NextBillion Editor

Weekly Roundup 7-3-15, Twitter Top Ten: An NB mashup in honor of America’s birthday

Editor’s note: The NextBillion team will be enjoying the Fourth of July holiday starting today, so we’ve combined our Roundup with our weekly list of Twitter favorites. Don’t forget to scroll all the way down to see some interesting links you might have missed this week. We hope you enjoy our consolidated approach … and America’s birthday party!

Disrupting philanthropy

We got a glimpse into the changing world of philanthropy this week.

On Wednesday, Silicon Valley superstar Sean Parker, the founding president of Facebook and co-founder of Napster, officially launched a private foundation to tackle malaria and cancer, using $600 million of his own money.

The next day, Saudi Arabian billionaire Prince Alwaleed bin Talal, 60-year-old nephew of King Salman, said he will donate his $32 billion personal fortune to charity.

Two very rich men addressing the same problem in very different ways.

Parker, 35, amassed his fortune using disruptive technology and he hopes to disrupt the risk averse philanthropic community and solve problems quickly. “In any other field outside of philanthropy, if a company released a product and just continued to insist that it was working when it wasn’t – and didn’t listen to feedback from customers and didn’t change – they would probably fail,” Parker told CNN Money.

He’s hired fewer than 10 people at his foundation; he wants to keep it “agile and nimble” like a startup.

The prince, who came by his money the very, very old-fashioned way – he invested his princely income – told the BBC his old-school aims: “Help build bridges to foster cultural understanding, develop communities, empower women, enable youth, provide vital disaster relief and create a more tolerant and accepting world.” His investments will be overseen by a traditional board of trustees, which he will head.

To put these announcements in perspective, it might help to read the timely blog by John Taft, CEO of RBC Wealth Management, on the Huffington Post. He focuses on how young philanthropists are changing Warren Buffett’s style of giving: make your money, then give it away. (That’s pretty much the modus operandi of The Giving Pledge).

Speaking at the Forbes Philanthropy Summit last month about social impact investing – designed to generate both financial and social returns – Buffett said, “I don’t believe you can solve for two variables at the same time.”

That, of course, is exactly what younger philanthropists – people Parker’s age – are trying to do. Will they?

It’s hard work to identify entrepreneurs who are finding solutions and building markets in developing countries. (Certainly harder, for instance, than writing a check to a legacy charity.) It’s even more difficult to decipher the dynamics in these emerging markets and to tweak those dynamics in a way that enables support to reach those who need it. It takes more than money; it takes involvement. That’s what this new breed of philanthropist aims to tackle, it seems.

It will be fascinating to watch as they try to figure out ways to give away money as creatively as they made it.

Kyle Poplin

State of SGBs: Shifting focus and mix

The Aspen Network of Development Entrepreneurs (ANDE) this week released its annual State of the SGB (small and growing business) Sector report. ANDE, which has more than 200 members, is an ecosystem-building organization linking funders, donor organizations, NGOs and businesses in emerging markets. ANDE’s membership has supported, either financially or through capacity building, more than 350,000 businesses.

There are many upsides in the report and a few places that could give an investor or social entrepreneur pause.

In 2014, 33 SGB investment vehicles launched with 22 of them confirming they had closed their first fund. Those funds had a median target of raising $40 million. Additionally, among those reporting their first close, 14 had attracted a total of nearly $350 million in capital.

In the past decade, ANDE found 423 investment vehicles were launched that had a “target deal size” between $20,000 and $2 million. In the past five years, ANDE estimates that 200 investment funds or products have raised $10 billion with the goal of investing in SGBs.

The report also notes that the investment sector focus and geography mix have been shifting over the past three years. Energy, education and water-related SGBs are gaining increased attention from investors compared with sectors such technology, agriculture and financial services, which had been the most popular sectors of the past decade. Geographically speaking, sub-Saharan Africa, which attracted a third of all new investment vehicle launches between 2005 and 2014, is cooling – at least in terms of the SGB sector. But Latin America is rising and in 2014, took the top spot, as the graphic from the report shows. ANDE notes the decline for Africa could be the result of a regional shift in fundraising toward large funds.

But there are some downsides. The report notes that donor funding for projects tied to SGBs exceeded $2 billion in 2013, or less than 1 percent of total development assistance. That’s a big drop from just a few years ago. Between 2008 and 2009 government development agencies poured about $3.3 billion a year into SME-related projects, or about 2 percent of the overall development assistance budgets.

Some may view a decline in government participation as a good thing, but ANDE’s report raises some concern.

“This spike and subsequent drop may be related to the emphasis on job creation and entrepreneurship that swept governments in the wake of the global financial crisis. But SGBs should not be relegated to ‘fad’ status. This sector should be seen for what it is: a powerful mechanism to achieve a range of development goals. SGBs can not only increase incomes, but they can also reduce global hunger, empower women and provide access to energy, for example.”

Scott Anderson

Links of interest from the NB Team this week:

Foreign firms are pouring into India’s $100 billion solar push by Business Insider

How a Global Corporation Is Quietly Changing the World by Fatima Crerar of PUBLIC Inc.

Cuba: Blazing a Trail in the Fight Against HIV/AIDS by Kanya D’Almeida, Inter Press Service

Manufacturing Deal Wins China Cheap Supply Of GSK’s New HIV Drug by Reuters

OPINION: Getting vaccines to people who need them is the most important issue in global health by Franklyn G. Prendergast, Steven G. Reed and Darrick Carter, for Quartz

Health Care
financial inclusion, impact investing