04 October 2017 | Adam Boros | Opinion
This is an important question that we ask ourselves often at Tshikululu. In such a dynamic sector, understanding the trends driving our work is essential as we strive for the greatest possible return on our investments. As I peer out to 2018, 2019 and 2020, six important trends – which are already gaining serious momentum today – come immediately to mind.
First is partnership. In the social investment sector, we speak ad nauseam about partnership – between non-profits and donors; between donors themselves; and between government, donors and non-profits. However, this talk rarely goes much beyond lip service. Instead, our sector is largely characterised by donors lording over non-profits, making unreasonable (and chronically underfunded) demands; non-profits who often have too little confidence or financial stability to push back against donors; donors who talk about co-funding but as soon as they feel a little bit of control slipping they decide it would be much easier to “go it alone”; donors who talk about working with government but actually believe government is too bureaucratic and “difficult” to work with; and government who is distrustful of private donors, believing there is always an ulterior motive lurking in the shadows.
Fortunately, this is changing. A growing number of donors are approaching government with humility and a true sense of partnership, hoping that additional funding, expertise and flexibility will help uncover solutions to South Africa’s immense challenges. Perhaps more so than ever before, Government is open to partnering with private donors and non-profits, realising that failing to tap into this pool of experience, talent and passion is a wasted opportunity. Donors are coming together more frequently to drive social programmes together, pooling funding, making joint strategic decisions and, crucially, giving up full control for the greater good. And finally, there are more and more examples (although still relatively rare) of non-profits and donors working in real partnership, making decisions together and having honest conversations about what is and is not working.
Second is new players. One of the most interesting developments in the last few years is the growing number of private, for-profit entrants into the social investment sector. This is most explicitly represented in the advent of impact investing, which aims to achieve financial and social returns simultaneously, as well as social impact bonds, where an “outcomes funder” (usually government) pays back initial investors for achieving verified social outcomes. Both are relatively underdeveloped in South Africa, but this will not be the case for long. A growing number of stakeholders are setting up or exploring impact investing funds, while the first social impact bond in South Africa will likely be launched before the end of 2017. Although these new players are not always viewed positively – unfortunately “non-profit types” and “for-profit types” often perceive each other with immense amounts of mistrust and derision – I strongly believe that bringing new pools of money with new skills and new perspectives can only be a good thing in the long run.
Third is technology. Just like every other industry in the world, technology has an important and growing role in social investment. Ground-breaking technology for social impact is happening within our borders. There are countless examples, but to name just a few: an initiative using blockchain – the technology behind bitcoin – to create fool (and corruption)-proof registration systems for beneficiaries of social programmes; an initiative using mobile phones to carry out vision and hearing screening at a fraction of the cost of traditional methods; and an initiative with the ultimate goal of designing an app that will allow illiterate people to teach their children to read!
Fourth, whenever you talk about technology, big data is not far behind. There are a growing number of initiatives – particularly in the education sector but more broadly as well – that hope to use big data to drive social good. In early childhood development (ECD), the lack of quality, accurate data is a major obstacle to improving services. Several partners are working with the Department of Social Development to build a national management information system to be able to track the services that young children are receiving, to assist in the implementation of population-based planning strategies. At basic education level, initiatives are underway to use data to identify at-risk learners before they drop out. And further along the education continuum, initial work has begun to use data to “match” young people with employment and entrepreneurial opportunities that best suit their skills, experience and preferences.
Fifth is scale. One of the most frustrating realities of the social investment and non-profit sectors is that there are countless examples of high-quality programmes making a positive difference in people’s lives but almost none of these reach meaningful scale. In response to this challenge, social investors are starting to do things differently. The first strategy is simply thinking about scale from the beginning. If the ambition of a programme is to reach large groups of people, there is little point in designing a “Rolls Royce” intervention that will be too complex or costly once it goes beyond pilot stage. Furthermore, we need to identify different ways of scaling: “handing over” programmes to government, finding the business case to make a programme sustain itself, grafting social programmes onto corporate strategies or making long-term investments to reach a behavioural “tipping point” that changes the way things are fundamentally done.
Finally, if you combine partnership, new players, technology, big data and scale, you reveal the most exciting trend of all in social investment: systemic change. There is a growing cohort of donors in South Africa that have recognised bringing about large-scale, systems-level change is possible. By strategically targeting the right leverage points, and building the right partnerships, these investors are committed to the long-term challenge of making change that will last long after we are gone.
I couldn’t imagine a more hopeful future for social investment, and Tshikululu is looking forward to helping make it a reality this year, and the next and the next…