development challenges is a shared responsibility that demands a more complex architecture of cooperation. Sundaa Bridgett-Jones (Rockefeller Foundation) described a "forward-looking posture" regarding support for innovations, and emphasised the need to think differently about how development is done, citing The Bellagio Initiative as one example of how innovation value chains can both unlock the potential of private capital and influence policy.

Everyone wants to be catalytic but we must ask, 'who wants to be the substrate?' Tatiana Filgueiras, Ayrton Senna Foundation

The second session, moderated by WINGS Board Member Barbara Ibrahim, focused on innovation and scaling up. Ibrahim described innovation as coming about in one of two ways: during thoughtful reflection following failure, or when it is forced upon us, as with the Arab Spring. Field hospitals that sprung up overnight at Tahrir Square in Cairo were good examples of how crowdsourcing can be beneficial. In this case, activists used text messages to mobilise critical supplies, demonstrating the value of harnessing human capital during a crisis. (The method worked so well, Egypt has since formalised it.)

As the discussion continued, crowdsourcing turned to data, and human capital to innovation. David Lynn (Wellcome Trust) discussed medical tech innovations in India, including a new tablet being trialed and software apps for online storage, decision support and reporting. Jeffrey Falkenstein (The Foundation Center) explained that a lack of global standards has alienated philanthropy from the Big Data space, suggesting that organisations learn how to give data as well as receive it, further emphasising the role of transparency in building partnerships that work. Tatiana Filgueiras (Ayrton Senna Foundation) added, "Everyone wants to be catalytic but we must ask, 'who wants to be the substrate?'"

Interim discussions were lively. Neelam Makhijani (The Resource Alliance) felt that philanthropy should not be seen as separate from development, but instead as a development index. Edmund J. Cain (Conrad Hilton Foundation), Nick Deychakiwsky (Charles Stewart Mott Foundation) and others weighed in. Speakers also included Graham Macmillan (Citi Foundation) and Navid Hanif (UNDESA). UN ECOSOC President H.E. Néstor Osorio opened the meeting with Thomas Stelzer (UNDESA) and Sigrid Kaag (UNDP).

Adding to the overall success of the day, WINGS joined a live tweeting event, using #phil2015 to share real-time comments and resources from the panel, and exchange questions with others on Twitter. I came away from the event with a deeper appreciation of the scope of the Millennium Development Goals, and of global philanthropy in general. Navid Hanif (UNDESA) closed with a reminder that the United Nations is fully committed to fostering a shared understanding across sectors. This gives me big hope for the future.

Our Knowledge Generation & Dissemination programme is committed to promoting data and information as powerful tools for the development of philanthropy worldwide. Christopher de la Torre is the Managing Editor for WINGS.

The Arab Human Rights Fund (AHRF) is a not-for-profit philanthropic organization that supports the promotion and realization of human rights through grants to human rights initiatives in the Arab region.

In its fifth year of operation, the Fund seeks an experienced, creative and energetic Executive Director to carry out its ambitious programs. Under her/his able leadership the Fund should make major strides in supporting groups to realize the vision of enjoyment of all human rights by all in the Arab region. The ideal candidate will combine good experience in human rights, Grantmaking, institution-building, and fundraising with excellent knowledge of the Arab region.

More details can be found here.

 

In August 2011 fourteen community foundations from all over Mexico formed Comunalia (Alianza de Fundaciones Comunitarias de México/Mexico’s Community Foundations Network). The first community foundation in Mexico was founded in 1996, and most of Comunalia’s members were set up at the end of the 1990s and early 2000s. In 2009 these organisations saw the need and opportunity to work together, and started discussions in a collective effort to join forces and improve their work through unity and representation. The network was formalized during a meeting in Guadalajara, three years after the initial discussions, and Comunalia is now an association funded by annual dues paid by its members.

Comunalia’s main purpose is to strengthen and give visibility to the work of its members, increasing their impact and therefore contributing to a sustainable, equitable and participatory development in Mexico. The intention is to stimulate the replication of the community foundation model in the country and build partnerships with other actors (government, academia, civil society, etc.).

Comunalia is present in 13 Mexican states: Baja California, Chihuahua, Estado de México, Guanajuato, Jalisco, Morelos, Nayarit, Oaxaca, Puebla, Querétaro, Quintana Roo, Sonora and Tamaulipas. Comunalia’s members work on a number of issues, ranging from education, culture, local development, health, environment, housing, ecotourism, capacity building, communication and employment, to citizen participation, philanthropy and social responsibility. Their constituencies include all of those facing social disadvantage - children, youth, women, men, indigenous peoples and people with disabilities.

Members

Corporativa de Fundaciones (Jalisco)
Fundación Comunidad (Morelos)
Fundación Comunitaria Cozumel (Quintana Roo)
Fundación Comunitaria del Bajío (Guanajuato)
Fundación Comunitaria Frontera Norte (Cd. Juárez, Chih)
Fundación Comunitaria Malinalco (Edo. de México)
Fundación Comunitaria Matamoros (Tamaulipas)
Fundación Comunitaria Oaxaca
Fundación Comunitaria Puebla
Fundación Comunitaria Punta de Mita (Nayarit)
Fundación Comunitaria Querétaro
Fundación del Empresariado Chihuahuense, A.C.
Fundación del Empresariado Sonorense

Fundación Internacional de la Comunidad (Tijuana, B.C.).

Governing body

Executive Director: Laura Trejo

President: David Pérez - Corporativa de Fundaciones

Beatriz Pineda Bours – Fundación Comunidad
Debbie Acevedo - Fundación Comunitaria Puebla IBP.
Diana Chávarri (Fundación Comunitaria de la Frontera Norte)
Luis Ruíz (Fundación Comunitaria Oaxaca)
Juan Carlos Ruíz (Fundación del Empresario Sonorense, A.C.)
Leslie Carrasco de la O (FECHAC - Fundación del Empresario Chihuahuense).