Nonprofit Pact Seeks To Increase Impact With Investments
Pact is a large NGO that isn’t content to do things the way they’ve always been done because it’s the way things have always been done. Amidst a global impact investing and social entrepreneurship boom, Pact created Pact Ventures and tapped experienced impact investor Brian Vo to lead the effort.
Using funds from its own balance sheet, Pact is seeking to prove that invested capital can be returned and recycled for future impact when funds are used to scale proven interventions.
Already reaching millions of people each year with a 2018 budget of $200 million, PACT seeks to increase its reaach by strategically applying an investment approach in certain circumstances.
Be sure to tune in to the full interview with Brian using the above players to learn more.
Interview with Brian Vo, the Vice President, Social Investment and Innovative Finance of Pact.
The following is the pre-interview with Brian Vo. Be sure to watch the recorded interview above.
For-profit/Nonprofit: 501(c)3 Nonprofit
Revenue model: For nearly 50 years, Pact has operated within the classic development model, one where we respond to a donor’s request, design and implement a program that aligns with that donor’s needs and repeat the cycle when the project ends. This project-based, time-limited work—which has led to important improvements in people’s lives—by itself is insufficient to address the intractable problems the world faces. Today, Pact is pushing ourselves and the sector to look beyond this traditional model of development, which largely addresses the symptoms of poverty, to one that leverages all the tools at our disposal to achieve systemic change.
This change requires new business and delivery models. We are integrating business-building skills needed by non-traditional partners like social enterprises into our core business of donor-funded grants, contracts and cooperative agreements from international aid agencies, private sector companies, foundations and multilaterals. In so doing, we seek to provide a suite of business expertise to help social enterprises solve development challenges, including growth and go-to-market strategies, scalable operating infrastructure, etc.
A key component of our shifting approach is Pact Ventures, a team that approaches development through the lens of creative financing vehicles and market-based incentives. Classic project design methodologies already recognize the complexity of social challenges and the interdependencies between areas like health, livelihoods and financial inclusion and the need for integrated program development. By also integrating economic principles like markets, customer needs and profit-seeking capital, we hope to align drivers of social impact with private capital. As part of that, Pact Ventures is investing in piloting projects and iterating on sustainable models, to then secure private capital to support scaling efforts. We’re focused on identifying the right financing vehicle for the type of problem as we identify areas where capital can unlock new ways for us to drive impact. Then we seek to determine if there is a relevant business model to sustainably scale the work by catalyzing/mobilizing private capital.
For example, Pact Ventures invested last year in Amped Innovation (www.ampedinnovation.com), a designer and manufacturer of income-generating solutions and off-grid solar appliances. The investment came on the heels of Pact’s launch of “Energy for Prosperity,” a platform to improve energy access through both donor-funded and private sector initiatives, and Smart Power Myanmar, an initiative to mobilize capital to roll out thousands of mini-grids and other rural electrification solutions in Myanmar. We’re now leveraging our Amped investment to explore how to sustainably distribute off-grid solar appliances to beneficiaries around the world through partnerships with energy distributors. In the process, we’re shifting the paradigm of Pact’s relationship from donor-beneficiary to provider-customer.
Ultimately, to be effective at accomplishing our mission, we need to be relentlessly creative about how we approach our work, including developing a diversified resourcing model that blends philanthropic capital from donor governments, foundations and individuals, with revenue from businesses aligned with our mission.
Scale: Pact works in 40 countries around the world, mostly in Africa and Southeast Asia, and employs nearly 5,000 staff across the enterprise, primarily local nationals working in their own communities. In 2018, our annual revenue was over $200 million, our largest annual revenue in Pact’s history. In partnership with the private sector, governments and local organizations, we implemented 108 projects in the last year that resulted in more than 2.5 million people gaining access to better health and social services, nearly 1.2 million people achieving a higher income, more than 430,000 people benefitting from improved natural resource management, 150,000 citizens engaging in initiatives that resulted in positive state-society engagement, and 1,220 local organizations gaining capacity to more effectively serve their communities. Pact publishes detailed information on our results and impact annually in our Measuring Pact’s Mission report (www.pactworld.org/our-results).
What is the problem you solve and how do you solve it?
In communities around the world, we work with people who want to take ownership of their future. They understand their challenges and what is needed better than anyone else. They are entrepreneurial and committed to realizing a better future for themselves, their families and communities. But, as often is the case, systemic impediments keep them locked in a cycle of poverty and marginalization, robbing them of the ability to grasp that future.
This is what we are trying to solve for by fundamentally transforming the way we approach development. We’re pushing ourselves to look beyond the symptoms and ask why. There are no ready-made solutions at Pact. We bring together diverse stakeholders, listen and learn from one another in order to make evidence-based decisions. Most importantly, we consider what works best for each community we serve.
On a practical level, we’re employing more inclusive methodologies, such as human-centered design, to ensure communities have a voice in the design process and want the solutions. We’re also leveraging best practices from the social sector and the private sector, bringing these skills to bear in a new, fourth-sector organization, while also drawing heavily on our staff with experience from the public, private and social sectors.
Pact Ventures plays a critical role in that transformation, as it serves as our market-facing unit to integrate market-based incentive mechanisms, business modeling, and creative financing into our problem-solving approach. Pact Ventures serves as the connective tissue to introduce new, non-traditional development skills into Pact’s journey towards becoming a fourth sector organization. Our Impact Investing team is a melting pot of real business skills that our staff excelled in prior to turning their talents to Pact: creative financing/transactions (Morgan Stanley, JP Morgan) and business strategy (McKinsey) coupled with social impact (UN, impact investing, social enterprises).
When people have agency and ownership of their own development—when they are heard and have the tools and resources they need to thrive—that’s when transformational, sustainable change happens. Ultimately, we believe this approach can help us succeed in being the first generation in history to solve the systemic drivers of poverty, and to eradicate poverty in our lifetime.
More about Pact:
Pact is the promise of a better tomorrow for communities challenged by poverty and marginalization. We serve these communities because we envision a world where everyone owns their future. To do this, we build systemic solutions in partnership with local organizations, businesses and governments that create sustainable and resilient communities where those we serve are heard, capable and vibrant. On the ground in nearly 40 countries, Pact’s integrated, adaptive approach is shaping the future of international development. Visit us at www.pactworld.org.
Brian Vo. Photo Credit: Willis Bretz Photography
Brian Vo’s bio:
Brian Vo leads the Pact Ventures team, which was launched to magnify Pact’s global social impact by leveraging impact capital and other innovative approaches to sustainable funding and financing. Prior to Pact, Brian was a director at Quantified Ventures, where he designed outcomes-based transactions for nonprofit and for-profit social enterprises. With McKinsey & Company’s Strategy/Corporate Finance and Public/Social Sector Practices, Brian advised clients on a range of topics including economic development, growth strategies, capital allocation, operational turnarounds, and transaction structuring. Previously, he was with Macquarie’s Private Equity Group and Jefferies & Company Investment Bank. Brian holds an MBA and BS from the Wharton School, University of Pennsylvania.
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