In September 2018, the British Asian Trust, along with an extensive coalition of partners launched an $11m Education Development Impact Bond. Their plan is to invest the funds raised by the bond through entrepreneurs and others on the ground, who can come up with innovative approaches to reduce the high drop-out rates across India’s primary, secondary and tertiary education system.
If successful, the programme will not only transform the lives of those who’d otherwise have dropped out, it will provide a tangible economic benefit for the country. At the DIB’s launch, Sir Ronald Cohen emphasised the potential that can be unlocked when, “You can link a social improvement to a financial return.”
If evidence for the statement were needed, the following month in neighbouring Bangladesh, the Grameen Bank lent $279m to the poorest of the poor, mostly through community groups, over 95% of whom are women. In the same month, it received the exact same amount, $279m of repayments from existing loans. Over its 40-year history, it has lent a cumulative total of over $26bn, mostly with interest, always without collateral, entirely based on trust. As a model, it’s had enormous social impact, generates a decent financial return, and won the Nobel Peace Prize in 2006.
This is all a far cry from the Band Aid images that filled our screens 34 Christmases ago, images that still shape much of the public perception about what international charities are for. Over recent decades, most international development organisations have extended their work far beyond relief, building livelihoods, employment and education into long-term programmes. By creating and harnessing markets and entrepreneurs, lending and investing instead of simply giving, enabling small businesses to grow and thrive, they have unlocked ways to embed permanent change, lifting communities from absolute poverty towards relative prosperity, dramatically increasing agency, financial security, self-determination.
It’s no longer about metaphorically giving someone a fish, nor is it even about giving them fishing rods. It’s about helping them develop a vibrant, resilient and sustainable marine-based economy. It’s less about giving food parcels, more about giving start-up loans and marketing advice. Different skills for different times, but critical skills nonetheless for modern charities.
For centuries we’ve lived in a capitalist world shaped largely by commercial and economic interests, and that’s not changing any time soon. Charities have often accused businesses of creating inequality and injustice, destroying lives and environments, and in many cases rightly so. But increasingly we’re witnessing charities who recognise the power that business can also have, in the right hands, to redress those outcomes, to shift that direction of travel. From Fairtrade to the Forest Stewardship Council, from development bonds to development programmes, commercial markets can be a powerful force for good when approached with ambition, insight and appropriate skill.
The question is, is the wider charity world ready to embrace those tools?
What portion of the people in your organisation, in the front line, fundraising or external affairs, genuinely understand the language and concepts of business? Can they read a business plan and recognise a market opportunity? Can they talk fluently and comfortably with corporates and start-ups? Are they thinking up ways to unleash entrepreneurs and reshape markets to further their mission?
Because these are the social-change skills of tomorrow, and charities need to be investing in them today.