Obtaining capital is the biggest challenge facing the growing global citizen sector – a deficiency that Ashoka aims to address through its new Social Investment Entrepreneurs (SIE) Programme, which will find, invest in and support people who are pursuing new ideas for mobilizing capital to solve social problems. Ashoka has elected over 20 SIE Fellows to date and aims to identify 30 Fellows worldwide each year.
The SIE Programme is in fact a third piece in Ashoka’s overall approach to spurring innovation in social finance. The first is to engage the major financial institutions in order to persuade them to enter the social capital market, while the second involves supporting global legislation that will break down the definition of ‘for profit’ and ‘not for profit’. The SIE Programme is really a matter of formalizing something Ashoka has done for some time, which is to encourage the election of Fellows who focus on finance.
SIE Fellows develop new ways of providing social finance by a number of means including the creation of new financial intermediaries; the launch of new investment vehicles, funds and products; the promotion of more efficient models of capital allocation; and the devising of incentives for investment in socially beneficial goals. They also target the underserved such as low-income households and people in developing countries with underdeveloped banking systems.
The Programme is continually seeking collaboration in a number of areas:
Finding and screening new candidates SIE is looking for nominators from both the citizen and finance sectors familiar with social investing who can help find candidates for Ashoka SIE Fellowships and help evaluate their ideas.
Mentoring Fellows Ashoka is looking for people who can offer financial, strategic and managerial expertise to SIE Fellows.
Financial support SIE has already engaged a mix of forward-looking foundations and global financial insitutions but is looking for new partners to enable the programme to grow.
William Foote Leveraging microfinance through factoring
In 2000, William Foote founded Root Capital, a social investment fund that provides affordable credit and financial education to grassroots businesses in the developing world that foster environmental stewardship and increase income and market access for the rural poor. To date, Root Capital has provided 407 loans with a gross value of over $80 million to 182 clients in 26 countries, maintaining a 99 per cent repayment rate.
Felipe Vergara Profitable education finance through equity-based instruments
Lumni, founded by Felipe Vergara and working in Colombia and Chile, is the first profitable education investment fund to use ‘human capital contract’ (HCC). This requires that, in exchange for education financing, students repay a fixed percentage of their income over a predetermined number of months after graduation. Compared with traditional loans, HCCs eliminate the threat of overly burdensome debt for students while allowing investors to purchase equity shares in groups of students’ post-college financial success. Lumni is expected to grow to $100 million over the next five years.
Vineet Rai Micro-venture capital for Indian enterprises
Vineet Rai is working to establish socially motivated venture capital as a new asset class in India. Through Aavishkaar India Micro Venture Capital Fund, venture capital financing and management support is provided to socially conscious, environmentally friendly, and commercially viable ventures in rural areas – those without access to established financial institutions. The aim is to raise an additional $20 million fund.
Charles Best Private funding for public schools
Through DonorsChoose, Charles Best brings together prospective donors and teachers in the US’s neediest public schools. Innovative teachers create proposals for needed supplies, books, field trips and other enrichment opportunities. These funding requests are screened for quality control and posted on the DonorsChoose website where potential givers can select the project, area, age group and amount that appeals to them. DonorsChoose has already raised over $9 million to fund 18,000 projects. The target is to intermediate $40 million for education needs in the next five years.
For more information
Contact Arthur Wood, Vice President for Social Financial Services, at firstname.lastname@example.org or Rosa Wang, SIE Director, at email@example.com