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Water.org, the nonprofit resulting from the 2009 merger of Matt Damon’s H2O Africa and Gary White’s WaterPartners, has completed an $11 million impact investing pilot project and has already closed on $33 million in a new fund that they hope will reach $50 million.
The transition from an entirely philanthropic approach built around drilling wells and building toilets to an investment model is motivated by a desire to reach more people, White, 55, the CEO says. “Frustration with the pace of our impact led me to try something entirely new.”
The resulting model does not require Water.org—or WaterEquity, the new entity it formed to make and receive water, sanitation and hygiene or WASH-related impact investments—to make individual loans to consumers in their target markets. Instead, WaterEquity provides investment capital to microfinance companies that provide loans to low-income consumers at affordable rates for WASH upgrades in their homes.
The program has demonstrated a 99% repayment rate, White says. Together with interest on the repaid loans, the pilot fund has already begun making distributions to investors of 3.6%, which White describes as “higher than expected.”
Be sure to watch the full interview in the player at the top of the article to hear the story of the merger of White’s WaterPartners with Damon’s H2O Africa.
The pilot fund helped 320,000 people in India gain access to clean water or sanitation. He also notes that 99% of the people directly supported by the investments are women and 77% earn less than $4 per day.
The new fund will operate in India, Indonesia, Cambodia and the Philippines. The fund had a first close in August with investors including Bank of America, the Overseas Private Investment Corporation (OPIC), Ceniarth LLC, Niagara Bottling as well as the Conrad N. Hilton, Skoll and Osprey Foundations. White notes that Damon is also an investor in the fund.
“The Foundation was an early investor in both WaterCredit Funds and strongly believes that market-based solutions will be vital to achieving Sustainable Development Goal 6 given the scale of investment required,” says the Hilton Foundation’s senior program officer Chris Dunston, who is responsible for its safe water strategy.
Dunston notes that the Foundation continues to make grants in support of Water.org’s work in Ethiopia and Uganda and is considering additional grants for Ghana as well.
“By leveraging consumer credit to drive investment in WASH infrastructure, Water.org and Water Equity have been able to dramatically scale the number of people their program reaches,” Dunston says. “This will likely play a major role in making progress towards Sustainable Development Goal 6 given the scale of investment required to reach universal access.”
White explains that the investment model, which recycles money as each consumer repays a loan, allowing the same money to help many people in sequence, has accelerated Water.org’s work. Over ten years, he says, the lending model allows the organization to help five to ten times as many people as grants allow.
“It took Water.org about 20 years to reach one million people through the traditional approach of digging wells and installing toilets. We are now reaching over one million people a quarter,” White says.
The $33 million from the August closing have already begun to be deployed to further accelerate the work. An investment in a Cambodia micro-lender was made this fall and two other investments are expected to close this year. Those three investments should yield 100,000 microloans, White says. WaterEquity has raised another $15 million recently, bringing the total raised to $48 million.
Target is another investor in the fund helping with that acceleration. Target views the investment as part of its role in serving communities where products sold in its stores are produced.
Target’s Jennifer Silberman, vice president for corporate responsibility, says, “At Target, we believe that clean, drinkable water and sanitation are human rights and should be accessible for all. For millions around the world, access to funds stands between them and safe water in their homes.”
“What we’ve done,” White says, “is create a system where the poor can now meet us halfway. We don’t have to raise a trillion dollars–which is what it would take in charity to solve this crisis. We can use that philanthropy catalytically and leverage this capital from the bottom up.”
December 19, 2018 at 09:56AM
Forbes – Entrepreneurs