Africa-Press-Ethiopia<\/p>\n
Ethiopian social entrepreneur Atti Worku faced challenges raising money for Seeds of Africa, an education and economic development nonprofit she founded in 2005. Initially, Worku thought she needed to tweak her proposals. But over time, she realized she was up against bias in grant-making.<\/p>\n
\u201cI realized I was not necessarily the problem,\u201d she said. \u201cThe system was stacked against me to get the funding I needed to grow my work and impact more people.\u201d<\/p>\n
In March, she became co-CEO at the African Visionary Fund, which pools grants from several funders to channel unrestricted funding to African social entrepreneurs working in their own communities.<\/p>\n
From small nonprofits to large venture-backed companies, organizations led by Africans tend to get less money \u2014 with more strings attached \u2014 compared with those led by others. Just 5.2% of U.S. foundation funding for Africa goes to local organizations, according to AVFund. Traditionally, many small and medium African enterprises have struggled to access the capital they need to grow.<\/p>\n
The COVID-19 pandemic has highlighted the power of proximity. Locally led organizations across Africa that have their communities\u2019 trust have often been better positioned to respond to changing needs when many international NGOs recalled their staffers to their home countries. But some of the same barriers that prevent donors from supporting local NGOs and civil society extend to philanthropy and venture capital, and it remains to be seen whether the lessons of COVID-19 will lead to more funding for African-led organizations.<\/p>\n
Shifting power in domestic and international grant-making
\nFor many funders, COVID-19 served as a wake-up call on the need to shift power to people who are closer to the problems. But not all foundations are making this transition. And when they do not trust the local founders they are supporting, they try to maintain control \u2014 often by asking them to follow rigid guidelines.<\/p>\n
\u201cYou can\u2019t really breathe as an organization,\u201d said Wendo Aszed, the founder and executive director at Dandelion Africa, a grassroots organization working to improve the sexual and reproductive health and economic livelihoods of women and youths in Kenya.<\/p>\n
When donors ask for impact metrics to understand how their dollars are making a difference, she said, they seem to forget that metrics represent not just numbers, but people.<\/p>\n
\u201cThese are our brothers. These are our sisters. We were born here,\u201d Aszed said at a recent webinar hosted by the African Diaspora Network. \u201cThis is the legacy that we are going to leave behind, and we want to leave our communities better than we found it.\u201d<\/p>\n
And while many U.S. foundations responding to calls for racial justice are now driving more domestic spending to organizations led by people of color, they are not making the same shifts in their international grant-making portfolios, said Katie Bunten-Wamaru, co-CEO at AVFund.<\/p>\n
\u201cThe root of why there\u2019s funding inequity in the U.S. to BIPOC [Black, Indigenous, and people of color] organizations, that racist root, is the same as why there\u2019s so little funding that gets to African leaders on the African continent,\u201d she said.<\/p>\n
AVFund is one example of how intermediaries with close ties to community-based organizations can play a role in driving more resources from larger foundations to grassroots leaders.<\/p>\n
AVFund recently announced its first $1 million commitment in multiyear, unrestricted funding to six organizations led by Africans, including Dandelion Africa. It pooled funds from the Skoll Foundation, Imago Dei Fund, King Baudouin Foundation United States, and Segal Family Foundation \u2014 where Bunten-Wamaru previously worked \u2014 among others. AVFund is working to raise a total of $10 million by 2023.<\/p>\n
From \u2018unconscious incompetence\u2019 to innovative finance
\nWith foreign aid to Africa declining, it is more critical than ever for private foundations and agencies to understand they can be catalytic investors \u2014 instead of just giving money away as grants, said Frank Aswani, CEO at the African Venture Philanthropy Alliance.<\/p>\n
\u201cThere\u2019s a lot of unconscious incompetence in the space,\u201d he said at a recent Devex event on angel investing for the Sustainable Development Goals.<\/p>\n
To contribute most productively as part of an ecosystem of social investors, grant-makers need to be brought up to speed on innovative finance \u2014 including tools such as venture philanthropy, impact investing, and blended finance, Aswani said.<\/p>\n
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\n\u201cYou\u2019ve funded us for 50 years. You\u2019re exiting now. At least leave us more capable to maintain and sustain what you\u2019ve invested in the last 50 years,\u201d he said of international development agencies. \u201cEmpower the African social investors to carry forward what you\u2019ve put down.\u201d<\/p>\n
Donors can also play a role in educating more African social investors about innovative finance, he said afterward.<\/p>\n
\u201cThis way, more of the capital needed locally can be raised locally and deployed by local players into local opportunities,\u201d Aswani said.<\/p>\n
He noted that the African Venture Philanthropy Alliance is working on investor education programs, including an innovative finance fellowship program starting in May, as well as an effort to build innovative finance into the curriculum of 40 African educational institutions.<\/p>\n
Bridging the gap
\nInvestors headquartered in North America accounted for 42% of all African venture capital deals over the last five years, according to the African Private Equity and Venture Capital Association, but they have favored African startups with white founders.<\/p>\n
When investors make a bet on a team, they rely on trust and their own networks. That can lead to disparities based on gender, race, or education levels, even among the African founders who are getting funded, said Sangu Delle, a Ghanaian investor and entrepreneur who chairs Golden Palm Investments Corp. And as investors go to their portfolio companies to get recommendations to expand their pipelines, those inequalities are further entrenched.<\/p>\n
Development finance institutions, including the World Bank\u2019s International Finance Corp., are investing in funds in Africa. Many have committed to invest more in low-income countries \u2014 the majority of which are on the continent \u2014 including through financing to support small and medium-sized enterprises that will create jobs.<\/p>\n
But most of these dollars are not going to African founders, Delle said.<\/p>\n
\u201cDFIs are providing capital to funds predominantly investing in white founders. That\u2019s crazy,\u201d he said. \u201cYou can\u2019t come and tell me you\u2019re investing in Africa, and your investment strategy is basically a neocolonial strategy. There has to be a reckoning.\u201d<\/p>\n
Foundations, donor agencies, and DFIs can help bridge the gap to make some of these African-led organizations financially viable. But if DFIs don\u2019t acknowledge their biases and make structural changes to address them, they will only perpetuate problems, Delle said.<\/p>\n
AVFund, for its part, operates on a relatively small scale. The co-CEOs said they hope to see a shift among private foundations, as well as bilateral and multilateral donor agencies, as these larger donors work to prioritize localization, enabling communities to decide which programs and services will support their own needs.<\/p>\n
But all too often, Bunten-Wamaru and Worku said, donors are tinkering with existing systems that have been shown to fail \u2014 rather than rethinking systems entirely.<\/p>\n
From grant-making to impact investing to venture capital, there is a funding gap for African founders and leaders, as well as a failure to shift power and decision-making closer to the problem solvers, they said.<\/p>\n
\u201cIt eventually comes back to this root of power and racism and bias,\u201d Bunten-Wamaru said. \u201cAll of those tools are important, but if funders have not come to understand the power problem, it will continue to perpetuate inequities.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Africa-Press-Ethiopia Ethiopian social entrepreneur Atti Worku faced challenges raising money for Seeds of Africa, an education and economic development nonprofit she founded in 2005. Initially, Worku thought she needed to tweak her proposals. But over time, she realized she was up against bias in grant-making. \u201cI realized I was not necessarily the problem,\u201d she said. […]<\/p>\n","protected":false},"author":84,"featured_media":4725,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[241],"class_list":["post-4723","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press-ethiopia"],"yoast_head":"\n