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How to Spend a Penny

Last week, the UK-based Stone Family Foundation, in collaboration with New Philanthropy Capital, published a paper that summarizes 10 lessons learned as a WASH funder since the Foundation made the decision to concentrate much of its grantmaking in the sector in 2010.

How to Spend a Penny: 10 lessons from funding market-based approaches in water, sanitation and hygiene (PDF) presents lessons drawn from the Foundation’s experience that have helped it to target funding toward the most effective and sustainable solutions -- from the value of market-based solutions that go beyond the ‘toilets and taps’ approach to the importance of understanding customer motivations.

How to Spend a Penny also identifies challenges in WASH that philanthropy may be uniquely positioned to address. Noting the lack of high risk capital in the WASH sector, as well as the attendant risks of scaling up a solution too quickly, the paper describes how the Foundation identified one of its niche areas: providing support to projects that have gone through the pilot stages, but still need to refine their business models in order to become attractive to investors and other funders.  

To learn more about the Stone Family Foundation’s investments in WASH – and those of other foundations active in the sector – view our Funder Profiles.

Sue Dorsey, chief financial officer at Water For People

Editor’s Note: This post was authored by Sue Dorsey, chief financial officer at Water For People. In the post, Sue identifies several issues with current funding mechanisms in the social sector and proposes solutions that will support rather than hamper organizations in building resilience and realizing bold visions. The post originally appeared on Water For People’s blog.

In a sea of social entrepreneurs, I am a rather unique voice. As the CFO of Water For People, I am part of a team that makes our vision of ensuring Everyone around the world has access to safe water and sanitation, Forever, a reality. Our Everyone, Forever initiative spans 30 districts across four continents reaching more than four million people, and we are proving that ending water and sanitation poverty is possible in our lifetime. Behind every bold vision is a “reality team” working to bring it to life. Being a member of that team is a huge responsibility and incredibly inspiring.

I believe that a critical component to making a world free of social, cultural, political, and economic barriers a reality is building strong nonprofit organizations, businesses, and government institutions. Our vision is the spark, and resilient organizations with appropriate funding mechanisms and a regulated environment is the engine that will get us there. But as it stands, current practices in the nonprofit sector won’t get us there. Here’s why, and what needs to change:

1. Funders offer small short-term commitments forcing organizations to create short-term solutions for long-term challenges.

#ChangeThat: Funding streams need to adjust their timelines to fit long-term solutions and outcomes.

2. Nonprofits struggle with success indicators, putting too much focus on overhead ratios that are easy to calculate but also easy to manipulate, leading to misdirected philanthropic investments.

#ChangeThat: Making outcome-based grants requires nonprofits to focus on long-term sustainable outcomes.

3. Funders generally resist financing capacity-building, and only focus on tangible projects. 

#ChangeThat: Financing monitoring and evaluation, talent acquisition and IT investments would actually increase efficiencies and reduce overhead.

4. Out of control donor restrictions lead to soaring overhead costs and trumps appropriate and necessary programmatic changes.

#ChangeThat: What if funding under $1M or less than five years could not legally be restricted under FASB rules?

5. Lack of public transparency for the true costs to run a nonprofit organization. 

#ChangeThat: What if we got rid of the functional allocation and asked NPOs to report on a full cost recovery basis on their 990, educating and sensitizing the public on the real costs to change the world?

6. Limited to no communication between donors and NPOs about organizational pain points.

#ChangeThat: Donors should ask and nonprofits should offer insight into what they need to succeed from a programmatic and operational standpoint.

There is an exciting opportunity to bring the reality teams from behind the curtain to be a voice for change in the nonprofit sector, by educating donors and effecting change in organizations. We have seen examples of this - InsideNGO has created a community of international development organizations to advocate for effective funding from USAID and other institutional funders. They are currently working on a database of information around the true costs of running an effective organization. And Dan Pallotta has been a strong voice on this issue for years. His TedTalk about the way we think about and execute charity has over three million views and growing, which shows there is an appetite to reinvent the nonprofit sector so we can actually change the world.

If you peek behind the curtain, you will find “reality teams” around the world poised to lead this change.

I see a nonprofit sector stepping up and making investments in data collection and analysis to allow for more data-driven decision-making. I see nonprofits sharing indicators and data across sectors to align us around a common set of benchmarks, providing a clearer picture of what success looks like and progress made towards that success. Greater transparency and accountability will build trust and collaboration with the funding community, and this will lead donors to reduce burdensome and unnecessary restrictions that only serve to increase overhead and reduce programmatic outcomes. I see government regulation pulling back from functional allocation to ensure nonprofits show the public a true picture of what it costs to run an effective, sustainable philanthropic organization.

Reaching our vision where Everyone has access to safe water and sanitation Forever is something we take very seriously. Anything less would just not be good enough.

Winners of 'Reinvent the Toilet Challenge: India' Announced

The Bill & Melinda Gates Foundation and India's Biotechnology Industry Research Assistance Council have announced the winners of the Reinvent the Toilet Challenge: India.

Six organizations were awarded grants totaling $2 million to develop innovative "next-generation toilets" that can deliver safe, affordable, and sustainable sanitation solutions in India. A collaboration between the Gates Foundation, BIRAC, and the Indian Ministry of Science and Technology, the competition is funded by investments of $1 million each from the Gates Foundation and the ministry's Department of Biotechnology.

Announced at the "Reinvent the Toilet Fair: India" in New Delhi, the grant recipients are Eram Scientific Solutions, which, in partnership with the University of South Florida, will field test a solar-powered modular electronic toilet that is integrated with a mixed-waste processing unit; the Amrita School of Biotechnology, which will test the use of viral agents to kill pathogens and odor-producing bacteria in fecal waste; Pradin Technologies, which will test the viability of using ultrasound to reduce water use in toilets; the Indian Institute of Technology Roorkee, which, in partnership with Fresh Rooms Life Sciences, will develop a single-household container that uses human feces to incubate black soldier fly larvae, which can be processed into marketable products; the Institute of Chemical Technology, which will evaluate the concept of using fine sand-like material and an air blower to create a water-free toilet interface free of odor and flies; and BITS Pilani K.K. Birla Goa Campus, which, in partnership with Ghent University and Sustainable Biosolutions, will design a septic tank that uses electrochemistry to reduce organic pollutants and improve the quality of discharged effluent.

"Effective and comprehensive sanitation seems an impossible dream for India," said BIRAC chair K. Vijay Raghavan. "Yet today we see a congruence of new and applicable science and technology, its affordability, and sustainable implementation. This congruence is a great opportunity, which we cannot afford to let slip. By implementing effective solutions in each kind of social context, big problems can be dealt with in small units and be catalysts for scaling up."

The Gates Foundation also announced a partnership with South Africa's Department of Science and Technology to field test technologies developed as part of the global Reinvent the Toilet Challenge. The foundation and DST will invest $1 million and approximately $2.76 million (30 million rand), respectively, in the effort.

"By applying creative thinking and new approaches to sanitation challenges, we can improve people's lives. And we have no doubt that these new partnerships with India and South Africa will help us achieve this," said Brian Arbogast, director of the Water, Sanitation & Hygiene team at the Gates Foundation. "We believe that with governmental leadership, new business models, and innovation, we can dramatically increase the progress made in tackling this global sanitation crisis."

"Indian Researchers Selected to Develop Next Generation Toilets." Bill & Melinda Gates Foundation Press Release 03/22/2014.

Hilton Foundation Awards $3 Million for Ghana Water Project

The International Water and Sanitation Centre (IRC) in The Hague has announced a $3 million grant from the Conrad N. Hilton Foundation in support of efforts to provide access to clean water in rural Ghana.

The grant will support IRC's work with the Ghanaian government to bring national and local partners together on efforts to provide sustainable water services for 1.3 million people in thirteen rural districts. The project, which is focused on building the government's capacity to deliver and maintain water services rather than taking the more conventional approach of installing hardware, will scale earlier efforts by the IRC in partnership with Ghanaian government agencies and communities in three districts.

"IRC believes strongly that strengthening the ability of governments to lead the provision of services is not only the best route to scale, but the only viable exit strategy for charitable giving," said IRC chief executive Patrick Moriarty. "By supporting our work in Ghana, the Conrad N. Hilton Foundation is giving strong support to the achievement of our vision of providing everyone in Ghana with water services that will last forever — without the need for endless charitable donations."

"We have been working with our partners in Ghana to increase access to safe water for more than twenty years," said Steven M. Hilton, board chair, president, and CEO of the Conrad N. Hilton Foundation. "We're teaming up with IRC to build on our experience and focus on improving how water systems are managed. This grant will help contribute towards providing reliable safe water into the future."

"Conrad N. Hilton Foundation Backs IRC With US $3 Million for Work in Ghana." International Water and Sanitation Centre Press Release 03/18/2014.

Keurig Green Mountain Commits $11 Million to Water Initiatives

Vermont-based specialty coffee company Keurig Green Mountain has announced grants totaling $11 million to four nonprofit organizations working in the United States and abroad to promote water security.

Grant recipients include charity: water, which will use the funds to help one million people gain access to clean drinking water by 2020; the Global Water Initiative, which was created by the Howard G. Buffett Foundation in partnership with CARECatholic Relief Services, the International Institute for Environment and Development, and the International Union for Conservation of Nature and will use its grant to improve management of water resources in coffee-growing areas of Central America; Raise the River, a coalition of conservation NGOs working within a U.S.-Mexico policy framework to restore the Colorado River Delta by reconnecting the Colorado River to the Gulf of California; and American Rivers, with which Keurig has partnered for several years to help communities clean up and restore local rivers.

Keurig also announced that it would work to reduce the water footprint of its processes and products and will convene water experts at its first annual water summit later this year to discuss solutions to the global water crisis.

"Freshwater resources are dwindling and communities throughout the world are threatened with scarcity," said Brian Kelley, president and CEO of Keurig Green Mountain. "Water is a critical natural resource that is fundamentally important to our company, our consumers, our stakeholders, and our supply chain. As a business and as global citizens, we have a responsibility to promote good water stewardship in the world."

"Keurig Green Mountain Funds Four Organizations with $11 Million Water Commitment." Keurig Green Mountain Press Release 03/19/2014.

Gates Foundation, Asian Development Bank Fund Three Sanitation Projects

The Sanitation Financing Partnership Trust Fund, an initiative of the Bill & Melinda Gates Foundation and the Asian Development Bank, has awarded three grants to help provide safe sanitation facilities in urban and rural communities across Asia.

Created in 2013 with $15 million from the Gates Foundation and administered by ADB, the fund will leverage more than $28 million in financing over the next five years for non-sewered sanitation and septage management projects across Asia. Grants announced by the fund include $2 million for ADB’s Facility for Pilot and Demonstration Activity, which will test and validate pilot approaches to new sanitation management and water services delivery policies, technologies, and business models, with the goal of replicating and scaling successful approaches across the region; and $1.6 million for pilot innovations in septage collection and treatment systems in eight coastal towns in Bangladesh. Part of a planned ADB loan to Bangladesh for infrastructure improvements, the grant also will support efforts to improve septage operation and maintenance, and to promote private-sector participation in septage management.

In addition, the fund awarded a grant to the South Asia Urban Knowledge Hub (k-hub), a network of four research and training institutions in Bangladesh, India, Nepal, and Sri Lanka supported by ADB that works to facilitate information and learning exchange among city managers, utility staff, policy makers, academics, and the private sector.

"We will continue to work with the governments in Asia-Pacific region to make countries open defecation-free and complement their efforts by providing options for small-scale sanitation systems in urban and rural communities," said Amy Leung, director of the Urban Development and Water Division in ADB's Southeast Asia Department. "We are proud to support new testing and pilot implementation of innovative solutions to hasten access to safe sanitation for Asia’s urban poor."

"Open defecation and inadequate toilets, sewers, and wastewater treatment systems lead to massive amounts of untreated human waste in the environment, harming the health and well-being of children," said Brian Arbogast, director of the Water, Sanitation & Hygiene team at the Gates Foundation. "We are delighted to have new partners like the ADB applying creative thinking to more effectively managing human waste to improve people’s lives."

"Three New Projects Receive Funding Across Asia to Improve Safe Sanitation." Bill & Melinda Gates Foundation Press Release 03/11/2014.

"ADB, Gates Foundation Launch Initiatives to Spur Sanitation Innovation." Asian Development Bank Press Release 03/12/2014. 

Catholic Relief Services has announced three grants totaling more than $10 million from the Leona M. and Harry B. Helmsley Charitable Trust in support of efforts to improve sanitation and access to clean water and health care in two West African nations.

One of the grants will support efforts in Ghana to build a hundred and twenty low-cost child-friendly latrines with hand-washing facilities at schools in remote and rural areas, as well as initiatives to promote hygienic practices and improved nutrition. CRS also will use its savings-based microfinance methodology to help parents with their children's school fees. "Many schools...in Ghana lack safe water and sanitary latrines for the students," said Lisa Washington-Sow, CRS's country representative in Ghana. "Those unhealthy conditions and the lack of privacy often result in illness and poor student attendance, especially for adolescent girls. The support of the Helmsley Trust will enable CRS to improve the well-being of more than a hundred thousand children and their families and help students stay in school."

A second grant will be used by CSR to teach community members and children at more than a hundred primary schools in Burkina Faso key hygiene practices such as hand washing, using a latrine, and safely handling drinking water. "Nearly half of the population in Burkina Faso doesn't have access to safe drinking water, and access to sanitation in rural areas is at less than 10 percent, placing the country in the bottom ten globally for sanitation coverage," said Bangre Moussa Dominique, CRS's country representative in Burkina Faso. "Schools become incredibly important in influencing young children to change their behaviors."

The third grant will enable CRS to expand its work to improve access to and the quality of health services in rural areas in northern Ghana by providing fifty motor-tricycles equipped to serve as rural ambulances and helping communities develop ambulance-management plans. With a focus on women and children, the project also will ensure that rural health clinics have essential medical supplies, promote behavior changes in seeking health care at clinics, and use traditional birth attendants as well as clinic staff to deliver quality health care.

"In Ghana, limited access to formal health care facilities remains a key challenge in the healthcare delivery system," said Washington-Sow. "The Helmsley grant enables us to help approximately eight hundred and fifty thousand vulnerable people, mainly women and children, to access quality health care when they need it."

"Catholic Relief Services Receives Grants to Improve the Health of Thousands of Children and Their Families in West Africa" Catholic Relief Services Press Release 02/11/2014.

Water for Breakfast

The WASH Grantmakers’ Network, along with the Conrad N. Hilton Foundation, will co-host the fourth annual peer‐to‐peer breakfast dialogue on innovative grantmaking in the global safe drinking water, sanitation, and health sector called Water for Breakfast. The event will include guests from Xylem Watermark, Procter & Gamble, the Veolia Foundation, the Avina Foundation, and others. 

Water for Breakfast 
Best and Promising Grantmaking Practices in the Global Water and Sanitation Sector 
Wednesday, September 25th, 7:30AM – 9:30AM 
Breakfast at 7:30AM, meeting starts promptly at 8AM 
Midtown Manhattan, New York, NY

This off‐the‐record, invitation-only conversation will provide current and potential grantmakers an opportunity to:

  • Meet other private and corporate philanthropic leaders in the global safe drinking water, sanitation, and health sector
  • Learn from experts on better collaboration, leveraging of public relations, and cost-effective giving practices
  • Exchange best, worst, and promising practices in grantmaking
  • Learn about innovations in access to capital and social entrepreneurship
  • Look for collaborative opportunities between and among private and corporate foundations, water sector experts, and the public sector 

At this year’s event, there will be a unique opportunity to discuss new leadership plans for the Network, and special guest speakers who will answer questions surfaced in previous meetings. A full agenda will follow. 

If you are interested in attending the Water for Breakfast event, please contact Ben Mann at bmann@WASHadvocates.org or 571-225-5823.

SIWI logo

Attending World Water Week? Join us for a seminar examining the role of U.S. philanthropy in solving the global WASH crisis. Detailed information on the seminar’s theme and structure is below.

Stockholm, Sweden — World Water Week conference venue, room K2

Wednesday, August 29th (9AM – 12:30PM)

Follow @WASHfunders for live tweets at the time of the session

This seminar will describe the unique role of U.S.-based foundations in the WASH sector, particularly how philanthropic capital differs from other funding sources, and how those differences can catalyze further funding, support greater advocacy efforts, and spur innovation. Key topics will include: lessons learned and best practices from funded programs; the role of philanthropy in leveraging resources and working collaboratively to increase funding, sustainability, and effectiveness of programs; and a demonstration of WASHfunders.org. Case studies will be presented by five foundations and their grantees through dialogues about opportunities, successes, and challenges of foundation-funded programs.

Programme
09:00 Opening Remarks and Seminar Overview. Mr. Edmund J. Cain, Conrad N. Hilton Foundation

09:10 Overview of U.S. Philanthropy. Mr. Brad Smith & Dr. Seema Shah, The Foundation Center

09:30 Foundation Strategies and Grantee Case Studies on Innovation, Advocacy, Learning and Leveraging of Resources in the Water, Sanitation, and Hygiene Sector — Opportunities, Successes and Challenges. Moderator: Mr. Brad Smith, The Foundation Center

  • Innovation & Multiple Use Services

Mr. John Thomas, Rockefeller Foundation & Dr. Mary Renwick, Winrock International

  • Advocacy

Dr. Braimah Apambire, Conrad N. Hilton Foundation  & Mr. John Oldfield, WASH Advocates

  • Scale & Sustainability

Mr. Louis Boorstin, Bill & Melinda Gates Foundation & Mr. Ned Breslin, Water For People

  • Learning from Partnerships

Mr. Paul Hicks, Catholic Relief Services & Mr. Peter Lochery, CARE 

  • Reporting & Transparency/Social Entrepreneurship

Mr. David Rothschild, Skoll Foundation & Mr. Ned Breslin, Water For People

11:00 Coffee Break 

11:30 Reflections from Panelists/Attendees; Conversations/Additional Q&A, Moderator: Mr. Brad Smith, The Foundation Center

12:00 Demonstration of WASHfunders.org. Dr. Seema Shah, The Foundation Center

12:20 Conclusions and Way Forward. Mr. Brad Smith, The Foundation Center

12:30 Close of Seminar

For the full seminar listing in the World Water Week online programme, click here.

John Oldfield, CEO of WASH Advocates

Editor’s Note: This blog post was written by John Oldfield, CEO of WASH Advocates. WASH Advocates is a nonprofit advocacy effort in Washington, DC entirely dedicated to helping solve the global safe drinking water, sanitation, and hygiene (WASH) challenge. Its mission is to increase awareness of the global WASH challenge and solutions, and to increase the amount and effectiveness of resources devoted to solving the problem around the developing world. For more information, visit www.WASHadvocates.org.  

“Forty years ago today, Apollo 16 landed on the moon… By anyone's standards it was a triumph of science, technology, and political will. I remember so many of us thinking that if humankind can do this, what could humankind NOT accomplish?” UNICEF executive director Anthony Lake continued on April 20 at the Sanitation and Water for All High Level Meeting in Washington, DC: “… and yet today, over 1.1 billion people still practice open defecation because they don't have access to the most basic sanitation facilities… If two generations ago we could land men on the moon, we can and must also afford people here on earth two of their most basic human rights — safe water and basic sanitation — because until we do, development progress will falter."

On April 19-20, 2012 in Washington, DC dozens of finance ministers and water ministers from throughout the developing world gathered to make stronger commitments to solving the WASH challenge in their respective countries. They were joined at the meeting by development cooperation ministers from donor countries, including the USAID Administrator Raj Shah. During the event, Administrator Shah made history by announcing that the U.S. government has joined this global partnership aimed at universal coverage of safe drinking water and sanitation.  

Why does this fundamental global safe drinking water, sanitation and hygiene (WASH) challenge continue to exist today? The most intriguing answer is when people respond: “The problem is not solved because of a lack of political will.” Once that statement is made, no matter how accurate it is, the conversation typically dies, because most people look at politicians as part of the problem, not part of the solution, and strong political will often proves elusive. 

This is why I consider the Sanitation and Water for All High Level Meeting arguably the most important meeting of 2012: political will is what we saw in Washington, DC on April 19-20. And it is political will that leads to sustainable WASH programs implemented at scale community by community, country by country.

The WASH grantmaking community, both foundations and corporate leaders, can take away a few lessons from the Sanitation and Water for All (SWA) Partnership and its April meeting:

  • Strengthening the evidence base of success is important. The Sanitation and Water for All process isn’t simply for finance ministers and other high-level political leaders to dialogue. The SWA Partnership focuses on strengthening the evidence base of success in the global WASH sector, and using that evidence base to strengthen political will. Political leaders country by country need to hear about WASH from their people. Those political leaders also need to understand how they can help solve the challenges. The SWA process facilitates both, and donors looking for ”exit strategies” need to think more consciously about what it takes to inspire a government at any level to scale up your work. The exit strategy for the most successful WASH programming is “Get the job done,” and universal coverage of WASH requires the highest levels of political support.
  • Better alignment is key. Too often, donor efforts are not aligned with governments, NGOs, or other donors; this can lead to unsustainable, inappropriate, and/or duplicative programming. Members of the SWA include bilaterals (e.g. U.S., U.K., Netherlands, Japan, Australia), dozens of developing countries, multilaterals like the African Development Bank, and the Bill and Melinda Gates Foundation. Many have joined the SWA in part to make sure their assistance is better aligned both with the need and with the actual plans and progress that developing countries are making. SWA partners also aim to make sure their assistance is better coordinated with each other's plans as donors as well. An example of this approach is the support that the Gates Foundation provides to the Water and Sanitation Program, a private partnership administered by the World Bank.
  • Linkages between economic growth and WASH need to be better quantified and communicated. What gets the attention of finance ministers? Arguably, it is not the morbidity and mortality associated with unsafe water and inadequate sanitation, but rather the increased productivity that safe, affordable, and sustainable water and sanitation offer an economy. The World Health Organization estimates that each dollar invested in WASH returns on average eight dollars in increased economic productivity and decreased health care costs. But how many of us know that inadequate sanitation cost India the equivalent of 6.4% of its GDP in 2008? Or that it cost Bangladesh 6.3% of its GDP in 2007? How many of us incorporate this and other cross-sectoral linkages into both our programs and our communications efforts as effectively as we could? 

Beyond the SWA Partnership, many other ongoing efforts illustrate these same points and deserve a closer look: strengthening community water board associations in Latin America; building the capacity of national and sub-national civil society WASH networks in Africa; donors and nonprofits partnering early and directly with mayors in developing countries instead of just inviting them to ribbon-cutting ceremonies; and bringing creative and leveraged business and financial approaches into the water and sanitation sector. 

Clearly donors (in Europe, the United States, and beyond) need to continue direct funding of safe drinking water and sanitation programs around the world. However, government and private donors also need to increase their financial and technical support for initiatives that strengthen the capacity of developing countries to solve the water and sanitation challenges themselves. 

If, as Tony Lake says, we can send a man to the moon forty years ago, we as a planet can certainly solve our water challenges today. The Sanitation and Water for All Partnership illustrates some of the lessons and approaches that will make the private and corporate philanthropic communities an even more important part of the solution. 

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