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Women Investing in Women Can End a Global Crisis

There’s a simple but incredibly powerful idea gaining traction in the financial world: women investing in women.

We often talk about this through the lens of venture capital supporting female entrepreneurs – because, outrageously, only 4.9% of VC partners in the United States are women, and only 3% of VC funding goes to female founders.

The more progress here, the better, but I think the idea of women investing in women is far bigger than the task of moving percentages in the VC arena. The truth is that women tend to re-invest a higher portion of their earnings back into their families and communities than their male counterparts – creating a force multiplier on a single investment that has the power to propel an entire family, village, or community forward.

Imagine what we could unlock if we directed our investments to women right at the base of the economic pyramid? It’s life changing. And it’s world changing.

Women tend to re-invest a higher portion of their earnings back into their families and communities than their male counterparts.

When water and capital flow to women

I have watched that potential unfold in the eleven years I have been a board member of Water.org, which invests in women by helping them invest in their own life-changing water and sanitation solutions. As a female executive and former investment banker, I have always been deeply passionate about expanding the economic value of and pursuing financial equity for women. That’s why I was so passionate about joining the incredible team at Water.org. If it’s not clear what my feminist mission has to do with an organization that innovates in microlending for household water connections and toilets, let me explain.

Asian women in traditional garb

Photo Courtesy of Water.org

Here’s the key: although Water.org’s microfinance partners offer their affordable water and sanitation loans to low-income customers of any gender, 90% of the borrowers are women. In Africa, Asia, and Latin America alike, it is women who come forward to take these opportunities to overcome the disadvantages that the water crisis heaps on them.

I joined Water.org to invest in those women. At first, I viewed this as pure philanthropy. But as the organization succeeded, we recognized the need to connect these now in-demand microloans to larger flows of capital. WaterEquity came into being as an independent investment manager, and I was one of the first investors in their funds. Nudging the capital markets through private investment like this, WaterEquity and Water.org can reach millions more people with affordable financing.

In Africa, Asia, and Latin America alike, it is women who come forward to take these opportunities to overcome the disadvantages that the water crisis heaps on them.

Making the payoff visible

Before Water.org, the microfinance sector didn’t have a place for water and sanitation investments. Microlenders would loan a woman money if she wanted to buy a cow or a sewing machine, because they could easily calculate the returns from those assets. They couldn’t see quite so clearly that there was a financial payoff to a toilet. To understand that takes a different perspective, and I believe different perspectives are exactly what women investing in women brings to the financial world.

I understood this more deeply when I started to meet individual women who had taken out these loans and changed their lives. In one village in India, I met a woman whose modest home backed up to the railroad. Before she installed a toilet, her family had to go to the bathroom outside. Children in the village didn’t like to do that during the day when people could see, so they would often wait until night – with the horrific result of children getting hit by trains in the dark. This loan was about making an investment in her children.

In these stark terms, investing at the base of the economic pyramid is also investing at the base of another pyramid: Maslow’s hierarchy of needs. Clean water is at the absolute foundation with other physiological needs – we require it every day to survive. The second level is the need for safety, which is exactly what the woman I met had achieved for her children and herself. Water.org’s programs have notably improved safety, security, and dignity, especially for women, who can put an end to long (often hours-long) journeys looking for water and a place to go to the bathroom. What they do with those hours instead is up to them.

Asian woman entrepreneur

Photo Courtesy of Water.org

These women care passionately about what they gain from water and sanitation investments, and their commitment results in repayment rates that are incredibly high – in excess of 98%. Now that millions of women are taking out loans that make such differences in their lives, and the lives and health of their families, and also repaying the loans to allow re-investment in millions of other women, the value proposition has become not only visible but, I think, quite magical.

Beyond necessities, equality

There are extraordinarily entrepreneurial women at the base of the economic pyramid as well as at the top. But creativity and innovation go wasted, for entire lifetimes, under the burden of carrying water, caring for sick children, and other tasks that come with a lack of basic necessities – and are inevitably left to women. Lifting that burden leads to a flood of entrepreneurship and a transformation in women’s lives that has been held back for generations.

In these stark terms, investing at the base of the economic pyramid is also investing at the base of another pyramid: Maslow’s hierarchy of needs.

Investing in the household water and sanitation solutions that women choose is, in truth, a massive investment in global equality. The way the water crisis is left on the shoulders of women is an injustice that we can end. We can see clearly now that two of the Sustainable Development Goals – Goal 5, gender equality, and Goal 6, water and sanitation for all – are in fact inseparable. It is women who will solve the water crisis, faucet by faucet and toilet by toilet, and that will be an essential step on the path out of poverty and the road to equality. Investing in these women’s solutions is helping them meet their most basic physical needs, find safety and dignity, and aspire to do far more with their lives. That is investment at its most transformative.

This is where I would like to see the idea of women investing in women really take off. Women should certainly be at the top of the economic pyramid and the top of big-league investment, but you don’t have to be there to be a part of ending our water crisis. I encourage you to invest in women, and to think without limits about what it means to do so.

Learn more about Water.org’s mission and (for accredited investors) WaterEquity.

Currently CEO of Shutterfly, Hilary Schneider has more than 20 years of experience leading and scaling consumer technology companies. Prior to Shutterfly, Schneider served as CEO of Wag!, the country's largest on-demand mobile dog walking and dog care service, and president and CEO of LifeLock, the leader in identity theft ... Read more

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