I had the privilege of participating in a panel during this week’s Skoll World Forum about performance measurement. Called Mirror, Mirror On The Wall What’s the Impact of This All?, I was joined by Joe Madiath of Gram Vikas, Jeroo Billimoria of Aflatoun, David Bonbright of Keystone and Fay Twersky of the Bill and Melinda Gates Foundation. I think that, in the past five years, there has been a remarkable convergence among both funders and practitioners in our community regarding the need to develop rigorous performance metrics. Thankfully, there’s also an emerging consensus around the need to be careful about how much impact can be attributed to our various programs.

Roger Martin, Dean of the Rotman School of Management and a Skoll Foundation Board Member summarized the areas of convergence on the panel with the three P’s: positive, precision and pluralist. All five of us agreed that you should not measure if it does not add (positive) value. Too much time and energy is wasted on evaluations that don’t add real insight and distract from program execution. Joe and Jeroo both spoke of how real time information helps them manage their programs, and how their staff and partners have come to find real value in measuring. Whether it is Joe’s ability to claim that a $1 investment in sanitation and water infrastructure leads to a $10 return of community value, or whether it is Jeroo convincing her Aflatoun partners that real time information allows for them to improve and innovate their financial literacy programs, metrics must and can add value.

From positive to precision: as Fay pointed out, the field needs to be very careful about impact measures that require careful framing, controlled research and counterfactuals, versus measures of outputs (number of houses built, liters of clean water sold). A narrow focus on outputs, however, can shift the focus from the measurement of broader, system -wide change we are seeking to have. Then again, one needs to think with precision about what systems our programs are seeking to change and how.

Finally, pluralist: metrics need to account for the voices of the voiceless. As David Bonbright argued, measurement systems need to allow for the recipients of programs or services to be part of the feedback loop.

All in all, it was quite an event – kudos to the organizers!

The opening session of the Skoll World Forum last night was a terrific reminder of the value of bringing different perspectives together and having the chance to stop and listen and reflect on the work that we do. The two most memorable speakers in the formal program, in my opinion, were Phil Hope, the Minister of the Third Sector in the UK, and Karen Tse, of International Bridges to Justice, a network of legal clinics and public defenders working for judicial reform around the world.

The Minister’s comments were the most forward thinking and provocative about the social enterprise that I had heard from an elected official: he talked about how social enterprises can tap into capital markets, how we might be able to create a social stock exchange, and the need for more transparency and accountability in thinking about impact.

Karen Tse was talking on a panel about how to navigate across cultures; she commented that the oversimplification of cultural difference often leads to mistaken assumptions. For example, she said that as an Asian woman, she often found the overt biases working in Asia to be easier to overcome than the subconscious biases she faces in the West, or that there are in fact some universal principles of justice that we should not be afraid of promoting globally. She reminded us that she and her colleagues view compassion and recognizing our interconnectedness as the essential tools to being personally effective in this work.

And of course, the value of any conference is who you meet in the halls and at the receptions. There are many personal friends, friends of Acumen Fund, and new faces who are on a shared journey of inquiry about how to make social enterprises more effective. More later.

Editor’s note:

Brian’s Monday post, “How to Value Social Enterprises“, generated some excellent comments. One commenter in particular noted the importance of the Best Available Charitable Option (BACO), a valuation methodology Acumen uses to evaluate social impact. This comment, from Premal, spurred further musings from Brian on the issue of social enterprise valuation, portfolio data management, and the “base of the pyramid” space in general. What follows is Brian’s response to Premal’s comment.

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Premal,

Thanks for the post. BACO is a helpful tool, but we would love to do away with it! We developed the framework because we found that absolute measures of social return (e.g. SROI) are too hard to implement in practice, but we needed something to help us think about the marginal use of our philanthropic capital.

Over time, we would love to see a world where the “output per dollar input” of a range of activities is made transparent and comparable. We have been working with volunteer engineers at Google on the development of a portfolio data management system (PDMS), which allows us to track our own investments and their progress against key metrics internally. (more…)

When Acumen Fund thinks about making an investment in a social enterprise, we start like a traditional venture capitalist might: what is the idea?  What kind of market will it serve? How do you scale the business? What is the potential exit from the investment? Unlike a traditional VC, however, the harder the market to serve, the poorer the customer, and the bigger the social need, the more excited we get about the ventures. We are also very clear that we want to support innovative business models, not just ones that can maximize our financial returns, but ventures that can demonstrate new models and help prove that in some cases, market-based approaches work to serve the poor. 

Our analysis always starts at the unit level: what is the product or service? Who are the customers? What are the costs to serve?  How do you make money?  How do you beat the competition?  Any good analysis is clear on the assumptions at the unit level and builds up from there. If one hospital or ambulance or housing development can’t return the cost of capital over three to five to seven years, it’s not quite clear to us the value in scaling the business. We also look at the relative social impact compared to the Best Alternative Charitable Option, are clear about the risks, think about the team and their alignment with our mission and values, and what value Acumen Fund brings to the table. (more…)

Yesterday’s visit by President Bush to the A to Z Textile Mills factory in Arusha, Tanzania, was a tremendous boost for Africa’s fight against malaria and for African economic development. A to Z is now the only manufacturer of long-lasting insecticide nets in Africa, supplying nearly 8% of the continent’s demand for these life-saving products and employing over 5,000 people. ABE, another local company that we have supported, has a long-term supply agreement to produce Artemisia, and by the end of the year should be producing about 15% of the world’s supply. ABE also employs thousands of farmers in cultivating a valuable cash crop. 

As we reflect on our experience with these two malaria ventures, we think that the President’s Malaria Initiative could go further in spurring economic development in Africa with a few policy changes in the allocation of funding for malaria prevention and treatment commodities.  (more…)

In development, there is considerable debate and uncertainty about two related concepts: whether the poor can pay for important health products and whether paying customers value these goods more than recipients of hand outs. The first is a question of whether or not people have the resources and are even willing to pay for basic health products like anti-malarial bednets or water purification filters or tablets. 

As an investor in a long-lasting bednet manufacturer in Tanzania, we know that people are not willing to pay the full cost of the bednets, but they are willing to pay for subsidized nets.  Just how big a subsidy is required is a question that we are exploring right now with Professor Pascaline Dupas of Dartmouth. With the support of Sumitomo, the Exxon Mobil Foundation, and an anonymous donor, we are conducting a randomized trial to find the price at which people will buy them. We are also reviewing the literature to see if there is a definitive opinion on whether people who buy nets vs. those who receive them for free are more likely to invest the time and energy into figuring out how to use them properly, and ultimately receive the health benefit of reduced exposure to mosquitoes with proper use of the bednet. 

This study from the Poverty Action Lab takes up the same set of questions for water purification tablets in Zambia. The findings are fascinating, and show that in this experiment, people who paid for the Clorin were more likely to use it than those who were given it. The next step is to study whether a market for public health products can be an important complement to other essential government and NGO strategies to reach those in need with access to clean water or preventative health products and medicines.

It was an incredible experience being at the opening of the first Sanjeevani store last Tuesday. The store and clinic looked wonderful (clean and simple), felt nice and cool in the warm Mumbai afternoon (the CEO of Medicine Shoppe India, Viraj Gandhi, made a note for me to thank Jacqueline for insisting on having the stores air conditioned), the Vision Shoppe had a long line for testing (I bought my first pair of prescription glasses after being tested as mildly myopic), and the line for the public clinic spilled out into the streets. I have also never seen Viraj as excited—he was just giddy about the possibilities that this new format holds for serving the poor. It also didn’t hurt that the Director of International Operations from Medicine Shoppe in the US was there at the launch. They were one of many partners that had cautioned Viraj about trying to enter the poor and rural markets, but seemed to be pleased with the launch yesterday. (more…)

Voxiva, one of our health investments, was recently profiled in this Wall Street Journal article. The company, which offers disease surveillance and disease management platforms for national or regional health systems, is building a brand around technology that uses SMS messaging for real time data collection and dissemination (”the power of the internet with the reach of the cellphone” as their management team likes to say).

As the article explains, the pervasiveness of the existing cellular networks, and the rapid penetration of mobile phones among all demographic groups, should enable Voxiva to offer a range of health services, leveraging existing infrastructure.

Like Drishtee in India - a company that is building health information services into a network that rural computer kiosks already used for a range of services (from e-mail to e-governance to just plain old web surfing for cricket scores) - the flow of health products, services and information may be more cost-effectively delivered using these existing information and communication technology (ICT) networks. (more…)

I’ve just returned from my first trip to Africa to visit Acumen Fund’s investments in South Africa, Kenya and Tanzania. One of the most striking things is that within 24 hours (5 airline meals, 4 movies and 3 hours of sleep) I went from sitting in the living room of a woman with AIDS in a poor semi-rural community in tropical Africa to picking up my daughter at elementary school, knee deep in snow, and somehow did not feel the culture shock I expected to feel. (Frankly, I felt much more culture shock readjusting to driving, and not having to lock my doors and worry about the carjackings of JoBurg). I suppose this is largely because the trip was extremely short or it may have to do with weak antennae on my part, but I actually think there might be two things: First, the kind of struggle and community support and perseverance I saw are not something so foreign to us in the U.S. I see the same kind of commitment, optimism and heartbreak in the U.S., particularly through involvement with urban community development corporations. Just add a few zeros to the per capita GDP and a decade or two to the life expectancy, and the circumstances, at their core, are not that dissimilar. (more…)