Thoughts from the Last Mile Welcome to the VillageReach Blog
09.01 2009

Canister_StacksAs the Social Capital Market Conference (SoCap) begins today in San Francisco, VillageReach is very excited to announce that Oasis Fund, a European investment fund, has committed a $1.375 million investment in VidaGas, the propane energy company owned by VillageReach and the Mozambique Foundation for Community Development (FDC).  SoCap is full of social entrepreneurs, investors and innovators excited about using private money for social good- but thus, far there are few true real-world examples of large scale, social investing.  This investment is a landmark transaction that demonstrates the potential for channeling private investment capital into commercially viable social businesses in developing countries.  Furthermore, the investment affirms the effectiveness of VillageReach’s model for enacting sustainable, systemic change to global health by establishing for-profit businesses to fill gaps in infrastructure.  The investment will enable VillageReach to expand its customer base and energy service offering to impact a greater number of households and businesses in remote areas of northern Mozambique.

VidaGas was started in 2002 to support the health system improvement program developed by VillageReach and FDC.  More than 80% of Mozambique’s population is rural and depends on charcoal and wood for basic cooking and heating.  Safe and reliable propane from VidaGas enables health centers to provide critical health services including vaccinations, equipment sterilization and nighttime birthing.  Additionally, propane from VidaGas is a clean and affordable alternative to charcoal and wood for households, small businesses, and light industry clients.  VidaGas has grown over 500% since 2002 and is now the largest propane distributor in northern Mozambique.

Oasis Fund is a Luxembourg investment fund which finances innovative, growth stage, commercially viable enterprises that deliver basic goods and services that improve the lives of low-income communities.  This investment is the first investment in Africa for the Oasis Fund.  Oasis Fund is advised by Bamboo Finance, a Geneva based investment advisory firm.

VillageReach’s Social Business Director, Craig Nakagawa, will be speaking with Keely Stevenson, of Bamboo Finance, about the investment at SoCap tomorrow.

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08.26 2009

On Wednesday, September 2nd, our CFO and Social Business Director, Craig Nakagawa, will present VidaGas: Anatomy of a Social Investment, a presentation featuring VillageReach’s social business VidaGas.  At their first annual conference last year, SoCap sold out before the conference even began.  This conference is a continuing testament to the excitement surrounding everything social entrepreneur-related.  Craig’s presentation will cover VillageReach’s creation of VidaGas as a social enterprise designed to support the health system in northern Mozambique and the development and expansion of the business model.  VidaGas has evolved from a small distributor focused on supplying propane to health centers to become the largest propane distributor in Northern Mozambique.  In conjunction with the conference, we are also highlighting the Harvard Business School case study on VillageReach which explores some of the successes and challenges of VidaGas.  The case study was published in the spring and will be used in Harvard classrooms beginning this fall.

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08.13 2009

The Rockefeller Foundation and Results for Development Institute just released their report that offers a landscape view of successful global healthcare financing and delivery models involving the private sector.  VillageReach’s model is recognized as an innovative model in supply chain management.    While the identified models span a wide variety of services and strategies, it is exciting to see a growing embrace of the role of the private sector in improving public health.  When VillageReach began in 2001, it often felt like there was mutual distrust between the public health and development professionals and the private sector entrepreneurs.  Reports like this are a nice reminder of how much and how quickly things have changed.

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08.06 2009

Over at the GiveWell blog, they’ve been asking some difficult but incredibly important questions about international aid projects.  Back in July, they explored the goal of sustainability.  Like GiveWell, we’ve noticed that sustainability is more and more often included as a requirement from funders yet it often remains vaguely defined and difficult to quantify.  VillageReach decided to establish businesses precisely because we believe that for many infrastructure gaps in the health system, they are the only truly sustainable way to address the problem.  And our social business VidaGas is a self sustaining organization, but as GiveWell notes, it has been a larger challenge achieving sustainability on the program side.  Even though we attempted to plan for long-term sustainability from day one in our Mozambique program, it has been challenging to convince the government to maintain the system even when we can show evidence of significant success.  The inertia of the status quo is a powerful obstacle to sustainable change.

So, this begs the question- how do you define and measure sustainability and how important should it be as a goal of a program?  This is especially important when you consider that sustainability often ends up being a trade-off with other qualities- for example, in order to make our program as sustainable as possible, we try to only include elements that we know the government is capable of carrying on after we leave- this can mean sacrificing impactful elements  because they are too expensive, too labor intensive or just too unprecedented for the government to assume control of.   GiveWell concludes that sustainability should be considered “a desirable goal, but not a reasonable requirement.”  The goal of sustainability is fundamental to VillageReach but a more candid conversation about what this truly means could be of enormous benefit to funders and implementers alike, both of whom tend to through the word around without really questioning its value.  On a similar theme- Phillip LaRocco has a humorous note to the “development posse” about lightening up- admitting when things are difficult and cutting through the clichés (of which sustainability certainly must be one of the most ubiquitous!) to truly impact the communities we serve.

GiveWell also explores investing in a small charity.  They note that “giving to VillageReach is a high-risk, high-upside proposition” and honestly, we couldn’t agree more.  VillageReach is proud of its dynamic and innovative approach- our President Allen is fond of saying that our theory of change boils down to “we see, we do, they see, they do.”  Basically, we recognize the problem and because we are small and agile we can create a customized model to address it and then advocate for both the recognition of the problem and the adoption of our model to others.  GiveWell was impressed by our rigorous monitoring and evaluation of our program, an expensive proposition that many small non-profits forgo because they view it as a luxury.  We, however, see quantitative evidence of impact a fundamental necessity in order to convince others of the value of our model.   But it is true that the same things that make us high-impact and allow for change on a scale disproportionate to our size also mean that we don’t have the security of a large, highly diversified non-profit working in a well understood area.  We rely on donors to recognize both the problem of last mile health system strengthening and the value of our solution.  We are thrilled to have GiveWell endorse our approach and we hope to report more success in the future.

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07.14 2009

Back in February, VillageReach purchased bicycle ambulances for a number of communities in rural Malawi.  Before they had these bicycles, community members would often resort to making homemade stretchers to carry their loved ones to the nearest health facility.  Needless to say, the communities are very excited to have the new bicycle ambulances.  In June, I was able to go back to Malawi and visit three of the communities with the new ambulances.

bicycle-ambulance

Welcomed by song and dance, I was incredibly excited to learn that the communities had formed committees to maintain the bicycleambulances and regulate their usage.  The committees each had an appointed treasurer who gathered and secured funds to ensure that thebicycle ambulances would be well kept as a community resource.  Of the three communities I visited, one community had used their bicycleambulance twice, another once, and the third had still not used theirs.  While at first this seems like the bicycle ambulances are being underutilized, to me it reflected a real valuing of the bicycle ambulances;the communities were not allowing them to be abused and were reserving them for truly grave emergencies.   This was a perfect (and heartening) example of real community buy-in, which at the end of the day is one of the few variables that can really support true sustainability.

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07.01 2009

We are excited to annouce that VillageReach has been rated as a top charity by GiveWell. GiveWell is an independent, nonprofit charity evaluator- founded by two ex-hedge-fund analysts, GiveWell brings a metrics-based business mentality to the table with their rigorous and thorough analysis of charities.

givewell-logo

It is incredibly refreshing to be asked about more than just our overhead to program ratio- as Anne mentioned in a prior post, we’re always thinking about what metrics we should be measuring our work by and how best to share our successes with our supporters.  We’ve been working back and forth with the guys from GiveWell for the past couple of months and been thoroughly impressed with the amount of work they put into each analysis they do.  We are incredibly proud to have passed their high standards!

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06.19 2009

Interesting article today in the Seattle Times! Even in the eight years since VillageReach was established, it’s been amazing to see how global health funding has fundamentally changed- we blogged before about GAVI and The Optimize Project, two enormous initiatives that would never have happened without the “balance of power shift” mentioned in this article…

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06.17 2009

As a recent MBA graduate, I joined VillageReach for the summer tasked with evaluating our models and frameworks to further reach scalability and create sustainable business opportunities.Throughout business school, I was taught the importance of proving that financial profitability and measurable metrics are essential for making business decisions. Shouldn’t this common standard be used to measure socially-focused investing as well?Our philosophy at VillageReach is that there is a place for social investing in which we can create profitable businesses that have the potential to achieve both a financial and social return. We have proven a case in which the combination of non-profit dollars and entrepreneurism can build a sustainable business.  Whileventure capitalists seek to create financial returns by investing in new technologies, VillageReach aims to improve established energy and logistics platforms to build base-of-the-pyramid businesses. However, unlike the VC world, there is no standard metric to calculate and measure the value of a social enterprise.Instead, the development community of entrepreneurs, philanthropists, and foundations has the challenge to develop a standard methodology. We’re excited to see the momentum and collective steps that organizations and individuals are collectively taking, especially as the Acumen Fund declared yesterday the WMD (World Metrics Day)!

At VillageReach, we are evaluating different methodologies to formulate our approach to quantify and present the value of a social investment. We are considering two methods: a BACO Calculation (for best available charitable option – created by the Acumen Fund) and an SROI calculation. The BACO model enables us to perform a cost-effective analysis on philanthropic dollars by comparing two options: a charity donation vs. an investment in a business. This analysis provides us with decision-making data to assess and determine the return the greatest social impact at lowest cost. The SROI (“social return on investment”) methodology has been in development for many years, and calculated using a discounted cash flow analysis + projected socio-economic contributions (direct, demonstrable cost savings and revenue contribution that are associated with the social purpose enterprise) into a projected blended business performance. There are distinct challenges with both of these approaches as it is difficult to often find a “comparable” charity donation and quantify the context of social outcomes. However, we strive to build quantifiable metrics that will help continuously evaluate our investments and allow us to communicate our impact to an external audience. Let us know what steps you are taking or thoughts about this process as this is clearly a shared effort.

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06.11 2009

We all know that operation of any health center requires a variety of external inputs- energy, transport/logistics (delivery services), and communications systems to name a few. In wealthy countries, these services would normally be provided by the commercial sector. In focusing efforts on the “last mile,” however, any and all of these commercial services are simply not available or are so expensive to procure that they are not operationally viable.

At VillageReach we focus on energy, transport/logistics and communications, the “Enabling Services” that are required to fulfill the mission of VillageReach programs. When implementing health care programs in regions with weak or nonexistent Enabling Services, NGO’s have traditionally elected to handle the provisioning of Enabling Services internally. Trucking in generators, fuel and other supplies directly supports the program objectives but it does little to provide Enabling Services to the surrounding community. It is widely recognized that a successful and sustainable program intervention creates and uses local capacity. The VillageReach model and programs to date have as a guiding principle the creation of local capacity not only for last mile health care infrastructure but also for the Enabling Services that support that infrastructure.

To sustain the improvement in health and decrease in mortality that is the core of the VillageReach mission it is necessary to create permanent health care resources in last mile communities. Sustainability requires that Enabling Services be available, be reliable and can be procured at affordable rates for the long term. In order for Enabling Services to be available for the long term the customer base must be substantially larger than just the rural health care clinic and therefore must include a vibrant market in the local community. The lack of Enabling Services in many of these rural situations clearly shows that sufficient market demand does not exist today for a viable commercial business. It’s a classic chicken and egg problem – VillageReach is moving forward as a catalyst with creating basic demand for Enabling Services as part of its programs to support last mile health care and incubating the required commercial business for the services.

So, why is social enterprise required in the VillageReach model? Because without established Enabling Services as one of the key elements in the intervention – the VillageReach programs would not achieve the required sustainability and would become yet another solution that fails to provide the long term impact when transitioned to local operation.

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06.08 2009

So who is paying attention to medical distribution systems and more specifically to the innovation pile-up we highlighted in the last post?

There are 4 main categories of players: Governments, NGOs, multi-lateral organizations (WHO, UNICEF) and public-private alliances.  While there are many, many important and interesting stakeholders in the field, the most interesting evolution over the last decade has been the ways these groups cross boundaries to find creative ways to work together.

When Global Alliance for Vaccines and Immunization (GAVI) was established in 2000, it had an enormous impact on the field of vaccines.  GAVI refocused attention on vaccine-preventable diseases which waned in the 90’s after the highly successful immunization campaigns of the 70’s and 80’s. gavi-logoAnd as a public-private partnership funded by donor governments and private organizations such as the Bill & Melinda Gates Foundation, it brought serious financial resources to the table (over $2 billion of net assets in 2007).  Currently, GAVI supports 72 low and middle-income countries in vaccine financing and procuring.  While considerable resources at GAVI have been directed towards augmenting the supply of existing vaccines and developing new vaccines, GAVI and its stakeholders are increasingly beginning to consider the inadequacies of the health systems into which these vaccines must enter.

One particularly interesting initiative is The Optimize Project, a joint collaboration between the WHO and PATH.  The Optimize Project seeks to identify and advocate for the “immunization systems and technologies for tomorrow.”  Funded by the Gates Foundation, the Optimize Project is a recognition that discovery and development of vaccines is only half the battle.

Here at VillageReach, it has been exciting to see the development of enthusiastic recognition and articulation of the problems of logistics at theLast Mile.

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