Funders & Investors

Funders play a key role within the ecosystem in enabling the growth of both intermediaries and early-stage entrepreneurial enterprises, especially in their early years. Many Impact investors (investors that seek both financial and impact returns) choose to play a role once an intermediary and enterprise is cash-flow positive. Many do this as a way to reduce risk and uncertainty. However, both philanthropic funders and impact investors can play a critical role in achieving gender equality and greater social impact.

KEY PROBLEM(S)

Power is often held by those who control the money, instead of being held by those on the ground who know what work needs to be done. Funders can often prefer for their funding to be linked to specific activities or demands, which may not always be conducive to the best social impact or business outcomes.

Some funders may hold an unconscious bias favouring male entrepreneurs due to cultural and societal norms, therefore, disadvantaging female entrepreneurs. Broadly speaking, investment decisions lie predominantly with men due to the gender imbalance that exists in the corporate finance, investment and executive management space. To date, female entrepreneurs have not been able to attract the same value of investment funding as their male counterparts both in the commercial and social impact spaces. Only 2.2% of the $130billion total in venture capital money invested in 2018 went to women.
DESIRED OUTCOME

Entrepreneurs and intermediaries are supported to deliver their best work, without being negatively influenced by funders.
HOW TO MEASURE THIS

Example measurement indicators and collection methods can be found here.

Why it matters

Financial sustainability is key for intermediaries and enterprises to survive. They work at the heart of the impact so know the best option for where the funds should be spent to generate the greatest social impact. Funders can use their money to achieve gender inclusivity and equality. Investors can use finance to achieve gender inclusivity and equality.

Reflection

How much influence do your funders have on your operations?

How much of your funding is linked to specific activities and outcomes dictated by the funder? How much isn’t?

Do your funders in any way influence your pipeline? e.g. if you have investors – do the criteria in their due diligence affect the criteria used to assess your program applicants?

Do your funders have any contact with the enterprises/programs or teams that they support?

STRATEGIES

1.

Determine your investment thesis, and create a robust criteria and scorecard aligned with this thesis. Apply a gender lens to this criteria to work beyond quotas and see the value of directing funding to marginalised groups (e.g. funding more women-led enterprises, by virtue, will support the creation of more employment for women thus increasing the income earned by a woman). Once developed, share these with funders.
- Example 9: Applying a gender lens to your investments
2.

Invite funders to meet enterprises on the ground and face-to-face to help them to understand why particular criteria is needed and provided while other criteria is not (e.g. 12 month cash flow reserve may not be possible due to the stage of the enterprise and the purchasing power of the beneficiaries however this might not deem the venture unsuccessful).
3.

Adopt a disciplined approach to measure against ‘gender’ metrics and report on them regularly to create an evidence base.

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GLIA Toolkit...

Funders & Investors

KEY PROBLEM(S)

DESIRED OUTCOME

HOW TO MEASURE THIS

Why it matters

Reflection

STRATEGIES