Category: Social ROI -
17 October 2012
photo by David Graham
For the first time in Asia, a sustainable and market-based water filtration business has been registered under the voluntary Gold Standard scheme, and will benefit from carbon offset funding, illustrating that carbon markets can support sustainable technologies that improve the lives of poor populations. iDE’s Cambodian social enterprise, Hydrologic, manufactures ceramic water purifiers which provide clean water to rural households, reduce the amount of wood burned to boil water, create local jobs, and bolster economic development. Hydrologic was recently named winner of a 2012 Ashden Award. Start-up resources for Hydrologic came from several sources including the USAID WaterSHED project in form of grants and technical assistance.
Nearly 40% of rural Cambodians still have no access to safe drinking water. Untreated water and poor sanitation result in about 10 million cases of diarrhea and 10,000 deaths per year in Cambodia, mainly affecting children in rural areas. iDE’s Hydrologic produces and sells ceramic water filters that provide safe drinking water to rural households of Cambodia. By displacing water boiling practices, the filters allow Cambodian households to avoid the unsustainable burning of 18,000 tons of wood per year, saving 41,000 tons of CO2 emissions annually. Thanks to this impressive environmental impact, the project has completed its registration under the voluntary Gold Standard scheme, an award winning certification standard for carbon mitigation projects.
The project has two major features:
• It uses a market based approach: Hydrologic Social Enterprise believes that sustainable business is a powerful way to provide clean water for as many people as possible. It created a market for water purifiers in Cambodia by selling affordable filters to NGO programs, and via shops and rural sales agents. Households benefit from a low cost water filtration technology, and the local economy is bolstered by the establishment of production and distribution facilities.
• Carbon offsets ensure a sustainable business model, as the carbon revenue is directly re-invested into further scaling up project activities.
Hydrologic joined Nexus, a nonprofit cooperative of NGOs and social enterprises that scale up development solutions by leveraging sustainable funding from the sale of high-quality carbon offsets, a concept referred to as “Carbon for Development.” Nexus provided financial and technical assistance with the carbon certification process, and is supporting the commercialization of carbon credits by engaging companies and public institutions on a fair approach to offsetting.
Hydrologic’s sustainable business model and its numerous benefits for the environment have also attracted private sector support. An impact investor, Impact Finance, provided a loan to support the development of the project, and a multinational company, Deutsche Post DHL, has committed to purchase carbon credits originating from the project.
24 June 2011
What is the future of the corporation? How can capitalism be a force for positive transformation?
iDE Founder Paul Polak’s recent talk at TEDx Mile High may challenge your assumptions about the answers to these questions. His talk details the tremendous shared value that lies within product and system designs for the bottom 90% of the income pyramid.
You can watch the video of Paul’s talk here.
4 April 2011
From iDE CEO Al Doerksen’s blog:
iDE has been going through a rebranding process. This is not just about visual identity, but also in terms of how we think about ourselves, our work and the people we interact with. Along the way, we have decided to go with the word mark as illustrated below.
The distinctly colored lower case “i” represents a lot of ideas we want to be known for: innovation, integrity, international, intentional, income, irrigation, impact, imagination, and the list could go on to include investment.
We have developed a little graphic with multiple “i’s”. An “i” alone represents me; it starts with what I believe is necessary and possible and what I am prepared to accept responsibility for. This is not an individualistic organization, however, the multiple “i’s” become “we”. We share a common belief system, a common philosophy of development, a common commitment to action … and we understand that when we believe and act together, things happen.
To take it further, we understand that we are a community of investors. You can see us in the graphic – some diversity to be sure, but there we are lined up shoulder-to-shoulder in common cause.
Each of us are investors.
Our donors invest in our mission because they believe and desire that we will create a social return on that investment which results in income and livelihood opportunities for the rural poor.
Our staff invests their careers and time in pursuit of a mission which is driven by the same desire for a social return. We believe that the efforts we invest in innovative product development and rural marketing programs will pay off.
Our interns and volunteers invest their time and passion to join us; the leverage they bring is not inconsiderable.
Our supply chain partners invest working capital to source and/or manufacture treadle pumps, drip systems and sanitary latrines because they believe in the underlying value of those products; that value to include the margins to keep the supply chain profitable and sustainable.
And most importantly, our small plot farmer clients invest their meager resources to acquire and put to work technologies which will increase their productivity and production, and their disposable income. We have learned a long time ago that small plot $1/day farmers require a payback which, in most cases, is less than a year. Generating this return is primary for us.
So we are a community of investors. We partner to achieve common purpose. Each of us has something at risk; each of us has a particular desired return on that investment. When we recognize that we are a community of investors, thoughts of paternalism disappear. So do characterizations of our small plot farmers as beneficiaries.
All of us in iDE are investors. We stand together, and together we achieve a considerable return on those investments. Some call it ROI. And that is good for all of us.
29 March 2011
Here is the latest newsletter from iDE Senior Advisor Andrew Romanoff:
What do you get when you cross a shower and a latrine? If you answered “an episode of Seinfeld,” you’ve been watching too many reruns. (That was my guess, too.)
In Cambodia, relieving yourself is no laughing matter. Sanitation-related illnesses claim more than 1,000 lives every month. And at $300, the price of a typical toilet exceeds most Cambodians’ annual income.
That’s why, as I reported in January, our team in Phnom Penh has been promoting a low-cost alternative: the $35 Easy Latrine. The device is manufactured locally and can be installed in a single day; 11,500 have already been sold.
Now the same crew is testing another vital innovation: a combination latrine/shower/drip-irrigation system. Click on the video below to learn how the Easy Shower may make thousands of Cambodians better off (and George Costanza awfully jealous).
MANHATTAN AND MARS
In my last newsletter, I suggested some reasons Americans should take an interest in the rest of the world. Our economy and our national security, I contended, are inextricably linked to our neighbors’ fortunes. Most respondents agreed.
“Prosperous nations tend to start fewer wars,” wrote Larry Kaufman, a “semi-retired journalist” and former railroad executive from Genesee. “They also make better customers than do poor nations.”
My friend and former colleague, Col. Joe Rice, reflected on his five tours of duty in Iraq. “Poverty, lack of education, and lack of opportunity are the main drivers of instability and terrorism,” he wrote. “A little money spent on international relief and development is in our own national interest.”
Then he added, “Oh, it probably is morally right as well.”
George Schumm, a professor of logic in Ohio, underlined that point: “A suffering human being is a suffering human being, and it matters not, from a moral perspective, whether it’s your suffering, that of your child, or neighbor, or fellow citizen, or someone living on Mars.”
None of these arguments, however, swayed a reader on the East Coast. “I don’t care about this,” a man named Aaron declared. “I live in New York.”
I’ll give another New Yorker the last word. In an article published in Outside Magazine in 2009, Nicholas Kristof, the Pulitzer-Prize winning journalist and author, explained why some causes (the plight of a homeless hawk on the Upper East Side of Manhattan) attract more attention than others (the genocide in Darfur).
“We intervene,” Mr. Kristof wrote, “not because of stories of desperate circumstances but when we can be cheered up with positive stories of success and transformation.… The irony: Altruism creates its own selfish reward. Or, to put it another way, nobody gains more selfish pleasure than those who act selflessly.”
(You can read Mr. Kristof’s article by clicking here.)
I’ll be sharing other stories of IDE’s success in the weeks ahead. Please join me to learn more about our work and how you can get involved:
- Denver Mile High Rotary Club, Wednesday, April 6, 7 a.m. to 8:30 a.m., University Club, 1673 Sherman St., Denver.
- Castle Rock High Noon Rotary Club, Thursday, April 7, 12 p.m., Philip S. Miller Library, 100 S. Wilcox St., Castle Rock.
- Brown-Bag Lunch, Monday, April 11, 12 p.m. to 1 p.m., at IDE, 3rd floor conference room, 10403 W. Colfax Ave, Lakewood. (Please note new date.) This month’s discussion will focus on Latin America.
- Denver West Rotary Club, Tuesday, April 12, 12 p.m. to 1:30 p.m., Rolling Hills Country Club, 15707 W. 26th Ave., Golden.
- Denver Cherry Creek Rotary Club, Tuesday, April 19, 7 a.m., Inn at Cherry Creek, 233 Clayton St., Denver.
To schedule a presentation, contact Michelle Warner at firstname.lastname@example.org. To volunteer, contact Dana Cousteau at email@example.com.
25 February 2011
From iDE CEO Al Doerksen’s blog:
One of my favorite concepts is that of “value.” It is a word we use a lot at iDE. Value chains. Value streams. Value proposition. Shared value. Value selling. Customer value. Value added.
So here’s a few thoughts about value. I start with the dead sofa on the boulevard of a Fort Collins neighbourhood – not that far from Colorado State University. I had occasion to visit Fort Collins several times over the space of a week or so. The sofa did not move; it was just there. No, it wasn’t a bus stop. It was just discarded. There was even a sign which said FREE. Still, there wasn’t even a university student on a limited budget who laid claim to it.
Since I spent half a dozen years in the upholstery business, I am sensitive to discarded sofas. In this case, the frame looked more or less intact, the fabric a bit dirty but not visibly torn. The cushions probably required replacing and a face plate on one of the arms was missing. To build a new sofa of that style would cost a few hundred dollars, at least; in the factory, we would go through a series of steps which we would consider to be value added, and end up with a product which would retail for a modest profit. The sofas we built had value, and yet, this one sits here free, discarded, unclaimed – apparently it has no value to anyone.
So here is the first observation. It is not the cost build up which determines the value of a product. It is customers who do their own mental assessment of what the perceived features and benefits are worth to them. In this case, there was no one around who perceived anything which seemed remotely attractive or interesting. Worthless in other words.
The definition of value is the ratio of perceived features and benefits relative to price. New HighDefinition television sets and new cars and countless other products are now available in a wide range of pricing. Yes, you can simply choose the lowest price product, and some people do, but many more consumers are do the value calculation – which features and benefits appeal to them within their ability or willingness to purchase.
These features and benefits may be warrantee, color, functionality, status, versatility, reputation, power consumption and a bunch of other factors. Each customer has her or own value paradigm. Successful companies, for example, Apple, understand a lot about customer values in how they put together and market their iProducts – iPads, iPhones, iMacs and iPods.
iDE’s customers are small plot farmers. The better we understand the value framework and farm economies of those customers, the more likely it is that we will offer products and services which align with those values. We can discover these value frameworks by simply observing the market response to our offerings, or we can undertake formal voice of customer exercises. Apple does it. Why shouldn’t iDE?
One of the things which iDE has learned from the 3.8 million small plot farmers we have served so far is that each and every one of those farmers is “sitting” in the middle of a value stream. Costs flow into the farmsite from upstream sources. Revenue opportunities for farm production are found in downstream markets.
We have not tried very hard to sell upholstered sofas to small plot farmers. Not only is it not our business, we doubt that the value proposition embedded in sofas would rate very high for subsistence farmers. I am sure we would fail. What does rate much higher are irrigation products and other agricultural products and services which dramatically increase family income.
In terms of water lifting, farmers have more and more choices: treadle pumps, photovoltaic pumps, solar thermal pumps, electric pumps or diesel pumps. Each has its own set of features and benefits. Our farmer customers make their own assessments. They each also review what their farm economy can afford. Then they make their own value choice.
4 January 2011
From IDE CEO Al Doerksen’s blog:
On a recent trip to Ethiopia, one of my colleagues collected a couple of photos of himself with a larger group of the local kids. I was ragging him a little about that saying that IDE doesn’t need any more images of “white men saving the world’s poor children.” I had to partially eat my words when I came across my own Pied Piper pose from a trip to Bangladesh in September. We were visiting project areas in northern Bangladesh; as visitors we may have been curious about irrigation applications, but for the kids in the village, the sight of a somewhat larger, white mustached foreigner with a black cap was also somewhat curious. It was not long before there was a procession of 20 or more following me. They were cute and they were interested in what this was all about. They happily agreed to pose for a photo; believe me, when I showed them the photo, they were more interested in seeing themselves than the “ferenghi”.
I have always enjoyed little kids, and somewhere along the way, people started to call me “Uncle Al, the kiddies’ pal.” Now, I’m not so big on my nephews and nieces (and I have about 30 of these) calling me “uncle”, but I do like the warmth and friendship dimension of this. (I’m glad that a bunch of them are now my Facebook friends).
These days I have two little grandsons who mean the world to me, and I am proud to be called their “grandpa”. I love their curiosity, their lack of pretension, their love of running, their hugs and smiles, and their enjoyment of good books. On my bucket list was the desire to take a grandchild to the zoo; they have allowed me to realize the fulfillment of this dream. Although they are challenging at times, fundamentally I do not see Matias and Lucas as problem cases which their great white grandfather needs to solve. What I resonate with is their own potential, hopes, dreams, energies & curiosities. Good health, literacy, a secure & peaceful environment and enough of the right food to eat would certainly be helpful.
Fundamentally, these are the same thoughts I have about the “gang” to whom I became an unwitting Pied Piper in Bangladesh. Their standard of living was basic to be sure, but it was not hard to see that they were also interested in books, in having enough to eat, in being able to run and in being safe & secure. In other words, their interests (whether explicitly addressed or not) were essentially the same as those of my little Canadian grandsons. Neither my colleague nor I are interested in a paternalistic view of development. Both of us enjoy kids, however, and if IDE’s income generating programs create opportunities for regular delicious meals, for reading, for running, for fun and for friendship, that turns us on. It’s not about being uncles or grandfathers or Pied Pipers – it is just about friendship and generosity.
20 December 2010
From IDE CEO Al Doerksen’s blog:
It’s already a few years back, but those finance lessons from my MBA are still stuck in my head. (1) The right way to value a business is to calculate the net present value of future cash flows. (2) The safest (least risky) investment portfolio is one which combines fixed income securities (bonds) with equity positions (stock). (3) It’s tough to beat the market in the long run. (4) Mutual funds offer the convenience of various investment profiles without the need for daily personal management. (5) Diversity is essential. Is this how Warren Buffet became so wealthy?
So now we’re getting to the end of the year, and some of us are started to review just how well we did with our personal investments in the past year. How much of the lost ground from the financial meltdown have we managed to recover? What’s been my return on investment (ROI) this year? How many years do I have to work before I can retire?
Investment considerations are also important for IDE. No, we aren’t taking any risks with our donor funds, but at a certain profound level, we have come to realize that IDE is smack dab in the middle of a community of investors. If the first case, the farmer customers who purchase our irrigation technologies are fundamentally investors in their farms, families and futures. If they invest $100 in a drip system, they are calculating that they will receive a ROI several factors greater than their purchase.
Likewise our donors, for example, the Gates Foundation, is very interested in the social return on their investment with IDE. They calculate their cost per customer as donors, and are strongly interested in seeing a substantial return. We are happy to report that many of our projects generate a return of 8 to 10 times when taken over a three year period.
So this adds a dimension to my personal portfolio management. Without a doubt, I want to be saving and investing for my personal future. At another level, however, I also have a profound sense that I live in a global community. In this global community, we are all more secure if all members of that community are doing well. An “investment” in Zambian and Ethiopian farm families, and a host of other places simply makes the world a more secure place for all of us. An improving ROI for Indian smallholders is good for all of us.
In the past year, IDE developed five social innovation funds to be used as donor vehicles for those interested in unbundled investing. Our Bottom of the Pyramid Enterprise Fund is designed to stimulate the sustainable creation of supply chains which use market mechanisms to distribute value rich irrigation technologies. Our Innovation Fund will invest in the development of new productive technologies to increase food production, hence income. Our Women in Agriculture Fund recognizes that in many parts of the world female farmers are really the group that does the majority of the work. Our Rural Finance Fund is designed to provide the credit necessary to make those investments in irrigation and other productive technologies. Finally, our Leadership Fund is based on the common sense idea that organizations and field programs like IDE are only as good as the quality of the leadership and management behind them.
The contention of this blog comment is that if my investments are restricted only to my personal future, that is an unbalanced approach to investment. On the other hand, if I invest in both my future and the future of dollar a day farmers in developing countries, that is balanced. I am interested in both.
We offer you no advice about your personal savings investments, but we do urge you to consider the five social innovation funds outlined above. We believe you will like the SROI (social return on investment). Consider it an enlightened approach to balanced investment.