This section articulates a pathway for developing an SDG 6 market network in the Senegal River Basin (SRB). We describe this in terms of the necessary steps for implementation, which the consortium of authors and contributors to this report is committed to pursuing with SDC, if that is of interest, as well as with other development, corporate and philanthropic partners.

An immediate next step the consortium will take is to share and socialise the conceptual advances we have made over the course of this scoping process with the home institutions of individual contributors, notably UNICEF, as well as with the funders and partners of previous work that was leveraged in this scoping process, notably the Bill and Melinda Gates Foundation.

At the same time, we will use also the insights from this scoping process to inform on-going conversations with aligned donors, corporations, civil society organisations, and intergovernmental organisations, including DFAT, DGIS, GIZ, USAID, Ambev, Coca-Cola, Nike, UBS, IFRC, IUCN, GHL, GWP, SuSanA and the Toilet Board Coalition.

Before we outline the project plan, it is useful to make a distinction between the capital we seek to mobilise (further described in Section 2 below), and the funding required to create the prototype of the financial and IT infrastructure we have described in this report.

It is a highly catalytic use of the limited annual funds of, say, the WSH program of the Bill and Melinda Gates Foundation or SDC’s Global Program Water, to underwrite the necessary R&D and prototyping of this infrastructure. When implemented in a use case such as the SRB, it creates the financial products and legal and governance pathways to attract and deploy the trillions of private capital looking for investment opportunities. Another potential funder of the prototype is an organisation, such as Aqua 4 All, that is actively working on a financing mechanism for WASH solutions and needs as an example of the infrastructure described herein.

We outline a budget estimate to create a global SDG 6 market network in Section 4. It is informed by the SRB use case.

Project plan · 2

Sources of capital

There is a lot of capital from private and public sources that is potentially available for deployment through blue equity. The premise of our work is that we can tap the largest pool of it by creating outcome-based securities that attract private investments from the corporate and financial sectors.

2.1 Government

Total expenditures of the Bretton Woods institutions to address core global development issues hover currently around US$150bn per annum. However, as a function of the success of the post-world order in achieving greater longevity (thanks to better healthcare and longer life spans), Western Governments now have substantive unfunded liabilities between now and 2050. In the U.S., the best positioned of any G20 country, these are estimated at US$3 to US$9 trillion, with health liabilities potentially ten times these figures. This is a global phenomenon. It is also a question that has been posed by academics since the late eighties and, given its slow-burning long-term impacts, effectively ignored by policy makers.

In Japan, South Korea, Italy, Germany and eventually China (because of the one-child policy), the ratio of the population over 64 to the one 15-64 will grow from 10-30 retired to every 100 working to 60-70 retired for every 100 in work, all for the most part unfunded. Over the last two years in Europe with the migration crisis, OECD rules have allowed the cannibalisation of aid budgets. The same has happened in the U.S., where the Trump Administration has raised this to be crystallised in hearts and minds. The bottom line is that Government as the primary systems player will remain a key stakeholder but cannot provide the scale of capital we need. Even the traditional social impact bond faces long-term problems.

2.2 Philanthropy

Globally, foundations control around US$1 trillion in assets but less than 3% of their core assets are aligned with social purpose. Of the 5% they give away in the US to maintain their tax status, only approximately 5-10% is applied to international causes. A credible case can be made that after frictional costs, corruption and the system inefficiencies that the amount of capital actually reaching the front line is no more than that earned by the bankers, who make 1-2% on the management of the core funds of foundations.

The strategic opportunity, therefore, is to align the core funds of foundations (i.e. mission-related investment – MRI – of US$1 trillion) and to increase programme-related investments (PRI). PRI are investments foundations that are allowed to make investments from grants in some jurisdictions, including in the U.S., where this has been enshrined in law since 1969. Currently, MRI and PRI amount to at less than 5% of the possible allocations that could be made.

The related impact investing market has grown to US$75 billion globally, and is estimated to be growing at 16% annually. Much of it is closely aligned, or potentially aligned, with the SDGs.

2.3 Corporate & financial sectors

There is an estimated US$218 trillion of private capital available in global financial markets, making it by far the largest pool of capital to tap for creating market demand out of social need. Private corporations and financial service businesses, especially in the insurance industry, are also potential contingent payers. For example, beverage and consumer goods companies that need water to produce their products have a vested interested in clean water as well as in healthy employees in the places they operate.

Project plan · 3

Building the market network

The following sequence of activities lays out how we would design, fund, launch and manage an SDG 6 market network in the Senegal River Basin, as outlined in Section 7 of the report.

3.1 Planning & scoping

The immediate next phase of Project 1800 is an approximately six-months R&D and extended scoping phase. During this phase, we would undertake the following 4 major activities:

3.1.1 Formalise the consortium

Building on the outreach to aligned parties immediately following the publication of this report, and on the pre-existing relationships between the existing and contributing partners, we will formalise the roles and responsibilities of participating parties. In this phase, we will also choose the use-case that will inform the initial implementation of the SDG market network, and this will in no small part be driven by the interests of funders underwriting this phase. To the extent that SDC is moving into this next phase, its interests in a place like the SRB would drive the use-case and thus the composition of the Consortium.

3.1.2 Refine the metrics framework

The metrics framework described in Section 4 of the report works conceptually. We have identified some research and development work that is needed to estimate the costs, benefits and impacts required for the financial transactions contemplated for the blue equity.

Externalities at the country and / or river basin scale will have to be analysed. While the methodology for this exists, it has not yet been applied to WASH in Africa. This work also needs to be informed by the use case chosen.

Refining the metrics framework also entails ethnographic and local discovery work in the geographies of the use case to make sure we understand the communities’ needs and interests as well as the modalities for implementing the feedback mechanism. This element will require in-country field work. It will rely on established anthropological and rapid assessment methods for understanding local political, familial and economic relationships and contexts.

3.1.3 Scale the feedback mechanism

One of the most important areas of methodological refinement is the question of how to scale the community feedback mechanism. As noted previously, we are deliberately departing from the standard M&E practices in the development arena because they are not scalable. In the community feedback mechanism pioneered by Integrity Action, we have the kernel of a method that provides the real-time feedback from communities necessary for an outcome-based approach such as the one we are proposing. During this planning & scoping phase, we will investigate how to scale this approach to the tens of thousands of communities ultimately required. We have begun investigating methods using simple, voice-based surveys and a feedback mechanism administered by cell phone.

There are related questions of education, communication and engagement with and between citizens, communities as well as sectorial participants in the market network. Specifically, the need to develop culturally-appropriate messaging that can be delivered, at cost-effective scale, to remote and marginalised communities. We believe that technology is an essential ingredient in this process, given the vast cost of implementing on-the-ground programs driven by human facilitators. In short, the cost-efficiencies of robust content-delivery hardware come in at less than 10% of the cost of salaried workers over a similar period of time.

Additionally, in communities that do not have a reliable power and telecommunications infrastructure, there is a need for a centralised source of information and applications, plus an easy way to aggregate data from field reports. By using context-appropriate hardware solutions, we can begin to address the digital divide that today limits the possibilities for true citizen-centric solutions.

3.1.4 Integrate the legal structure with the distributed ledger

Implementing SDG market networks relies, at scale, on replacing expensive, tailored legal agreements to organise multi-party collaborations / investment structures with smart contracts that are stored on a distributed ledger. While we established that this is feasible conceptually, the actually integration and translation of the legal innovations and structures proposed here with a distributed ledger, such as Holochain, remains an item for exploration and refinement.

A central activity during this phase will be a multi-day design workshop involving the legal experts and the team from Holochain. In essence, the legal and governance structures described in Sections 5 and 6 define a list of requirements that need to inform the engineering of algorithms to track the contractual commitments, the contributions by individuals and organisations to outcomes, and the feedback loop that triggers contingent payments.

3.2 Set up the use case

The use-case will be chosen in the first stage (3.1) of the next phase. Assuming that SDC would wish to pursue with the Senegal River Basin, we would first need to understand what is already working in the SRB and what still needs to be done. The Swiss Embassy in Dakar could possibly introduce a qualified Swiss WASH expert based there to Project 1800 to support this step.

Then, we build the structure to support the scaling of the appropriate solutions to the identified challenges. This includes:

3.2.1 Carry out regional research

Researching and prioritising the interventions required in the SRB
Cataloguing the various actors across all sectors and functions
Cataloguing WASH solutions already being implemented
Reviewing WASH solutions that have been proven elsewhere

3.2.2 Establish baseline & measure outcomes

Predictive modelling of the total externalities: anticipate which interventions will resolve challenges
Tracking and articulation of sources of successful (solution) inputs and interventions, with attribution for eventual purposes of remuneration
All measurements tied to key performance indicators (KPIs)
Benchmark creation so as to set minimum performance expectations and thresholds around specific interventions (and the nature of their financing)
Examples: Measuring at the school level (using the methodologies of Integrity Action and Social Progress Index at the community level to track total externalities and outcomes) · Measuring outcomes, for example reverse migration back to the villages where interventions take place · Measuring community acceptance of the intervention: for example seeing demand for water kiosks going up, and kiosks being used by community leaders.

There are significant unknowns in this rubric, including:

Investor quality (for metrics): assessment of rigour in structuring, oversight and post-investment management of interventions undertaken by investors is an important part of ensuring objective data and metrics (alongside the subjective feedback loops) are credible.
Acceptance of interventions by community/population

3.2.3 Secure funding

To ensure a vibrant and robust market network that is focused on a set of niche interventions within a specific sector, it will be necessary to landscape and analyse where relevant investors and donors are concerned. This ecosystem will be naturally segmented along the traditional fault lines of ‘early stage’, small ticket funders as well as grantee to later stage, seeking funding, with diverse funding models.

This needs to be distinguished from larger ticket investors, whose positioning is more likely to make them a contingent (our “outcome”) payer in our model. Namely corporates that see an economic opportunity or the ability to address a cost which constrains or threatens their business; a government, who sees an economic, social or political issue to be resolved, or a philanthropist, who could align funds, e.g. through a donor advisor fund to save taxes, and then take a contingent liability based on tangible social outcomes. These contingent returns could be disbursed in tranches, thus allowing incentives to be dynamic.

It is already common practice for equity investors who invest into smaller social enterprises to disburse cash in a series of tranches against operational milestones. One could say that this is a simple approach that ‘rewards’ (just the management team, of course) based on outcomes (performance). This is not far from the concept we propose. The reward can take the form of simply triggering a subsequent tranche of money. Or it can translate as far as the valuation exercise of shareholders. The equity model also allows a more sophisticated way of managing the diverse incentives and financial requirements of different stakeholders.

This type of activity is typically deal-specific. However, this may be captured and shared along a chain or network of concerned parties towards understanding (a) the true cost of broader outcomes and (b) what constitutes a reasonable expectation for X or Y level of investment and risk. Performance on an absolute basis (i.e. digging three bore-wells in a span of X months for Y cost) is fine. However, few benchmarks exist that serve as a point of reference on relative performance for field level interventions, particularly when financed by a wide and diverse range of funders. When private capital is deployed bilaterally, most investment managers do not have the bandwidth to ascertain the ‘true cost’ or price of a particular intervention.

The emergence of a price discovery mechanism on the back of a blue equity structure is almost an incidental by-product. Participants in current structures are typically incentivized to blur or obscure their true operating costs. The outcome or reward for behaving in concert and with urgency and transparency thus not only benefits from the feedback loop from ‘citizens’ on the ground, it also yields previously hidden information on how much input was required to generate output and therefore, proven outcome.

Only thus can we begin to operate in a world where minimum expected baselines for performance are set, where those who work fastest and most efficiently may be rewarded by ‘sale’ of an outcome to the highest contingent paying bidder. In sum, we must:

Identify and landscape sources of funding: start-up funding (to create entities and technology; contract official development assistance, special purpose vehicles and Holochain providers) · contingent payers (payers who make a promise to pay if result or outcome is achieved), including communities, governments, corporates (who have a vested interest in, for example, healthier populations)
Secure start-up funding
On-board contingent payers

Likely, ‘priming the pump’ and working with grant-making philanthropists with reasonable risk appetites will constitute a first phase of this work. From within and across a number of impact finance organisations and networks, careful assessment and relationship management must be undertaken to engage with investors capable of seeing their role as ‘ecosystem funder’.

The final structure will be defined together with the legal team. However, as a general rule of thumb, the larger the scale of capital raised, the more we can apply risk management tools and sophistication. The larger scale and replication implicit in this proposal provides the opportunity to apply wider and more sophisticated financial tools to social issues.

3.2.4 Define governance

According to Section 6 of the report.

3.3 Implementation

This phase requires identifying and assembling already implicated and ready actors and innovations as well as engaging with and on-boarding key relationships. Thus, it can be ensured that collaborative interventions are tested, and if proven effective, scaled. This includes:

3.3.1 Catalysing ideas

Design a challenge mechanism to solicit ideas for outcome-based interventions.

Challenge mechanisms are useful to elicit early stage investment proposals from a wide ecosystem, particularly when it is nascent. They also provide the benefit of making a particular ‘campaign’ within a given issue more visible. Numerous formats exist, but it is worth noting that a challenge can provide its ‘finalists’ or ‘winners’ the opportunity not only to receive a grant or ‘prize’, but also the chance to benefit from longer-term technical and capacity assistance programming as well as direct mentoring. This, in turn, may be followed by a variety of blended financing opportunities. For example, in the case of the Artha Venture Challenge deployed in India for the last four years, up to 24 months of technical assistance is followed by a commitment to match additional funding from other investors, be it debt, grant, or peer equity. This venture challenge model has been adapted from the UK-based Big Venture Challenge operated by UnLtd. in various forms since 2002.

Organise inputs around KPIs to track for contingent payments.

3.3.2 Implementing and commercialising

To commercialise individual and collaborative interventions, e.g. Swiss Fresh Water and Access to Water, the question to be asked is how must technology, financial, and business support be organised to enable scaling? When considering this, it is important to note that BoP markets do not buy or invest in promises. This is proven by the relatively low market take-up of water kiosks compared to the high take-up of mobile phones. The value and service delivery of the latter is both tangible and immediate. We are dealing with the world’s most quality-focused, discerning consumers.

Examples of key actors that can play a collaborative role in scaling interventions: Access to Fresh Water / Access to Water Foundation · cewas — ecosystem builder, incubator · Other regionally impact-focused incubators and accelerators · Water.org and Aqua for All · Bill and Melinda Gates Foundation.

Note: payments to any entity providing inputs will be linked to key performance indicators (KPI).

3.3.3 Insurance

Insurance markets also can play a role in reducing risk and leveraging the core capital market offering of blue equity and its social impact by:

Micro-insurance to de-risk the engagement of a community in a WASH solution = an insurance payment scheme against a leasing arrangement;
Using insurance structures to de-risk a tranche of investment to change the credit risk profile of part or all of an investment. This can be from taking the volatility out of an investment to foreign exchange (forex) and interest rate risk, to create more effective blended value models;
Changing the risk and credit profile of local currency investments, allowing local capital markets (pension funds) to invest in their own sustainable infrastructure;
Using insurance investment frameworks as “wrappers” to create tax efficient frames for Investment in WASH products.

3.4 Replication

The third stage of deployment consists of getting all the checks, balances and influencing factors in place to foster the on-going success of interventions whose outputs and outcomes have been best received and absorbed by intended target client / citizen communities. Crucially, this stage will also set them up to be replicated at a similar (or larger) scale, targeting another region, issue, or both.

3.4.1 Convening

We envisage a technology platform capable of holding user profile, deal, solution and basic activity information as points of reference, coupled with in-person convening to foster collaboration and sharing. The team has a nearly 10-year track record of convening in-person / offline sessions within the social investment community on a monthly basis, focusing on various geographies and sectors.

3.4.2 Publishing

In addition to the convening activity mentioned above, storytelling and publishing data analytics and market intelligence are vital to invite new emergent businesses into the network (‘the eBay effect’).

The purpose of this is to inspire not only those who may wish to develop a greenfield idea, but also those whose existing enterprise solutions and pilot tests in other geographies (near or far) may be applicable and transposable to the SRB context. A case in point is the work of a major impact innovation network like Ashoka. Its approach is shifting slowly from individual ‘hero-preneurs’ to more collective, campaigned and strategic action where a number of individuals working on e.g. menstrual hygiene programmes are supported to access proven market solutions on a franchise basis.

3.4.3 Advocating

Advocacy is another vital component of this work to identify and push for regulatory and legislative changes to advance more collaborative and orchestrated approaches to large and complex societal problems.

For example, any corporate procurement activities or corporate social responsibility (CSR) programming touching on a particular sector are characterized by standards and protocols / processes. This may or may not be mirrored by minimum standards or information provision requirements set at the regulatory level that help all incorporated entities with, e.g. a national chamber of commerce, to be easily located, identifiable and verifiable. These types of inputs representing public administration and process are an integral part of the implementation plan.

3.5 Educating

Education runs throughout the entire process of building a market network. It begins with a preliminary set of tailored outreach initiatives to adapt to the local language(s) and jargon as well as to integrate main players. It also includes proactive engagement with local and municipal governments regarding potential benefits and outcomes, clear value addition vis-à-vis investors and contingent payers, who may or may not be already visible and active in the region, and peer-to-peer (P2P) education within and amongst community leaders.

At its most basic level, this is an obvious bridge-building and crossover point through which to engage with SDG 4, as it is not unusual for many awareness programs to be looking at using eager young children in school settings as the primary channel through which to reach community elders.

Project plan · 4

Project partners

We have identified a number of potential project partners, whom we profile here in the interest of exposition. It should be noted, however, that with the exception of the four Project Partners listed immediately below, representing the authors of this report, the entities mentioned in the Project Plan are not confirmed partnerships, and are included for the purpose of demonstrating the breadth of aligned individuals, organisations and networks that we are already working with in the implementation of separate but aligned projects in WASH.

Artha Networks Inc., a program associated with Rianta Capital Zurich, is designed to pursue the goals of realising sustainable development in India and beyond. The word ‘artha’ is a Sanskrit term that refers to ‘purpose’, ‘prosperity’ and the ‘pursuit of wealth’. Rianta Capital Zurich is Artha’s main investor and de facto ‘parent’. It is a Zurich-based separate entity and is comprised of a team with a focus on appraising direct private equity investment opportunities for their clients. The clients of Rianta Capital are a range of offshore entities from which the Singh family may benefit; the head of the family is Tom Singh, who is founder of a well-known UK retail business called New Look.

The objective of the Artha program and related investment activities is to apply the rigor of commercial thinking to the challenges of development throughout India, particularly in the context of marginalized rural communities and villages. Artha strives to support those who are validating the market niche for providing important goods and services to the ‘base of the pyramid’, with an emphasis on those who work the land and who are producers.

Sphaera is a social benefit technology company and advisory firm created to address the question of how we can accelerate the pace of social change in the face of climate change and other urgent challenges of the 21st century. Centrally concerned with the creation of infrastructure that advances solutions from idea stage to implementation at scale, Sphaera collaborates with a number of aligned technology companies, including Artha Networks, icoloi, and Induct to build a modular, open, global architecture for facilitating the flow of innovations and capital along the social value chain. Particularly pertinent to this project, Artha started as a proprietary deal sourcing and diligence platform for impact investments in social enterprises in India and parts of Asia, and has since been white-labelled for use by the Inter-American Development Bank, and we are now working on a solution sourcing and investing platform for a network of European foundations.

Induct is currently developing an innovation ecosystem for the government of Norway, with a view of sourcing those across networks larger than the Induct platform.

Strategos is a boutique consulting practice founded in 1997 and based in Lausanne, Switzerland. Its mission is to help its clients identify and work on fundamental business, strategy and/or organisational questions with the aim to build enabling and sustainable solutions. Through eleven partners, it provides a range of services such as strategy consulting, complex project management, organisational development, participatory leadership & dialogue and coaching. Among its clients are public services of the Swiss Confederation, various cantonal and city administrations, corporations such as Conforama or Migros, local, national and international foundations and associations (cinfo, YWCA, UICC) as well as SMEs and start-ups or the Lausanne and Geneva teaching hospitals (CHUV and HUG) and Universities (UNIL, UNIGE, EPFL).

Total Impact Advisers is part of Total Impact Capital. It specialises in identifying sourcing and developing private investment opportunities that are socially and financially attractive. We see global problems as win-win global opportunities for the social sector and the private sector with the need to apply “market-based solutions for philanthropy” — a now much used term that we actually coined in a joint report in 2005 with UBS. In essence, we seek to create market demand for social need. Looking at models beyond the classic VC-PE models with a focus on outcome models, we seek to design innovative, sustainable financial solutions and strategies for governments, corporates and non-profits to support their missions. This has included the conceptualisation of the Social Impact Bond, one of the first blended value models, the DB / Ashoka / IAPB Eye Fund as well as working with former regulators to change (and pass into law) the legal frameworks to stimulate social impact investment. Our clients are major foundations, UN organisations, social entrepreneurs and corporates.

Thomas W. Brunner is a partner in LeapFrog Investments, a leading manager of impact investment funds supporting innovative providers of financial services and health care to low income people in Asia and Africa. From LeapFrog’s launch in 2009 through 2016, he served as its general counsel. Previously, Tom was a Partner at the Washington, DC law firm of Wiley Rein where he founded and chaired the firm’s insurance practice. He was the co-chair of the Washington Lawyers’ Committee for Civil Rights and Urban Affairs, served for many years on its Board and received its Wiley Branton Award for Civil Rights Litigation. He coordinates impact investment projects for International Senior Lawyers Project.

Global Geneva is a print and online publication stressing quality journalism and exploring critically themes represented by the international Geneva or Switzerland hub. These range from humanitarian response, conservation and disaster prevention to human rights, world trade and conflict mediation. Almost all are linked in one way or another to the 17 Sustainable Development Goals (SDGs) of the UN promoted by the Global Compact Network.

Holochain is a global team of meta-currency and crypto-currency designers that have been working on the leading edge of digital currencies for over twenty years. Co-founded by Art Brock and Eric Harris-Braun — global thought leaders in meta-currency design — the Holochain team are developing distributed ledgering technologies that support truly representative governance, equitable wealth distribution, and accessibility of information, especially for those most frequently overlooked by the design of 21st century technologies.

Guy Hutton is a development economist, currently serving as a Senior Advisor for WASH at UNICEF, based in New York. He has provided vision to the WASH sector since his publications in the early 2000s on the costs and benefits of water and sanitation interventions, gaining consensus on the methodologies for evaluating WASH interventions across major agencies such as the World Bank, WHO and UNICEF. He has previously held positions at the University of London, the University of Basel and the World Bank. He has lead country implementation projects, international research studies and global advocacy initiatives in the fields of water supply and sanitation, health, air pollution and climate change. He currently provides leadership for several global initiatives in the water and sanitation sector, including WASH costing and economics, the WHO/UNICEF Joint Monitoring Programme, WASH public financing for children (PF4C), the WASH bottleneck analysis tool, and WASH in the workplace. He is the author of 40 peer-reviewed journal articles, and over 100 published reports, manuals, guidelines, book chapters, and donor policy papers in the field of international development; and contributing author to flagship reports such as the World Health Report, Human Development Report, Intergovernmental Panel on Climate Change (IPCC), Commission on Sustainable Development, Disease Control Priorities Project, and the “Copenhagen Consensus” on human development priorities.

Integrity Action enables citizens to improve the delivery of essential services, infrastructure projects and humanitarian aid in some of the world’s most challenging environments. This is achieved through the promotion of integrity. Rather than top-down finger pointing, the bottom-up promotion of integrity creates an environment where corruption and mismanagement are simply not tolerated. Integrity Action addresses this challenge with its own unique mix of knowledge, tools and approaches. It helps everyday citizens to monitor projects and services in their own community; it provides tech tools to help them post their findings openly and in real time; and it enables these citizen monitors to work with those responsible and constructively solve the problems they find. Integrity Action’s work has resulted in a range of outcomes, from essential repairs to schools and water infrastructure, to improved construction of roads and health facilities, to faster and more equitable earthquake relief. To date the organisation has worked with just under ten thousand of community monitors across more than a dozen countries in Africa, Asia and the Middle East who between them have monitored over US$1 billion worth of projects and services — including in the WASH sector.

William C. (Bill) Kelly is Founder, former President and now Strategic Advisor to Stewards of Affordable Housing for the Future, an organisation committed to dignity, innovation and excellence in affordable housing. Previously he was a partner in the global law firm of Latham & Watkins. He is also a Director of Ashoka, the Low Income Investment Fund, the International Senior Lawyers Project, and the Governance Institute. Mr Kelly was a law clerk for U. S. Supreme Court Justice Lewis F. Powell, Jr.

Cantwell F. Muckenfuss III is a retired partner in the D.C. office of Gibson Dunn focusing on regulation and public policy related to financial institutions. Previously, Mr Muckenfuss was Senior Deputy Comptroller of the Currency for Policy and Counsel to the Chairman of the Federal Deposit Insurance Corporation. Mr Muckenfuss is a founder and Chairman of the Board of City First Bank of D.C., a community development bank in Washington, and Chairman of City First Enterprises, Inc., the non-profit parent of City First Bank. He is an Operating Partner of Vista Capital Advisors, a member of the Board of Ethos Lending LLC and the advisory boards of several financial technology start-ups. He is a Clinical Visiting Lecturer in Law at Yale Law School.

Marc Owens is a partner in the Washington, DC, office of the law firm, Loeb & Loeb, LLP, where he specializes in federal tax issues relating to tax-exempt organisations, including charities and issue advocacy groups. Prior to joining Loeb & Loeb, he spent 15 years in private practice and 25 years with the US Internal Revenue Service, including serving as Director of the Exempt Organizations Division from 1990 until 2000. As Director of the Exempt Organizations Division, he was responsible for the design and implementation of federal tax rulings and enforcement programs for charities and other tax-exempt organisations. He is a member of the District of Columbia and Florida Bars and he is a member of the Board of Directors of the Pemsel Case Foundation, a Canadian foundation focusing on the development of the law of charity. He is also co-chair of the Subcommittee on Audits and Appeals of the Exempt Organizations Committee of the American Bar Association Tax Section. Chambers USA ranked him as a “Top Lawyer” in 2009-2012; he is also named to “Best Lawyers of America” for non-profit /charities law and tax law for 2008-2018. Thomson Reuters identified him as a “Washington, DC Super Lawyer” in 2012-2017; and The Legal 500 US named him as a “Leading Lawyer” in non-profit and tax-exempt organisations.

Social Progress Imperative consists of partner organisations in business, government and civil society that use the Social Progress Index to improve human wellbeing. Born out of the World Economic Forum, it creates a framework for social development in the same way GNP measures economic development. The Social Progress Imperative, through regional partnerships, promotes the formation of local networks which apply the Social Progress Index within countries or regions to guide social investments. Local networks operate at a national scale or focus on specific areas within a country. This provides a unique opportunity for social innovators to lead social progress in communities they know best.

UNICEF has country offices working on WASH in almost all sub-Saharan countries, and depending on the context and demand from government, it deploys a mixture of programming approaches to achieve its aim of bringing affordable, quality WASH services to poor people, in particular children and women. Through bilateral funding (DFID, DGIS, SIDA) UNICEF is implementing WASH projects targeting the poor across West Africa. These projects include WASH monitoring, sustainability, financing and knowledge management as major areas of focus. In addition, UNICEF is the co-lead or the lead development partner in many countries, and is a relied on partner to the governments for its convening power and its know-how.

Project plan · 5

Timeline and budget

5.1 Timeline

We believe that a fully functional SDG 6 market network could be in operation in the SRB or another geographic or sectorial use case within 24 months.

Appendix L summarises an indicative work plan to that end, covering a 6-month prototyping phase, during which some essential methodological issues need to be resolved and baseline data collected.

The output of that phase would be (i) a formalised funder consortium co-creating the financial and IT infrastructure of the market network, (ii) a baseline of estimates for a range of WASH indicators that are actionable in terms of investment transactions, (iii) legally compliant prototypes of both a financial vehicle and the distributed IT infrastructure for aggregating solutions, measuring impact and feedback, and organising multiple stakeholders, and (iv) a demonstration of how the market network is beginning to mobilise these stakeholders and their capital.

Over the subsequent 18 months, we will then iterate on the critical requirements for the legal, financial and technological mechanisms to support the market network, both in analogue and digital forms.

5.2 Budget

While creating an SDG 6 market network is a complex task, the necessary legal, technical and administrative work is well understood. It can be scoped with some degree of accuracy.

To build the overall market network infrastructure will require approximately US$10 million over 24 months, not including the capital raised into the special purpose vehicle(s) for specific use cases like the SRB. Table 6 presents a summary budget.

Tasks

Monthly rate

FTE

SDG 6 market network (24 months)

SDC (6 months)

Notes

Project management

$10,000

$240,000

$30,000

Stakeholder management

$15,000

$360,000

$90,000

Product management

$10,000

$240,000

$10,000

Technology management

$10,000

$240,000

$10,000

Engineering

$10,000

$960,000

$40,000

UX Design

$7,000

$168,000

$7,000

Financial engineering

$15,000

$360,000

$90,000

Distributed ledger design

$10,000

$960,000

$10,000

Strategy

$15,000

$720,000

$30,000

Legal

$20,000

$1,920,000

Metrics

$4,000

$96,000

$76,500

Benefits (33% on salaries)

$41,580

$2,067,120

Consultants — metrics in 3 countries

$157,500

—

Consultants — service fees for IA & SPI to scale their methodologies

$60,000

Travel

$5,000

$120,000

$10,000

Conferences & meetings

$100,000

$75,000

Direct total

$172,580

$8,708,620

$538,500

Admin o/h (15%)

$25,887

$1,306,293

$80,775

Grand total

$198,467

$10,014,913

$619,275

Table 6 — Summary budget

This budget assumes the following:

The project manager is shared 50:50 with an aligned SDG 6 use case such as the Bill and Melinda Gates Foundation.
There is a full-time stakeholder manager and coordinator for the SDC use case, including curating potential investors into the eventual special purpose vehicle.
One month of a product manager to integrate what is built for SDC with the adjacent use case(s)
One month of a technology lead / CTO to ensure the same
One month of engineering talent to build a prototype
One month of user experience (UX) design
Full-time support for financial strategy, product design and engineering
Honoraria for distributed ledger experts to attend workshops
One month each of Artha and Sphaera team on systems design
Legal work continued to be pro bono in this phase
Field and analytical work for deriving baseline estimates in one country
Rates are inclusive of taxes & benefits
Honoraria to Integrity Action, SPI and others for mindshare on refining metrics
Core team travel to workshops and for outreach activities
Three in-person meetings of the consortium, incl. travel and lodging for 10, at 25K per meeting
Standard 15% rate for overheard and administration

Part III

Appendices

Appendix A

Abbreviations & acronyms

API — Application programming interface

A2W — Access to Water Foundation

BoP — Base of the pyramid

DAF — Donor advised fund

ETF — Exchange-traded fund

FMCG — Fast-moving consumer goods

GAHI — Global Alliance for Humanitarian Innovation

GAVI — Global Alliance for Vaccines and Immunisations

GWP — Global Water Partnership

HNWI — High net worth individual

IRR — Internal rate of return

LLC — Limited liability company

LLP — Limited liability partnership

MHM — Menstrual hygiene management

WSP — World Bank Water and Sanitation Program

MRI — Mission-related investment

OMVS — Organisation pour la Mise en Valeur du fleuve Sénégal / Senegal River Basin Development Authority

PE — Private equity

R&D — Research and development

SDC — Swiss Agency for Development and Cooperation

SDE — Sénégalaise des Eaux

SDG — Sustainable Development Goal

SIB — Social Impact Bond

SPI — Social Progress Index

SRB — Senegal River Basin

UNICEF — United Nations Children’s Fund

UX — User experience

VC — Venture capital

WHO — World Health Organisation

WSSCC — Water Supply and Sanitation Collaborative Council

Appendix B

Glossary

Terms related to the final product

Open architecture framework — A type of system architecture that is designed to make adding, upgrading and swapping components easy

Systems architecture

Market network — As with below (SDG 6 market network), but for any subject.

Multi-sided market network — The generic description of what we are building: multi-sided because it enables transactions and interactions between more than two sides of a market (innovators, investors, implementers, donors, technical experts, citizens, etc.)

SDG 6 market network — A global ecosystem that (1) facilitates the transactions of WASH solutions; (2) binds together the global community of WASH practitioners, experts and investors and (3) serves as a workflow engine that facilitates collaboration, innovation, measurement, aggregation and financing of solutions.

Terms related to the co-creation process

Ecosystem — The interaction of stakeholders in a (bounded) economic or social system

Platform — A platform is a combination of a community of users, interacting with each other on some technology layer, and the data these interactions generate. The challenge is that even a static communications website is a “platform”, and the term is also widely used to mean voice or policy position.

Resilient — A system, organisation or person that is robust despite facing abnormal conditions and that is capable of rapid recovery

Systems approach — An approach that recognises that to solve e.g. a social problem requires multiple stakeholders

Use case — A specific example that informs the development of the global infrastructure by offering up ‘on the ground’ experience, challenges and general data

Technology related terms

Agile — The values and principles of software development, under which requirements and solutions evolve through the collaborative effort of cross functional teams

Application user interface (API) — The means by which separate databases communicate

Blockchain — An open, distributed ledger that allows transactions, data and more to travel between individuals without the use of a centralized authority

Bi-directional APIs — Application Programming Interface (API) that allows integration between 2 or more platforms. Bi-directional APIs allow data to flow in all directions; creating and updating in any system that has been integrated

Customisation — The ability of organisations to apply solutions made by other organisations to its own market or clients, mixing and matching to fit the context

Data classification — The process of organising data into categories that can then be easily shared across platforms. For example, identifying what are individual, organisational and network data so that it shows up the same way on each platform

Data standardisation / normalisation — The process of creating standard terms that can then be understood no matter the context. For example; standardising the definition of the word ‘poverty’

Distributed ledgers — A consensus of replicated, shared, and synchronized digital data; geographically spread across multiple sites, countries or institutions. There is no central administrator or centralized data storage.

Holochain — A next-generation meta-currency that allows many-to-many transactions and sharing; nested smart contracts and other improvements on blockchain, while also needing less energy for computing

Personalisation — The ability to present one’s integrated solutions (see customisation) through one’s own brand or compliance lens. Combining personalisation and customisation means that one can co-create solutions and avoid reinventing the wheel, while still retaining control over one’s brand, compliance and positioning.

Smart contract — Self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements within exist across a distributed ledger.

Finance related terms

Asset class — A group of securities that exhibits similar characteristics and that behaves similarly in the marketplace. Often, the same laws and regulations apply to the group. Examples: equities (or stocks), fixed income (or bonds), cash equivalents (or money market instruments), real estate, commodities

Blue equity — Blue equity is the proposal to create a tradable equity that reflects the performance of a social outcome. As a standard equity, it would be fungible and tradable, and be equal to (pari passu) any other equity.

Convertible — Traditionally, a debt security that would convert into equity at a specified price and time

Exchange-traded fund (ETF) — A fund with a range of investable companies / participants, where the fund reflects the performance of those constituent parts. The fund trades on a normal exchange. Currently, ETFs are one of the fastest growing investment products providing asset diversification around unique asset classes.

Externality — In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.

Financial product — An instrument that is connected with the way in which money is saved, invested, managed or used. It is issued by a bank, financial institution, stock broker, insurance provider, credit card agency or government-sponsored entity. Examples: bank account, credit card, insurance, equity, bond, exchange-traded fund

Investment class — Same as asset class

Liquid yield option notes (LYONS) — A form of convertible that trades both as bonds but also the performance of an underlying equity

Outcomes-based financing — Financing mechanisms that see end-funding triggered when the systemic outcomes are met, e.g. how many children die in a region. A process that usually means that diverse stakeholders work together. As opposed to an Output mechanism that looks at funding a bilateral intervention and then measuring that, e.g. build a hospital and then measure the impact

Principal — (1) A sum of money or capital which can earn interest. (2) The owner of a firm or other asset(s) who assigns the management of the firm or asset(s) to an agent (who acts on behalf of the principal)

Private equity (PE) — Private equity is a non-publicly traded source of capital from investors who seek to invest or acquire equity ownership in a company. A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor. Each of these categories of investors has its own set of goals, preferences and investment strategies. However, all provide working capital to a target company to nurture expansion, new-product development or restructuring of the company’s operations, management or ownership

Private placement — A private placement is a funding round of securities that are sold to a small number of chosen investors and not through a public offering in the stock market.

Programme related investment (PRI) — Passed in 1969 by the U.S. Congress, PRI are investments made by a foundation in a for profit security with a social purpose. Such investments count towards the 5% the foundation has to allocate to retain its tax benefits of being a foundation. There are a number of constraints, including that the investment has to provide below market returns at the outset. The PRI rules were revised in the USA from 2012 to 2016. They now reflect the changes that would enable blue equity. In other jurisdictions, a similar process can be achieved by contract law.

Quasi-equity — A synthetic security created by financial engineering. It creates an equity-like structure around a defined issue, e.g. WASH.

Royalty — A payment to an author or composer for each copy of a work sold or to an inventor for each item sold under a patent

Security — An instrument of investment that takes the form of a document (such as a stock certificate or bond) that provides evidence of its ownership

Tax wrapper — A way to structure an asset class so that is saving taxes (‘tax efficiency’). Examples: pension fund, foundation

Venture capital (VC) — A type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are expected to have a high growth potential.

Other terms

C-Corp — A standard corporate framework in the U.S.

Appendix C

List of tables, figures and boxes

Tables

Table 1: Sustainable Development Goal Nr 6 — key targets and indicators
Table 2: Work streams and their participants
Table 3: Building blocks of social equity
Table 4: Different types and roles of stakeholders
Table 5: Methodology to implement a market network
Table 6: Summary budget

Figures

Figure 1: Achieving the SDGs requires old and new sources of financing
Figure 2: Every day, 1800 children die from diseases caused by poor WASH
Figure 3: Map of the Senegal River Basin
Figure 4: Ten design principles inform the work of Project 1800
Figure 5: A citizen-centric model for creating an SDG 6 market network
Figure 6: Data-driven design of interventions and tracking of outcomes
Figure 7: Sample structure for a regional or sectorial sponsored fund

Boxes

Box 1: Design thinking
Box 2: Distributed ledger
Box 3: Design rationale

Appendix D

The Senegal River Basin

Environment

The basin has three distinct parts: the upper, mountainous basin; the valley; and the delta, a source of biological diversity and wetlands.

Most of the SRB has a sub-Saharan desert climate, which has been aggravated by more or less long periods of drought during the 1970s. Seasonal temperatures vary extensively.

Politics

Eyeballing the maps of administrative units, the following estimate emerges of jurisdictions in the SRB. To simplify, we have assumed that departments = prefectures and communes = sub-prefectures. A question mark indicates administrative units that may or may not be in the watershed, or unknown numbers.

Country

Regions

Departments

Communes

Rural districts

Senegal

Saint-Louis

Dagana

Podor

Saint-Louis

Matam

Kanel

Matam

Ranérou Ferlo

Louga?

Kébémer

Linguère

Louga

Mauritania

Assaba

Aftout · Boundeid · Guerou · Kankossa · Kiffa

1 (Guerou), 1 (Kiffa), rest ?

Brakna

Boghe · Bababe · M’Bagne · Aleg? · Magta-Lahjar

1 (Boghe), 1 (Aleg), rest ?

Gorgol

Kaedi · M’Bout · Maghama · Monguel

Guidimaka

Ould Yenge · Sélibaby

Hodh El Gharbi

Kobenni · Tintane · Ayoun el Atrous · Tamchekket

Trarza

Keur Massene · Rosso · R’Kiz

Mali

Kayes

Bafoulabé

Kéniéba

Kita

Diéma

Nioro

Yélimané

Koulikoro

106

Guinea

Labé

5 prefectures

53 sub-prefectures

Kankan

5 prefectures

57 sub-prefectures

Total

384

78+

WASH landscape

Foundation funding does not seem to have focused on WASH from 2010 to 2015 according to SDG PP (although their results are very high level and mostly focused on U.S. foundations).

The range of players, though not fully captured in the above table, does signal the potential of a blue equity structure to be applied in the context, as the SRB ecosystem is rich with programmatic activity. There are many international organisations whose footprints and relationships may help to leverage philanthropy, venture philanthropy and impact investment.

Unedited notes

Mauritania. “The local administration is adopted from French local administration framework with a Ministry of Internal Control governing the local bodies. The original administration was held by governors of each district, but after the municipal elections in 1994, the powers have been decentralized from the district bodies. Mauritania has been divided into 13 wilayas (regions), including the Nouakchott Capital District. The smallest administrative division in the country is the commune and the country has 216 of them. A group of communes form a moughataa (department) and the group of moughataa form a district. There are total of 53 moughataa for the 13 districts in the country. The executive power of the district is vested on a district chief, while it is on hakem for moughataa. Out of the 216 communes, 53 classified as urban and rest 163 are rural. The communes are responsible for overseeing and coordinating development activities and are financed by the state. The local governments have their own legal jurisdiction, financial autonomy, an annual budget, staff, and an office.”

Who is on the ground? Senegal

L’ETAT définit la politique globale du secteur.
La SONES (Société Nationale des Eaux du Sénégal) est chargée de la gestion du patrimoine, la maîtrise d’ouvrage des travaux de renouvellement et d’extension de l’infrastructure, le contrôle de la qualité de l’exploitation.
La SDE (Sénégalaise des Eaux), société privée, est chargée de l’exploitation [de l’eau en milieu urbain]. Elle a pris service le 23 avril 1996. Elle est lié à l’Etat du Sénégal par un contrat d’affermage et avec la SONES par un contrat de performances.
L’ONAS (Office National de l’Assainissement) est chargé de l’exploitation de l’assainissement.

The PLAN SENEGAL EMERGENT — Plan d’Actions Prioritaires 2014-2018 describes the strategic and sectoral priorities as well as action lines of the Senegalese government during the period 2014-2018. Two tables in the document might be of interest to the Metrics team: an evaluation grid to determine priorities for action (“en fonction de leur apport probable, essentiellement sur la croissance économique et le développement humain durable”), and criteria of choice for public private partnerships.

Water and sanitation are mentioned as follows. Les principaux projets et programmes inscrits dans le gap de financement du volet public d’un montant de 2 361 milliards de FCFA montrent la prépondérance des six secteurs suivants: … l’eau potable et de l’assainissement pour 251,6 milliards de FCFA, soit 10,7%; avec le PEPAM pour la résorption de son gap de financement ainsi que l’assainissement rural et des villes [5th position, after education and training, before health] …

Le volet PPP du PAP, d’un montant de 1587 milliards de FCFA concerne les secteurs suivants: … l’eau potable et l’assainissement: 40 milliards de FCFA avec la réalisation d’une usine de dessalement de l’eau de mer …

The government has 3 strategic axes: (1) Transformation structurelle de l’économie et croissance, frs CFA bn 6,439,266 (66.5%); (2) Capital humain, Protection sociale et Développement durable, frs CFA bn 2,520,487 (26.0%); (3) Gouvernance, Institutions, Paix et sécurité, frs CFA bn 725,972 (7.5%). WASH is considered part of axe 2, capital humain, la protection sociale et le développement durable.

Appendix E

Design principles

Citizen-centred

Citizen-centred design means designing for the needs of the individual participants and recognizing their sovereignty and agency. By placing the human individual at the centre of the design experience, we ensure the design of a system that transcends organisational and political boundaries.

Equitable

All participation in the framework must be appropriately recognised, attributed, and valued, with participation in the governance of the framework in situ commensurate with one’s level of experience, investment, and/or risk.

Agile

We are not going to get this perfectly right before we begin. Being agile means focusing on the development of minimum viable agreements and a minimum viable product, and iterating forward on the basis of user feedback.

Distributed

The centralisation of data is one of the primary causes of dysfunction within this market. We favour a decentralised approach to both data sharing and platform interactions utilising distributed ledger technologies to validate value creation.

Persistent

Network participants should be able to interact with the network regardless of physical or digital location, technology, bandwidth or other factors unique to their context. Further, they should be able to interact meaningfully with the entire system from any of the platforms involved.

Modular

By developing a framework comprised of multiple disparate entities, the components must be designed to work together, or alone, with equal effectiveness. This also minimises risk by permitting modules to be swapped out as required.

Scalable

Most ‘development’ technology platforms are designed for use in high-bandwidth, high-computing power environments, with reliable network and power access. This excludes many citizens from actively participating in, and benefiting from, the framework. For the framework to be scalable it has to work in low bandwidth settings, and allow for asynchronous operation.

Interoperable

The platform, and its data, must be interoperable with all other adjacent and overlapping platforms and databases. This requires data protocols and standards, including universal taxonomies, as well as the design of application programming interfaces (API) as a functional requirement.

Measurable

The system must be designed in such a way that data flows are quantifiable, supporting better sense-making, value-recognition and capital flow.

Investable

Monetary value must be able to be assigned to the value created within the framework. This is the only way in which the necessary level of financial capital can be brought to bear on wicked problems.

Appendix H

Immersion workshop participants

Jacqueline Barendse
WASTE
Managing Director & Senior Business Adviser and Coordinator of the Solid Waste Group · Broad range of financing and project expertise (access to finance, microfinance, SME development, infrastructural projects, corporate financing, guarantee and investment funding, development finance, private sector development programmes, public private partnerships) · Finance and business development for micro- to large enterprises in different sectors (industry, ICT, financial sector, infrastructure) · Product and business development manager for Philips Electronics · Investment manager, ING Bank

Cameron Burgess
Sphaera Solutions · Uncompromise
Experienced impact entrepreneur and commercialisation strategist, with more than 20 years of experience at the intersection of social technology and social change. Cameron has worked globally across more than 30 market segments from social enterprise, civil society, green goods, fintech, cleantec and renewable energy.

Renaud de Watteville
Swiss Fresh Water · Access to Water Foundation
CEO & Founder SFW · Founder, Access To Water Foundation · Co-Founder, Dream Boxes and Founder, Swiss Mate (event organiser, incl. Freestyle.ch) · Delegate for sports, Expo.02 · Professional pilot

Badara Diom
Djirnda rural community · SENOP · Access to Water Foundation
Mayor of the Djirnda rural community (youngest mayor ever elected in Senegal), General Manager, SENOP Ltd & Senegal Representative, Access to Water Foundation · President of the regional association of rural community presidents of Senegal from 2009–2014 · President of the Djirnda rural community from 2002–14

Sjef Ernes
Aqua for All
Managing Director and CEO · Former Managing Director, Municipal Water Company, Eindhoven · Business Development Manager and CEO for a private company in the industrial water sector · Lived for five years in rural areas of Mozambique working for the Ministry of Agriculture and contributing to the development of irrigation systems and infrastructure for access to drinking water · Consultant for UNEP and the Water Education Institute

Linzi Fidelin
Sphaera Solutions
Key Accounts and Training Lead · Facilitator · Global development veteran · 10 years working in 18+ countries · Consultant for Care, WFP, BASF etc. · Specialised in organisational learning, collaborative technologies, Communities of Practice, research, narrative & storytelling, information management, workshop facilitation

Fredrik Galtung
Integrity Action
President and co-founder · World-renowned expert in measurements and metrics pertaining to corruption, fraud and organisational integrity · Founding staff member and Head of Research of Transparency International · Products: Development Check, Bribe Payers Index, Global Corruption Barometer (with Gallup International) · Founder of Integrity Education Network · Lecturer · Ashoka Fellow

Edward (Ed) Girardet
Global Geneva magazine
Editor, Global Geneva magazine · Editor, Le News · Reporter for The Christian Science Monitor, US News and World Report and the PBS MacNeil-Lehrer NewsHour · Regarded as one of the most informed international journalists on Afghanistan and humanitarian media issues · Author of several books, including Killing the Cranes

Michael Green
Social Progress Imperative
CEO · Economist · Co-author of Philanthrocapitalism: How Giving Can Save the World and The Road from Ruin: A New Capitalism for a Big Society · Senior official in the U.K. Government’s Department for International Development, Economics lecturer at Warsaw University in Poland · Named one of “The 100 Most Connected Men in Britain” by GQ Magazine and one of the NonProfit Times’s “Power & Influence Top 50” in 2016

Johannes Heeb
seecon · cewas
Co-founder & Chairman of the executive board · Managing Director, cewas — International Centre for Water Management Services · Expert in regional development, sustainable resource management and ecological engineering · Board member, Tropenhaus Wolhusen and Tropenhaus Frutigen · Assistant director, regiosuisse · Co-founder Centre for Applied Ecology, International Ecological Engineering Society (IEES), Centre for Ecological Engineering Tartu (CEET) · Lecturer at the University of Basel and the Lucerne University of Applied Sciences and Arts · Member of the cantonal parliament of Canton Lucerne (1987–1995)

Guy Hutton
UNICEF
Senior Advisor · Development Economist · University of London, University of Basel, World Bank · Leader of country implementation projects, international research studies and global advocacy initiatives in the fields of water, sanitation, health, air pollution and climate change · Played a leading role in the global “economics of sanitation initiative” and global results monitoring for the World Bank; the process to select global water, sanitation and hygiene (WASH) targets and indicators after 2015 for the Joint Monitoring Program (World Health Organisation and UNICEF); the review of indicators to monitor affordability of WASH services globally (UN Office of the High Commissioner for Human Rights), global and country economic briefings for the ‘high-level meetings’ (Sanitation and Water for All partnership), the World Bank’s global SDG WASH costing study, WASH chapter of 3rd edition of Disease Control Priorities and many more

William (Bill) Kelly
Retired partner, Latham & Watkins
Retired Partner · Board Member, Ashoka · Former President, Stewards for Affordable Housing · Member of the Bar of the District of Columbia · Director, Ashoka Innovators for the Public, the Governance Institute and the Washington Legal Clinic for the Homeless · Member of the Elderly Housing Coalition and the D.C. Bar’s Community Economic Development Pro Bono Project · Executive Assistant to the Secretary of the United States Department of Housing and Urban Development

Pierre Kistler
Swiss Agency for Development and Cooperation (SDC)
Programme Manager, Global Programme Water · Geographer & ethnologist · Programme manager, Institutional partnerships, SDC · Programme manager, West Africa, SWISSAID · Project director, Otto Frei AG · Project Director, Centre for Development and Environment (CDE), University of Bern (Madagascar)

Clémence Langone
Access to Water Foundation
Project manager · Traineeships: Bureau cantonal d’aide au retour — Service de la population (Vaud); EarthCheck, Relationship Management and Consulting (Australia); Youth Welfare & Social Affairs, Ville de Pully · Volunteer experience: Barefoot College, Enrich & Solar Programmes (Rajasthan, India); Jumeirah Group / Jumeirah Hotels & Resorts, Guest Relations Trainee (Dubaï)

Olivier Magnin
Former programme manager SDC (2008–2017) · Hydrogeologist engineer and WASH specialist · Experience in project and programme design and management in development and cooperation · Experience and knowledge in water governance and in integrated water resources management (IWRM) as well as in disaster risk reduction and climate change · Worked with the International Committee of the Red Cross (ICRC), various NGOs, with the Swiss government and as freelance consultant in Africa in humanitarian and development programmes

Violette Ruppanner
Strategos · Swiss Bluetec Bridge
Partner, Strategos · Manager, Swiss Bluetec Bridge · Co-Lead Project 1800 · Strategy development & change facilitation · Experience and knowhow in project design & management, strategy development & execution, business planning & development as well as change facilitation & organisational governance · Worked in government, IGO, NGO and the private sector on topics such as international trade, trade diplomacy, economic development cooperation, trade and development, human rights and trade

Astrid Scholz
Sphaera Solutions
CEO · Co-Lead Project 1800 · Immediate past President of Ecotrust (where Sphaera was incubated in partnership with the Rockefeller Foundation, Mercy Corps, Oxfam, the Island Institute and other like-minded organisations) · Advisor for public-private partnerships for conservation and social outcomes (for example the State of California’s Marine Life Protection Act Initiative) · Founding board member of XXcelerate Fund, a revolving loan fund created for and by women entrepreneurs piloting in Oregon, US · Board member of several conservation and economic development related civil society organisations · Speaker on social innovation, the business of philanthropy and the role of technology for change

Arthur Wood
Total Impact Advisors
Founding partner · Lead Project “1800” · Convenor, World Sanitation Financing Facility · Senior Vice President and Global Head of Social Financial Services, Ashoka · Director — Head of Product Development and E Commerce — Kleinwort Benson · Institutional specialist in US Aerospace Defense / Geopolitics · Co-creator of L3C legal structure in the US and the SELLP legal structure in the UK as well as social impact bonds and social equity; the first blended value model (Eye Fund) · Advisor to OECD on G8 Impact Investing Report and served for 3 years on the WEF Social Investment / Philanthropy Council · Regular speaker at leading global academic institutions as well as industry forums on social finance

Appendix I

WASH indicators

The most important feedback loop is derived from the direct inputs of citizens in their communities, with the segmentation of their subjective assessment of benefit falling under three main categories (defined below) for valuation purposes. Many outcomes/impacts can fall under more than one category.

A financial benefit has a direct, measurable impact on household finances
An economic benefit is longer-term impact that is likely to impact household finances (such as a child death), or is a resource (such as time) that can be valued in monetary terms
A social benefit is related to non-financial non-market impacts, such as dignity, social status, comfort, quality of life, etc. Note, however, that some of these benefits can be given monetary value through willingness to pay surveys.

The calculation methodology (algorithm), data sources and causal pathways of impact need to be determined for each of these benefits, drawing on past studies that have done the same. The potential financing sources and willingness to pay for each of these benefits also require assessment. For real-time monitoring following project implementation, it is often necessary to identify which variables can be captured, by whom and with what validity.

Benefit type

Financial

Economic

Social

Health benefits (positive externality)

Value to individuals and households

Yes

Value to businesses and employers

Yes

Value to educational attainment

Yes

Time benefits (private benefit)

Value to individuals and households

Yes

Value to businesses and employers

Yes

Value to educational attainment

Yes

Environmental benefits (positive externality)

Value of cleaner environment to households and community

Yes

Value of cleaner water to households

Yes

Value to producers (water quality)

Yes

Value to businesses and employers (due to improved aesthetics)

Yes

Productive value of excreta/sludge (private benefit)

Value to households

(Yes)

Yes

Value to producers (fertiliser, soil conditioner, wastewater reuse, energy)

Yes

Additional benefits of institutional WASH

Value to would-be employers able to work (women)

Yes

Value to existing workforce

Yes

Value to children able to attend school

Yes

Health benefits — averted death

(Yes)

Yes

Health benefits — averted disease cases

Yes

Time savings for productive / leisure uses

Yes

Reduced infections from WASH in health care facilities

Yes

Social benefits (convenience, dignity)

Value to women, mothers and girls

Yes

Value to elderly, impaired

Yes

Value to households (guests)

Yes

WASH status indicators

Household coverage and practices: Basic water (community source) · Household water treatment · Piped water supply · Basic sanitation · Hand washing · Safely managed water (SDG target 6.1.1) · Safely managed sanitation (SDG target 6.2.1) · Other hygiene (food, MHM, floor)

Institutions and public spaces (schools, health facilities, markets): Basic water · Basic sanitation · Basic hygiene · Menstrual hygiene management (MHM) · Other hygiene, such as food

Further categories: benefits, costs and total externalities of WASH; changes in WASH status.

Appendix J

Sample product: An exchange-traded fund (ETF)

One of the standard primary instruments at our disposal to realise a broader blue equity structure is the ‘exchange-traded fund’ or ETF.

An ETF, or exchange-traded fund, is a marketable security and special purposes vehicle that tracks an index, a commodity, bonds, or a basket of assets. Unlike mutual funds, ETFs trade like a common stock on a stock exchange. They can experience frequent price changes as they are bought and sold and typically have higher liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. Because they trades like a stock, ETFs do not have their net asset value (NAV) calculated once at the end of every day like mutual funds.

Further, an ETF is a type of fund that owns its own underlying assets (shares of stock, bonds, oil futures, gold bars, foreign currency, etc.) and divides ownership of those assets into shares. The actual investment vehicle structure (such as a corporation or investment trust) will vary by country, and within one country there can be multiple structures that co-exist. Shareholders do not directly own or have any direct claim to the underlying investments in the fund; rather they indirectly own these assets. They are entitled to a proportion of the profits, such as earned interest or dividends paid, and they may get a residual value in case the fund is liquidated. The ownership of the fund can thus easily be bought, sold or transferred in much the same was as shares of stock, since ETF shares are traded on public stock exchanges.

Our thesis that tradable financial mechanisms are useful to our objective is based on the idea that the umbrella organisation will provide digital infrastructure and support any number of dynamic, mission-locked ETFs / SPVs. Each ETF may on average manage up to USD US$20-30m; with individual structured products, one could probably raise in the range of US$5m. This is further elaborated upon in Section 6, where we explore a potential governance framework.

The legal counsel consulted for Project 1800 are those whose careers have been entrenched in the work of the SEC, and other major social impact / entrepreneur support organisations in the USA. Ample evidence has been provided from the case of pro bono legal service to an ETF issuer called Impact Shares, who in November 2017 set up three funds (one for women’s empowerment, one for minority empowerment and one for various causes), all of which have been slated to launch in Q1 2018.

The essence of their design, which is replicable for ours, is in the formation of a series of socially responsible investment solutions that enable not-for-profits and for-profits to together invest in low cost equity solutions designed to enable such collaboration. This precedent is a critical one for Project 1800, insofar as costs are controlled in a context in which corporate responsibility, deep social sector expertise, and the value of public brands are all optimally leveraged and aligned for collective benefit. Our iteration is to take that model and add in a contingent payment solution, where economic value is managed inside the traditional ETF structure, but social value is calculated and activated as a driver of return. If we move to Phase 2 of operationalising this plan, the appropriate legal team has already been identified, and initial conversations with a leading ETF lawyer already completed.

Such products are intended to build “the” new channel for retail and small to mid-sized institutional investors to use their capital to engage with social causes while earning an equity market return. They are also flexible enough to integrate the smaller, more agile (but not necessarily less deep-pocketed) private wealth funds whose increasing awareness of their role as catalyst is only becoming more obvious with time.

The true versatility of the ETF as a liquid, tradable investment instrument is perhaps best captured by the range of risks that are listed in the standard registration statements stipulated by the SEC. Indeed, most ETFs are investment companies. Therefore, the Funds’ purchases of ETF shares generally are subject to the limitations on, and the risks of, the Funds’ investments in other investment companies. This range is indicative of the vast possibilities in the context of using ETFs for social purpose, including the ability of deriving daily investment results that correspond to the inverse (or a multiple of the inverse) of the daily performance of some or another index.

In terms of who can partake in an ETF, any range of players may join in the equity structure of this vehicle, whose mission may be ‘locked’ through the issue of a ‘golden share’. How one may be rewarded for taking risk in financing an intervention that will have a target outcome may be determined on the back of the algorithms of the underlying information infrastructure or integrated platform that profiles and tracks all relevant activity.

Practical elements related to costs for specific time periods and target percentage returns for each year must be articulated, and investors in ETFs may pay brokerage commissions on their purchases and sales of fund shares. The turnover of a portfolio is a function of the commissions it pays when it buys and sells securities within its portfolio. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These are the costs that affect annual fund operating expenses and thus, performance.

For Project 1800, we are considering using an ETF as a management frame of the Investment opportunities and the members of the LP in say the SRB. This would give a standard fund management frame for the Investments. Attached also would be the contingent payments reflecting the payments from the contingent payers triggered by the achievement of a delta of improvement of a social issue. Logically the ETF security would trade as a function of the combined economic and the market perception of the likely achievement of the social outcomes. As an ETF it has the benefit of providing a tradable frame with standard exchange mechanisms. As an ETF it could be placed in most standard portfolios and have access to a wide range of tax wrappers in which it could be placed — hence securing both compliant and efficient tax distribution in a range of jurisdictions. This will be subject to legal review in Phase 2 and will also be dependent on the size of the assets raised to address the issue. Dependent on the practicalities it therefore may be a private placement but with an eye to blending into an ETF structure going forward. The ultimate vision is a range of securities trading as a function of the achievement of social outcomes.

Appendix K

Sample product: Aqua for All

Aqua for All (A4A) intends to apply the insights gained from Project 1800 as well as the proposed structures to several of its public-private-partnership (PPP) projects currently being developed:

The sanitation social impact bond INDIA (where the contingent payment will come from the Clean India subsidy from the national Modi Government).

The rainwater-harvesting aquifer recharge approach as inevitable intervention for water source related parties (potential contingent payers could be corporates, breweries, bottlers, utilities, agriculture and industry)
The Finish mondial concept (contingent payer not identified yet)
Carbon credit related interventions (with carbon credits as contingent outcome payer), for example biogas programmes, charcoal substitution, re-use of compost to avoid artificial fertiliser production

The goal is to test the concepts in practice, to provide insights for the architecture and to demonstrate the benefits to all players within a single proposition. It rests on the assumption that there is no global solution for this global problem, but that the latter needs to be addressed through many local approaches and solutions (for example within a river basin, public territory, area of mandate or market segment).

For each of the projects mentioned, A4A will price either the negative or the positive externalities and contract a contingent payer as (ultimate) beneficiary. It will aggregate the players that can perform the wanted social impact as well as the process and the capital streams. The projects will be structured in a way that provides for a positive financial return. For this, it will need guidance in metrics for outcome monitoring, as different social value will ask for different parameters (that align with literature and practical abilities).

In parallel, A4A will start providing support to Swiss Fresh Water (previously supported by cewas and the Swiss Bluetec Bridge) to help it realise its ambition to scale up its business in the Senegal River basin.

The person responsible for Project 1800 is Sjef Ernes CEO of Aqua 4 All working with Jacqueline Barendse, CEO of WASTE and Founding Manager of @scale ltd, a joint venture between A4A and Waste. The plan is to provide the Dutch Directorate-General for International Cooperation (DGIS) with a ‘bidbook’ of programmes that A4A wishes to support from 2019 onwards. In this ‘bidbook’, priority will be given to @scale-programs with DGIS funding to leverage DRFC and technical assistance (TA) support, unlocking private sector capital for scaling WASH interventions. Within that proposal, A4A will urge DGIS to participate in the further roll out of Project 1800 as co-funder, provided that the Bill and Melinda Gates Foundation (BMGF), SDC and WIPO continue their support.