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Jacqueline Novogratz on Social Return

August 21, 2009 | Comments Off | Guests

If measuring financial return on an investment has becoming a common practice, measuring social return still faces several issues and there is no global consensus yet on the way it should be assessed. To invest with impact, it is however a key information; on the first hand for the investor anxious about the impact generated by its capital and on second hand for the investment fund to evaluate their objectives, improve their practices and communicate the outcomes. Social return, being at the heart of the debate on impact investing, Fair Street has investigated how social investment funds measure the social impact of their investment.

Fair Street had the great privilege to interview Jacqueline Novogratz, founder and CEO of Acumen Fund, a major social investment fund mainly active in Asia.

Jacqueline Novogratz started her career at the Chase Manhattan Bank. After obtaining a MBA at Stanford University, she decided to go to Rwanda and founded a microfinance institution called Duterimbere. Consultant for the UNICEF and the World Bank, she then joined the Rockfeller Foundation where she created and managed key programs focusing on development. In 2001, together with main international organizations, she founded the social investment fund Acumen Fund.

In 2009, she wrote the book “The Blue Sweater” and she often shares her optimistic and inspiring vision at difference conferences such as Ted Talk or WEF.

In the following interview, Jacqueline Novogratz answers Fair Street’s questions on the role of patient capital and the challenges of measuring social return.

Fair Street: Could you shortly describe Acumen Fund? More precisely, could you tell us how it differentiates from other social investment funds?

Jacqueline Novogratz: Acumen Fund exists to help end poverty by changing how the world addresses it. We do this in two ways. We invest patient capital to identify, strengthen and scale business models that effectively serve the poor. And we champion and spread this approach as an effective complement to traditional aid, which can create dependence, or pure market approaches, which can bypass the actual needs of the poor.

Acumen Fund focuses on a market-oriented approach to addressing problems related to poverty in the developing world, and in its use of debt and equity, as well as an investment model that relies on intensive due diligence and the use of metrics to ensure that each investment yields measurable social returns. We actively listen to understand who the poor are and let markets indicate what they need, in an effort to help people make their own decisions and solve their own problems

Our long-term vision is that one day every human being will have access to the critical goods and services they need – including affordable health, water, housing, energy – so that they can make decisions and choices for themselves and pursue lives of greater purpose. This is where dignity starts – not just for the poor but for everyone on earth.

FS: Could you explain what a social return is? What are the different tools to measure it? What are the challenges in measuring it?

JN: It’s the measurement of this « social return » that is so difficult – not just for Acumen Fund but for the nonprofit sector overall. We have a clear commitment to accountability and metrics, from ourselves as an organization and from all the investment enterprises with whom we work. So we continue to work to develop systems that help us better understand the real impact of our work, and how we can better support our investees. At the level of our individual investments, we assess our investments along four criteria: Financial Sustainability, Social Impact, Scale and Cost Effectiveness. We expect quarterly metrics from each enterprise on the corresponding financial, operational and social impact metrics.

We employ an analysis called BACO (short for ”best available charitable option”), which is our tool for assessing the cost effectiveness of our investments. We designed it as a way for us to better understand and improve the effectiveness of our own work, not necessarily as a tool for the sector, although we are happy to see that others find it applicable.  We developed the framework because we found that absolute measures of social return 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. The question of standardized metrics is an incredibly difficult one, given subjectivity in values. With Google’s support, we have built a web-based tool to share portfolio performance data across our four international offices. Called Pulse, this system allows us to keep metrics data and insights reliable and available. We can then analyze this aggregate pool of data to identify cross-cutting principles—and to explore and communicate breakthrough insights into how to reach base-of-the-pyramid markets. Pulse is currently being beta tested by a number of peer organizations, and along with a standard set of definitions, has the potential for allowing for greater comparison and transparency across the sector.

FS: You said in the “Ted talk” that patient capital plus management support are more efficient than market and charity alone. Why is this combination more efficient in generating social return in the long run?

JN: Poor people seek dignity, not dependence. Traditional charity often meets immediate needs but too often fails to enable people to solve their own problems over the long term. Market-based approaches have the potential to grow when charitable dollars run out, and they must be a part of the solution to the big problem of poverty.

But the marketplace alone isn’t the answer either. Very low-income people are too often invisible to businesses and society. Building new models that provide these critical services at affordable price – in the face of high costs, poor distribution systems, dispersed customers, limited financing options and, at times, corruption – requires imaginative business solutions and partnerships supported by investors willing to take on a risk/return profile that is unacceptable to traditional financiers.

Our approach is to invest “patient capital” – typically below-market investments that are accompanied by management assistance in enterprises with the potential to reach hundreds of thousands of individuals. We regard low-income as individuals as customers (even if they have no ability to pay) rather than as passive recipients of charity. We start with the market because we believe it the best listening device we have. From our investments, we gain insights not only about the poor as consumers but about where the market fails entirely. In these cases, we believe we can bring deeper insights about more efficient ways of delivering needed services to the very poor.

FS: In classical financial models, people usually build their portfolio looking for the highest expected return given a certain level of risk. Do you think social return will become a key investment driver in the future? Does paying attention to social return necessarily imply renouncing to some financial return?

JN: I don’t think the financial model that’s changing — what’s shifting is the way many investors consider the definition of return. I think social return is already a driver for many people, who are seeking the highest expected return that combines both the financial and social. For Acumen Fund, while we operate as a venture capital fund, we seek to make a social impact with investments while achieving financial sustainability. With our earlier investments, we have generally sought the return OF our capital as opposed to a return ON our capital – however, our more recent investments have the potential for far greater returns.

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Fair Street and microfinance

July 14, 2009 | Comments Off | FairExchange

Fair Street’s objective being to put forward an ethical and responsible finance, our interest in microfinance is obvious as it is one of the financial activities that has contributed the most to reduce poverty during the last three decades. Reduced to its simplest, microfinance is “the access to capital for the most vulnerable communities”. Today, close to 10,000 microcredit institutions serve 130m people with liabilities of €30 billions. With a potential market constituted by the 4 billions individuals that live with less than €3 per day, the growth potential is important.

By attributing microloans to entrepreneurs who cannot have access to the classic financial institutions, microfinance enables the realisation of microprojects which favours the economic activity and wealth creation in the developing countries. Based on simple, efficient and responsible principles, the microcredit activity is considered as one of the main driver of these countries’ economy.

Depending on the structure, the working method and the geographical area the size of the microcredits fluctuate between €100 and €2,000. Today, the MFIs activity does not only consists in providing credit but includes different financial services such as savings, micro-insurance and even credit cards; this is why the term microcredit has evolved towards to microfinance.

As financial actors contributing to the economic and social development of the most destitute populations, microfinance institutions are good examples of the message Fair Street wants to promote. In the frame of Fair Street, the case of microfinance will be studied under two perspectives:

- Firstly as a field of social entrepreneurship. The most famous social entrepreneur is without a doubt the Nobel Price winner Muhammad Yunus, founder of the Grameen Bank, who by creating the first microcredit institution has been able to balance economic and social interests. The success of his model has encouraged other people to replicate it throughout the world. Fair Street has visited a Bolivian microfinance institution that will be the subject of the next video report.

- Secondly, microfinance and social entrepreneurship are two activities that are increasingly converging. Several social entrepreneurs collaborate with MFIs to extend the social impact of their innovations. This collaboration can take different forms. Some social entrepreneurs work with microfinance institutions to take advantage of their distribution network. It is for example the case of Sobre La Roca which sells a part of his solar cookers through a microfinance institution. This institution provides loans to the rural populations in Bolivia to help them financing the purchase of the solar cooker. Microfinance can also be at the origin of a micro-franchise system by financing several micro enterprises (franchisees) whose activities are centralised by a “mother” organisation. Other forms of collaboration exist and this is why many actors see a strong potential in this association.

With the apparition of new approaches and the diversification of activities, microfinance, as any activity growing sharply, is facing different challenges. The most important one being to avoid excessive debt within the populations it addresses. If in the case of Sobre La Roca the grant of consumption credits has a positive effect, an excessive debt erases all the advantages of the social and economic progress initiated by microfinance. It is therefore essential that microfinance institutions stick to their main mission that is providing loans to income generating activities.

In this framework, MFIs in collaboration with governments and regulatory bodies work towards the elaboration of good and bad governance practices. For example, several countries have already put in place national credit offices with mission to monitor the debt level of the MFIs clients.

These different questions and the initiatives they trigger go hand in hand with the evolution of microfinance and are part of a healthy process of maturation. Microfinance is an extraordinary financial tool that supports the economic development of many people in developing countries. By offering millions of entrepreneurs the opportunity to develop a professional activity, it constitutes a strong lever for their empowerment and their integration in the economic life. Consequently, the reflexions aimed to determine better practices are vital.

Sources:

www.lamicrofinance.org

www.blueorchard.com

Blue Orchard is the main commercial investor in the microfinance sector. Created in 2001 and headquartered in Geneva, Blue Orchard supported in the year 2008 more than 140 institutions in 40 countries .

Blue Orchard’s mission is to empower the poor world-wide and improve their quality of life by promoting income-generating activities through private investments in microfinance.

Practically, Blue Orchard creates a bridge between the international financial markets and the microfinance institutions (MFI) by investing in them through debt or capital.

Using innovative placement solutions and innovative financial tools, Blue Orchard favours the flow between the private capital markets and microfinance institutions. This enables Blue Orchard to generate an attractive return on investment while supporting the growth of millions of microenterprises. 53% of Blue Orchard’s clients are women and receive microloans oscillating between $50 and $8000.

Blue Orchard considers its investments in the MFIs as long-term partnerships and wants to be present at all their development stages. During our visit at CRECER, we observed that microfinance institutions strongly appreciate this approach as their capital needs vary along their evolution.

In order to be able to inject more capital within the microfinance sector, Blue Orchard launched its own private equity fund in 2007. On December 31st 2008, this fund managed $130m originating at 80% from institutional investors and at 20% from private investors. The fund’s results have been excellent up to now. This trend should maintain and enable Blue Orchard to remaining the reference institution supporting MFIs financially.

For more info, visit www.blueorchard.com

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Alterfin: Invest in a better world

July 11, 2009 | Comments Off | Financial Agents

One of the main challenges of the microfinance institution CRECER is to have enough capital to answer the growing demand for micro-loans while preserving its solidity. To face this challenge, CRECER needs the support of external investors such as Alterfin that provides it with financial backup. The impact of such external investors is huge as each capital contribution of $500,000 allows CRECER to provide credit to 1,200 additional people.

Alterfin is a Belgian Social Investment Fund based in Brussels. Its aim is to reinforce the North-South cooperation by investing in microfinance institutions and fair trade producers in the developing countries. With its investments, Alterfin wants to contribute to the construction of a financial network that is accessible for the most destitute.

Alterfin does not provide grants but invests. Through this market based financing strategy, Alterfin is able to raise more capital while reducing the dependency that charity involves.

Alterfin raises funds in the Western countries by emitting stocks for private investors. The stock capital constitutes the financial base that Alterfin uses for its investments. At the end of 2008, Altefin’s stock capital was worth €8.8m and had been brought by more than 1,200 shareholders.

In addition to its own capital, Alterfin manages a portfolio of €18m that belongs to the Swiss investment fund responsAbility. Alterfin also collaborates with the sustainable Bank Triodos which makes credit lines available for Alterfin thanks to the savings generated by its accounts.

Altefin mostly invests through credit (94%) with the rest of the capital being invested in participations or warranties. The size of the credits varies between $30.000 and $600.000 for a maximum period of 5 years and at an annual interest rate that fluctuates between 6 and 10%. The projects that Alterfin finances must have a positive social and economical impact on the local communities while being financially sustainable.

After more than 15 years of experience, Alterfin manages today a total portfolio of more than €25m supporting more than 60 initiatives that have an impact on more than 50.000 families. In 2008, Alterfin has met a 17% growth in capital.

For further information, visit www.alterfin.be

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Our sixth company visit takes place in La Paz, Bolivia where we have been warmly welcomed by the staff of CRECER, a microfinance institution. After a very interesting interview with CRECER’s management team, we went to “El Alto”, the poorest neighbourhood of La Paz, to meet microentrepreneurs and observe CRECER’s work on the field.

Problematic and context:

Providing access to capital to the people at the base of the pyramid is a key element to help them in getting out of poverty. Whereas the majority of the most destitute depends on loan-sharks that charge interest rates close to 10% per month, an access to credit at decent interest rates is a first step in their economic development.

Before the invention of microcredit at the end of the 70’s, the poorest populations in the developing countries could not have access to traditional credit as they could not comply with the lending conditions of the traditional financial institutions (proper ID, warranty, minimal deposit…). In addition, their financial needs were too limited to cover the cost of a classic financial operation and therefore did not appear as an attractive segment. Nevertheless, in most cases, these people owned small income generating activities but could not expand them as they lacked access to capital. In Bolivia, where 60% of the population lives under the poverty line, it meant that more than half the country could not develop an economic activity.

The apparition of microcredit allowed poor families to obtain small credits. Whereas traditional banks had always considered the poorest as insolvent, the reimbursement rate went over 95%. As a profitable industry generating a positive social impact, microcredit has met a skyrocketing growth in the last decades. From microcredit, it has enlarged to microfinance and now offers the marginalised populations a range of diversified financial services (credit, savings, insurance…)

Microfinance mainly targets women for two main reasons. Firstly, it has been proved that the impact of microfinance on the whole family is stronger when the loan is given to the woman. Secondly, as we already mentioned it in our reporting on Coronilla, women discrimination is a widespread phenomenon in Bolivia. They are still the target of domestic violence and do not enjoy the same level of recognition than the men. If it is encouraging to see that this situation has significantly improved in the last years, a lot still needs to be done.

The company:

CRECER (Credito Con Education Rural) is a microfinance institution that focuses its activities on the development of rural communities of Bolivia. Today, the company has more than 90.000 clients in the different Bolivian departments.

CRECER uses the “Village Banking” model. Concretely, CRECER works with “bancos communales” (village banks) constituted of groups of 8 to 30 women. CRECER’s credits to these “banco communales” can reach $800 but generally are around $300-$400. The members of the group self-manage the credits they receive and split the credit among themselves in function of their needs. However, whereas the women split the loan among themselves, the group shares the responsibility as a whole.

In addition to its banking operations, the innovation that makes CRECER special (even if it is not the only MFI to function this way) is that its financial services go hand in hand with an education program. All the women that receive CRECER’s loans have to attend training sessions that are aimed to enable them to better manage their microenteprise but also to deal better with other aspects of their daily lives such as health, children education, women rights…

This combination of financial and educational services is at the heart of CRECER’s model. People at CRECER are convinced that the association of these two activities is the best way to reach a sustainable rural development. In addition, with regards to their pure financial performance, they are convinced that the education program has a positive influence on the reimbursement rate.

Within its financial services, CRECER has recently started to offer individual credits and micro insurances. Up to now, these products have met great success. CRECER also gives a strong importance to the savings services; the members of the “bancos communales” must indeed save a part of the revenues they generate so as to have saved 20 to 50% of their initial credit at the end of the credit cycle. This obligation has two objectives: on the one hand, it constitutes an additional insurance for CRECER to be reimbursed and on the other hand, it teaches women how to better manage their patrimony.

Social Impact:

CRECER, by providing capital to more than 97.000 families has a positive impact in different ways.

Firstly, by offering credit and insurance services, CRECER enables the most destitute to be less vulnerable to external shocks. These populations are indeed particularly sensitive to events such as an illness, robbery, earthquake… as they have huge consequences on the families and their limited financial resources. Without efficient financial services, these families are brought down to a level of poverty from which they can take years to recover. In this case, CRECER’ services represent a safety net for these families that helps them in facing bad times with more serenity.

Secondly, by allowing thousands of women to become economic actors, Crecer enables them to empower, to affirm themselves and to increase their influence within society.

By providing credit, CRECER helps the poorest in developing their activity and therefore increasing the revenues they get out of it. This has a positive effect on food security, education, health and increases the probability that they can get out of poverty.

Through its association of financial and education services, CRECER increases the knowledge of many women in Bolivia which has a positive effect on the way they manage their household and educate their children. The trainings on savings combined with the obligation to save at least 20% of the amount they borrowed makes women aware of this matter and forces them to manage their budget on a conservative way.

Finally, at the macro level, CRECER’s actions also stimulate job creation and the integration of new actors into the economic system.

Financial impact:

As the majority of the MFIs, CRECER benefits from the support of several financial actors. Generally, these financial institutions are actors from the “North” that want to finance MFIs from the “South”. The close to perfect reimbursement rate and the professional management of MFIs are attractive arguments for investors. In addition, the reduced amount of intermediaries enables to generate a direct impact on the living conditions of the people at the BoP.

CRECER is supported by different Investment Funds (Oikocredit, Incofin, Alterfin, Blue Orchard,). In this case, Fair Street focused on the financial support it received from Alterfin a Belgian organisation and Blue Orchard, a Swiss organisation. As the demand for microloans is huge and the need for development urging in Bolivia, the support of such institutions enables CRECER to grow rapidly and serve a higher amount of clients while not endangering its solidity. Within CRECER, the impact is of such external investors is considerable as each $500,000 loan enables them to reach 1.200 additional families.

Alterfin is a Belgian Social Investment Fund that mainly invests in MFIs and cooperatives. Alterfin has provided two credits to CRECER at the LIBOR rate +3%: one of $600.000 and another of $700.000. Alterfin was one of the first organisations to support CRECER.

Blue Orchard is the largest financing institution for MFIs worldwide. It is based in Geneva, Switzerland and has recently invested in CRECER through a $2m loan (biggest loan CRECER has ever received). This loan has a 3 years period. Given the size of Blue Orchard and the size of its loans, CRECER hopes this collaboration will last long in the future.

Throughout the years, CRECER achieved to position itself as a solid and professional institution. As it received an A- rating and different awards for its strong social impact, it represents a very attractive target for the funds mentioned here above. CRECER will soon expand its offer to credit cards and savings management to build a financial network that is even more accessible for the socially and economically destitute people.

In 2002, Coronilla received $400 000 from the SEAF investment fund. This contribution, in debt and capital has enabled Coronilla to convert itself into a stock corporation and to develop its exports. In 2004, Coronilla has bought back its shares to SEAF.

Small Enterprise Assistance Fund (SEAF) is an investment fund based in Washington DC. It focuses on small and medium enterprises with high growth potential in developing countries by providing them with capital, technical and operational support.

SEAF positions itself as a sustainable and professional institution caring for the return of its shareholders. In addition to the financial return, SEAF wants to contribute to the economic and social development of developing countries. It uses its capital, its know-how and its global network to accelerate the growth and the sustainability of its investees with the central objective of allowing them to generate profit that beneficiates to local communities.

SEAF is structured in local teams that are present in markets that generally seem unattractive to traditional investors (they have recently opened a local office in Afghanistan). In addition to providing capital, SEAF offers technical and operational support to its companies helping them professionalising and improving their organisational structure. In the case of Coronilla, SEAF assisted Martha Wille in converting the family business into a stock corporation. Moreover, working with local teams and paying attention to the national culture is an essential element of the SEAF fund.

SEAF has invested more than $260m in more than 30 countries mainly in Asia, Europe and Latin America. Up to now, the fund has made more than 150 investments generating an average added value 1.7 times higher than the amount initially invested.

SEAF considers that investing in SMEs is a promising tool to dynamise growth in developing countries and to fight poverty. It focuses on companies having a positive impact socially and environmentally and exclude investments linked to tobacco, alcohol, weapons and other activities generating speculation or having a negative impact on society.

SEAF mostly invests using capital and debt. It pays a strong attention to the liquidity of its investments developing exit rights rigorously defined . It also favours a flexible approach to answer adequately the specifics of each enterprise.

The impact of SEAF is considerable on the financial and social aspects. It has been proved that each dollar invested by SEAF generates on average 12 dollars in the local economy. Its investments positively influence many stakeholders including employees, suppliers, consumers and the society as a whole.

The average financial return of SEAF’s investments is 21%. It is worth mentioning that the global return (Economic Rate of Return) rises to 66% if we include the social factors and the global impact on society.

SEAF is financed mainly through institutional investors (World Bank, European Bank for Development, Belgian Investment office, etc) willing to invest on a sustainable way.

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Coronilla: The video report!

June 28, 2009 | Comments Off | Enterprises, Videos

Coronilla is a company based in Cochabamba, Bolivia, that produces gluten-free pastas and snacks. Coronilla’s objective is to have a positive impact on all the actors of its value chain. Therefore it buys its raw materials at a fair price to local suppliers, its workforce is composed of 75% of women with 10% with  of the employees that are disabled and it offers optimal working conditions. Discover the interview of Martha Wille, the entrepreneur that insufflated her social fibre to Coronilla.

For more information, read Coronilla’s profile

Fair Street - Coronilla from Angalio Productions on Vimeo.

After the fascinating discovery of the solar cookers, Fair Street made a second reporting in Cochabamba, Bolivia. We had indeed the chance to meet Martha Wille who manages Coronilla, a family business created more than 40 years ago. Through her actions, Martha made of Coronilla the perfect example of a company that beneficiates to all the actors of its value chain.

Problematic and context:

Coronilla addresses problematic that are directly linked to the political and social situation of Bolivia. Even if a progressive opening to market economy has improved the economic situation of the country, Bolivia remains today the poorest country in South America with strong inequalities between urban areas where 60% of the population is poor and rural areas where this figure rises to 80%.

The bad living conditions of the Amerindians (60% of the total population) is one of the main issues in Bolivia. Evo Morales’ accession to power triggered a lot of hope among this segment of the Bolivian population. Nevertheless, many still live in precarious conditions. As homeland for the majority of the Indian population, the Bolivian Altiplano, region of high plateau at heights of more than 3000 meters is particularly poor. There, people essentially live from agriculture, first sector of activity of the country, and earn unstable and little wages.

If it is the case of many poor countries, the situation of women in Bolivia is particularly worrying. In the 90s’, this problem was even considered as one of the plagues of the country. A study made in 1994 showed that close to 70% of the women endured domestic violence. Today, Bolivian women still suffer important discrimination compared to men. With their main task being house caring, they have a limited economic power and are therefore strongly depending on their husband. This isolation, combined to wife-beating prevents women from taking part to the development as they are too busy defending themselves.

At the root of the women marginalisation stands their low level of instruction that reduces their emancipation possibilities.

Fortunately, in the last 10 years, the situation of women has become a central preoccupation in Bolivia and many initiatives and laws that aim at improving their situation have appeared but a lot still needs to be made.

The company:

Founded in 1972 by Guillermo Wille, Coronilla has been a pasta producing company from its beginning. In the mid-90s’, the export market strongly contracted, putting the enterprise close to bankruptcy. Martha Wille, daughter of Guillermo Wille redynamised the company by diversifying the product range. If Guillermo Wille already paid attention to the well being of its employees, it is with Wartha that the second life of Coronilla as a social enterprise really started. Today, the company produces pastas and snacks mixing quinoa and a traditional andine cereal that makes them gluten-free.

Coronilla wants to fight poverty by having a positive impact throughout its value chain. As CSR (Corporate Social Responsability) is a relatively unknown concept in South America (even less in Bolivia), Coronilla wants to be a pioneer. In its buyings, the enterprise purchases its ingredients (quinoa, rice…) directly to destitute local producers, negotiates in their own language (Quechua or Aymara) and offers them price stability.

The employees also have a very important place in the company’s strategy. 75% of the employees are women and 10% are disabled. The working conditions are optimal in terms of hygiene and security and the enterprise provides its employees with the possibility to study or to follow complementary training. Finally, Coronilla offers support to the working families so they can put their children at school.

As there is very little demand for organic food in Bolivia, Coronilla only focuses on exportation. Today, the company exports to 11 countries in North America, Europe and Oceania.

The entrepreneur:

Daughter of Guillermo Wille, Coronilla’s founder, Martha Wille was influenced by the social convictions of his father and incorporated them to the family business. As manager of the family business and being extremely attentive to the well-being of its employees, Martha wants all the employees to feel part of the Coronilla family.

After being elected social entrepreneur of the year 2005 by the Schwab foundation, Martha was invited to participate to the World Economic Forum in Davos where she met many other social entrepreneurs. As a follow-up to the exchange of ideas taking place there, Martha’s next challenge is to launch a foundation « the Guillermo Wille Foundation » that will work on the to replication of Coronilla’s model by giving advice to Bolivian companies and encouraging them to adopt CSR policies.

Social impact:

Buying its ingredients to local producers following Fair Trade principles, Coronilla provides a stable source of revenues to 1500 families allowing them to maintain a certain life standard.

As Martha told us during the interview, by providing a respectful and blossoming work environment, the company wants to have a positive impact on the lives of its 65 employees. After the production manager noticed that an employee had developed a skill at resolving the problems that occurred on the production chain, the company encouraged her to attend a two year engineering program. Today, this employee enjoys a much higher wage that allowed her to provide her children with higher quality education.

The economic autonomy aquired by women working at Coronilla facilitates their emancipation.

Financial impact:

Since 1997, two organisations have contributed to Coronilla’s development

The first, SEAF (Small Enterprise Assistance Fund), has invested $400 000 (mix of capital and debt) through its fund « fondo Capital Activo de Bolivia », to finance its needs in working capital. More than the supply of capital, SEAF support helped Coronilla in improving its accounting practices and in transforming into a stock corporation. SEAF essentially professionalised the company. Coronilla bought back SEAF’s shares in 2004.

After SEAF’s help, Coronilla still only used 20% of its production capacity in 2004 and the enterprise needed capital to keep growing. Back then, Coronilla obtained a loan of €350 000 from the Dutch organisation Cordaid. This loan allowed Coronilla to double its exports within the same year. Today, Coronilla’s exports are close to $1 000 000 using 50% of the productive capacity. If the company has met a high growth in the last 5 years, it still enjoys important growth potential that should enable it to spread its fixed costs better and increase its margins.

By continuing to create value for all its stakeholders (producers, employees, shareholders and clients) Martha Wille is convinced that Coronilla is meant to be a major company in Bolivia.

Fair Street highlights the role of finance in the development of social enterprises.

If there has been social entrepreneurs for a long time, their development and their influence has strongly increased in the last three decades. Among other things, this happened thanks to the work of several organisations which, convinced of the potential of these extraordinary individuals, support them to increase their impact and spread their innovations.

Ashoka was the first and is today the largest organisation supporting social entrepreneurs.

Ashoka is a non-profit organisation that aims at structuring and developing social entrepreneurship at the global level. It was founded in 1980 in India by Bill Drayton who was persuaded that the economy needs the dynamism and the innovations of social entrepreneurs in its long term development.

Bill Drayton famously commented that “our job is not to give people fish, it’s not to teach them how to fish, it’s to build new and better fishing industries.”

Guillerma Lazzaro, Ashoka’s director for the Cono Sur region (Argentina, Chile and Uruguay) received Fair Street in Buenos Aires to explain us in details the vision of Ashoka and the main challenges that social entrepreneurs will have to face in the coming years.


Fair Street - Ashoka Cono Sur from Angalio Productions on Vimeo.

E+Co: Energy through enterprises

June 12, 2009 | Comments Off | Financial Agents

E+Co supported Sobre La Roca in 2005 with a loan of $20,000. This financial support has triggered Sobre La Roca’s recent impressive development during which the company saw its sales increase by 300%.

Created 15 years ago, E+Co is an American venture fund that exclusively supports entrepreneurs active in the clean energy business in developing countries. E+Co is convinced that there is a demand for clean and affordable energy in developing countries and that this demand can be satisfied by local entrepreneurs. Furthermore, this fund is a great example that an efficient financing in clean energy can have a significant impact on the environmental situation of our planet.

Today, E+Co invests in more than 200 companies. For a total of $28.8m, 88% of its investments are debt whereas the remaining 12% are in equity. E+Co’s investments vary between $20,000 and $1,000,000.

The majority of these investments is in Africa and in South America. On the technological side, solar energy constitutes the main field of investment focusing with 32% of the portfolio.

E+Co has a very clear investment strategy guided by the following principles:

The business idea of the activities in which they invest:

1) Must be well defined and involve capable people

2) Should employ approaches to energy production, use or finance using established affordable, reliable technologies that move communities up the energy ladder

3) Must offer clear social and environmental benefits, while being competitive with conventional alternatives

4) Must have the potential to be economically self-sufficient and offer growth potential


For E+Co, capturing the impact of the investments is critical to demonstrating the effectiveness of its approach. To calculate the return on investment, E+Co measures its clean energy businesses across 34 social, environmental and financial indicators. E+Co collects data from each investee company biannually and then compiles the results into an organizational summary called an Impacts Table.

Since its creation, E+Co has enabled 4.8m people to use clean energies. E+Co’s investments have also made possible the reforestation of 335,000 trees as well as a reduction of 4.6m in CO2 emissions. Everything put together, all E+Co’s actions saved $11.2m.

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