|
Click here to view an introduction video clip to Heart
The context
In our current global financial, social and environmental crisis, it is imperative to create a capital structure that is capable of driving social change in a sustainable way. Giving billions away to charities in South Africa and Africa each year does not produce sustainable solutions. Handouts, however well-meaning, are most often a temporary reprieve for cash-strapped charities struggling for survival.
We acknowledge that there are many trusted and deserving organisations to support and that charitable contributions are an important driver of the social sector. At the bottom of the pyramid however, handouts create dependency and distortion. Of greater concern is that the capital available for grants and donations is only a drop in a rising ocean of need facing the African continent.
The crux of the problem is that charities have a capital barrier for grants and donations. As a result of this limited access to funding, the social sectors in Africa are plagued with under-paid, under-qualified staff. In most cases this leads to unsustainable and low quality service delivery despite the good intentions of the charitable organisations and their workers.
The pressing need for new and innovative solutions to social and environmental problems in Africa is made evident by the continuing struggle that millions of Africans face every day.
For example:
* 74.9% or 13 million children in South Africa live in poverty.
* South Africa has the sixth highest prevalence of HIV in the world, with 18.8% of the population estimated to be infected
(Aids Foundation, 2009).
* South Africa has more than 700 000 orphans (General Household Survey, 2007).
* South Africa records approximately 10 000 murders every six months (SAPS, 2007).
* South Africa has an unemployment rate of 21.9% (STATSSA, 2009).
* South Africa is among the top 15 of CO2 emitters in the world (HDR, 2008).
* In sub-Saharan Africa, more than 309 million people live off $1 a day (HDR, 2008), many seek asylum in South Africa.
To address these challenges, and many, many others, billions of Rands are given to charities each year.
In 2008/9:
* Corporate giving = R4.2 billion
* Private giving = R18 billion
* Government giving = R80 billion
* International aid = R6 billion
The challenges that confront our local population and environment are not exclusive to South Africa. Threats to the livelihood, dignity, and survival of people in need exist throughout the world. There is no dispute about the presence of such issues, but there is a constant debate about the most effective way to go about solving these problems. The great challenge faced by most NGOs and charitable organisations throughout the world is to find a way to generate the maximum impact possible with the very limited resources that are available to them.
The problem
The problem is twofold. On the one hand, Social Entrepreneurs are usually do-gooders who respond to human need. Driven by anti-suffering, they seldom have the resources, knowledge or experience to manage their businesses effectively.
General limitations include:
* Lack of know-how to start-up
* Limited access to capital
* Short runways
* Inadequate infrastructure
* Weak governance structures
* Excessively engaged in non value add activities (e.g. fundraising)
* Insufficient capital to afford competent management team or consulting services
* Inability to build capacity in employees through limited access to training
* Isolated and challenging work environments
On the other hand, Social Investors are growing tired of giving handouts to charity, and with an increasing sense of urgency they are looking for new ways to give. In this global state of crisis they want their funds to work harder, better, faster and smarter.
The challenges finding suitable social investment opportunities include:
* Lack of qualified deal flow
* Weak governance and accountability
* Small scale start-up Ventures with low growth potential
* Effort intensive activities of monitoring, evaluation and reporting
* Lack of scale
* Poor return on investment, if any at all
In response, Heart is well positioned as the nexus between Social Entrepreneurs needing financial and development support, and Investors seeking social and financial returns.
|