Research into the international development sector and its effectiveness by the H & S Davidson Trust points to a flawed system badly in need of reform. In this series of interviews, we talk to figures in the sector in order to get their views on how we can co-create the narrative of the system we want and how we obtain it. In this interview, Andrew Milner talks to Kevin Starr of Mulago Foundation.

Andrew Milner: Can you start off by telling me about the work of Mulago. It describes itself as a venture fund, is that right?

Kevin Starr, Mulago Foundation

Kevin Starr: Yes. A lot of what we do operates in a manner similar to a venture fund but if they were focused on impact instead of profit. In other words, we’re looking for people who we think have an idea that could go big, in terms of exponential impact over time, and who we think have what it takes to shepherd those ideas to scale, build the organisation around that idea, and construct the strategy to take them there.

So you’re all about effectiveness and the capacity to take to scale. We’re in the middle of what people are calling a polycrisis. Which parts of that polycrisis are you working on and what do you see as your challenges?

We work on big problems that we see a solution to. In other words, we can’t just choose to work on something, we need to find somebody with a good idea. Of course, like everybody else we’re very concerned about the climate crisis, we’re concerned about Africa’s job crisis, we’re concerned about all the ways in which the basic needs of the poor are not being met.

And more than anything else we’re concerned about the fact that there’s a lack of jobs so people are going to remain poor. So it’s very broad, but at the same time it’s very focused on the basic needs of the poor, including an environment that is supportive of their well-being and progress.

How did you come up your approach in the first place? Did it evolve, or did you go in with the venture-led approach from the beginning?

It has evolved over 20 years, and in fact that analogy wasn’t even apparent to me until somebody described us as being like venture capital and I asked: ‘what’s venture capital?’

What were the stages in that evolution?

I noticed in trying to learn what works that things were not designed, they were collections of activities, and things weren’t being measured and were often not run professionally. And then I got intrigued with what it means to take impact to scale, and the net of all those pushed us in the direction we’re going.

From that general approach, do you see any initiatives that been particularly successful and why do you think that is?

I think we’re in the midst of seeing things come to fruition. For example, there area bunch of professionalised community health worker organisations, that have coalesced into a movement, and are on the verge of creating a whole new class of health worker that, in and of itself, promises to finally deliver primary healthcare for all. But it’s really on the verge, and for it to really matter it needs to scale up via governments.

The fundamental problem is that African economic growth has completely stalled. The GDP per capita has been flat for 20 years.

Between the defects of philanthropy and the problems of failed economic growth and development writ large in, say, Africa, it’s going to take a while. Sadly there’s been very few examples of things really, really scaling up.

You talk about failed economic development and growth, What do you see as being behind those? Is it because of development practices of the past or is it just that the challenges have been too intractable to get to grips with?

The fundamental problem is that African economic growth has completely stalled. The GDP per capita has been flat for 20 years, and it’s beyond my pay-grade to say exactly why that is. Clearly African agriculture is too fragmented to be an engine for economic growth, manufacturing in Africa is so far behind so many other countries that it’s hard to see it getting its share of that, and service industry requires a lot more education and infrastructure than Africa has been able to manage. I don’t really see a way out of this any time soon.

So it’s beyond the reach of any one sector?

Yes, it is. What we really would like to do is make people not poor any more rather than provide solutions for the poor. A lot of people are going to be in poverty for a long time, so we want to make their lives better and start to create the conditions for prosperity, even if we don’t have the key to prosperity yet.

Obviously your partners, the people you fund, are the key to this from the point of view of your work. How do you select them?

For our two Fellows Programme which is the on-ramp to our portfolio, we have a big nomination network and we screen about 800 organisations for 20 slots a year. What we’re really looking for is scalable ideas. And those are ideas where we have a notion of who’s going to really deliver that idea at very big scale, and who’s going to pay for it.

Once we have a sense of that, we can start asking the questions about whether we think it’s good enough. In other words, is there evidence of impact of a size that is likely to be consequential in people’s lives? Is it big enough, in other words is the overlap of where it’s needed and where it would work such that it’s interesting to us? Is it simple enough? If you’re saying that government could do it, for example, can you make the case that it actually is something government could do? And, finally, is it cheap enough, in other words, given whoever is paying for it, whether it’s a customer or a finance minister, is it priced such that they would pay for it? So it’s a systematic way, given the stage of an organisation and its idea, of trying to decide whether it’s scalable. Then we learn more about each of those as we go along with an organisation and they start to get things like more rigorous evidence.

How did the fellows programme develop in the first place? Did you decide you needed to invest in leaders first, then you could fund the organisations or was it the other way round?

Again, it was iterative. My board chair really wanted a Fellows programme. He liked the idea of giving talented people resources and seeing what happened, so we established one. It evolved into a programme that taught Fellows how to design for impact – a methodology to create a high-impact model that’s scalable, a strategy for scale, evidence, iteration methods, behaviour change, fundraising, all these basic things that could help them get better at what they do. The Fellows have a week-long course at the beginning, a year working intensively with us, and then another week-long course at the end. And at the end of that second course, we make decisions about whether it’s a fit for the portfolio and continued funding.

What’s your success rate? 

It’s a moving target because we’re constantly evolving based on what we’re learning, but historically about 70 per cent of the Fellows have gotten into the portfolio, and of those about 70 per cent are still in the portfolio five years in.

You say on your website that you don’t fund people who don’t measure impact because they’re flying blind and so would you be. What is it that you measure and ask them to measure?

The first thing is to clarify what they’re setting out to do, and you’d be surprised how few organisations are super clear on that. We have a tool we call the eight-word mission statement: it’s made up of a verb, a target population and an outcome. We really try to get to that for any given organisation; is this about keeping CO2 out of the air? Is it about saving kids’ lives? Is it about achieving literacy? And with that, it becomes an easier task to pick the right metrics, some of which is experience and some of which becomes quite obvious.

What needs to happen is organizations measuring their impact well, and funders only funding organisations that measure their impact well.

Then it’s a question of showing a change over time with a baseline and end line, and the right interval, and the right sample size, and the right survey methods. And then making the case for attribution, which usually becomes more rigorous as you go along until you get to the gold standard randomised control trials that are not appropriate for very early stage organisations, but usually need to happen before things scale up.

Obviously, you don’t fund them all the way. Somebody else takes them on beyond a certain point. How much of a challenge is getting them to the next level? Is that the toughest bit of your work?

Absolutely. We stay in the game, we keep funding as long as we see the potential for exponential impact over time, because really the scale of a given idea is often a distant dream. The big challenge at the philanthropy stage is other funders because not enough funders are serious about impact at scale. And then as you get into funding from government revenues and/or Big Aid, you run head on into the problems of those two things. It’s really the challenge of our time.

When you say not enough philanthropy is serious about impact, do you mean that they don’t measure at all, or that they’ve got very hazy ideas about what they should be measuring?

Either-or. Most funders aren’t that serious or that knowledgeable about impact, so they do fund a lot of things where they don’t measure or they’re not effective, and they fund a lot of organisations that should probably go out of business — we call them zombies. The net of that is that it’s a low- performance sector that I’ve written about in SSIR.

And when you get into the bilaterals and governments presumably you’re against the problems of bureaucracies?

Yes, but bureaucracy’s important and it can function, but they’re not set up to function very well because the whole sector is not configured to scale up solutions. Once you start getting into Big Aid, it’s more about projects for some reason, it’s not about really scaling up solutions.

There’s two streams of Big Aid.  One runs through governments and, to some degree, it follows government priorities, and if those priorities are similar to those of organisations that can at least start to be a way of scaling up an idea through government. Then there is the Big Aid that goes directly to social sector organisations and big contractors. That tends to be project-based and those don’t fix anything.

You said, ‘it’s more about projects for some reason’.  What do you think that reason is?

There’s a lot of reasons.  Again, I’m venturing above my pay grade, but take USAID, for example. They seem to feel that projects administered through big contractors are safer in terms of risk, which is ludicrous because they don’t even measure impact much of the time, and they often re-fund things that don’t work. It’s a very, very poorly functioning and designed system. It’s evolved over time and was never particularly well thought out. It becomes a self-reinforcing cycle where Big Aid wants projects, so big NGOs do projects which reinforces Big Aid funding projects and nobody’s breaking out of the cycle.

Is part of that because organisations like to do business with other organisations that look and behave a bit like them?

What I learned about USAID, from outfits like Unlock Aid, is the perception of risk is a big factor. You want to work with someone you perceive as unlikely to steal or misuse the money, and so they work with these big contractors they’re very familiar with, but their bureaucracies exact a premium and the premium is extremely high – like 60 per cent – so it’s as if you were buying insurance on your investments, and the premium was 60 per cent of your investment. The way it’s worked out is absurd. Nobody would ever design it that way, but that’s how it’s ended up.

We’re looking for people who we think have an idea that could go big, in terms of exponential impact over time.

It’s in a lot of people’s interest to change it, but it’s not in the interests of those contractors and their lobbyists. There are a lot of good, smart, conscientious people within USAID who would like to change it, but it’s a big ship with a small rudder. We fund Unlock Aid, which is run by some very smart people, and is helping to push USAID in the right direction from outside. There’s also a lot of people who would like to change it from within, it’s just hard.

The Reform and Development Initiative have got what they’re calling four pathways to better funding practice; equal voice for communities in decision-making, increased collaboration and partnerships, increased and unrestricted longer-term funding, and changing the roles of INGOs from being donor-led to led by local circumstances and needs. What’s your view of those four?

I don’t know what the first and the fourth really mean, and I don’t think that there’s a lot of drivers of the second. The truth is NGOs respond to their funders, and they are accountable to their funders far more than they’re accountable to their constituents. You can give their constituents a voice but NGOs would still not actually not accountable to them.

And what does local even mean? What matters is whether organisations are having a positive impact in the lives of their constituents, and it’s up to the funders to ensure that happens because the only real accountability is the NGO to the funder. If the funder does not make them accountable for the well-being of their constituents, nothing happens. You can talk about voice all you want, and you can talk about local all you want, but unless funders are held accountable for impact nothing’s going to change fundamentally.

So this idea of equal voice for local communities is a bit of a red herring?

Totally. What needs to happen is impact in the lives of those constituents. I don’t really know what “voice” means. Any good design process by an NGO will be drawing from their constituents and finding out what they want, because that’s the whole point of the thing! But it’s the measuring, the assurance that it actually happened, that really matters.

So the idea about the changing roles of INGOs from being donor-led to community led falls into the same category? They’re always going to be donor-led?

They’ll always be donor-led. It’s ridiculous to think it would be anything else. They respond to what gets paid for. The problem is that donors haven’t taken responsibility for the well-being of the constituents.

Coming back to your work, what sort of support or what conditions do you think need to be in place from either the rest of philanthropy or the public and private sectors to make it more effective? Is there something missing from what people call the ecosystem, that would help you to do your work better?

I think it’s exactly what I just said. It’s organisations measuring their impact well, and funders only funding organisations that measure their impact well and showing that they are benefiting their constituents. It sounds simple.

Imagine in industry that a business makes a product. Nobody likes that product so they don’t buy it, so the business doesn’t make any money, so investors avoid it. We don’t have that very simple dynamic in the social sector. People get what they get and they don’t really have a say in it, and they’re not going to have a say in it. Organisations are going to give them what they give them, and it’s up to the funders to say: do the customers want that product? Is it really improving their lives? That’s our job because we don’t have the same feedback loops as industry. Yes, it’d be really great to hear what people think of your product, but every organisation should be asking that because they want maximum impact for their product, not because it’s nice.

It sounds as if you think the needs of constituents, instead of being mediated through through NGOs as they are at the moment, should be assessed by the donor directly and then they should give the money to the NGOs that are doing the right thing.

It’s more like NGOs should be doing that because they want to have maximum impact and funders should only fund them if they are. Funders can’t measure the impact on beneficiaries. That would be an enormous cost. What you really have to do is only fund organisations that  are interested in maximising their impact and measuring it toward that end. And we’re looking out for their constituents by making sure that they’re measuring impact.

Andrew Milner is features editor at Alliance.