1. Social Capital for Sanitation “It is time for Change” Arthur Wood – VP, Social Financial Services, Ashoka

2. “The coming Social Finance Crunch – “Population aging is a worldwide phenomenon that will affect all G-7 countries”

3. There is simply not enough money in the current paradigm– “Population aging will be a key challenge facing the G7 economies over the coming decades”

4. There is a double whammy coming “The projected decline in the employment-to-population ratio will gradually become a hindrance to growth in living standards beyond 2010”

5. The Spectrum of Social Capital Investment - created in 1888 / 1944 – “essentially pre modern capitalism” – the Gap
no financial return
below market return
market return
Low risk
Programme-related
investments
Mainstream
“For Profit” Investments
Investment plus
Social Responsible Investment
circa $4trn
Corporate Engagement incl CSR
NO INDIVIDUAL OR SYSTEM MECHANISMS – THE GAP
Grants
$400bn
50%
Venture philanthropy
High risk ”

6. Value Chain Financing – Sanitation
no financial return
below market return
market return
Legal Process – ie L3C / CIC
Scale (GAVI) & Synthetic Profit (Corporate incentive)
Investment Plus
Programme Related Investment
Mainstream
Investments
Grants
Recoverable Grants
Increase the credit quality of social capital markets ie. Leveraging - Microfinance / DB Eye fund model
Incentivising Innovation / Collaboration at the bottom of the pyramid – Social Entrepreneurship
Financing Mechanisms incentivising Community and Corporates Carbon / Vouchers / Fertiliser / Power
Enables a Range of Financing options; incentivising corporates, banks, civil society; integrating “ for profit” and “not for profit” players
Based on “Foundations and Social Investment” Margaret Bolton 2005 and Bates Wells & Braithwaite

7. Why is Sanitation such an opportunity ?
Political Will – The IYS Call by Brown / Moon to end of Silo’s
A moral imperative “Adequate Sanitation is the most effective public health intervention the international community has at its disposal.” Lancet – 11 / 07
Metrics, Single Data Set and Audit Mechanism in place - Clear Cost Benefit Analysis – WHO,UNICEF, DFID,WSP
You can Identify the Community / Distribution chain – WSSCC, SuSanna
Not enough Money - $500m vs. $8bn per year for ten years
It is however a business opportunity – a size to attract
Structurally the status quo is not going to be bailed out – GAVI ?
Banks looking for markets in real scale
Path-finding for other MDG Financing Structures

8. World Sanitation Financing Facility
Participation
WSSCC, UNICEF, WHO, WSP, OPIC, SuSanna, IFAD, Deutsche Bank x2, UBS, Legal Group – (Caplin Drysdale, Gibson Dumm, Latham’s, Linklaters, Bates, Morrison), Acumen, L3C Advisors, Environtrade, Ashoka 10/40 Fellows incl WTO, Keystone, SROI – we welcome partners
Open Supply Side Model – ideas
UN Foundation (GWC) Funding Competitive / Collaborative – Sanitation supported by CNN, Coke, Hilton Foundation and Morgan Stanley
Facility Not Fund
Different banks / Organisations – with different proposals on the Value chain
Inclusive, Leverages Different Financial Players / Concepts
Via Banks - Links into other core funders – ADB, IADB
Wider range of Investment opportunities – ultimately integrated
To many different constituencies including the corporate sector
Identifying a Single Language and Single platform - Integrating Social and Financial Profiling

9. NEXT STEPS – SINGLE PLATFORM / SINGLE LANGUAGE
QUALATITIVE PLATFORM >> A MECHANISM DEFINING WHAT IS EFFECTIVE TO THE CORPORATE / BANKING WORLD
PHASE 1 – Completed in March -
PHASE 2 – Open Model Update with involvement of key Players
QUANTATIVE PLATFORM >> A MECHANISM DEFINING WHAT THE SOCIAL SECTOR HAS TO DO TO GAIN ACCESS TO CAPITAL MARKETS
Commenced this week with OPIC, UBS, Deutsche Bank, WSP, Keystone, SROI, Ashoka, Acumen, U of Geneva – combining the best of Top Down and Bottom up models – with Feedback Mechanisms and Audit Mechanism

10. MECHANISM TO ENGAGE ALL PLAYERS IN SCALE Looked at as a Business Problem
SIX GLOBAL BUSINESS LINES TO SOLVE THE SANITATION ISSUE (may be others)
1 - Municipal Financing ;2 - Public Toilets; 3 - Mortgage / Housing
4 - Small Entrepreneurs; 5 - Methane / Carbon / Energy; 6 – Fertilizer
>> SCALING - Three Tier Corporate Engagement – Primary (i.e. Toilet Manufactures, Secondary (Soap), Tertiary (Companies with an Opportunity Cost – Capture the Value of the Social Externalities)
>> COLLABORATION Social Entrepreneurs, Corporate , Social Sector The New Legal Paradigms >> L3C and CIC and New Intermediaries
>> ENGAGEMENT of the Banks – The need for Banking Skills!!
>> Are we part of a broader solution >> Water, Climate and Sanitation

11. IF I AM A SOCIAL SECTOR ORGANISATION / CORPORATE - WHAT ARE THE NEXT PRACTICAL STEPS NOW
PHASE 1
WORK ON PLATFORM – QUALATIVE & QUANTATIVE PLATFORM – UNIVERSITY OF GENEVA
CREATION OF A GOOGLE WORKING GROUP – SHARE MODELS
DESIGN BOTTOM UP FEEDBACK SYSTEM WITH KEYSTONE AND SROI – YOUR ENGAGEMENT NEEDED INDEED CRUCIAL
>> CONSUMERS ARE SEPARATE FROM FINANCIERS
WORK WITH WSP TO VERIFY FINANCIAL MODELS AND PROCESS AND MARRY TO TOP DOWN

12. THE SYSTEM CAN BE CHANGED IN SANITATION A NEW PARADIGM - “IT IS TIME FOR CHANGE”
PHASE TWO
APPLY TO BUSINESS LINES ACROSS ALL POTENTIAL RETURNS > -100% to FOR PROFIT MODELS – DESIGN TEMPLATE
>> WHERE DOES YOUR EXPERTISE FIT?
>> NOT JUST SILVER BULLETS BUT THE MAGAZINE OF SOLUTIONS – NOV 2007 PM –GORDON BROWN AND UN SEC GEN - BAN KI MOON – “AN END TO SILOS”
PHASE THREE
>> INTEGRATED REINFORCING ASKS CREATING A COLLABORATIVE MARKET CAPABLE OF SCALING
>> NOT JUST AT “FOR PROFIT” (+5%) AND “NOT FOR PROFIT” (-100%) BUT ALL INVESTORS AND INVESTMENT POSITIONS TO ADDRESS SANITATION
HOW DOES FINANCE CHANGE THE INCENTIVES FOR ALL THE PLAYERS
>> A SYSTEM THAT REINFORCES COLLABORATION BETWEEN ALL THE PLAYERS IN MOVING A MARKET TO SCALE NOT FRAGMENTATION

13. WHAT DO I DO IF I AM A BANK OR GOVERNMENT
WHAT DO I DO IF I AM A BANK OR GOVERNMENT ? Paul Martin - Former PM of Canada “The question I would put to you is quite simple” – Nov 2007
“If we are prepared to use these kinds of (tax / legislative) incentives to enable business entrepreneurs to tap capital markets for the betterment of the economy, why would we not provide similar incentives to social entrepreneurs as they seek to tap capital markets for the betterment of society.
Financial experts ought to be developing new cutting edge instruments to make funding available to social entrepreneurs
Tax experts ought to be thinking about mechanisms that can support social enterprise in a meaningful way.
Legislators should encourage an environment that allows foundations to become more imaginative in support of social enterprise”.

14. SUMMARY THE IMPORTANCE OF COLLABORATION AND SCALE
To solve the problems of Sanitation on a systemic basis requires:
Governments to change legislation – Tax treatment and Legal structures >> CIC, L3C
Empower the bottom of the Pyramid
Collaboration from the Social sector / NGO’s
Foundations / Donors – Leverage - HOW to draw in more Private capital - LEVERAGE THE 100% NOT ALLOCATE 5%
Corporates to engage in “for profit” for social impact
Banks bringing their skills to bear along the whole Value Chain
Creation / Evolving of Intermediaries to create Collaborative behaviour and Safeguard the Sector