A recent Harvard Business Review article on “Funding Social Enterprises” opened my eyes with a new perspective on how I manage my own little “investments” in social enterprise.

Charitable Giving as an Investment

If you were to think of your annual charitable giving as an investment fund, how would you rate the fund’s performance? Traditional investors look at Return on Investment (ROI) in a pure financial sense. They only put money in if they expect to get more money out in the end. On the other end of the spectrum, HBR looks at charitable donors as another kind of investor. Charitable “investors” seek ROI in terms of pure social impact. They put money in expecting to make a difference in the problem that the organization addresses. It’s nice to get free money, but charitable funding is hard to forecast and competition is steep to win donors’ dollars.

When seeking traditional investment funding, social enterprises face insurmountable challenges when trying to compete against other enterprises, since their ability to promise financial returns is hampered by selling to the poor or increasing costs in order to benefit the cause (environment, health, education). With financial restructuring, new approaches offer a mixture of financial and impact-based ROI to help social enterprises appeal to traditional investors. For a nice summary of those blended financial investment models, I point you to the HBR article, which delves into the financial offerings much more rigorously.

Demand Evidence of ROI

Charitable investors are willing to take a -100% ROI (completely ludicrous for a traditional investment) in order to see social ROI. However, social ROI varies wildly from donation to donation, and it is only by the grace of donors’ emotion-induced investment blindness that most charities continue to receive funding.

To make smarter charitable investments, donors should seek organizations that demonstrate visible accountability for the aid they receive. The more granularly the organization can demonstrate ROI, the better. For example, many non-profits publish an annual report stating how their funds were used and what they delivered using the aggregate resources available to them. However, it is hard for individual donors to see directly how their donation contributed to the impact, or to know whether their donation has as much impact as they were expecting. With that knowledge, donors could adjust their investments to ensure they are making the impact they seek.

If a favorite organization does not report ROI today, you can exhort that organization to start publishing ROI or risk losing your support. To see two examples of organizations that publish excellent ROI reporting to their donors, subscribe to this blog to get an alert when Part 2 of this series is posted.

Quantifying Social ROI

Now, philanthropic investors can evaluate their investments’ performance according to a double bottom line: financial and social. Similar to the Generally Accepted Accounting Principles (GAAP) for financial accounting, the Global Impact Investing Network has set up a standardized set of metrics for quantifying ROI in terms of social impact. This set of metrics, published in the Impact Reporting and Investment Standards (IRIS), is used by the GIIN members Rockefeller Foundation and Acumen Fund to evaluate their investment performance.

As an individual, I won’t likely have access to the information needed to evaluate the IRIS accounting for the organizations I donate to, but hopefully institutional investors will encourage social enterprises to proactively report their social ROI so that it is more apparent to individual donors. Until then, I will simply have to manage my “charitable investment fund” according to the information that organizations provide today…which means in 2012, I will definitely be shifting my investment proportions more heavily toward those that demonstrate a clear evidence of ROI for the dollars I give.

Pilloton chose excellent visual aids to show Colbert how design can improve lives. Selected from her book, Design Revolution: 100 Products that Empower People, Colbert walked to the interview table wearing Spider Boots, donned a pair of Adaptive Eyewear, and marveled at Pilloton’s ability to move 200 pounds of water with the ease of a “very, very suspicious flight attendant” using the beloved Hippo Water Roller.

The full episode is below. Sorry for the off-color freeze frame! We didn’t choose it, we promise.
Or to watch just the exact 6 minutes of Pilloton’s interview, view this clip directly on Hulu.

Here is Josh Silver’s 5-minute presentation of the optometrist-free glasses at TEDGlobal 2009 in July. In it, he explains that he is 30,000 on the way to putting glasses in the hands of one billion people by 2020. As with many humanitarian designs, the foremost obstacle he faces is bringing down the $19 cost of each pair. He is an atomic physicist by day, which just goes to show anyone can be a humanitarian designer.

The challenge

• In third-world countries, women and children must haul water over long distances in order to supply their communities with clean, safe water.
• Alternative sources like wells are only functional 6-8 months of the year, and well pumps are unreliable or fuel to power them can be difficult to obtain
• The first version of the Hippo Roller multiplied the hauling capacity of a single person but the cost of manufacturing and shipping them limits the number of people they can impact.
• Hippos are currently manufactured in South Africa but are needed in other countries such as India and Siberia.

Enter Project H Design and Engineers Without Borders
Emily Pilloton took interest in the Hippo challenge and began with fundraising for a “Hippo drop” – the term for a distribution of Hippos to a community – as the founding project for Project H. During the Hippo drop the designers visited the Johannesburg manufacturing facility and identified an opportunity for design improvements.

Project H partnered with Engineers Without Borders’s Appropriate Technologies’ Design Team and split into two teams: one focused on reducing cost in any way, and one focused on playing with the inherent design of the device. We find the Flickr photos of the design process to be fascinating. Here are a few of our favorites:

One meeting asks, “What do men do?”, considering the social cause for women and children needing to do the hauling.

Presentation of concepts using current water containers for transport

The most viable options progressed to 3-D modeling with design features called out.

The final design

The next step: India
These redesigned hippos need a new passport stamp! See below to learn how one click – your vote – can send Hippo Water to India. Today is the last day to vote!

Before we dig in, Hippo most urgently needs your vote for a much-needed scouting trip in India to exchange ideas and advice with other social entrepreneurs and establish critical distribution partners. The contest is hosted by JustMeans, offering an India Social Entrepreneurship Journey with Journeys for Change, for which Hippo Water is currently in the Top 5 contenders. There are only a few more days left to vote, so please vote today!

More about the designs behind the new Hippo coming soon. For now, you can read about their founding principles in our original post about Hippo Rollers.

A Twitter tip informed me of Project Masiluleke in South Africa. Due to the stigma associated with HIV/AIDS in South Africa, individuals avoid getting tested and 90% of those infected are not getting treatment. In the KwaZulu Natal province, >40% of the population are infected. The project takes advantage of the fact that nearly 90% of individuals use a mobile phone, and their use of “Please Call Me” messages creates an SMS advertising opportunity of over 1 million messages per day. Frog Design provides great insight into the use of new mobile media, consideration of the mostly-male target audience’s cultural attitudes, and the initial success promoting the national AIDS hotline and private HIV self-testing.

Yesterday, Google Africa launched Google SMS in Uganda. In addition to the familiar Search functionality, the Uganda edition starts with two other channels developed specifically for the needs of the poor. One channel provides health and farming tips. The other hosts a marketplace, something of a Craigslist browseable entirely via SMS. These are just two starter examples of mobile apps that can be supported by the Grameen Foundation’s AppLab.

Perhaps the newest organization, FrontlineSMS:Medic helps medical centers provide support to doctors in rural areas through mobile connectivity. The central clinic receives and responds to field messages from a laptop while medical workers visiting patients use mobile phones to send informational messages and requests. Since community health workers may leave the clinic for up to a month to serve large remote communities, this communication link with the clinic can accelerate and widen care coverage. Springwise reports that FrontlineSMS:Medic has even modified camera phones to become diagnostic devices for HIV/AIDS, tuberculosis, and malaria. In the Stanford + Portland spirit of its founding team, this is a free, open-source software program. The Discovery Channel has a nice interview with Josh Nesbit from their pilot program, “Mobiles in Malawi“.

Discuss these and other mobile innovations by social entrepreneurs July 1, 4-6pm ET in the Social Entrepreneur Chat on Twitter (#SocEntChat), hosted by Ashoka. (via Cooper-Hewitt Design Blog)

Acumen Fund’s main criticisms of alternative stoves like rocket stoves and solar cookers are as follows:

There are lots of stove technologies…out there that can do the job better and use cleaner fuels, but the capital costs are higher and the distribution models are complex. Incentives from the carbon markets…have not provided enough benefit to drive the adoption of clean cooking products…getting certified through the Kyoto Protocol is a long and complicated process, a real barrier for start-ups interested in attacking the stove problem.

Could the Berkeley Darfur Stove be a solution?

• They certainly are not the cheapest solution, placing the stove at $20 on a stove comparison chart that cites their main competition – stoves made of three stones or mud/dung over burning wood – as $1, and the only two more expensive – solar cookers and the Saves 80 Stove – as $20-57. They claim that the cost is offset by a savings of $240/year due to a 75 percent reduction in wood consumption with this stove.
• The stove design is indeed well-thought out, citing a wind collar to protect against Darfur’s windy environment, a variety of cooking surfaces for various types of Darfuri cuisine, and a small firebox opening to discourage over-feeding the fire with excess wood.
• But they may have the edge when it comes to distribution model. By manufacturing the parts in India then flat-packing them for shipping to Sudan for assembly (a la Ikea), the Darfur Stoves project has been able to increase production seven-fold, to 100 stoves per day.

Case study for marketing and driving adoption of your developing world design: Developing world designers must remember what is most vitally important to their target market. When considering a technology that promises to solve MDG #7 – environmental sustainability, marketers must remember that the third world is concerned with this generation’s life, not the next two or three. That means global warming, sustainable design, and climate crisis are not motivators for them to adopt alternative technology.

We first heard of the Darfur Stoves Project from Michael Helms’ article in Stanford d.school’s Ambidextrous Magazine. Rather than position it as an environmentally conscious choice, people talk about the Darfur Stove because it saves women from having to walk hours away from the safety of their camps in search of wood, in a region of Sudan where rape and murder are common threats to these refugee women. This even spurred 17-year-old Spencer Brodsky from Maryland to raise money to donate stoves to the women, drawing celebratory news coverage from CNN and currently achieving over $125,000 for 4,000 stoves (for $30 a stove? we thought it was $20?).

The Darfur Stove Project’s focus on the immediate life-or-death impact of choosing an alternative technology is not alone. Our coverage of Amy Smith’s TED talk on charcoal, one of CbD’s most popular posts, also notes that she met with more success when changing her story from “deforestation” to “saving childrens’ lives”.

1. the best-designed nets currently available, which can kill mosquitoes on contact and last up to 5 years instead of only 5 months
2. produced by A to Z Textile Mills in Tanzania, creating thousands of jobs and stimulating the country’s economy.

Malaria No More cited benefits of malaria prevention beyond saved lives on its blog: malaria prevention leads to

• a more productive work force
• reclamation of 25% of a family’s income usually devoted to malaria treatment
• reclamation of 40% of Africa’s health expenditure that can be redirected from malaria to other high-priority issues like HIV/AIDS, tuberculosis, and water safety.

Other celebrities to lend their support to the fight against malaria include Kiefer Sutherland, who appeared in a somber message during this season’s 24: Redemption on Fox calling upon viewers to donate nets. Malaria No More has rallied many other famous names – American Idol contestants, UK’s Gordon Brown, Dave Chappelle, Bono – to the goal of distributing bed nets to 100% of those who need them by December 31, 2010.

Hippo Roller brought the challenge to Project H Design and Engineers Without Borders, resulting in a two-part, nesting, stackable version of the Hippo which cuts the required shipping volume to 1/3 the original space. Ikea would be proud!

The next challenge is to cast the mold that will enable the manufacture of the Hippo 2.0s. To raise the $5000 needed to create this mold, Hippo has launched a $25×200 campaign. For a $25 donation, 200 supporters can sponsor the original mold and bring more Hippos to more people in need of safe water globally.

Here’s a beautifully captured video of their most recent Hippo Drop delivering 90 Hippos in South Africa. Great chance to see the Hippos in motion – looks like they’re fairly easy to push!

capture a monsoon,
don’t only collect water,
build an “extreme” team.
 

A project called “The Deathstar” won this year’s monsoon challenge from the Design for Extreme Affordability class. This challenge gives teams 48 hours and $20 to design and build a device to maximize the capture of rainwater from a simulated monsoon.

Team Deathstar took advantage of the fact that the “monsoon” comes from a set of sprinklers mounted on a ladder; their solution surrounded the sprinklers and captured water from all 360 degrees, draining through a gutter system to a collection receptacle. Not exactly an option in a real monsoon, but the team did demonstrate innovative thinking. The video proves that they accomplished the third requirement of the competition: have fun!