Philanthropic funding can help validate an idea and de-risk it. It helps take an idea that is high risk, and demonstrates that it has a successful value, growth, and impact hypothesis.
However, philanthropic funding is often insufficient to properly scale an intervention to address a significant number of those affected by a need. That is where one of the proposed 8 Engines of Growth in Social Impact comes in.
Ann Mei references, Kevin Starr’s work who sees two critical questions in determining the ability to scale:
- Who are the doers at scale?
- Who is the payer at scale?
The Doers may include: your organization, lots of nonprofits, lots of businesses, or the government.
The Payers may include: customers, government taxation, private philanthropy, and foreign aid. However, Ann Mei is skeptical that the last two payers can truly function at scale – as even the largest of foreign aid and philanthropy is often unable to meet needs at scale.
One should not wait until they are at the stage of scaling to determine if their hypothesis for growth is correct. This hypothesis must be tested earlier on: “Can and will the doer do? Can and will the payer pay?”.
For instance, if the growth hypothesis is that local businesses can replicate the solution, this should be tested to make sure its model is easy enough to replicate. If the payer hypothesis is that local governments will pay, this too should be validated. If the validation experiments fail, perhaps an alternative engine of growth is required, or perhaps an alternative intervention is needed.
8 Engines of Growth in Social Impact
These are engines that can take an idea that was proven successful, and scale it to the size it needed.
This summary does not include the advantages/disadvantages of each. See the book for further details.
1 – Market-driven: this approach works at scale because the customer and the funder can be the same person.
2 – Voluntary contributions: examples such as non-profit crowdfunding sites make it possible to scale voluntary contributions
3 – Cross subsidy: the profits from one area fund another need. Such as selling one version of the product at a higher price point in developed countries, and a lower price point a different product at developing countries. Or having the surgeries of higher-paying patients cover the cost of lower-paying patients.
4 – Replication: needs an easy and cheap solution that can be duplicated. Traditionally replication has meant ‘franchise’, but micro-franchising makes it possible to pre-package a single product to drive sales.
5 – Commoditization: increased manufacturing capacity drives down costs. By choosing to avoid proprietary standards in their design of a water purifier, PATH made it possible for any company that built cartilages and filters that fit the specifications to be able to sell their product.
6 – Government funding: is the largest spender in areas such as education and healthcare
7 – Government adoption: using existing government infrastructure may be the fastest way to scale an intervention. Such as the adoption of an in-school de-worming program makes it possible to treat children for under 50 cents and achieve benefits of more than 50x the program’s cost.
8 – Big Donors: often don’t work because large enough funds can’t be mobilized. However, the exception is when the intervention is relatively inexpensive and costs don’t increase with scaling reach. For instance, scaling many technology-based solutions (think Khan Academy).
Articles in this series:
- Lean Startup + Lean Impact: Combined Short Summary
- Why philanthropy hampers innovation
- Engines of growth in social impact (this article)
- Lean Impact: How to Innovate for Radically Greater Social Good (detailed summary)
Other articles you may like:
- The Lean Startup: Key themes from the book by Eric Ries
- Pair Together: Design Thinking, Lean Startup, & Agile
I highly recommend reading the full book Lean Impact: How to Innovate for Radically Greater Social Good, by Ann Mei Chang yourself.
Please note. The quotations used in this blogpost are jotted down while listening to the audio version of the book. They may be slightly inaccurate or accidentally missing. Please contact me with any revisions to the accuracy of these quotes and the original text.