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The World We Want Foundation – 3W 2011 – Successes and failures


3W – The World We Want Foundation

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3W – The World We Want Foundation

The World We Want Foundation – 3W 2011 – Successes and failures Table of Contents Reflections Letter from the Founder Letter from the Managing Director

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2011 Results Our Partners Financials 2011 – Results vs. Goals Impact Milestones by Project

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In Focus Focus: Success – Root Capital Focus: Failure – Partners in Health

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Our Model The 3W Model Lessons

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Looking Ahead The Year Ahead

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3W – The World We Want Foundation

Letter from the Founder Last year we quashed all possible doubts that we might have had about the reason for our existence. 2011 was in our eyes a stellar year. Looking back at our activities in 2009, 2010 and now 2011, our progress has been steady and strong. Each year has had very distinctive characteristics – the first year we set the groundwork, the next year was more turbulent as we significantly increased our portfolio, and in the past year we increased engagement and investment with our most promising partners. Specifically: 2009 – Organizational Road Map -- In this “launch” year, we spent a good deal of time on the development of the organizational structure and process, setting strategies and

priorities. Interestingly these priorities still hold. 2010 – Portfolio Development -- We started to get our bearings and significantly expand our project base. We took a very active approach to create pipeline through collaboration with partner foundations and visits to new regions. We began to understand the kind of partnership that best suited 3W’s model of active philanthropy and how to assess partner capabilities. We embarked on our most successful partnership, Root Capital. Despite our disappointment with Hand-inHand, we learned a great deal from the process; these lessons have been reapplied through our model.

2011 – Deep Dives – We have come a long way this year. Through our increased experience and knowledge, we have been able to identify, and hone in on, the most impactful investments and feel confident cutting the low-performers. 2011 was a year of increased engagement and investment with a few partners, most notably Root Capital and Caribbean Harvest Foundation (CHF). In addition we paved the way for deeper involvement with Pratham and our new partner, Acumen. Although continuously adapting, we have developed an effective model of active philanthropy and have reached a new level of credibility that allows us to be a valued and impactful player in this field. Does this mean that I´m satisfied? No. The plight of the people in Haiti, for example, is still there. Many things could be done to make the aid effort more effective. On the environment front, the sense of urgency, within the general public, surrounding climate change is gone, and most animal populations are decreasing on an aggregate level. Many organizations that focus on conservation are not capable of delivering meaningful

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and sustainable alternative livelihoods to local communities and therefore will struggle to reach a sustainable state. This has been a constant problem for us when trying to get engaged and for the time being we consider the Root Capital model to deliver the best environmental results for us. We could definitely have tried to influence things more by becoming more vocal on the global development/aid scene. Perhaps that would have had some positive impact over time. We know that such work is timeconsuming and requires a lot of skills and patience. The truth is that had we spent our time on such policy work we would not have had the time to support and help to build and scale our partner organizations. I prefer the motto “lead by example”. What we hope for is that the organizations we support will be able to show great results and grow. Notwithstanding this, I believe the voice of active philanthropists needs to be heard in some key forums. Had we been closer to Haiti, perhaps we could have tried harder to push for some macro improvements that we perceive as critical (for example improvement of the poor roads that boost many economic activities). One problem in the not-for-profit world is the lack of a common, simple denominator of results or impact such as profits in the commercial world. Impact is both easy and difficult

to measure. If we, for example through Root Capital, support a cooperative, which as a result is able to grow revenues by fifty percent -- we have an easy impact to measure. In many cases we will then be able to translate that increased revenue into incremental income at the household level. However, if we then try to see what impact that in turn has on the individuals’ lives, the metrics become difficult. Did they choose to put more of their children to school or buy a donkey? And what is most impactful? I believe that where there is economic activity, it is enough to stop at the level of measuring incremental income at a household level. Generally, but definitely not always, I would argue that the individual/ household will be better at deciding how to spend their money than, say, an outside humanitarian organization. That is likely to be wrong in some cases, as the authors of Poor Economics show. Schools and vaccinations, for example, should be free or subsidized as many households will not be able to fully appreciate the value of those services. Coming back to impact and the not-for-profit world -- the impact that different organizations contribute is also very much in the eye of the stakeholder. I went to a dinner where the CEO of the Bill and Melinda Gates Foundation (BMGF) made a very interesting presentation. Talking

Reflections

3W – The World We Want Foundation

with the other participants, I realized that almost all had his/ her own interests. Talking about which organization has the most impact can then be very difficult. It almost becomes turned around, i.e. what impact the organization has had on its donor. This illustrates the problem of catalyzing interest/fundraising for certain organizations, unless the potential donor has a readiness to objectively evaluate and compare the impact of projects and organizations. Encouragingly, we have had some examples of collaboration where our involvement has led to trusting partners joining us. One example worth mentioning is the Clinton Bush Haiti Fund (CBHF) and the Clinton Foundation; 3W involvement helped to increase support for shared projects in Haiti.

Encouragingly, we have had some examples of collaboration where our involvement has led to trusting partners joining us. Some of my personal highlights this year were visiting Haiti again, this time with our friends from Root Capital (RC), and seeing with my own eyes the results of our work. Last time, Caribbean Harvest had about 50 cages in Lake Azuei, now it´s close to 300. That means 150-200 families having a stable income. 5


3W – The World We Want Foundation

We visited COOPCAB, a coffee cooperative uniting 5,000 coffee farmers who grow high-altitude, shade grown coffee which is so strong that if you drink it you feel as doped as Ben Johnson and ready to take on any sprinter. I had never thought that RC would be able to identify over five clients in less than a year and also commence operations that have already helped both coffee and mango coops and companies to increase production and exports in 2011. Our first, half-year experience from the inside of the Root Capital organization as newly elected directors has been deeply satisfying. I have experience from directorships in businesses

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and from interacting with and observing both for-profit and not-for-profit boards. I have come to realize that well managed boards, good corporate governance and directors that fulfill Buffett´s three criteria: smart, interested and ready to put money in the companies they direct, appear to be exception rather than the norm. Root Capital´s Board of Directors is one of those exceptions. The strong and entrepreneurial management team is well complimented by the Board, which although large, is very involved. This is a board, which is what it says it is -- an oversight body with real-life connection and interest in the activities. Hence, it is a Board on which our

time is well spent.

Our first, half-year experience from the inside of the Root Capital organization as newly elected directors has been deeply satisfying. We have a portfolio approach when we think about our projects. Caribbean Harvest Foundation, for example, is a direct investment where we sit on the Board of Directors and take an active role in the formation of strategy and questions related to finance and organization. Pratham on the other hand is a relatively passive investment.


Our role in Root Capital is somewhere in between and it remains to be seen how our role in Acumen´s Educational Fund will evolve. I feel that we have been prudent in choosing how to spend our capacity. As in 2010, we had to prune the tree by withdrawing from our education project with Partners-In-Health in Haiti. Once again we were reminded that early warning signals should be taken seriously. Kirsten struggled to put things on course but when an organization is outside its scope of competency, does not provide necessary local leadership, instead tries to apply an ineffective and bureaucratic approach that disregards low performance, then withdrawal is the only possible course of action for us. We feel for those 3,300 children and wish we could have done something. They did get some weatherproofed schools and more teachers but only 25% passed state exams as opposed to 80%, which was the target. There are two reasons we need to withdraw in a case like this.

Firstly, once all our options have been depleted, we have to send a message to partner organizations that poor performance, without a willingness to improve, sends a bad signal to the rest of the world and sheds a bad light on 3W, as well as

the organization in question. Secondly, there has to be a certain Darwinian order even in the sphere of development and aid. Money spent in vain can be circulated and injected in wellfunctioning projects instead.

Onto my own character building. In my personal development, I think I can say that I have reached another level. If in the early days of 3W, I did harbor some ambitions about being seen as doing something honorable, I´m now doing it entirely, I dare to say, from two perspectives: to contributing in some way, and to enjoying all the aspects of learning and developing my skills within the field. Having a handful of projects that I can follow over time is very satisfying. To paraphrase Jeff Raikes of the Bill and Melinda Gates Foundation: “Enjoy your philanthropy”. I am, and I know that Kirsten and Jacob are too! Finally, I´m happy that Stella and Isa are taking a growing interest in what we do, and soon, I believe, we will be on the road together – I can´t wait for that.

Paul Leander-Engström Founder and Chairman

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Reflections

3W – The World We Want Foundation


3W – The World We Want Foundation

Letter from the Managing Director 2011, another eventful year filled with celebrations, and at times, frustrations. We can boast more successes than failures, both providing ample opportunity to learn. Companies and nonprofits – and I would argue, especially non-profits with their intrinsic dependence on donor dollars – use annual reports to celebrate. In this new, Facebook world, we use social media to brand, validate, and re-affirm ourselves. Inherently, I believe this to be good and necessary for the rejuvenation of the human spirit. I want hope and resilience to prevail. Failure is hard to swallow and “dwelling” is just bad, and boring, for all involved! However, incredible opportunities for learning come from failure – as we all know, or at least have been told a thousand times. And I am sure that most of us take these opportunities in stride, learn a little, deny a little, and go on posting our Facebook pictures highlighting our successes. Honestly, I would want it no other way – on FB, that is. In our work, where a simple metric like profits lacks, we need

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total transparency – we need to showcase the failures to stop repeating the same mistakes. Many donors do not want to put in the necessary time it takes to ask the hard questions and get the, sometimes, painful answers. Often donors want a feel-good investment – based on their own, very specific agenda. Too often, recipient organizations must deliver on misconstrued metrics -- from internal and/or external forces -- in order to stay in the race. The intentions are good, but the mechanics are faulty. No

one wants to acknowledge that money or sweat was wasted, thereby leaving the grantor and grantee trapped in a perpetual cycle of denial, and in the worst case, deceit. 3W is in a very interesting position. We do not require additional funding, we only answer to ourselves (and our beneficiaries, of course), and we want to be actively engaged -- adding value where and when needed. This approach allows for, even encourages, a focus on


Reflections

3W – The World We Want Foundation

failure. Weathering the lows, facing challenges head-on, that is when we are most needed and can be best utilized. Through open disclosure, we can improve, tweak, and ultimately increase impact. A thorough vetting process ensures our belief in the organizations’ model of change; it is then through the operational engagement – with all the setbacks and, hopefully, positive developments – that we create a long-term partnership. Partnership is the key word for our investments. And notice that we also use the term investments. Although most of our financial funding is grant-based, we consider program support as an investment. We invest our time, money, and organizational capacity for the highest returns – in this case social, not monetary, returns.

issues head-on and offer our support, both financial and organizational, to look for solutions. We will also force ourselves to cut our losses when all else fails. And finally, we will continue to tell our story – both the good and the bad – and hope that we help to create an atmosphere of critical learning with greater transparency, accountability, and ultimately, positive results.

Kirsten Poitras Managing Director

We will address issues head-on and offer our support, both financial and organizational, to look for solutions. So, together with our invaluable Board Director, Jacob Röjdmark, we will continue to objectively and critically examine our partnerships. We will welcome bad news as an opportunity to increase effectiveness and improve models of transformation. We will address

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3W – The World We Want Foundation

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3W – The World We Want Foundation

Acumen Fund – www.acumenfund.org – Acumen Fund’s mission is to create a world beyond poverty by investing in social enterprises, emerging leaders, and breakthrough ideas. Featured in Forbes, the fund is described as “quite literally a philanthropic venture-capital fund, which has put almost $69 million to work in India, Pakistan, Kenya, Tanzania, Uganda, and Rwanda. Its loans and equity investments mandate the same benchmarks traditional VCs use, with a twist: Since the donor-investors don’t get their money back – all returns are reinvested in Acumen – progress is measured not in ROI but rather against the good that could have been done by simply giving the money away.” 3W is a founding investor of the newly established Education Fund.

Caribbean Harvest Foundation (CHF) – www.caribbeanharvest foundation.org -- One of 3W’s areas of focus in Haiti is job creation and increased economic opportunity. The lack of jobs is a symptom of the shortage of viable industries. We have partnered with Caribbean Harvest, a Haitian non-profit established by Dr. Val Abe, to help grow the fresh water fishing industry. Not only will Caribbean Harvest create sustainable incomes and a high-protein local food source, but the organization has a strong social agenda. Dr. Val Abe was recognized as Time Magazine’s 100 Most Influential People of 2010 and Bill Clinton had this to say, “Valentin Abe, who, after graduating from Auburn University, went to Haiti to raise fish and to put more Haitians to work and increase their incomes. He powers his entire operation with solar energy, and he involves fish farmers, whose incomes he’s multiplied two or three times or more. [People like this] don’t get noticed very much, but they have a profound influence on the people whose lives they touch.”

Partners in Health (PIH) – www.pih.org – Named one of the best NGOs in the world by The Global Journal, “Partners in Health has provided health care to the world’s poor, fueled by a simple credo: “whatever it takes” – to do for their patients exactly what they would do for a member of their own family. For over two decades, Partners In Health has transformed conventional thinking on health care among the world’s poorest populations.” PIH was founded in Haiti by the renowned Dr. Paul Farmer. 3W funded an education program designed specifically to meet the needs of children who have been unable to enter primary school in grades appropriate to their age; they are among the most vulnerable children in the Central Plateau and Lower Artibonite regions of Haiti.

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2011 Results

Our Partners


3W – The World We Want Foundation

Pratham – www.pratham.org -- The organization’s mission is clear: Every child in school and learning well. Pratham works to provide quality education to the underprivileged children of India. Established in 1994 to provide pre-school education to the children in the slums of Mumbai city, the organization has grown both in scope and geographical coverage. Today, Pratham reaches out to millions of children living in both rural and urban areas through a range of interventions. The Pratham model has been tested and its impact validated through a partnership with J-Pal (MIT’s Poverty Action Lab). Banerjee and Duflo highlight the results in their award-winning book, Poor Economics. 3W initiated its support for the organization in 2007. Our funding has been strategically placed to increase the educational level of children in the slum areas of Baiganwadi and Shivajinagar in Mumbai.

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Root Capital (RC) – www.rootcapital.org – Root Capital is a nonprofit social investment fund that grows rural prosperity in poor, environmentally vulnerable places in Africa and Latin America by lending capital, delivering financial training and strengthening market connections for agricultural small and growing businesses. As described in a David Bornstein’s New York Times piece titled “News Flash: Progress Happens”, Root Capital “disbursed $80 million in loans [in 2010]. This year, it disbursed $120 million: 50 percent more. It now finances farmer-owned businesses that support 220,000 producers, extending benefits to roughly a million people.” 3W supports Lending Activities, Financial Advisory Services and Haiti Operations through grants, as well as providing both short and long term debt through loans.


3W – The World We Want Foundation

Our total disbursements, combined loans and grants, were $5,675,000 USD in 2011. We have maintained a respectable balance between administrative activity, including due diligence and project evaluation, and investment activity. Although we have no funding minimum, investments are an important sign of activity and engagement from which we create impact and learning. Additionally, we want to ensure that operational expenses are appropriate in relation to our investment activity.

1.

We allocated $1,675,000 in grants this year. Our grant funding dropped by 30% vs. year ago (2010 ended with $2,135,000M USD in grants). The year-end funding was lower than expected for 2 reasons: one, an exit from Partners in Health, and two, our catalytic influence. Our commitment to RC Haiti was not fully utilized as Clinton Bush Haiti Fund provided much of the needed funds. A drop in the number of investments was

2.

in-line with our strategy to focus on our most successful partnerships. Although having a decrease in grant funding, we allocated $4M USD in loans to Root Capital. The first $2M USD loan was a short-term loan which was repaid in full. The second loan of $2M USD is over 5 years at 2% interest.

2011 Project Dispursement USD Project Grants Root Capital, Latin America and Haiti Pratham, India Caribbean Harvest, Haiti Acumen, Education Fund Partners in Health, Haiti Lejon Award Miscellaneous Loans Root Capital, Global Short term Long term Total Disbursements

Q1 $135,000 $50,000

Q2

Q3

$855,000 $700,000

$205,000

$60,000

$50,000 $140,000

$75,000

Q4 $480,000 $300,000

$1,675,000 $1,050,000

$110,000 $65,000

$185,000 $175,000 $140,000 $90,000 $10,000 $25,000 $4,000,000

$90,000 $10,000

$5,000 $4,000,000

$10,000 $5,000

Total

$5,000

$2,000,000 $2,000,000 $5,675,000

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2011 Results

Financials


3W – The World We Want Foundation

3W – Cumulative Funding All Figures in USD

2006 Project Stree Mukti Sanghatana, India Voluntary Action for Development, Uganda Reforestation in Cameroon Grounds for Hope, DRC WaterCan, Uganda and Ethiopia 2006 Total 2007 Project Stree Mukti Sanghatana, India Pratham, India Tretjak, Russia 2007 Total 2008 Project Stree Mukti Sanghatana, India Pratham, India Tretjak, Russia 2008 Total 2009 Project Stree Mukti Sanghatana, India Pratham, India Hand in Hand, India Tretjak, Russia 2009 Total 2010 Project Pratham, India Partners in Health, Haiti Root Capital, Latin America Hand in Hand, India Caibbean Harvest Foundation, Haiti Stree Mukti Sanghatana, India Flora Fauna International, Awacachi,

Q1

Q2

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Q4

$40,000 $20,000 $20,000 $-

Q1

$20,000 $60,000

Q2

$85,000

Q3 $130,000

$20,000

Q4 $100,000

$-

Q1

$20,000 $20,000

Q2 $20,000

$130,000

$100,000

Q3

Q4

$-

$20,000

$130,000

Q1 $35,000 $25,000

Q2 $35,000 $25,000

Q3 $36,000 $25,000

$60,000

$60,000

$61,000

Q1 $50,000

Q2

Q3

$25,000

Q4 $36,000 $25,000 $250,000 $20,000 $331,000

FY Total $142,000 $100,000 $250,000 $20,000 $512,000

Q4 $110,000

FY Total $160,000 $105,000 $750,000 $250,000 $170,000 $50,000 $90,000

$500,000 $110,000 $25,000

$60,000

$30,000 $200,000

$50,000 $200,000 $10,000 $75,000

$880,000

$50,000

$200,000 $100,000 $200,000 $60,000

$850,000

$2,135,000

$50,000

$330,000

FY Total $130,000 $100,000 $20,000 $250,000

$20,000 $20,000

$105,000 $250,000 $250,000 $60,000

FY Total $65,000 $40,000 $20,000 $20,000 $20,000 $165,000

FY Total $20,000 $130,000 $20,000 $170,000

$130,000

Ecuador Sweetwaters Chimp Sanctuary, Kenya ApesMapper, Global Database Jane Goodall Institute - DRCongo Operation Blessing, Haiti and Pakistan 2010 Total

Q3 $65,000

2011 see previous page for details

$ 5,675,000

FY 2006 to 2011 CUMULATIVE DISBURSEMENTS

$8,907,000


3W – The World We Want Foundation

2011 – Results vs. Goals

1. Develop a 3W proprietary model – This was a very useful exercise as we were forced to look inwards to our own modus operandi, our successes, our failures, and most importantly, the lessons we have learned. The output is a “live” document that we will continue to revise as we progress, develop and learn. The result has been greater precision and focus in our work and our partnerships that will, hopefully, continue to drive the work ahead. 2. Manage the Haitian effort – We tightened the ship in Haiti – increasing engagement with our high performers, Root Capital (RC) and Caribbean Harvest Foundation (CHF), and cutting our losses with low performers, Partners-in-Health. RC has disbursed over one million dollars in loans to seven clients with pipeline for over $2M in 2012 including renewals and 8 new clients. The organization now has a strong foothold in the coffee industry and exports are flowing to Japan and the States. RC has made tremendous strides in a variety of other industries

including mango, cocoa, and metal art – leading the pack in investments -- and has received an additional $1M from the Clinton Bush Haiti Fund. Our direct investment, CHF, has also shown remarkable growth, with a 10-fold increase in cage volume. Dr. Abe has recently been awarded Digicel’s entrepreneur of the year and we have obtained funding from CBHF for a processing plant. 3. Build Caribbean Harvest, together with Dr. Abe, into a showcase – We have reached significant results and greatly increased organizational development. As noted, cage volume has moved from a mere 30 cages in May 2010 to 300 cages at the close of 2011. The infrastructure has been strengthened with offices, land purchase, and electricity solutions. We have also focused on building the organizational capacity, moving from a one-man show to an organization with functional capabilities. We have put in place a financial system and are working towards stronger governance. The organization is now poised to partner with more traditional actors like CBHF as well as move into value-added processing. Although still not without risk, CHF’s development is impressive and substantial.

4. Strengthen our cooperation with Root Capital – Our relationship with RC has blossomed into a true partnership. Not only has RC become our largest investment, but also we have intensely engaged at an organizational level. Paul joined the board in September; Kirsten was voted in as an observer. We are moving into measurement, messaging, fund-raising and financial re-structuring. We moved from a funder/supporter in 2010 to a thought partner and key stakeholder. The impact of the model is unrivalled, and we are now in a position to scale the organization to reach evergreater heights.

2011 Results

At the beginning of the fiscal year, we set five goals for 2011. Although many of these goals have a long-term outlook, our results are strong and we reached our targets. Specifically:

5. Identifying a few key conservation opportunities – Whereas we achieved strong results on all other goals for 2011, we have been unable to identify a conservation organization/ program that meets our criteria for long-term sustainability with strong community, livelihood development. Midyear we decided to focus on our current investments and take an opportunistic approach to conservation. We currently have an interesting conservation program in Zambia under review for Q1 2012.

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3W – The World We Want Foundation

Impact Although much of work this year was around the finetuning of models for successful development, it is necessary to measure our direct impact. As said before, 3W is wary of forcing impact metrics onto projects simply for the sake of making impressive pie charts. Impact metrics will rarely be a perfect reflection of the benefit realized on the ground; however, for a summary of the year, we have tried to employ our partners’ metrics. Although difficult to quantify, there is no doubt that 3W has had significant and positive impact on the lives of hundreds of thousands of people. This number may seem arbitrary, but given our stake in Root Capital, the numbers are justified. Humanitarian (numbers reflect the impact directly associated to 3W funds): A. Root Capital Latin America: Given that 3W covers the entire deficit in lending activities in Latin America, it is fair to say that our funds have impacted all RC clients and their families in Latin America. This would account for at least 90,000 farmers/artisans reached, impacting almost 500,000 people. B. Root Capital Haiti – It is difficult to estimate the total impact. We do know that 16

thousands of producers have been impacted, as well as the hundreds who have jobs in processing facilities. COOPCAB alone has 4,000-5,000 producermembers. C. Pratham: +30,000 children reached through various education programs. D. Partners in Health: 3,300 children given intensive education. E. Caribbean Harvest: 300 families given economic opportunity, impacting 1,500 people. Environmental: A. Root Capital: +400,000 hectares under sustainable management. Great Ape Conservation (funding disbursed 2010): A. The Sweetwaters Chimp House was completed allowing for 45 new occupants – a doubling of current capacity. B. The Jane Goodall Institute’s -- Democratic Republic of Congo, Conservation Action Plan was published. From this report, conservation agencies will be able to collaborate and work more effectively. C. ApesMapper -- The A.P.E.S. Portal provides access to information on individual species bringing together various graphing and prediction

tools. The A.P.E.S. Dashboard is the first of its kind and aims to support preliminary, broadscale comparisons enabling identification of subsets of important ape sites that can be refined through further analyses, study and data collection. The database will be launched April 2011. We are currently developing and implementing a series of impact studies to understand the full impact of the Root Capital model among coffee farmers in Haiti and of the Caribbean Harvest model around the Lake Azuei communities. Both studies will be instrumental in assigning meaningful metrics to these development models. Catalytic Impact This year we have taken our cautious, first-steps with “growing the pie” and helped to raise over $1M USD, with an additional $250K in the pipeline. By bringing likeminded foundations together, Acumen received $500K USD, Root Capital received $550K USD, and the Clinton Bush Haiti Fund approved $250K USD of funding to Caribbean Harvest Foundation.


3W – The World We Want Foundation

Key Project Milestones As described, our approach is to not only support effective and impactful programs, but also to enhance our partners’ capacity to increase results. Therefore, the below project results include how 3W has enabled greater impact through organizational development.

Root Capital: Our partnership with Root Capital is our gold standard. We now support global operations through grants and debt, in addition to our ongoing Latin America and Haiti contribution, and actively participate in the governing process as Board Director and Observer.

In regard to social metrics, RC was spot-on or above all targets, i.e. number of farmers reached (228K HHs for 2011), purchases from rural producers ($390M for 2011), and hectares under sustainable management (410K for 2011). In regard to operations, Latin America was a strong performer, dispersing $8M (17%) more in loans than targeted -- a total of $65M is disbursements for LA in the first three quarters. The year-to-year growth in LA was a whooping 54% -- a figure 3W can be especially proud of as we are the majority supporter of the lending activities in the region, and have been so for the past 2 years! The technical assistance program, FAS – for Financial Advisory Services, we support was initiated in Central America and Mexico to 20 associations. This program addresses urgent financial management deficiencies that are bottlenecks to business growth or portfolio risk. The intense training allows existing clients to access larger loans and move into new products. Root Capital – Haiti: This year, Root Capital disbursed just over $1M USD in loans to 7 clients from the coffee, metal arts, mango, and cocoa industry. The pipeline for 2012 sets the organization to reach 8 new 17

2011 Results

Milestones by Project


3W – The World We Want Foundation

clients, in addition to 4 renewals, for a total of 12 loans estimated at over $2M in disbursements. The success on the ground has led to greater financial backing from the CBHF. With a $1M grant, Root Capital not only has funds to increase their client base, but also can greatly increase the Haitian Financial Advisory Services. With the hire of a new Financial Advisor, RC is also poised for greater growth and impact. Caribbean Harvest: As discussed, cage volume is up to 300 cages in rotation, from a mere 30 at the onset of our engagement in May 2010. Additionally, we have been influential in structuring a greatly strengthened organization with increased capacity for planned growth, financial transparency and accountability, and strong governance. Our growth plan is to hit 450 cages in 2012 and reach sales close to $800 K. This translates into 1-2 cages per family and an average income of $1,100 USD/cage/year. Partners in Health: Although we exited this program in September, the following program milestones were reached. š Increased capacity to 3,360 students, up from 1,475. š The 18 schools were “weather-proofed”. š 46 new instructors were hired (total is now 123), 5 new supervisors added (for a total of 20 supervisors), and a 18

full-time education assistant hired to monitor the program. Pratham: The program continues to run well in our 212 communities. š The impact indicators and milestones include: š Total 3W area -- +30,000 children in Bainganwadi/ Shivaji Nager slums, all of which are covered via the library program and community “social workers”. š Read Mumbai – 6,284 students in Standard II, 77% of students can now read (17% before 3W), 96% of students can perform math (44% before). 854 students in the Standard III, of which 59% can read (compared to 24%), and 71% can do basic math compared to a mere 20% baseline. š Scholarship Class – of the 566 Students in the program, 93% took the exam and 100% passed. š Another dipstick survey is currently ongoing; results are

š

š

š

expected in Spring 2012. We launched a pilot program to stop anemia and malnutrition in our areas among 14-18 year olds. The program covered 4,300 teens. We provided all of the almost 1,000 Balwadi students a nutritious meal which significantly increased attendance and had a significant affect on weight gain (exact impact not calculated). 3W Organizational Impact: We have no influence on the overall direction of Pratham. We do, however, have a speaking partner representing our communities, and are therefore able to ascertain community needs and react accordingly. Although the project has strong management at the grass-roots level, as well as transparency and accountability, we want to be involved at the leadership level. We have initiated


2011 Results

3W – The World We Want Foundation

a relationship with CEO and founder, Dr. Madhav Chavan. We hope to use this relationship to better understand the organization, identify weaknesses, and improve overall effectiveness and impact.

Acumen: This is a new investment for us and we spent much of our time with Acumen acquainting ourselves with the key actors and the investment model. The Education Fund is now fully staffed and up and running. Although impressed with the organization and its mission, the team has yet to make an investment, as of Q4 2011.

2010 Projects with Completion in 2011: Jane Goodall Institute, Deomcratice Republic of Congo, Conservation Action Plan

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3W – The World We Want Foundation

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3W – The World We Want Foundation

In Focus: Success Root Capital

The success of our partnership is two fold Best in Class Organization: 1. The Root Capital model is highly effective: A. High Impact in poverty alleviation – Viable Rural Agriculture is one of the key elements of successful development as it shrinks the need for migration, revives disused farmland, helps to wean a country off imports, provides food-security, creates jobs in the country-side, and the list continues. B. High Environmental Impact – Although Root Capital focuses communication on poverty alleviation outputs, the model has huge environmental impact. Supported crops usually require significant tree coverage. The

impact is abundantly clear on the ground, but not yet well communicated. 2. Sustainable – Unlike most development models, RC’s approach has built-in, selffinancing mechanisms. The majority portion of the portfolio will be self-financing within the next three years. 3. Scale – Due to its inherent impact and sustainability, the RC model is scalable across all regions and product segments. The team has already proven immense growth at +50% CAGR. Projections for the portfolio balance growth over the next 5 years are almost +30% CAGR. 4. The Organization is excellent. CEO, Willy Foote, has been extremely successful in building an organization, as opposed to a one man-show. There is real depth at all levels of the organization – both at the HQ level and in the field. 5. The Governance is excellent. The prestigious Board is comprised of active stakeholders. Dynamic Donor/Recipient Partnership: It is difficult to pinpoint exactly why this partnership has worked

so well. Why does a relationship work? Many intangibles are involved, but there are also concrete features, such as mutual respect and full disclosure. RC has always been up front about all problems, even potential problems, to not only prepare us, but to also ask for guidance and solutions. The result is a true partnership – we are highly invested in the success of the organization.

The result is a true partnership – we are highly invested in the success of the organization.

In Focus

Overall: Root Capital has exceeded our performance and impact expectations; therefore, we have greatly increased our financial and organizational engagement. The success of our partnership is two fold: firstly, RC is a “best in class” organization with exceptional results. Secondly, RC has welcomed our active, impact investor approach.

Plans for Scale: Growth plans over the next 5 years will increase RC’s impact by almost 300%. RC has developed an aggressive and achievable plan for scale. The plan will increase the portfolio by over 200% to $284M USD reaching over 700,000 producers (+300%). 3W Role: Following the principle to “ride with our winners”, we have increased our engagement, both financially and organizationally, over time. Financial Support: In the summer of 2010, we initiated our 21


3W – The World We Want Foundation

support to RC with a relatively “safe” $500,000 grant to their core-competency, the lending operations in Latin America. As the relationship grew, we felt more comfortable to venture into riskier markets, and RC was willing to extend their model to our area of focus, Haiti. Important to note with the Haiti expansion – both RC and 3W were willing to move into a high risk/high impact area through a R&D approach which would NOT jeopardize RC’s core portfolio. 3W provided the first-loss loan capital and initial operational funding to Haiti enabling other investors to enter the Haiti

22

program. In 2011, overall funding was $1,050,000 USD in grants – $700K to Latin America lending operations, $250K for Financial Advisory Services in Latin America, and $100K for Haiti operations. We also extended $4,000,000 in short and long-term debt for global disbursements. As we move into 2012 funding, we will work towards a three-year grant commitment – we believe that continuity is as important as quantity.

We believe that continuity is as important as quantity

Organizational Support: In addition to our financial partnership, 3W has also taken an active role in the RC organization, specifically: š Very active Board membership š 3W is driving impact assessment in Haiti š 3W is a strong supporter/ driver of increased environmental impact assessment.


3W – The World We Want Foundation

In 2010, 3W went to Haiti to try to understand the dynamics of the development world. We knew that we could add little value in the rescue and relief operations, but we wanted to understand why Haiti was still teetering on the brink, even before the earthquake, despite the overwhelming number of NGOs, the large UN force, and its proximity to the US. We also wanted to find a few highly impactful organizations that were providing economic and educational opportunities as the country started to re-build itself. Partners in Health (PIH), with its origins in Haiti and its stellar reputation, was our first stop. We were well aware that healthcare is the foundation of all PIH interaction; the organization starts with health as the focal point for their holistic community approach.

... we wanted to understand why Haiti was still teetering on the brink... Although confident of the best-inclass approach and impact, we

were not interested in funding the healthcare activities for a number of reasons: namely, as an organization we have no experience in the industry and feel other funders can add more value, and PIH was receiving a huge influx of money for its healthcare activities. We want our funds to be transformative to an organization, thus we set out on our journey with PIH exploring opportunities in the community outreach programs, specifically within job creation and education.

Believing that education is a fundamental tool to overcoming the cycle of poverty and disease, 3W wanted to support and expand the Adolescent Program. We had heard much about PIH’s agricultural initiatives, but found their business approach lacking in, what we considered, important business principles. We had also been discussing

an education initiative that PIH had started in response to the abysmal state of the government system. Believing that education is a fundamental tool to overcoming the cycle of poverty and disease, 3W wanted to support and expand the Adolescent Program. This education program was designed specifically to meet the needs of children who had been unable to enter primary school in grades appropriate to their age; they were among the most vulnerable children in the Central Plateau and Lower Artibonite regions of Haiti. Adolescent classes met Monday through Friday for four hours in the morning, and the content of the courses included reading, writing, math and science. Students progressed over four years through Levels 1 through 4, after which they had the opportunity to take a state certificate exam to document that they had completed primary school. The certificate itself, a very rare signification of achievement and interaction with the government, was incredibly meaningful to the children. More broadly, the education that they

23

In Focus

In Focus: Failure Partners in Health


3W – The World We Want Foundation

gained, in theory, would enable the youngsters to catch up with their peers and have a shot at improving their life prospects, including further schooling and economic opportunity. We loved the mission of the program, and were confident that given PIH’s dedicated commitment and highly engaged approach, the program would be a success. We therefore decided to scale the program, tripling the number of students, and intended on staying for the long haul. As we had learned from a past project “failure” or exit, we wanted to ensure a strong connection to the headquarters and to us, and therefore established a local program officer position within PIH, specifically to oversee this program. After a year of classes and engagement, the results from the first batch of children came in and the pass rates were significantly lower than expected, 20% compared to an expected 80% pass rates. Although extremely disappointing, mostly as a failure to the beneficiary, the low pass rates were not our main concern. We can live with issues and are prepared to help our investment organizations through challenges via financial and organizational support. What we

24

found unacceptable was the local organization’s lack of knowledge and control over the realities on the ground. Throughout the year, we had asked for and funded the initiation of meaningful midterm metrics to help track and guide the program and needed improvements. We also gave ample opportunity for the local and headquarter teams to devise a plan of action after the poor results. Ultimately their efforts fell far short of our expectations and, more importantly, the program’s needs. The basis for this decision was the local organization’s lack of commitment, transparency, and control of the project on a whole. We knew, going into this partnership, that the core competency of the organization is health NOT education. Given PIH’s reputable excellence, we decided to move forward in education with PIH despite the core-competency risk. Unfortunately, our bet did not pay off, and we were forced to make the heart-breaking decision to allocate our funds elsewhere.


3W – The World We Want Foundation

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3W – The World We Want Foundation

The 3W Model 3W – Guiding Principles For us, the guiding principle is a high level of engagement and ownership. There are no simple parameters in this industry, comparable to profit in the business world. You must be actively involved to not only gauge success and impact, but to also drive this success and impact. Why should you spend less time giving away your money than you spent earning it? The issues we are dealing with – poverty, food insecurity , climate change, etc. -- are extremely difficult. If there were easy wins, these problems would have been solved long ago. We believe in Catalytic Philanthropy. We are willing to take bigger risks. With successful intervention, we then open the door to greater engagement and a range of other investors. With risks come failures – but the only real failures are those that you did not learn from.

With successful intervention, we then open the door to greater engagement and to a range of other investors. In regard to measurement, we try to use a balanced and disciplined 26

approach, specifically: š Common Sense / Reality Check of the Model or Mode of Change. This requires that we investigate similar approaches in other countries, that we turn to professionals in our network for sanity checks, and that we go on-site to see the operations first hand. š Field visits are a must. However, all projects look good from one or two angles. We travel off the beaten path to expose fallacies. š Impact is very difficult to measure, as it is almost impossible to isolate the influencers. We believe that you need a few meaningful metrics that directly correspond to the chosen forces of change. We have taken the approach that if you believe in your mode of change; you must focus on measurements that exemplify that mode of change. For example, we believe that a farmer’s ability to sell crops at a fair market price will have significant impact. We therefore can measure farm gate prices, and check the coop’s book etc. Quick and Dirty – but based on real information. š We think of valuating/ measuring as the importance of long term R&D in a

company. We don’t have all the answers today or even after a year, but if we do a thorough analysis that is kept up to date, we can get a good idea of what makes sense. It is important to measure those parameters that can actually lead to action and change. Finally, we emphasize the importance of the donor organization/philanthropist being up to speed with the investments. Our aim is to be efficient and have real and lasting impact, popularity with grantees and partner foundations/organizations is not a motivator. 3W Approach 1. Move into projects with potential for high leverage – where the impact greatly outweighs the investment. 2. Weigh potential for scale and sustainability. 3. Portfolio Approach: A. Go deeper with successes B. Increase knowledge build-up C. Create a diverse knowledge base 4. Adhere to the principle that time and money is needed and that business principles can have a positive impact in the development space. 5. Address Market Failures.


3W – The World We Want Foundation

6. Able and willing to take measured risk. 7. Act as a catalyst. 8. Be an active partner. We are highly involved in guiding the organization and the model of change.

9. Be a critical and questioning partner. 10. Do not be held hostage to our projects. Just as in business, we must weigh successes, failures, potential for addressing failures, and

opportunity costs. 11. Increase investment and engagement with proven success for a concentrated portfolio.

Foothold Investment

Increased Investment and Engagament

Concentrated Portfolio

š Initial Due Diligence š Stake in core competency š Establish relationship š Disciplined and Diverse

š Increase Investment of Time and Money š Move from Core Competency to Broader Organizational Needs and Development š Increased Engagement in

š Long-term Commitment with Proven Partners š Direct Investments: - Local Model of Development with potential for replication - Major stakeholder - Operational Support and Guidance - Ex: Caribbean Harvest Foundation

Approach

Governance

š Indirect Investments: - Large Scale Investments - Multinational - BoD involvement to Increase Scale and Sustainability

Portfolio Development: 3W Active Philanthropy The debate of aid vs. market forces has been raging on for over a decade. 3W is not waiting for a proven paradigm to be created. We act now with the information available today, taking nothing at face value. Our model of Active Philanthropy entails: 1. We have a very broad mission that includes priority areas such as job creation and education, for the most vulnerable.

2.

We are well read on the development space and apply industry best practices to our work. However, we do not rely only on academia and proven methods. We also investigate and test hypotheses and assumptions against realities on the ground. Our knowledge base: A. Industry Best Practices with proven results B. Business Best Practices

3.

4.

5.

C. Academic research and findings D. Realties on the ground We are not rigid in our approach. We invest in various tools that address market inadequacies. We are not afraid of failure, and never miss an opportunity to learn from our failures. We require transparency and accountability from our partners and ourselves.

27

Our Model

- Ex: Root Capital


3W – The World We Want Foundation

Step 1: Due Diligence

Identify Market Failures and Strengthen Positive Market Forces

3W Beliefs

Initial Engagement

š

š

š š

š

š š

access to finance access to job opportunities access to education access to clean technology

š

š

š

š

Market failures exist and must be addressed A long-term, social entrepreneur is required High Impact Model with potential for scalability and self-sustainability is ideal Organizational/Business Capacity is lacking – 3W can add value here Time, Money, and Longevity are needed – active ownership and investors We must have time to manage and drive our

š š š

š

Right Social Entrepreneur with Highly Impactful/ Game-Changing model Field Visits Foothold Investment Disciplined approach to investment with active involvement in organization Increased Time and Money committed over long-term with proven partners

key investments

Step 2: Engagement

Social Entrepreneur

3W

š

š š

š

š š š

Passionate Social Entrepreneur with innovative/effective method of change Right motivation for real social profit not just ”numbers” Flexible, Nimble Organization Questioning mind-set Open to 3W model

š š š

Working Relationship Highly Engaged Willing to take measured risk Financial AND Organizational support Questioning Flexible

š

š š

š

Long Term Partnership based on Transparency and Accoountability High Level of Honest Engagement We need to understand the problems, in order to address the problems Awareness of, and Adaptation to, Realities on the Ground

SUCCESS = SIGNIFICANT IMPACT Revise, Revise, Revise for Measured Impact

Step 3: Sustainability / Scale / Growing the Pie (exit) We have not yet completed the cycle, but with our largest financial investment, Root Capital, we are very active at the Board level to drive scale and sustainability.

28


3W – The World We Want Foundation

Lessons

Important to highlight: there is no failure, only learning. We have to keep this in mind as we look back on our second project exit, Partners in Health. This process not only reaffirmed much of our model and our approach to investment, but it also validated one of our most valuable attributes – we will never be held hostage to a beneficiary. By continuously questioning and improving our engagements, we will drive impact. Documenting our lessons-learned through our development and progression is important. The list will inevitably grow as mistakes are made and best practices better understood. Here is the list to date:

Lesson 1: There are no easy wins. Lesson 2: The sector lacks an obvious, comparable parameter similar to profit in the for-profit world. All projects look great at first-sight and most are well advocated; yet there is no way to compare the social impact of various projects. This sector deficiency means that MORE time must be put into social investments than traditional ones. The due diligence process and a high level of involvement are even more necessary. With measurement, we try to keep it simple, follow the 80/20 rule, and look for meaningful metrics. We also rely on our gut, i.e. you know success when you see it. Lesson 3: The two most important criteria for engagement: A. Partner selection – passionate, questioning, “truly” motivated, long-term commitment (10-20 years), flexible, accessible, credible, transparent, accountable, open to 3W’s active model of philanthropy, abreast of realities on the ground, close to the front lines. B. Mode of Impact – does it make sense given realties on the ground, is it relatively cost-effective, is there a potential for scalability and sustainability. Lesson 4: We have a very unique role as a catalytic force in this space. We are able to take risks, to perform deep dives, and provide very flexible support. This approach allows us to steer clear of many of the pit-falls we have observed in the non-profit world. As a donor, we do not want our culture or demands to kill the original business model. As a donor, you do not want the recipient organization jumping through unnecessary hoops to get funding. We want to be a support, not a distraction from impact. Lesson 5: It is a plus to have created a company, to have entrepreneurial experience and success. If you have done it yourself, you may be better suited to develop and manage social enterprises. Lesson 6: There is too little strategic, result-driven action. Non-profits often try to do it all. We have found that focusing on a core-competency, just as is often the case in business, leads to greater impact.

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Our Model

Lessons Learned Whereas in 2010 we accumulated knowledge though our due diligence processes and various project engagements, this year we were able to reach a new profundity through deep-dives with partner organizations. Given our small size, we have the ability to be flexible and nimble. We are continually striving to improve, and thus have an open mindset towards our approach.


3W – The World We Want Foundation

Although difficult, we strive to be completely transparent with all our successes and failures.

30

Lesson 7: Even the best are “stuck” in the middle. We have observed that few “investors” are spending time to analyze deeply enough to dare to sponsor heavily. A result of this is that all organizations struggle with fund-raising, even the gold-standard organizations. Lesson 8: We have seen a lack of donor transparency. Actors in this field, especially donors, are unwilling to discuss their failures. This mentality only drives inefficiency and inaction in the sector. Although it is difficult, we strive to be completely transparent and up front with all our due diligence and partnerships.


3W – The World We Want Foundation

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3W – The World We Want Foundation

The Year Ahead 2012 will hopefully be another year for celebration. One significant milestone will be that we will likely reach $10MUSD in disbursements. Although the actual “amount” does not drive us – quality does – the number would mark a substantial effort from those we support and ourselves, as well as signify the learning process we have undergone. To guide our work for 2012, we have agreed the following goals:

1.

Increase investment and engagement in Root Capital. RC grew its loan disbursements by close to 40% in 2011 to 111 MUSD. Lending operations were self-financed to a level of some 85%. RC is now ready for the next phase and has put together an impressive Scaling Impact Plan that envisions full self-sustainability of its core lending operations of its sustainable trade fund

2.

by 2015, and a total of $280 MUSD in disbursements. We want to be part of that growth and support it. Also, Root has an ambitious but doable plan for the growth of the Haitian business in which we will take a special interest. Continue to Build Caribbean Harvest into an exemplary model of development – Although making significant gains this past year, we must

We will likely reach over $10MUSD in cumulative disbursements, marking a substantial effort. continue to stay focused. We must strengthen the organizational capacity, the governance and the financial planning. In addition, the organization has gone through incredible growth and will now enter the valueadded, processing sector. Many challenges and risks will arise. We will have to be prepared to manage this

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3W – The World We Want Foundation

We would like to help the organization identify its strengths and limitations, and drive improvements where possible.

4.

organizational capacity. The impact of Pratham is well researched. The organization is operationally strong at the grass-roots level. However, we would like to help the organization identify its strengths and limitations, and drive improvements where possible. Increase emphasis on livelihoods programs that have an outsized impact on

5.

conservation. We have just visited Burkina Faso and Zambia, and have high hopes that we will finally be able to show meaningful progress in this space too. Increase our Impact and Result Metrics: A. Create a professional, meaningful, and targeted reporting system for our major investments. This system will allow for a monthly snapshot of performance vs. expectations. Such a system will also improve our ability to identify and mitigate risk. B. Develop and Implement Meaningful Impact Assessment on key focus areas. Environmental measurement is one of those metrics.

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Looking Ahead

3.

enterprise on an operational level for the coming year. We will also work closely with Dr. Abe and his team to measure and understand the impact. Evaluate strengths and weaknesses in our ongoing programs, applying 3W thinking and organizational assistance where needed A. Consider higher engagement in Acumen. We may decide that Acumen should remain an indirect investment, as this is the setup of our current funding, or increase our involvement in the investment process of the education fund. B. Evaluate Pratham’s potential for increased


3W - The World We Want Grev Turegatan 13B 114 46 Stockholm Tel. +46 8 611 56 10 www.theworldwewant.se

2011 Annual Update  

This document highlights our progress throughout 2011.

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