The Stone Family Foundation was established in 2005 by John Stone and his wife, Vanessa, following the sale of the business. Why did they decide to start a philanthropic activity and how did they choose the social needs to support, with the guide of New Philanthropy Capital?
Following the sale of the business, John and Vanessa discussed how they wanted to spend the proceeds. They concluded that a hedonistic lifestyle wasn’t for them, nor did they think it a good idea to leave such wealth to their children. This led them to conclude that they should set up a philanthropic foundation to give the money away.
The Stone family did not start with a clear idea of what the Foundation should fund. John and Vanessa approached NPC, a UK think tank and consultancy, to help them develop a focus. This started by developing a ‘learning portfolio’ of ten different grants. The grants went to NGOs working in a range of different sectors, including mental health in Bangladesh, microfinance in Malawi and girls’ education in Laos. Over the course of the grants, the family visited all ten projects and spoke to experts, with the aim of learning as much as possible about development and philanthropy.
In 2010 the Foundation had a strategic review deciding to focus on Water and sanitation (WASH) in the developing world. Can you explain us the process that led the Foundation to this important change?
As the learning portfolio came to an end in 2010, the family were ready to develop their philanthropy further and set a longer-term strategy. To do this, they reflected on what they found most rewarding in the ‘learning portfolio’ and where they felt they had most impact
It’s here that access to safe water and sanitation emerged as an important theme for the Foundation. The lack of water and sanitation services, plus the high incidence of water-borne diseases, in many of the projects they had visited led them family to conclude that they would like the majority of the funding going to water and sanitation work in sub-Saharan Africa, South and South-East Asia.
As well as deciding on the sector, the Foundation refined how it liked to work with organisations it funded. During the course of the learning portfolio, the family discovered they preferred to have engaged relationships with grantees, and really wanted to understand the organisation’s vision and approach.
The preference for market-based solutions to water and sanitation was also clear, and this came more strongly to the fore over the following years to now become the central focus of the Foundation’s funding in water and sanitation.
There’s more information about the process the Foundation went through in NPC’s report, A funder journey.
Can you explain us your venture philanthropy approach to support local entrepreneurs in the WASH sector, for example by providing risk capital?
The Foundation’s founder, John, wanted to make sure that he applied the same principles and approach to his philanthropy as he had done when building his business. He was keen to break out of the mould of seeing households that lacked access to proper water and sanitation as passive beneficiaries, and instead wanted the Foundation to view them as consumers—responding to their specific needs and wants.
As a serial entrepreneur, John also wanted the Foundation to take risk, and this principle is central to the Foundation’s approach today. We provide risk capital to early stage enterprises to develop their business models and scale to the point where larger, more risk-averse funders can come in.
That said, we’re very particular about what kind of risks that we are willing to take: we are comfortable with supporting new and innovative business models that aim to disrupt the sector. We have learnt however that high-quality management is absolutely key to an enterprise’s success, and so we need to have a high degree of confidence in the leadership of any organisation we support.
Your aim is to revolutionize the approach to traditional water and sanitation programmes, for example by working also to support the whole sector. Which are the achievements so far and how can you measure the social impact of your action?
The history of the water and sanitation sector is littered with examples of well-meaning donors and NGOs installing pieces of infrastructure, like a water pumps, and thinking the job was done. Those approaches have unfortunately not been successful: one study has shown that 40% of rural handpumps installed in sub-Saharan Africa had broken down and not in use just two years later.
This is changing, particularly with the new Sustainable Development Goals. These are shifting the emphasis from just having access water or sanitation, towards the quality of that service: is water available 24/7 for example, or has it been treated so that it is safe to drink?
For our part, the Foundation is looking at the role that market-based approaches can play in achieving this vision for sustainable services. It’s not an approach that will work everywhere, but we believe that the enterprises are part of the solution and can help avoid the mistakes of the past, by developing products services that households actually want to buy. and that will be sustainable in the long term.
We’re not there yet, but one of the most exciting enterprises in the Foundation’s portfolio right now is Safi Sana, a social enterprise currently based in Ghana. Safi Sana takes human waste that normally gets dumped into the sea, and processes it with organic matter to create electricity, soil conditioner and hydroponic water for seedlings. Revenue from selling these products covers the operating costs of the plant, making it financially sustainable. It may not sound the most glamorous business possible, but it has tremendous potential for social impact—by avoiding the terrible diseases that come from not safely disposing of waste and embracing elements of the circular economy.
As for measuring social impact, we look to the academic community to build the evidence base for the positive health benefits that come from safe water and sanitation. With our enterprises, we focus on trying to understand four main things:
- Is the enterprise serving low-income and underserved customers?
- Are the services reliable and of high standard?
- Is the service affordable?
- How close is the enterprise to financial sustainability, and how will it get there?
Despite the challenges, we’re optimistic that we’ll see breakthrough in the water and sanitation sector in the next five years. We don’t want to work alone though, and are keen to collaborate with any other funders interested in coming on the journey with us!