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How the Omidyar Network Pumps Up Nonprofits

In the fourth in our series on social entrepreneurs, meet the manager of eBay founder Pierre Omidyar’s network, which helps companies as diverse as Digg, Wikia, Kiva, and Creative Commons.

Leaders from the tech and finance sectors are having an ever greater impact on the nonprofit world. Nowhere is this most apparent than at the Omidyar Network, a philanthropic investment firm started by eBay founder Pierre Omidyar.

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Omidyar Network, or ON, works with a wide range of for-profit and non-profit ventures that they believe can have a massive social impact—including Digg, Wikia, Kiva, and Creative Commons. ON provides them all with financial capital and recruiting, governance, and scalability support.

Fast Company spoke to ON managing partner Matt Bannick, Omidyar’s right hand man, about the link between technology and philanthropy, the classifieds market in rural India, and why some successes can’t be measured with metrics.

How did you and Pierre’s working relationship evolve from technology to philanthropy?

Pierre and I met in 1999, when I joined eBay. We developed a strong, trusting relationship while working together at the executive level. Even when I was running eBay International and was post-acquisition CEO at PayPal, we used to talk about ways in which we can bring some of the underlying promise of eBay—the creation of a platform that presents people with community and livelihood and creates opportunities for them to do fabulous things–to the developing world.

In 2005, we started a pilot project to figure out how to bring an eBay-like model to rural India. eBay India already existed, but we wanted to know how to reach people who had less means. For-profit companies like eBay tend to penetrate countries with more disposable income and Internet access first. They eventually trickle down to the low per capita GDP countries, but we wanted to know if there was a way to leapfrog that and create genuine economic opportunity for people in less fortunate parts of the world using technology.

One thing we noticed was that mobile was the preferred platform. We also learned that there was already a vibrant classified market in rural India–people would post sheets of paper on a wall at a central point in a village asking who was available to do x or y, or whether someone had a tractor for rent.

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We were inspired and motivated to figure out ways to take the lessons from eBay and extend them more broadly to the philanthropic sector using technology.

As our relationship evolved, and I became more familiar with what Pierre was doing at ON, we realized it might make a lot of sense for me to join him. I started working at ON in 2007. Now, I spend my team working with my team to make sure we’re doing what we need to do to help our investees become successful. I spend a fair amount of time on the road, and Pierre and I catch up on the phone for about one hour every week.

 

How important is technology in the organizations in your portfolio?

A lot of the organizations we support have a strong tech background. If you look back historically, technology is frequently the source of great innovation and great social impact. Entrepreneurs are all about innovation; innovation frequently comes through technology.

For example, we invest in a company called d.light that provides low-cost solar lanterns, mostly in Africa and India. People there currently use kerosene–a bad pollutant that is expensive and causes lung problems. d.light is cheaper, and it enables kids to study—and education, of course, creates a route towards greater opportunity and prosperity.

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There’s a core tech element in play that enables us to build a business that creates fabulous opportunities for individuals. We also recently invested in a non-profit called Refugees United, which is a web-based platform that enables 40 million displaced people to register to find missing family members. It’s hugely innovative, and the fact that we have a tech background holds great value.

We also have some innovative organizations in our group that aren’t completely tech-oriented.

For example, one of our portfolio companies is a for-profit called Bridge International Academies that provides super low-cost private schools in the slums of Nairobi. Bridge is able to educate a child on about four dollars a month and is demonstrating fabulous results. They have a whole host of innovations around teacher training, building new schools, and how content is prepared, developed, and delivered. They charge tuition, so they’re not dependent on the whim or any particular grant funders, and they’ve scaled to reach hundreds of thousands of students. It’s a very innovative, cutting edge model.

 

How do you measure success?

ON is fairly unique in that we have both an LLC and a 501(c)(3)–we can do both for-profit and non-profit investments. There’s flexibility in the financial tools we use to support the organizations that we believe will have great social impact. Financial returns are an indicator of the degree of success, but there are other indicators, too. Sustainability is one. We also look at metrics like reach and engagement: how many people are they affecting, and how deep is that impact? With d.light, for example, reach would be measured by how many lanterns they sell, and engagement would be how much they’re being used. For Bridge, the number of students is reach, while how much their academic performance has improved is engagement.

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With Refugees United, reach might be the number of families reunited, but engagement becomes harder to define.

It’s hard to compare metrics across investments when they are based on values rather than an objective bottom line. How do you make a qualitative assessment of reuniting a family versus educating a student? Is it worth educating 20 students? 100? You’ve reconnected human beings–I don’t know how you even begin to measure that.

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About the author

I write articles about culture, technology, and human rights for publications like Wired, Popular Science, and the New York Times Magazine. I also produce radio segments for American Public Media, Public Radio International, and WNYC

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