CGI: Omidyar Network, A Philanthropy That Invests in For-Profits Too

image Old school charity and "philanthropy" once referred exclusively to financial contributions to nonprofits. Today, Omidyar Network (ON) takes a more innovative and inclusive approach, called "flexible capital." As a philanthropic investor, ON invests in for-profits, as well as nonprofits.

Here's the deal. Whether they are for-profits or nonprofits, ON's beneficiaries are chosen because they seek to achieve the ultimate outcome that ON strives for: "individual participation that can catalyze economic, social, and political advancement on a global scale." Omidyar Network was established in 2004 by eBay founder Pierre Omidyar and his wife Pam. To date, ON has committed more than $363 million to enterprises in microfinance, property rights, consumer Internet, and mobile and government transparency.

Flexible capital, human capital & technology

"Half of the funding we provide is in the form of grants to nonprofits, and the other half in investments--early stage, venture capital--to newly formed for-profits," explained Amy Klement, Vice President, ON, in a private interview with me at the Clinton Global Initiative (CGI) last week. ON also provides value in the form of human capital, applying the principles of venture capital to philanthropy. For example, explained Klement, "as engaged investors, someone from ON takes a seat on the board, whether we are investing in a for-profit or a nonprofit. We also have a recruiting team for C-suite positions."

Participation on boards where ON invests was music to my ears. As a consultant to NGO/nonprofit boards, I am hired to train and coach board members to become investors/donors in the organizations where they serve on the boards; unfortunately, contributing where you serve on the board is not as common as it should be. I am also asked to help nonprofits recruit executives from their donor companies to serve on their boards. The fact that ON involves one of their key people on the investee/grantee board as a matter of course is simply smart investing and an excellent value-add for the recipient.

In addition to bringing flexible capital and human capital to bear, ON brings outstanding expertise to the equation by building on its roots: technology. "Many of our executives have built or scaled large companies and are also from the world of hi-tech so we bring technology and organization-building experience with us when we invest in an enterprise," explained Klement.

Mobile phones changing the world

At last week's CGI, ON made a fresh new commitment to invest $55 million in Internet and mobile technologies to advance government transparency and economic empowerment. Funding for government transparency to date has gone to work in Africa and the U.S. to the Sunlight Foundation (find out whose contributing to whom and lots more!), mySociety and Global Integrity. Funding to harness the power of mobile technology in emerging markets has gone to Frontline SMS , Ushahidi , and Opportunity International--providing microfinance, loans, savings, insurance and training to over 2 million people working their way out of poverty in the developing world.

Ushahidi, which means "testimony" in Swahili, provides open source software to report on crisis events via mobile phone. It's been used in Haiti, for example, to send help to people in distress, and in Pakistan for victims of the floods. Through Ushahidi's Platform, cloudnets can be up and running in matters of minutes, most recently during the Pope's visit to the U.K., as well as tracking crimes in Atlanta, and tracking Metro outages in Washington, D.C. According to Ory Okolloh, Executive Director, Ushahidi, whom I met at CGI, "Omidyar is our largest funder, covering our operating expenses so that we can focus on our work. Omidyar allowed us to grow to scale."

Investing the Next $55 Million, Beginning on Monday

In order to begin investing the next $55 million, Omidyar is partnering with SOCAP at next Monday's SOCAP 2010 for a Mobile Technology FastPitch, a special session of the Mobilizing for Change track http://www.socialcapitalmarkets.net/

Competitors will pitch their enterprise's approach to harnessing the power of mobile technology to create social impact. Fast pitchers will represent the following:

  • Assured Labor, enabling companies in emerging markets to recruit better candidates, faster for less, by leveraging mobile phones to reach workers that lack consistent access to the Internet.
  • ClickDiagnostics, facilitating global access to medical specialists and real-time health data needed for strategic intervention.
  • mDhil (www.mdhil.com) providing basic health care information to the Indian consumer via text messaging, mobile Web browser, and interactive digital content.
  • Mobile Transactions Zambia (www.mtzl.net), providing mobile-based financial services to build the economy and extend access to individuals.
  • Simpa Networks (www.simpanetworks.com), developing a combined hardware, software and wireless solution to make sustainable solar home energy systems radically affordable to the 1.5 billion Base of the Pyramid (BoP) consumers who currently lack access to electricity.
  • SlimTrader (www.slimtrader.com), an e-commerce firm seeking to facilitate easy and affordable financial transactions for people in developing countries.

New technologies, new solutions, and bold new investment approaches to solve global challenges. Stay tuned here for more!

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