Ten key lessons learnt from funding market based solutions in water and sanitation.
NPC has been advising the Stone Family Foundation since 2005, providing strategic advice and supporting the day-to-day management of the Foundation.
It’s been a fascinating journey—presented with a blank sheet of paper, we’ve worked together over the years to find the foundation’s current focus on the development of market-based approaches in water, sanitation and hygiene (WASH) – the Foundation’s unique and critical niche.
But the journey doesn’t stop here. There is an undeniable need for greater funding of WASH—it’s shocking and inexcusable that over 740 million people (in 2014) do not have access to safe drinking water and that one in three do not have a hygienic toilet. But it’s been challenging to work out how to fund effectively in a sector where philanthropic involvement is limited, and market-based approaches are at a very early stage.
Advice and knowledge from other funders has been invaluable in helping the process along the way, and NPC and the Foundation are keen to share insights and lessons learnt over the last nine years.
In the accompanying document, we argue that fresh thinking is needed in this area, and identify ten key lessons:
1/ There are no silver bullets in WASH—solutions need to be tailored to suit different customers and geographies.
2/ WASH is much more than toilets and taps. Technology is no good without attention to getting products and services to the people who need them.
3/ We need to build demand for WASH by putting customer, not donor, needs first.
4/ Households are often able to pay for WASH, but this can be easily undermined by poorly targeted subsidies.
5/ We need innovative financing solutions to improve households’ ability and willingness to pay for WASH, including through microfinance.
6/ Market-based approaches in WASH exist but most innovative organisations are early stage and small scale.
7/ Lack of high risk capital is holding the WASH sector back—there’s a need for patient and flexible investment.
8/ Market-based approaches in WASH need to resist the temptation to scale too fast.
9/ The WASH sector is under-funded, and philanthropic funds are a limited but precious resource.
10/ WASH is not a sector for quick wins, so funders need to be patient and flexible.
There’s no easy solution to challenge of delivering sustainable water and sanitation services and market-based approaches certainly aren’t the answer alone. But by making the most of their ability to be flexible and take risks, philanthropists can play a vital role in stimulating exciting new approaches by funding where others can’t or won’t.
Written by Dawn Plimmer, NPC
This post was originally published on the New Philanthropy Capital website in October 2014 and has been edited.