Refining our approach to enterprise development in water and sanitation

Over last 2 years, we have spent a fair bit of time considering how to position the Foundation to make as positive a contribution to advancing the water and sanitation sector as possible.

We have a stated ambition to increase the Foundation’s annual disbursements in the water and sanitation portfolio to at least £10M per year and have plans in place in 2018 to disburse close to £6M, doubling spending since 2015.

We are making progress towards that aim but as the adage goes, giving money away can be relatively easy, doing it well is a considerably harder challenge.

Mindful of this, we aim to be focused but at the same time thoughtful and considerate about what we do and how we do it.

So, over the past year we have been reviewing the Foundation’s vision, aims and beliefs from which to build forward looking plans and the overall approach we should take.

What we did

We began by going back to first principles and working with our Board to agree a set of guiding principles – the fundamentals underpinning why we are interested in water and sanitation, what we do and how we do it.

These included points such as a belief in social entrepreneurs as part of the solution to providing better water and sanitation services, to focus on people as consumers not beneficiaries, and to focus on providing risk capital and non-financial support to the organisations we are lucky enough to partner with.

These guiding principles provided an excellent starting point from which to then restate the vison we have for the Foundation’s engagement in the water and sanitation sector:

“Financially sustainable water and sanitation enterprises delivering affordable, high quality, and reliable services that have a transformational impact on households in Africa and Asia.”

We believe this is our niche – to focus on how to develop and support financially viable enterprises that provide services that are needed, desired and that are affordable for consumers.

These types of enterprises require exactly what the Foundation, as a private, independent foundation, is set up to do – provide patient risk capital via long term and mutual partnerships.

With the guiding principles and a restated vision in place, we then considered how to engage with the sector and the challenge of enterprise development.

Repositioning the portfolio

We owe a debt of gratitude to many conversations had with similar foundations in WASH and other sectors, like access to energy. Discussions and learning from peers has contributed to our thinking and how we repositioned of the portfolio.

The key changes we have made has been to view enterprise development through the lens of thematic areas and then consider what challenges, both internal and external, they face when growing and scaling up services.

When mapping our portfolio, it quickly became apparent the Foundation’s support fell naturally in four core areas – enterprises in safe water, urban sanitation services, waste to resource and rural sanitation in Cambodia.

So, to maximise our impact, we have aligned what we do into these four areas.  The lens of thematic areas will, we hope, enable us to develop expertise and a deeper understanding of the challenges and opportunities in these areas and inform future plans.

At the same time, we also recognise providing support solely to enterprises may not necessarily be enough to enable them to make the breakthrough, to achieve financial viability and scale up to reach more consumers.

Enterprises, like anything else, do not operate in a vacuum or isolation, instead operating in a system, a market, an enabling environment (choose which framing term you wish, there are many!).

To respond to this, and with a nod to the developing body of important systems thinking going on in the sector, we provide support to two additional complementary ways – via direct non-financial support to enterprises alongside finance and more strategic funding to support to national or global initiatives.

The goal of these wider initiatives is to contribute to changing the systems (city, market, global) in which enterprises operate and we hope this will benefit multiple enterprises and the sector to address external barriers to enterprises scaling.

In each case, we have spent time considering what the Foundation’s added value might be in these areas and focusing down hard on core areas where we believe we have the resources or networks to make a meaningful contribution.

We have also gone on to think about how to effectively measure this and assess impact as well as to develop some golden rules for how we approach new opportunities – which we will share in blogs in the coming months.

You can find out more by viewing a copy of our strategy slides here.

We remain optimistic and excited about the developments we see and are committed to supporting enterprises and social entrepreneurs to breakthrough and become part of the solution to achieving the ambitious targets and goals in SDG 6.