To do good, gathering donations from good-hearted people isn’t enough. The most efficient and effective way to bring about positive change is through business, partnering the profit motive with a project that helps improve lives.
That’s the kind of model Chamutal Afek Eitam is trying to develop in order to feed starving kids in Africa – the last scenario in the world where one would expect an investment and profit model to work. Yet Eitam has developed a model that will bring aid to the neediest and food to the poorest people in the world, in a program that will be funded not by donations, but by investments – which Eitam believes will return a profit for investors.
“Investments are a better way to fund things than donations, and our model marries business methods with assistance,” Eitam said. “Our objective is to change the way aid is distributed, eliminate waste in the aid industry, and spread resources more effectively.”
Eitam was one of 200 entrepreneurs, investors, and visitors from abroad who gathered at the annual ID2 (Israeli Designed International Development) conference in Caesarea to discuss ways investors can impact the developing world, both for positive effect and for profit.
“We see ourselves as an incubator for potential future collaboration, connecting the unconnected,” said conference co-chair Daniel Ben Yehuda. “There are lots of great ideas out there that can help emerging markets, but you need a practical plan in order to bring those ideas to the people who need them. This is the place for entrepreneurs to learn how to do that, and to connect with investors who are interested in impacting the developing world.”
“We recently spoke with investors from the KfW German Development Bank, who are very interested in impact investing,” said conference co-chair Danielle Abraham. “Israel was not too long ago itself a developing economy, and Israelis in areas like farming and agricultural technology know how to develop technologies that help farmers thrive, despite challenging environmental and social situations. The Germans see Israel as a window into the developing world, which can help them reach large populations that were until now unreachable.”
Reaching the unreachable is a key part of Eitam’s business plan. Her organization, the Three Million Club, initially aims to raise money from donors to purchase food packages to feed starving children. The therapeutic food packets contain vitamins, minerals, and proteins. For $60, donors can provide RUTF (Ready-to-use Therapeutic Food) packages that can feed malnourished kids for three months – enough time, according to Eitam, to enable a starving child to recover from severe malnutrition.
“There are many organizations out there that raise money to help malnourished kids, but ours is the only one in which 100% of funds go to feeding them,” said Eitam. “The only fee we take is a $3 bank transfer fee for each $60 donation. Once the money is transferred, it is used to purchase food locally, thus helping to support the local economy – and donors get a message when ‘their’ child gets the food.”
So where’s the investment angle? “The aid will be distributed by workers in the field, who will be given devices to record information about what the children and community members are eating, what diseases they have and what drugs they are taking, the number of needy children in a community, what the diet in the community is, etc.
“No one has ever attempted to collect this kind of data in the back country in Africa and other needy areas,” said Eitam. “This is information that will prove useful to governments, pharmaceutical companies, medical groups, food companies, and many others. The sale of this data will fund more assistance, and provide investors with a return on their investment.”
With its no-frills and no-waste donation program, Eitam hopes, the Three Million Club model will upend the donation industry, which is rife with administrative costs, as well as provide a model in which investors will be attracted to pouring capital into projects involving even the most disenfranchised.
The time is ripe for those changes, said Eitam, who has seen it all working hand living for over 16 years in emergency relief contexts of conflict and natural disaster response in the Balkans, Africa and Asia, in a variety of operational positions with NGOs and the UN.
Projects like Eitam’s are a good example of not only impact investing, but of tikkun olam – the Jewish concept of improving the world, said Noa Gorlin, associate executive director of the ROI Community of the Schusterman Foundation (one of the main sponsors of the event).
“Israel is a member of the global village, and doing what you can to help others in the village is an important Jewish value,” said Gorlin. “In addition to portraying Israel and Judaism in a positive light by emphasizing authentic and important Jewish values, it’s also a way to connect Jewishly with professionals in the business world who might not have had much to do with the Jewish community in general, but are interested in embracing tikkun olam as an important Jewish value.”
Tikun olam was also on the mind of Eugene Kandel, until recently chairman of the Israeli National Economic Council and now an impact investing entrepreneur. During a keynote address at ID2, Kandel talked about how Israeli technology could help the developing world, emphasizing the importance of sharing advanced Israeli technology in healthcare, energy, agritech, and other areas with the world’s needy. To that end, Kandel said, he was developing a new project to be called TOV – Tikkun Olam Ventures – a fund that will raise investment money for impact investing in developing countries.
According to Eitam, the methods she is using for the Three Million Club are going to be adopted by the rest of the fundraising industry. “I’ve discussed this with colleagues in UNICEF and other organizations, and pointed out how we’ve been able to help thousands of kids for very little money. They were very enthusiastic about the model we developed, and believe that this is the wave of the future. Many workers in the aid industry are sick and tired of seeing so much money going to waste. Eventually, I think our approach will be adopted by many others, too.”