KC-based Water.org fills need with focus on poverty as a market to be served

When philanthropy is used to correct a market failure, there is potential for profit, said Gary White, co-founder and CEO of Water.org.

“The poor should not necessarily be seen as a problem to be solved but a market to be served,” White told a recent crowd at the University of Missouri, highlighting the importance of microfinancing and smart solutions in the global water crisis.

Water.org, a Kansas City-based nonprofit, has helped about 22 million people around the world meet water and sanitation needs by providing small and affordable loans through microfinancing methods dubbed “WaterCredit” and “WaterEquity,” White said.

White founded WaterPartners International, a predecessor to Water.org, in 1990. Two decades later, the organization combined with a water nonprofit co-founded by actor Matt Damon to become Water.org. White began a discussion at Mizzou by drawing attention to how deep the water issue runs.

Sizing up the problem

About one in nine people worldwide doesn’t have access to safe water and one in three people — or about 2.3 billion total — lacks access to a toilet, White said, quantifying the water crisis Water.org aims to shrink.

Surfacing statistics and anecdotes throughout his talk, White said the lack of sanitation and water has resulted in a loss of 266 million hours that women could have devoted to productive work and children could have used for their education.

“Every 90 seconds, a child dies from a water-related disease,” he said.

Though the numbers tell a bleak story, there is hope as the world is getting better through market-based approaches like those innovated at Water.org, White said.

Harnessing the power of microfinance

“Microfinance has been around for a while, but unfortunately microfinance wasn’t providing loans for water and toilets because it was seen as too risky and there were no clear paths for income generation to repay the loans,” White said.

In places where there is acute water shortage, people earn about $2 per day and pay almost one-fourth of their income to water vendors, according to White. He believes this money could instead be used to fund a long-term solution.

Water.org partners with 125 financial institutions, foundations and brands including Bank of America, the Ikea Foundation and PepsiCo Foundation to provide capital.

“We knew that if we could help people get a loan to pay to connect to the public utility, they could repay that loan through those savings or through working at a paying job,“ he said.

Every dollar put into WaterCredit creates $59 worth of impact, he said. Over the years 4.9 million loans have been disbursed through the program, according to the organization’s website.

More than 99% of the loans were repaid in time, White said, and repaid loans could be directed toward different water projects to help those in need.

The way forward

“We’re not so much a water organization as we are an innovation engine,” the Missouri S&T graduate said about taking the concept of WaterCredit to the next level.

WaterEquity is a similar program that uses impact investing to provide more funding for water and sanitation loans, White said. It is an asset manager that allows investors to invest in these loan portfolios and then get a financial return on them, he said.

“Essentially, you could contribute to a social cause and also pocket $50 a month. … Smart solutions are the way forward because there’s not enough charity to meet the water needs of the hour,” he said.

The organization is launching an app next year that will allow donors to use their savings account to fund WaterCredit loans and track the impact of their loans, he announced.

“Right now, this is a $1 trillion problem and we’re only investing about $114 billion a year in it,” he said. “The greatest need of the hour is access to affordable capital, especially capital being distributed to the grassroots levels.”

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This story was produced through a collaboration between Missouri Business Alert and Startland News.