With their own money, executives report a sharper focus on innovation
Younger executives and those leading smaller organizations or working in the field are more willing to donate their own money to innovative startups. While this indicates a growing openness to new approaches, executives remain cautiously optimistic about development innovation.
By Claire Peracchio // 23 September 2014This article is part of The Future of Global Development, a series for Devex Executive Members that explores what development leaders think of the industry’s top issues. When looking for ventures to fund, impact investors and traditional donors often consider an organization’s track record as a primary factor. But this doesn’t seem to be the case when development executives are using their own money to support innovative ideas or firms. Our recent survey of senior executives reveals that 61 percent of respondents are more likely to donate their own money to a startup with innovative ideas but no track record, rather than an established nongovernmental organization with conventional approaches but a solid track record. Younger executives, as well as those who work at smaller organizations or in the field, were more likely to favor donating to a development startup. The survey results indicate a growing willingness to consider new methods — and according to executives reached for comment, are a testament to the challenge of untangling development innovation’s hype from its substance. Survey respondents who work at less-traditional organizations were even more likely to favor donating to startups. More than 70 percent of respondents who work at social enterprises and local NGOs picked this option. The group least likely to donate to a startup? Executives at multilateral donor agencies, as 75 percent of this group said they’d give their own money to an established NGO. Executives Devex spoke to were ambivalent about the future of development innovation. While the industry is in some cases more willing to take on risk, they said new approaches are often countered by bureaucracy, regulations and a fear of failure. There’s also the issue of scale, with executives noting the challenge of adapting innovative projects to reach millions of people. “There is a fair amount of innovation, despite the fact that the risk tolerance in the industry is low and declining,” said Karl Hofmann, CEO of the global health nonprofit Population Services International. The executives Devex spoke to also noted the crucial importance of stretching every development dollar to reach as many people as possible, an imperative that can run counter to experimentation and risk-taking. “Scale is the new currency and it isn’t going away,” said Mihir Desai, CEO of Dexis Consulting Group. Suspicion toward untested approaches among traditional donors has led some executives to seek funding from alternative sources like individual philanthropists and the private sector. Over 18 months, PSI mobilized $15 million from private individuals interested in development initiatives related to girls and women, Hofmann said. The business-oriented nonprofit TechnoServe has focused on addressing poverty among 300,000 coffee-farming families, mostly in East Africa, according to Simon Winter, the organization’s senior vice president for development. The initiative got off the ground with a large grant from the Bill & Melinda Gates Foundation and is looking to tap into private-sector resources, as companies like McDonald’s increasingly seek to tout their products’ ethical origins. For established organizations, shifting to a less risk-averse culture can be a challenge. “There was a lot of resistance initially, people saying, ‘but we all innovate,’” said John Whalen, a former software executive who was tasked with making the more than 40-year-old Pact more receptive to innovation. Whalen noted the importance of hiring the right people and playing to organizational strengths — in Pact’s case, capacity building. Under Whalen’s leadership, Pact invested in building a software platform for reporting on organizations’ capacity development priorities. Chemonics CEO Susi Mudge also spoke of fostering a culture hospitable to risk-taking. “We try to instill a ‘no fear’ value here, both in the home office and in the field, so people are willing to take chances and try something new,” Mudge said. For Desai, though, innovation may actually be driven by players outside of the traditional development ecosystem who are finding solutions to everyday challenges, rather than doling out funding on a project-by-project basis. “We have mastered the science of reacting, which is different from new innovators who are seeing a problem and creating a solution to that problem,” he said of the industry. Would you donate your own money to startups with innovative ideas but no track record? Join the conversation by leaving a comment below or tweet us at #futuredev. What do nearly 1,000 senior-level executives from NGOs, donor agencies, corporations and the public sector think about the future of global development? View our complete series — featuring exclusive insights and interviews with top executives — to find out.
This article is part of The Future of Global Development, a series for Devex Executive Members that explores what development leaders think of the industry’s top issues.
When looking for ventures to fund, impact investors and traditional donors often consider an organization’s track record as a primary factor. But this doesn’t seem to be the case when development executives are using their own money to support innovative ideas or firms.
Our recent survey of senior executives reveals that 61 percent of respondents are more likely to donate their own money to a startup with innovative ideas but no track record, rather than an established nongovernmental organization with conventional approaches but a solid track record. Younger executives, as well as those who work at smaller organizations or in the field, were more likely to favor donating to a development startup.
This story is forDevex Promembers
Unlock this story now with a 15-day free trial of Devex Pro.
With a Devex Pro subscription you'll get access to deeper analysis and exclusive insights from our reporters and analysts.
Start my free trialRequest a group subscription Printing articles to share with others is a breach of our terms and conditions and copyright policy. Please use the sharing options on the left side of the article. Devex Pro members may share up to 10 articles per month using the Pro share tool ( ).
Claire Peracchio worked on Devex's digital strategy. She joined us from Atlantic Media, where she contributed to the marketing team within the company's in-house digital consultancy, as well as its business development and corporate strategy divisions. A graduate of Brown University, Claire also had a tenure as editor-in-chief and president of the Brown Daily Herald.