Bringing Management Expertise to Philanthropy:
New Approaches to long-standing problems

Owen Stearns ’89

“Lots of movement is happening quickly all over the world. Our job [at Monitor] is to facilitate good thinking and growth in a healthy, connected, cohesive way, and we’ve got signals that other organizations implementing change want that, too.”

Fast Company (the magazine and Web site) and Monitor Group named “Forty-three entrepreneurs who are changing the world” in their 2006 joint ranking. These entrepreneurs have “found a better way to do good: They’re using the disciplines of the corporate world to tackle daunting social problems.” If you, the individual donor, want to maximize the impact of your philanthropic dollar, give to one of these organizations, the article urges.

The scale of philanthropy today is unprecedented and growing. According to Monitor Group data, total giving in 2006 reached $260 billion; the number of billionaires in the world exceeded 400 this year, compared to roughly 170 in 1997; in the United States, from 2001 to 2004, the number of households with a net worth of $100 million or more increased from 7,000 to 10,000. Sophisticated donors want to find effective, long-term ways to solve complex problems, and their outlook is not only local, but global.

The most powerful philanthropists are affecting the social and political order, worldwide: Bono and Bill Clinton use personal influence to galvanize world action to treat and contain the HIV/AIDS virus. George Soros has linked some of his funding projects directly to demonstrations of open, transparent governments. The Rockefeller Foundation is partnering with the Gates Foundation to move lessons learned about improving agricultural productivity from South America to Africa.

Leveraging Donors’ Dollars

The opportunity to be an influential activist is not limited to Warren Buffett, Larry Page and Sergey Brin of Google, or Pierre Omidyar of eBay, however. The growth of aggregated funds (nonprofits structured like mutual funds except that their purpose is to invest in problem-solving ideas) allows donors at all levels to leverage their dollars. Individuals can give to one of the many aggregated funds where full-time staffers with M.B.A.s and Ph.D.s help identify, evaluate and support enterprises meant to accomplish systemic change.

A consultant with the Monitor Institute, Owen figures in this new environment of philanthropy—bringing management expertise to foundations, nonprofit organizations or philanthropic venture-capital funds, ensuring that they have solid business plans with rigorous and relevant performance metrics that make them accountable for results.

Owen’s firm, which operates within the umbrella of the international management consulting company, Monitor Group, wants to be a leader in anticipating changes and applying new approaches to addressing complex social challenges.

The Acumen Fund was Owen’s latest major project. Acumen Fund is a non-profit investment fund that operates somewhat like a venture-capital firm. They look for market-based approaches that provide basic services to populations making under $4 a day. Jennifer Lee wrote in the New York Times recently that Acumen Fund’s vision responds to “a desire to reinvent philanthropy and push the boundaries of how people who had done well could also do good.” One of Acumen Fund’s tenets is that markets work for the poor, not just the rich. Philanthropy has always addressed immediate needs; the new philanthropic models try to couple meeting needs with creating sustainable projects that contribute to broad, economic and social progress.

“Small amounts of philanthropic capital, combined with large doses of business acumen, can build thriving enterprises that serve vast numbers of the poor,” the Acumen Fund Web site claims. “Our investments focus on delivering affordable, critical goods and services—like health, water and housing—through innovative, market-oriented approaches.”

A representative project, for instance, combats malaria, which kills at least one million people each year. Acumen Fund created a public-private partnership with WHO, UNICEF, Sumitomo, ExxonMobil and an African bed-net maker to manufacture an anti-malarial bed net. Typical bed nets must be treated every six months and are prone to tearing. The new bed net produced by A–Z Textiles Mills—although more expensive than the old bed nets—kills mosquitoes on contact for five years and is non-tearable. The nets are selling, and making them has created more than 100 jobs. Instead of the traditional approach of buying several thousand bed nets and distributing them to the poor, Acumen Fund’s investment and management assistance allowed A–Z to expand its operations dramatically—their bed nets now protect over 6 million Tanzanians from malaria.

Acumen Fund has also invested in a new drip irrigation system engineered by International Development Enterprises in India. Subsistence farmers can buy the system for $30, far less than the price of typical irrigation systems. With increased land productivity, the system pays for itself quickly. Incomes increase and farmers buy a second and third system, ultimately beginning to accumulate wealth.

Other investments help urban squatters in Pakistan build cinderblock homes and achieve tenure security and legal title to them; or provide small capital loans to women entrepreneurs; or work with a local Indian company to produce, market and distribute Mytry De-flouridation Filters, which give families access to clean, safe drinking water.

Some ventures are disappointing, as with those in any investment fund, and Acumen Fund is learning important lessons and adding expertise as they go. Acumen Fund has 27 full-time staff, many with M.B.A.s and other specialized degrees who do the evaluation, decision-making, and bring hands-on operations expertise to the projects Acumen backs.

Uncovering sustainable solutions

Over the past six months, Owen and his team from Monitor worked with Acumen Fund to develop a strategy for the next five years—one that will expand Acumen Fund’s current investments from $20 million to over $150 million. “Acumen Fund is really at the cutting edge of a few different trends in the social sector, all of which could really change the way we think about creating change in the world in the coming years,” Owen says. “If this really works, they will have uncovered a much more sustainable way to address issues of global poverty. And so, being centrally involved in helping them figure out how to actually make this work feels great.”

Prior to the Acumen Fund project, much of Owen’s work for Monitor Institute involved education enterprises. He has worked with an inner-city boarding school in Washington, D.C., that wanted to replicate its model in other cities. For the Gates Foundation, he developed a business plan on behalf of a network of charter and choice schools in Milwaukee, Wisconsin, to help the foundation evaluate and strategize possible support. Owen’s current project is back in the international development space—helping a publicly funded organization based in Latin America design a transition plan, as its funding will be eliminated and it will need to find a new business model with different sources of revenue.

The recent evolutions within philanthropy—and approaches to social change more broadly—have created jobs and even careers that did not exist even a decade ago. When Owen graduated from Amherst College in 1994, he had been heavily involved in community service activities, including doing a City Year and supporting the creation of AmeriCorps. He then spent several years with the Monitor Group, a global strategy consulting firm, before leaving to co-direct The City School, a non-profit leadership development program for high school students in Boston founded by Milton Academy former faculty Todd Fry. Owen was a charter board member for the City School and as co-director led the fund-raising strategy, and then the search for the next director, as well as the transition to new leadership.

With these two early experiences at leading for-profit and nonprofit organizations, he found himself searching for something that was a hybrid of the two. The most interesting learning and activity in the world was actually in the space between the two sectors, where social change was being pursued without regard to the IRS designation. He was fortunate to find the Foundation Strategy Group, a newly formed firm that provides strategic advice to private, corporate, and community foundations. After four years there, he returned to Monitor to help launch the Monitor Institute, its social change practice, which works with many of the leading actors continuing to create new approaches to long-standing problems.

Improving education for urban students is one of Owen’s core commitments: he is founding board chair of Excel Academy, an East Boston charter school serving middle school students. As with Owen’s other projects, results matter: Students in Excel’s first eighth-grade graduating class outperformed students from nearly every district in the state, scoring in the top 9 percent statewide on the 2006 English MCAS exam and in the top 6 percent statewide on the 2006 math MCAS exam.


Cathleen Everett

 

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