How we adapted our approach to funding in response to COVID-19

We reflected back on the past 10 months or so since the restrictions brought about by COVID-19 were implemented. In this blog, we share how we adapted our funding approach in the WASH portfolio and supported enterprises during a challenging and unprecedented time.

As the world responded to COVID-19 in March and April 2020 through national lockdowns and restricted travel, our first response – like most funders – was to offer support to our existing partners; to check in and provide additional resources where needed.

As a result, we made six COVID-19 specific additional grants to existing partners (totalling almost £350,000) and adapted the agreements of five enterprises to be more flexible and responsive to their challenges. In addition, we made two further awards (one grant; one working capital, total £400,000) to organisations not in the portfolio but well known to us that were delivering a specific COVID-19 response.

We knew and understood that access to safe, clean drinking water and good sanitation and hygiene are critical to reducing transmission routes and stopping the spread of COVID-19. Many of the enterprises we partner with were deemed essential services in lockdown periods – and continued to operate in uncertain times.

As the year progressed and it became clear that opportunities to travel to Africa and Asia were increasingly unlikely for the remainder of 2020, we reflected on how we might consider supporting organisations not currently in the portfolio, to continue to expand the number of partners we work with and their impact.

As a funder based in London, travel restrictions meant we were unable to conduct due diligence in the way we normally would, which would include travelling to spend time with the enterprise, its management and seeing operations on the ground. At the same time, we also heard that many water and sanitation enterprises were finding critical fundraising opportunities drying up.

In response, we decided to adapt our normal due diligence process through the development of a lighter touch, quicker decision-making process we called a “pipeline pitch”. With echoes of Dragons’ Den or the Shark Tank (in the U.S.), we set up a focused pitch session with our Board designed to identify and select new partners for the portfolio using only desk-based research and discussions.

We set clear criteria for the pitch process:

  • The organisation should be completely new to the Foundation i.e. we had not considered funding it before;
  • There was a clearly defined project that the Foundation was well placed to support and it would help the enterprise overcome a critical internal barrier to scale;
  • There was a positive initial assessment against our existing Golden Rules, accepting the due diligence constraints.

To mitigate any perceived risk in not being able to complete a normal due diligence process, and to speed up the decision-making process, we also:

  • Capped the value of the grants to a maximum of £100,000 each;
  • Proposed defined project time periods – most were 12 months, with a more focused scope and a critical question or challenge the enterprise was seeking to overcome (vs our normal approach of providing less restricted funding against a longer-term plan);
  • Triangulated with other funders where possible.

We were delighted with the response – all six proposals put to the Board were approved.  As a result, we have been able to begin to develop new partnerships with: Water4 in Sierra Leone, Oshun in Senegal, Drinkwell and Biocom in Bangladesh, Aerosan in Nepal, and Opero in Kenya.

Water4 supports locally owned and operated safe water enterprises providing NUMA-branded water. It is one of the new organisations approved through the pipeline pitch process and we are investing in new ways for it to expand services to the urban poor in Sierra Leone.  

We hope that within this initial group of six enterprises there are future scale partners and that we can develop longer-term, more strategic partnerships.

We will monitor how these grants progress through the course of the year, and hopefully there will be opportunities to visit these new enterprises in 2021 to understand the outcomes of the projects and impact of their work better.

The process has been a significant learning opportunity for the Foundation – it has made us reflect on our processes and encouraged us to think differently about how we make decisions; all of which has been positive. It has raised questions that if this approach works, is it something we should continue once the pandemic is over? Is a small grant with less due diligence and more flexibility in the process one way to develop new relationships, rather than comprehensive upfront due diligence?

We hope this year will give us a clearer answer to these questions and we look forward to learning more from this process and the new enterprises we have brought into the portfolio.