NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Almost fifty per cent of the developing world’s population – 2.5 billion people – lack improved sanitation facilities, and over 884 million people still lack access to safe drinking water. The Clean Water Roundtable was recently held at the Haas School of Business, at University of California Berkeley to explore sustainable solutions to clean drinking water opportunities in the developing world. By bringing academics, NGOs, foundations, corporations and venture capitalists together, participants explored and identified technologically and culturally viable, scalable solutions to developing clean water systems and what is needed to overcome existing impediments.

One afternoon panel titled “What Water Opportunities are Non-Profits Looking for in the Developing World?” included panelists Keith Stamm, from Water.org, Raul Gauto, from Avina, and Stephanie Maurissen, from CARE. The three organizations are each taking a unique approach to increasing access to clean water in the developing world.

Avina’s vision is that thousands of excluded communities self-organize through equalitarian and democratic processes to manage their own distribution and sanitation of water. CARE aims to establish and scale up a trust fund to innovate financial mechanisms and technical assistance to water providers in El Salvador, and Water.org is focusing on combining microfinance with water and sanitation credit in southern India – building capacity at the community level and creating support groups to take loans. In addition, they are funding MFIs to enter the water space and develop financial mechanisms for water specific programs.

A common theme around all three organizations was the need to empower communities through capacity building, support and the availability of creative financial mechanisms. Hearing this focus on longer term enablement and sustainability reinforced the idea that the nonprofit world is shifting from traditional approaches to more market-based solutions for development.

To this point, Water.org explained and emphasized the relationship between philanthropic and commercial capital. Many of their projects are initiated with philanthropic money, but then rely on commercial capital investment for continued sustainability. For example, philanthropic capital is needed to extend an initial pipeline into slums, and then the focus turns to commercial capital in partnership with MFIs to ensure that people have the opportunity to take loans out and purchase products like water connectors to the nearest pump. The ratio of commercial to philanthropic capital obviously varies from region to region, with areas where microfinance penetration is higher showing higher ratios. To be most effective, Water.org generally operates in areas where the concept of microfinance has already been introduced successfully.

The enabling environment needed for these approaches to succeed was also discussed, and land ownership was an interesting point that came up in this regard. Most people in these communities do not hold property rights to the land they inhabit, making it counter-intuitive that they would invest in things such as water connectors to improve it. However, experience has proven the opposite and many people seem to use such investments as means to legitimize their right to this land, making it harder for the government to displace the property; a positive and unexpected side effect.

Another point discussed around the enabling environment was governance, and here Avina emphasized on the issue access rights to water and the importance of building a democracy within community organizations. Developing assemblies and electing leaders within them allows communities to build a democratic processes and essentially develop a middle class. Building financial institutions along with governance schemes creates a shift from people as inhabitants of a community, to people as citizens in that community, with access to water, credit and reliable decision making procedures.

The roundtable steered away from traditional non profit approaches and the panelists emphasized the need to start with local communities and develop bottom up, scalable approaches rather than top down solutions. All participants were highly aware of the need to create sustainable solutions while keeping in mind future costs such as maintenance, exploring ways to leverage commercial capital and ensuring hat surrounding aspects like property rights are governance were taken into account. Finally, all agreed on the need for collaboration and capacity building on multiple levels, building a solid infrastructure for future development.