It's All About Purpose…. The Era of Doing Well by Doing Good
"It's all about purpose." It's encouraging to see this theme continuing to gain traction across discussions, organizations, and articles focusing on topics including business, investing, and entrepreneurship. It’s a theme so many of us find inspiring, and one that has fueled tremendous innovation and impact across all sectors. I recently came across four articles that really brought this concept to life, and encouraged me to further think about all the ways you can have an impact in this world – no matter who you are.
These articles include: an interview of Beyonce by Elle Magazine, a deep look into Irish rock icon Bono’s philanthropy and impact by Ellen McGirt in Fortune Magazine, an interview of Julie Hanna who is the Executive Chair of Kiva and US Presidential Ambassador for Global Entrepeneurship by WIRED, and an article by Merrill Lynch on social impact investing. With this blog post, my goal is to highlight a few quotes from these articles that really stuck with me, and inspired my discussion on the importance of social investing and the global water crisis at a recent sustainability event in Miami called “The Athlete Race: Able Talks.”
Here we go:
· One of the best quotes from Beyonce’s interview: “To me, power is making things happen without asking for permission. It’s affecting the way people perceive themselves and the world around them. It’s making people stand up with pride….It’s not about perfection. It’s about purpose.”
· Another quote from Ellen McGirt’s article: “Bono leads a widely acclaimed, data-driven, global organization that influences governments, rallies C-suites, and raises hundreds of millions of dollars for people living in poverty. What’s his secret? An ability to convince others that they are the true leaders of change, not him.”
· Two quotes from Julie Hanna’s interview that I found very powerful and insightful: “The global economic crisis of 2008, a sluggish recovery since, pollution, an escalating climate crisis and growing income inequality are ubiquitous and undeniable evidence that the pursuit of profit maximisation at any cost has come at a great cost to the planet and to our humanity.”
· “Contrary to conventional wisdom that purpose is a tax on the bottom line, companies such as Dannon Group, Patagonia, Virgin, Starbucks, Southwest Airlines and Whole Foods are demonstrating that purpose-driven enterprises have an inherent market and profit advantage giving them staying power.”
And finally, here is a quote from the Merrill Lynch article on social impact investing: "It's a profound shift to think that private capital, along with government and philanthropic resources, can help solve complex social and environmental issues. But in an interconnected world, an investor in New York can help build bridges - both literally and figuratively. When investors zero in on the intersection of what matters to them and what's needed across the globe, they can maximize their impact, both near and far. This is the next level of impact investing, and now that we've reached it, we expect to see a lot more growth."
This point is particularly important since it’s critical we attract and tap into new forms of capital – such as social investment capital – to address key challenges such as the global water crisis. We need to bring social impact investors along, while simultaneously continuing to elevate and scale purpose-driven and results-oriented enterprises and companies.
Let me explain this further. In 2016, nearly 80 percent of the world lives on less than US$10 a day. Clearly, global inequality has reached a tipping point. When focusing on needs as fundamental and basic as access to safe drinking water, this inequality is pervasive and robs entire families, communities, and even countries of a future. In 2016, 663 million people still lack access to safe drinking water, and 2.4 billion are without proper sanitation – including toilets.
The status quo of how philanthropic and aid capital is currently deployed to solve the global water crisis remains insufficient. According to one of the latest Stanford Social Innovation Review impact investing articles: “the current size of global capital markets exceeds $225 trillion and global private wealth exceeds $156 trillion. Private capital’s scale, global reach, and sheer power dwarf funding from governments, development institutions, and philanthropies that now invest in developing countries.”
When it comes to the global water crisis, the World Health Organization estimates that it would cost US$200 billion a year to end this crisis over five years. Annual aid for water and sanitation amounts to only US$8 billion – far short of what is needed. Hence, charity can only do so much. We need to unlock the capital that's needed to match the scale of the problem.
Combining catalytic philanthropy with social impact investing presents a promising opportunity to end the global water crisis in our lifetime. Social impact investing is defined as investing in privately held impact ventures, companies, and funds. Water.org is now venturing in this area, launching its first $11 million social impact investment fund in 2015. This Fund is now fully deployed, and investing in seven leading microfinance institutions (MFIs) in India aiming to reach at least 730,000 people over seven years with safe water and/or sanitation.
The goal now is to build on this and create a more financially inclusive ecosystem around water and sanitation. To oversee its first Fund and launch additional funds, Water.org has incubated WaterEquity - a social impact investment manager that will build the market between social impact investors and enterprises (including MFIs) that have the potential to reach hundreds of millions of people with safe water and sanitation worldwide. WaterEquity is going to market with a new $50 million fund in March 2017 that will invest in enterprises in India, Indonesia, Cambodia, and the Philippines, and will reach 4.6 million people. These WaterEquity funds will scale a proven model launched by Water.org called WaterCredit that brings microfinance to the world's poor to help them meet their water and sanitation needs.
There is a $12 billion (untapped) demand out there from families at the base of the economic pyramid for access to affordable financing such as small loans to pay for the water and sanitation solutions and services they need. Through WaterCredit, Water.org has taken one step toward meeting that demand, partnering with over 65 local MFIs (small banks) who have provided over $1 million loans to BOP families - helping more than 5 million people get access to safe water and/or sanitation.
WaterEquity will build on this, and demonstrate that it is possible to make financing for water and sanitation goods and services ubiquitous and affordable for the poor. We hope to take social impact investors on a journey with us and show that is possible to do well by doing good.
I was delighted and honored to have the opportunity to share these points, along with the Water.org and WaterCredit story, at a recent event in Miami focused on sustainability and called the Athlete Race. This event, organized by Asher Burris and hosted at the Miami Science Barge, aimed to raise awareness of key global issues such as the water crisis and how you can get involved. Other panelists included Dr. Ted Caplow who is the Founder of the Miami Science Barge, Peter DeMaria who is the Founder of DeMaria Design, and Marc Megna who is the Founder of Dream Big Never Quit and Co-owner of Anatomy 1220. It was truly inspiring to hear the stories of these entrepreneurs who - despite all odds - managed to bring their vision to life, to make things happen, and build purpose-driven businesses that are improving people's lives, and the world we live in.