Open Letter to the Country Directors of USAID and DFID in Nepal: You have a big task ahead, promoting Social Innovation

                                                                                                                                                                                                      24^th of July 2013

                                                                                                                                                                                                              Kathmandu

To the attention of

Mr David Atteberry, Mission Director, USAID Nepal

Philip Smith, Acting Director, DFID Nepal Office

Dear Mr. Atteberry and Dear Mr. Smith,

Through this open letter, I would like to make the case for your agencies to take the lead in promoting new ways of aid for development, something that could kick off a wave of social innovation in Nepal.

USAID and DFID in the recent years, while focusing more and more on wealth creation to end poverty and inequality have embraced a bold and holistic reform of the way aid is delivered with a strong focus on results and impact.

I believe that there is a strong case for setting a launching pad of development innovation that goes well beyond traditional boundaries of traditional aid.

You represent nations with the most vibrant not for profit sectors all over the world and your respective governments have been investing considerable resources in pursuing an innovation agenda in the social sector.

Moreover the recent G8 Meeting, under UK Presidency, fully endorsed the concept of social innovation by setting up a specific Taskforce on Social Impact Investment.

The following proposals, if implemented, could create real added value in the way development sector in Nepal is managed, ensuring a wave of new ideas at the intersection between profit and not for profit.

Setting up a Social Innovation Fund

We need to ensure massive amount of money, also making best use of market based approach and a better use of philanthropic work to cultivate and scale up promising social ventures.

The creation of a Social Innovation Fund could offer a first response to these challenges. It would offer an incubation service for the best ideas from, both for profit but with a social purpose companies but also innovative not for profit organizations, with a potential to be real game-changers in uplifting people out of poverty, supporting interventions also in more traditional sectors like education and health.

The Fund, acting as active or angel investor with provision not only of seed funds but also of technical mentoring and coaching, will offer guidance and expertise in order to shape up powerful intuitions and prototype them on small scale.

Importantly the fund could foster synergies and partnership among different stakeholders, bringing together not for profit, corporate sectors and new community interest or social purposes companies. The example of  Chaudhary Group that already committed to set up a Social Business Fund is tremendously  inspiring. The Social Innovation Fund could compliment this effort and work in synergy with it.

National Award on Aid for Development

Because aid through grant is here to remain at least for a while, awarding the best impactful projects from NGOs and INGOs in different areas like education, health, livelihoods would give a strong message to non state actors. The applicants would be encouraged to share their best practices, generating a positive competition that will push up the current working standards. At the end of the day money is not a problem but only for the best ideas. Accountability and transparency would deserve special consideration in the criteria used to evaluate the proposals.

Executive leadership training for the brightest social leaders

Nepal boasts a large not for profit sector with cases of outstanding leadership. The most promising minds in the sector, also those coming from areas like social business and social entrepreneurship need to be supported and encouraged. Why do not offering them top notch exposure through a tailored made Fellowship Course on Management and Leadership to be delivered locally in executive format? Imagine if we could bring once every month some of the most prominent leaders of not for profit sectors in USA and UK in Nepal through video conference. The participants will have the opportunity to learn from best practices and they could be challenged, as part of the fellowship, to pilot some of new concepts in their own organizations. The mix of participants, from classical not for profit and social enterprises background, will generate a cross-pollination of insights and ideas.

Last but the least I would say that an ambitious social innovation agenda should also include a pilot on Payment by Results or Cash on Delivery. Enough evidence has been generated on the effectiveness of innovative funding mechanisms that incentive the achievements of results, ensuring a greater impact and ownership.

Sir Ronal Cohen, Chairman of Big Society Capital and Chair of Taskforce said “Social Impact Investment is a response to the urgent need to achieve innovation and scale in the way we tackle social issues. It seeks to harness entrepreneurship and capital markets in doing so.”

I would add that the traditional aid should not be for granted but its relevancy is at stake and its future will depend on a maximization of its effects through a mix of better accountability, transparency and greater focus on impact.

A new era for development cooperation has started with fusions and mixed approaches driven by innovation. Let’s ensure that USAID and DFID will be the leaders of this new phase and guide the change.